Acushnet and Callaway Keep the Momentum Rolling
The companies reported financial results for the first quarter of 2023.
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Today At A Glance:
Acushnet and Callaway recently reported financial results. Acushnet had an incredible first quarter across the board. While Callaway beat expectations — there is some concern over corporate events negatively impacting Topgolf.
Read Time: 5 minutes.
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Hey Golfers —
Is golf sustaining the pandemic bump?
Yes.
Acushnet and Callaway, the only two public golf companies, recently reported first-quarter financial results. The companies both beat expectations and had reasonably good quarters.
Acushnet reported financial results on May 4th — let’s dive into it.
As a refresher, Acushnet has several brands under its umbrella, including the following.
Titleist
FootJoy
Pinnacle
Vokey Design
Scotty Cameron
And Acushnet recently added Club Glove to its portfolio a few months ago.
Acushnet grew its first-quarter sales by 13.2% to $686 million. Three of Acushnet’s four segments had double-digit growth. The biggest driver in the first quarter was Titleist Golf Gear at 51.9%. Titleist Golf Balls and FootJoy Golf Wear made up over 57% of sales for the first quarter.
Acushnet blew it out of the water in the United States — growing 25.3% in sales for the quarter. The EMEA market was down 6.8% — not adjusted for currency. Acushnet stated that the number aligned with expectations in the EMEA region as the golf season is just starting. The United States represented over 53% of first-quarter sales for Acushnet.
Acushnet ran at a healthy gross profit margin of 53.3% — about 1% better than the first quarter of 2022. And their Adjusted EBITDA number was $146.8 million — up 22.3% versus the prior year.
Acushnet’s numbers show that the market is generally strong — especially in the United States. I don’t think we need to get too excited about the massive FootJoy Golf Gear number, as the first quarter in 2022 was not great due to supply chain issues and an April shipment that went out early in March.
The market liked Acushnet’s quarter, as the stock was up nearly 5% after reporting results.
Now onto Callaway — they reported financial results on May 9th.
Callaway has the following brands in its portfolio.
Ogio
Topgolf
Odyssey
Toptracer
TravisMathew
Jack Wolfskin
Callaway beat expectations on both the top line and bottom line. But their financial results were more of a mixed bag.
Callaway grew its first-quarter sales by 12.2% to $1.167 billion. Callaway breaks its sales into three segments — two had double-digit growth, with Active Lifestyle leading the way at 28% growth.
Topgolf revenue grew 25.3% — but the number we need to look at is Topgolf's same venue revenue. Topgolf grew the same venue revenue at 11% for the quarter. And they have recorded six consecutive quarters of same-venue growth.
Topgolf represented over 34% of Callaway’s revenue.
Callaway’s final results had several takeaways.
Topgolf is a behemoth — Callaway mentioned that the acquisition is turning out to be more successful than they initially anticipated. And Callaway is making efficiency gains with Topgolf. They have revised the payback period from three years to two and a half.
The most exciting item Callaway highlighted about Topgolf is how many people they believe they will introduce to off-course golf. They believe they will add 3 to 4 million off-course golfers annually with their venues.
Why is that number significant?
Callaway conducted a survey, and around 10% of on-course golfers credit their Topgolf introduction to getting them on the golf course. A number that is great for the industry.
Golf Equipment opened the year softer than Callaway had anticipated. Callaway didn’t seem too concerned with their Golf Equipment performance and mentioned that number was primarily due to channel fill-in during the first quarter of 2022.
Active Lifestyle had an enormous quarter for Callaway. The brand’s Jack Wolfskin and TravisMathew had strong e-commerce results, and TravisMathew was aided in the successful expansion of its women’s line.
Callaway’s numbers tell us that money is being spent on Topgolf and apparel. Golf Equipment numbers weren’t as strong as Acushnet — but Callaway was pleased with its Paradym launch.
Callaway’s stock price got rocked after they reported financial results — down over 8%. Even though they beat expectations on both the top and bottom, they revised the second quarter down from prior estimates.
There are two items to note of potential weakening in the industry — both macroeconomic factors.
Topgolf saw a downward trend in corporate events late in the quarter. Callaway mentioned the banking crisis could reduce corporate spending. Corporate events represent around 20% of Topgolf's revenue.
Both companies highlighted possible macroeconomic uncertainty. And several organizations are saying the same — it isn’t only the golf industry.
I am optimistic about the industry — but a few people have cautioned me. I’ve heard that the second quarter will be interesting — mainly on the retail side. But Acushnet reaffirming their full-year guidance gives me confidence.
Have yourself a great Monday. Talk to you next week!
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