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Topgolf Callaway 2023 Sales Hit $4.285 Billion
The Topgolf Callaway 2023 sales and financial report is out and once again it’s a fascinating look into where golf’s biggest company is heading.
First the headline: 2023 sales hit the $4.285-billion mark. That represents a 7.2-percent increase over 2022. Topgolf Callaway’s nearest publicly traded competitor – Acushnet – finished 2022 at $2.27 billion. (Acushnet usually releases its annual financials in March.)
All three Topgolf Callaway business segments cracked $1 billion in sales, led by Topgolf at $1.76 billion. The Golf Equipment segment reached nearly $1.39 billion in sales while the Active Lifestyle segment rocked in at $1.13 billion.
There’s a lot to unpack here, particularly how $4.285 billion in sales generated only $95 million in net profit. (There’s a simple reason.) But, first, here’s our standard disclaimer:
We are not nor do we claim to be financial experts, investment counselors or Wall Street-level business analysts. We’re simply golf industry geeks who like to read.
Let’s dig in.
TopGolf Callaway 2023 Sales
If you took away any two of Topgolf Callaway’s three business units, you’d still have a billion-dollar operation.
That, friends, is how you “equipment proof” a golf company.
However, if you’re a glass-half-empty kind of person, you might think $4.285 billion in sales is a disappointment. As recently as the end of the second quarter of 2023, Topgolf Callaway was projecting 2023 sales would reach nearly $4.7 billion. But sluggish Topgolf same-venue sales and a flat equipment market forced the company to revise its projections downward to between $4.235 billion and $4.260 billion.
The glass-half-full types could say Topgolf Callaway exceeded those revised projections by anywhere from $25 million to $50 million.
Regardless of whether you consider yourself an optimist, a pessimist or a realist, Topgolf Callaway did enough course correction in Q4 to keep the ship steaming forward.
“Topgolf same-venue sales outperformed expectations in Q4 as a result of a stronger than anticipated holiday season,” said Topgolf Callaway CEO Chip Brewer in a statement to investors. “(Same-venue sales) finished the full year at plus one percent.”
It’s important to note same-venue Topgolf sales were down three percent over the first three quarters of 2023 compared to 2022.
As mentioned, overall Topgolf sales hit $1.76 billion in 2023. That’s a 14-percent increase over 2022, with much of that growth fueled by 11 new Topgolf venues opened during the year, four of them in Q4 alone. Additionally, Topgolf generated nearly $109 million in operating income for the year, up 42 percent over 2022.
No. 1 in Golf Gear
Even though Topgolf is the clear and growing top dog at Topgolf Callaway, golf equipment is still in the company’s DNA.
“We finished the year with the number one U.S. market share for total clubs, drivers, fairway woods, hybrids and irons,” Brewer told investors. “And our new 2024 product line is our best yet.”
2023 Callaway equipment sales totaled $1.39 billion. Just over $1 billion of that was in clubs and $314 million was in golf balls. Club sales for the year were relatively flat in terms of dollars while ball sales increased 2.2 percent.
Cause for alarm? Not really
2022 was a screwy year for manufacturers in most industries, including golf. Remember we were coming out of a worldwide pandemic followed by a worldwide supply chain nightmare. Manufacturers spent the year scrambling to fulfill open orders and retailers did their level best to stock up to satisfy pent-up demand.
2023 sales suffered a backlash of sorts, but for those glass-half-full types, staying relatively flat in sales after a record high, pandemic-fueled year can be considered a win.
On the other hand, operating income for the segment was down 23 percent for the year. It still posted positive numbers but second-half revenues took a hit due to lower production volumes.
The Active Lifestyle segment, however, had a banner year. Its $1.13 billion in sales was a 9.2-percent increase over 2022. And operating income was up more than 51 percent. The company cites strong TravisMathew performance as well as, interestingly, big increases in direct-to-consumer sales, as fueling growth.
Topgolf Callaway 2023 Sales: Now About That Profit …
If you just look at the surface of things, you’d think $95 million in net profit on $4.285 billion in sales is a misprint at best. And if you consider that $95 million is a 41-percent decrease compared to 2022, you might think it’s time to man the lifeboats.
Adjusted EBITDA, however, would like a word.
If you’re in sales, you learn to love EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). EBITDA reflects two things: your company’s relative strength in the market and your sales and marketing organization’s efficiency and performance. It shows how much money you made before the corporate finance people do all their corporate finance voodoo. When you look at Topgolf Callaway’s performance through the EBITDA lens, you see a very different picture.
For 2023, Topgolf Callaway’s Adjusted EBITDA was up nearly 10 percent globally, at $596.6 million. That’s a healthy increase over the $558 million posted in 2022. That left the finance department with money to cover interest expenses (a 47-percent increase over 2022) as well as impairment losses, accounting write-offs and additional IT expenses.
TopGolf Callaway 2023 Sales: Odds and Ends
Topgolf Callaway always includes interesting tidbits in its investor presentations. If you think the game’s growth is slowing, the numbers don’t support that. According to the National Golf Foundation, 26.6 million Americans played on-course golf last year. That’s up by one million over 2022 and is the largest one-year growth since 2001.
And that number was driven by 3.4 million first-timers. Golf isn’t dying. The pipeline appears to still be full.
Off-course participation increased 18 percent in 2023 to nearly 33 million participants. That’s up 41 percent compared to the pre-pandemic year of 2019.
Additionally, Topgolf Callaway says Topgolf adds three to four million unique visitors each year. Topgolf is expected to exceed 30 million unique visitors in 2024. What’s more, 10 percent of current on-course golfers credit Topgolf for getting them into the game.
That’s a big reason why Topgolf Callaway’s investor presentation focused heavily on Topgolf’s performance and 2024 projections.
Looking Ahead for 2024
As it did last year, Topgolf Callaway is projecting conservative growth for 2024. The company is expecting revenue to increase this year to around $4.5 billion to $4.555 billion. That might not sound like much but it is, in fact, a quarter of a billion dollar increase. There are OEMs that would sell their entire marketing department’s kidneys for that kind of annual revenue, let alone an increase.
Adjusted EBITDA is expected to hit the $620 million to $640 million range, with Topgolf alone expected to contribute more than half of that.
The company plans to open eight more Topgolf venues in 2024, including the rebranded and newly acquired BigShots facility in Akron, Ohio. Same-venue sales are expected to be flat, although Topgolf Callaway is looking for ways to drive additional revenue through Topgolf.
For example, by mid-year, you’ll be able to rent premium Callaway equipment to use at Topgolf. Additionally, each venue’s director of instruction now is on Callaway Staff and is set up to fit and sell Callaway gear. Any additional direct-to-consumer sales channels can only help the bottom line.
You’ll also see Topgolf setting up loyalty programs and memberships for its customers.
For the record, Business Insider is reporting that Topgolf Callaway’s Q4 results exceed analysts’ expectations and that its 2024 projections are in alignment with their estimates. Additionally, Topgolf Callaway is reporting a healthy increase in free cash flow, which the experts say will allow the company to further reduce debt in the second half of the year.
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