Lost in this week’s big-hearted TaylorMade news is the fact that golf’s two other top dogs have released remarkably strong Q1 financial reports. Both Callaway and Acushnet blew away 2020 ’s COVID-infected Q1 makes. What induces it interesting is both companies outperformed their pre-COVID 2019 numbers.
And not by a little, either.
Acushnet is reporting $581 million in sales for Q1. That’s up 42 percentage from 2020 and 34 percent from 2019. Callaway, meanwhile, says it hit $652 million in Q1. That’s a new Q1 company record. It likewise represented by 47 -percent increase over last year and a 26 -percent jump from 2019.
What’s more, both companies reported health net profits.
No doubt about it. The golf business is red-hot right now.
Q1 Financial Reports: Acushnet
Acushnet intent 2020 by reclaiming its title as the No. 1 corporation in golf. It even posted a COVID-diminished $96 -million net profit for the year. Last year’s second-half momentum indicates no signs of letting up.
“Acushnet is off to a promising start to 2021 as is asking for all Acushnet product categories is firm and rounds of play momentum continues, ” said Acushnet President and CEO David Maher in the company’s Q1 financial report press release. “Sales growth across all segments was fueled by our Product Development squads and the outstanding execution of our Operations crew by keeping with strong consumer demand.”
Titleist clubs and projectiles resulted the way. Club marketings increased 67 percentage compared to Q1 last year to $156 million. The new TSi metal timbers and Scotty Cameron Phantom X putters fueled the charge along with higher selling price across all categories. Vokey wedge sales went down in Q1 though, largely due to the fact the line is in its second year.
Titleist golf ball sales jump-start by practically 50 percentage compared to Q1 2020 to $174 million. The new Pro V1 pipeline triggered that increase.
Additionally, Titleist Gear sales( handbags, hats, accessories) totaled $53 million, up 22 percentage over last year. And FootJoy sales totaled $159 million, likewise an increase of 22 percentage.
Regionally, U.S. marketings hopped 46 percentage time over year. Marketings in Japan and Korea increased 50 percentage and 57 percent respectively and what Acushnet calls the Rest of World increased 61 percent.
Europe spent Q1 still in various stages of lockdown, nonetheless. Sales there were still up in the Q1 financial report but only by eight percent.
Profits and Specifics
While the top cable is impressive, the bottom line establishes investors smile. Acushnet is reporting an $85 -million Q1 net profit. That’s a crazy 855 -percent increase over the$ 9-million profit posted in Q1 2020. It’s an even crazier 144 -percent increase over the pre-COVID 2019 Q1 profit.
Acushnet’s Q1 EBITDA( Earnings Before Interest, Taxes, Depreciation and Amortization) was $135 million, a 156 -percent jump over 2020 and a 111 -percent increase from 2019.
Like every other OEM, Acushnet is going golf’s new popularity wave. Having brand-new metalwoods and projectiles to sell certainly helps. And while it’s difficult to be specific with amounts, the lack of a PGA Merchandise Show this year as well as overall travelling restrictions had to have played a role in controlling expenditures. Acushnet’s Selling, General and Administrative expenses( which include marketing, trip and recreation, marketings boards, programs and other overhead) were higher this year compared to last-place. However, it was only by $23,000, a minuscule increase considering a 42 -percent increase in actual marketings.
Acushnet did meet the writing on the wall last year and prepared for the worst. At the end of Q1 2020, the company established sure it was flush with cash to help navigate the coming lockdowns. This year, Acushnet reports just over $113 million currency and cash equivalents on hand( compared against $151 million last year ). However, in another sign of a recovering golf economy, Accounts Receivable are up by more than 48 percentage. That entails retailers and light-green grass accounts are stocking up.
With brand-new cast-irons on the horizon for 2021 and with the U.S. and, eventually, Europe emerging from COVID-related rules, there’s no reason to think Acushnet can’t top its 2019 amounts.
Q1 Financial Reports: Callaway
As mentioned, Callaway is reporting a Q1 record $652 million in marketings, which is a 47 -percent increase over Q1 2020. Callaway is also reporting a Q1 Net Income of $272 million. That, nonetheless, requires an asterisk, which we’ll get to.
“Our golf equipment business is continuing to experience unprecedented challenge while our soft goods business and Topgolf business are recovering from the pandemic faster than expected, ” said CEP Chip Brewer in a prepared statement. “We believe our three controlling segments is in a position for both the current environment and our promises in the course of the coming several years.”
The Callaway-Topgolf merger became official in March so Callaway’s Q1 Financials include four weeks’ merit of TopGolf revenue. That move motivated Callaway to create three specific business divisions: Golf Equipment, Apparel and Gear and Topgolf. For Q1, Golf Equipment marketings( clubs and projectiles) topped $377 million. Club sales accounted for $ 316 million of that total( 26 -percent increase from Q1 2020) while ball sales totaled virtually $61 million. The ball sales figure represents a 50 -percent increase over last year but Callaway is still light years behind Titleist’s $174 -million quarterly figure.
Apparel and Gear marketings totaled $182 million in Q1( a 21 -percent increase ). That was a near-even split between apparel( Callaway-branded, TravisMathew and Jack Wolfskin) at $95 million and Gear( bags, gloves and accessories) at $87 million.
Regionally, U.S. sales be increased by a whopping 78 percentage over last year to $388 million. Unlike Acushnet, Callaway marketings actually dropped in Japan by seven percent. Like Acushnet, European sales were sluggish but did manage to grow by 12 percentage. Marketings in what Callaway defines as Rest of World grew by 64 percentage.
Profits and Specifics
Remember that asterisk attached to Callaway’s reported $272 -million Q1 net profit we mentioned a few cases paragraphs ago? It’s truly an on-paper profit thanks to some necessary accounting ploys. Callaway’s Q1 profit from activities is a none-too-shabby $ 76 million. The remainder is due to the Topgolf merger. Callaway already owned 14 percent of Topgolf and the merger bargain itself was worth nearly $2.5 billion formerly Callaway accepted all of Topgolf’s debt.
As a result of the deal, Callaway’s 14 -percent stake wound up increasing in value by $253 million and it had to be accounted for in a valuation write-up. It depicts in the Q1 report as a non-cash gain. So, yeah, it’s an on-paper profit but Callaway is still pay taxes on it.
Segment-wise, Golf Equipment turned in practically $85 million in Q1 profits. That’s up 45 percent versus last year and up 20 percentage compared to Callaway’s pre-COVID 2019 amounts. Apparel, Gear and Other earnings totaled virtually $20.5 million which was down seven percent from 2019 but up practically 640 percent from last year.
Four months of Topgolf owned resulted in more than $92 million merit of income and nearly$ 4 million in gains.
All that adds up to more than $ 109 million. That’s offset by a variety of costs, including asset liquidation in connection with the Jack Wolfskin and OGIO acquisitions, and $17 million in transaction costs related to the TopGolf merger.
Callaway reported an adjusted EBITDA of $128 million, a 115 -percent increase over last year.
Q1 Financial Reports: What Does It All Mean?
That the golf equipment business is booming may be the biggest duh statement you’ll read all week. Golf Datatech reports equipment sales industry-wide were up 72 percent compared to Q1 last year and up 49 percentage compared to 2019. That’s made this past quarter the highest Q1 on record and it was the third consecutive quarter of record marketings.
Both Callaway and Acushnet( and, we presume, everybody else) are well ahead of their 2019 pre-COVID marketings gait. As the old-fashioned saying moves, you make your forage while the sun reflects and right now the sunshine is as bright as it’s been since the Tiger Boom.
Neither Acushnet nor Callaway is offering investment guidance yet but both appear to be bullish on 2021. Acushnet expects full-year marketings in the $1.8 – to $1.87 -billion range. Callaway isn’t offering specific projections but the company does say it expects marketings and EBIDTA for its legacy business( which omits Topgolf) to outstrip 2019 levels. The company expects the new Topgolf business segment to do likewise.
And, in cases where, Callaway has a boatload of cash and available credit on hand, to the tune of $ 713 million.
Worldwide supply chain issues do lurk for both companies. Acushnet says Q1 supply chain interruptions induced shortages of various raw materials and increased freight charges. Callaway says challenges remain in supply chain, logistics and labor, but the company believes it has given itself up to meet foresaw require.
And both companies’ stock prices are indicating the strong market. Callaway stock opened this morning at $32.58 per share. A years ago, it was at $ 11.50. Acushnet stock opened today at $51.35 per share. This time last year it was at $27.12.
Some Topgolf Tidbits
Obviously, the Topgolf merger is the big-hearted narrative for Callaway this year. As mentioned, Topgolf drew in $92 million in only four weeks. Topgolf’s top cable has grown steadily over the past five years to the tune of practically 20 percentage annually. Curiously, the bottom line has been a bit more stubborn. SEC filings testify Topgolf has, in fact, yet to turn a profit.
That’s not necessarily a sign of impending destiny, as the company has been in a state of constant expansion and reinvestment over that time. In fact, two new venues was initiated in Q1( Lake Mark, Fla ., and Albuquerque, N.M .) and three more have opened so far this quarter( San Jose, Calif ., Waco, Texas, and Buford, Ga .). Eight more are slated to open this year.
Despite COVID, all Topgolf venues worldwide are now open, even though many have restricted capacity. Callaway reports walk-in traffic remains strong and small to medium-sized event business is picking up.
In the big picture, Topgolf sets Callaway into a whole new corporate stratosphere. Topgolf’s annual projected revenue readily tops$ 1 billion. On its own, Callaway topped $1.7 billion in 2019 and it’s not a extend to imagine the brand-new Callaway could top$ 3 billion in sales, if not this year, then most certainly by next year.
Acushnet spent times as the No. 1 company in golf. It lost the title to Callaway in 2019, simply to gain it back in 2020. With the addition of Topgolf , no one will be able to challenge Callaway for the foreseeable future, barring a major sea change or key acquisition.
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