The Q2 financial reports for Topgolf Callaway and Acushnet have always been a contrast in styles. But for the second quarter of this year, one company is leading with a nearly five percent year-over-year sales growth.

The other says its results “reaffirm 2023 revenue and Adjusted EBITDA guidance.”

Care to make any guesses on which is which?

Both companies have traditionally led with sales numbers, percentage increases, and growing net profits – you know, the sexy stuff that gets investors all gooey with anticipation. But for the second quarter in a row, it’s Topgolf Callaway with the muted quarterly results announcement.

Not that the actual numbers are scary or anything, but it begs a simple question:

Why the change?

We’re going to dive into both companies’ Q2 financial reports, but we first want to deliver 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.

Now that we have that out of the way, let’s look at the books.

Q2 Financial Reports: Acushnet

The big headline for Acushnet is its sales number. The company topped $689 million for Q2. Not only is that a nearly five percent increase over Q2 of 2022, or 6.4 percent constant currency (we’ll explain what that is later). It’s also a very small increase over the first quarter of this year. In an industry where most of the sales come in Q1, that’s kind of remarkable.

Acushnet’s year-to-date sales are at $1.375 billion. That’s a nearly nine percent increase over 2022. And Acushnet’s profits are up, as well. The Q2 net profit was nearly $75 million (up 12.3 percent over last year) and profit for the first six months is $168 million. That’s up nearly 14 percent over last year.

The big sales drivers were Titleist golf clubs and golf balls, both of which showed double-digit growth in Q2. In the US, ball sales increased 23 percent fueled by the new edition Pro V1. And club sales jumped 26 percent, with the new TSR metal woods and Scotty Cameron Super Select putters leading the way.

That growth, however, was offset in the US by a five percent drop in FootJoy sales, particularly in footwear. Nevertheless, Acushnet is bullish on the rest of 2023.

“We are excited to launch new T-Series irons later this summer, and a wide assortment of new products from FootJoy and KJUS for the fall and winter seasons,” said Acushnet CEO David Maher in a prepared statement. “Underscoring our enthusiasm is strong participation and interest in the sport of golf, particularly in the US, where rounds of play are up over five percent year to date.”

Global Specifics

Despite a solid performance in the US, Acushnet is treading water in Japan, Korea and Europe. Overall, net sales outside of the US dropped 6.3 percent, or only 2.5 percent in constant currency. US companies with significant sales overseas will use constant currency figures when reporting those sales. When the US dollar is strong overseas, companies take a hit on the exchange rates. Constant currency ties the current value of the US dollar to last year’s value to normalize the sales numbers.

US Sales topped $401 million in Q2, a 14 percent increase over last year. Sales in Europe, Japan and Korea, however, were all down between five and 10 percent in constant currency. Each area reported lower FootJoy footwear sales. Ball and club sales, however, were up in Korea, while ball sales were up in Europe.

Globally, ball sales topped $237 million in Q2 (up nearly 20 percent in constant currency), while club sales reached $188 million. That’s a 16% constant currency increase. Titleist Golf Gear (hats, gloves, bags) was up slightly for the quarter but, as mentioned, FootJoy was down nearly 10 percent in constant currency.

For the first six months of the year, US sales topped $771 million (up 19.3%). Europe is down 2.2 percent for the year, but Japan is up four percent in constant currency while Korea is basically flat. What Acushnet calls Rest of World, however, is up nearly 15 percent.

Global golf ball sales for the first half of the year reached nearly $430 million, up 20 percent in constant currency. Golf clubs hit nearly $369 million in sales (up 16 percent constant currency), while Titleist Golf Gear hit nearly $137 million, up 24 percent in constant currency. FootJoy was down slightly but still reached $363.5 million in sales. 

Q2 Financial Reports: Topgolf Callaway

It’s now two quarters in a row that Topgolf Callaway’s financial report has been, well, un-sexy. Despite the fact the company is going to crash the $4 billion sales barrier this year, the press release headline says results were “consistent with expectations.”

You’d expect to find something amiss in the numbers. But while some segments were down compared to 2022, Topgolf Callaway is still turning a tidy profit and is still on track to open eight more Topgolf facilities by the end of the year.

Q2 sales hit $1.18 billion, up 5.7 percent over last year (6.5 percent constant currency). And quarterly profits reached $117 million, up 11 percent from last year.  While the numbers are bigger (thank you, Topgolf), the percentage increases in sales and profit are consistent with Acushnet’s. Additionally, Topgolf Callaway included a slide in its presentation to investors touting itself as a “unique and compelling investment opportunity.”

Some financial analysts were predicting slightly higher quarterly sales, but those same analysts predicted only 34 cents in earnings per share. Topgolf Callaway posted earnings per share of 39 cents after adjusting for one-time costs. Despite that, Topgolf Callaway stock prices have dropped more than 11 percent in the past week.

Segment Specifics

One of the reasons Topgolf is so valuable to Topgolf Callaway is that its sales aren’t as seasonal as, say, golf equipment. Q2 Topgolf and related sales topped $470 million, a 16.6 percent increase over last year. And despite being number one in driver, metal wood and iron sales (according to Golf Datatech numbers), club sales dropped more than six percent constant currency compared to last year, reaching $340 million. Despite the decrease, it’s still 80 percent higher than Titleist club sales.

Golf ball sales jumped nearly 33 percent (constant currency) in Q2, to nearly $111 million. Again, perspective is needed, as Acushnet’s ball sales were more than double that number, at $237 million. Apparel sales were up nearly six percent in Q2, while Gear, Accessories and Other were down 6.6 percent.

Globally, Topgolf Callaway is in the same boat as Acushnet. Q2 US sales were strong at $886.7 million, up nearly 11 percent. Europe, however, was down over 15 percent, while Asia was basically flat for the quarter. Topgolf Callaway’s Rest of World was up 20 percent.

By segment, Topgolf, as mentioned, topped $470 million. Golf equipment hit $451 million, which is essentially flat compared to last year. The Active Lifestyle segment was also flat, coming in at $258 million.

First Half Statistics

For the first six months of 2023, Topgolf revenues hit $874 million, while Golf Equipment reached nearly $895 million. However, while Topgolf sales are up nearly 21 percent in constant currency compared to the first six months of last year, Golf Equipment sales are flat. Specifically, even though ball sales are up nearly 14 percent ($203.6 million), club sales are down nearly four percent at $691 million.

And even though the Active Lifestyle business unit was down in Q2, it’s still up for the first six months by nearly 16 percent in constant currency.

Total sales for the first half of the year are $2.347 billion, up more than 10 percent in constant currency. US sales alone are nearly $1.7 billion.

But while profits for Q2 were up more than 11 percent, profits for the first half of the year are down nearly 26 percent compared to last year, at $142.4 million. Looking at the company’s income statement, some of the detractors include a higher cost of goods sold, higher Topgolf-related venue expenses and interest expenses and costs associated with suspending Jack Wolfskin operations in Russia.

Q2 Financial Reports: What It All Means

After watching these reports for the past few years, it’s interesting to see Topgolf Callaway and Acushnet change roles. It used to be Topgolf Callaway was all flash while Acushnet was steady and measured.  Acushnet is still steady and measured, but so far this year Topgolf Callaway is out-steadying and out-measuring them, at least when it comes to press releases.

Topgolf Callaway does say it is expecting to hit its net revenue projections of $4.42 to $4.47 billion. And it’s also expecting to reach its net EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) projection of $625 to $640 million. Topgolf is expected to contribute more than half of that.

Additionally, the company is expected to open eight more Topgolf venues by the end of the year. Construction costs range from $20 million to $40 million for each venue, depending on size. Payback is expected within 2.5 years.

Both Acushnet and Topgolf Callaway are, obviously, publicly traded companies. And also obviously, each company’s press releases and earnings presentations are meant for investors, not golfers. Both companies predicted modest growth for 2023. And reaching those goals should be a layup.

But no doubt both want to keep investors happy. Topgolf Callaway stock dropping 11 percent in the past week and 27 percent in the past year despite big sales and profit numbers is no doubt a concern. Acushnet stock is down slightly over the past week. But it’s up more than 6.5 percent over the past month and up over 16 percent over the past year.

Steady and measured, it seems, might be a good thing.

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