Topgolf Callaway Brands : MODG Q1 2025 Earnings Presentation Final

Published: 2025-05-12 16:33:16 ET MODG

Published on 05/12/2025 at 16:33

May 12, 2025

Q1 consolidated Net Revenue of $1,092 million and strong Adjusted EBITDA both outperformed expectations.

Q1 2025

Highlights

Q1 Total Segment Operating Income increased 9.7%.

The Company further strengthened its available liquidity position to $805 million, increasing by 12% year-over-year.

The Company reaffirmed its consolidated full year Revenue and Adjusted EBITDA guidance (subject to adjustment pending the sale of its Jack Wolfskin business).

Q1 NON-GAAP RESULTS1

($ in millions, except per share data)

Q1 2025

Q1 2024

Change (%)

Net Revenues

$ 1,092.3

$ 1,144.2

-5 %

Net Income

$ 20.3

$ 14.4

+41 %

Earnings Per Share

$ 0.11

$ 0.08

+42 %

Adjusted EBITDA

$ 167.3

$ 160.9

+4 %

Note: Numbers may not foot due to rounding.

See Appendix for reconciliations of non-GAAP measures to the most directly comparable GAAP measure and slide 2 for further information on the use of non-GAAP measures.

U.S. golf consumer U.S. rounds played in 2023

remains strong and +4% year-over-year

engaged

TOPGOLF

Sunday Funday has shown encouraging traffic growth, driving 20%+ improvements in same day traffic1

Player experience metrics continue to improve year-over-year

Topgolf Nights is driving late night utilization and adding energy and fun

GOLF EQUIPMENT

Elyte Triple Diamond model was named

GolfSpy's Most Wanted Driver for 20252

Strong gross and operating margin expansion

Elyte driver was awarded 15 out of 15 stars on the US Golf Digest Hotlist3

ACTIVE LIFESTYLE

TravisMathew women's continues to grow driven by recent launches such as the Everyday Pant

Active Lifestyle operating margins increased ~300 bps year-over-year

Announced agreement to sell Jack Wolfskin to ANTA sports on April 10

Traffic growth represents venues that have implemented Sunday Funday.

Source: mygolfspy.com

Source: golfdigest.com

TOPGOLF

GOLF EQUIPMENT

ACTIVE LIFESTYLE

Topgolf rolled out more compelling and accessible value options

Min Woo Lee wins 2025 Texas Children's Houston Open

TravisMathew launched third Reggie Bush collection, "Legacy Reclaimed"

Improved trends in April 1-2 bay, driven by new value initiatives

'25 vs '24

April

1-2 Bay

SVS

-12%

-8%

SVV4

-8% + Low Single Digits

SPV5

-4% - High Single Digits

Total1

'25 vs '24

-12%

'24 vs '23

-7%

Total Stacked

-19%

1-2 Bay2

'25 vs '24

-12%

'24 vs '23

-5%

Total Stacked

-17%

3+ Bay3

'25 vs '24

-13%

'24 vs '23

-16%

Total Stacked

-29%

Note: Numbers may not foot due to rounding.

Total same venue sales (SVS) represents sales for the comparable venue base, which is defined as the number of Company-operated venues with at least 24 full fiscal months of operations. Stacked same-venue sales represent the summation of the same venue sales growth for 2025 vs. 2024 and 2024 vs. 2023.

1-2 bay represents US same venue sales primarily to non-corporate or "consumer" customers

3+ bay represents US same venue sales primarily to corporate customers

Same venue visits (SVV) represents the number of visits for the comparable venue base, which is defined as the number of Company-operated venues with at least 24 full fiscal months of operations.

Spend per visit (SPV) represents the average sales per visit for the comparable venue base, which is defined as the company-operated venues with at least 24 full fiscal months of operations.

FULL YEAR 20251

($ in millions, except per share data)

Current FY 2025 Guidance

Prior FY 2025 Guidance

FY 2024

Results

Consolidated Net Revenue

$4.000 - $4.185B

$4.24B

Topgolf Revenue

$1.680 - $1.790B

$1.725 - $1.835B

$1.81B

Topgolf Same Venue Sales

Down 6 - 12%

Down Mid Single

Digits

Down 9%

Consolidated Adjusted EBITDA

$415 - $505

$588

Topgolf Adjusted EBITDA

$240 - $300

$337

Full Year Guidance Assumptions1

FX rates are ~$45M favorable vs. mid to late February rates.

Includes ~$25M EBITDA impact from incremental tariffs for 2025. Prior guidance assumed a $5M tariff impact.

Topgolf Net Capex of $90 - $100M; Core business Capex of ~$60M

Positive FCF at Topgolf and Total Company

Q2 20251

($ in millions)

Q2 2025

Guidance

Q2 2024

Results

Net Revenue

$1.075 - $1.115B

$1.16B

Adjusted EBITDA

$139 - $159

$206

Second Quarter Guidance Assumptions

Same venue sales of down 7-12%

Includes an ~$22M negative impact to adjusted EBITDA related to hedging losses, tariffs, and sale of WGT

See appendix for calculation methodologies of adjusted EBITDA, net capital expenditures and adjusted free cash flow. See slide 2 for disclaimers on the use of non-GAAP measures and the appendix for reconciliations to GAAP.

($ in millions, except for EPS)1 Topgolf

Non-Topgolf3

Total

Adjusted EBITDA

$270

$190

$460

Non-GAAP Depreciation & Amortization

$275

Non-GAAP Topgolf D&A

$213

Non-GAAP Non-Topgolf D&A

$62

Non-GAAP Interest Expense2

$238

Non-GAAP Venue Financing Interest (Venue Financing Cash Interest $117)

$140

Non-GAAP Corporate Interest

$98

Share Based Compensation & Non-Cash Rent

$20

$23

$43

Non-GAAP Pre-Tax Income

$(103)

$(96)

Note: Numbers may not tie due to rounding.

See appendix for calculation methodology of adjusted EBITDA and non-GAAP depreciation and amortization and reconciliations to GAAP. See slide 2 for information on non-GAAP measures.

Includes non-cash interest and fees.

Non-Topgolf includes Active Lifestyle, Golf Equipment and Corporate

($ in millions)1

Topgolf

Non-Topgolf

Total

Non-GAAP Operating Income

-$12

$100

$88

Non-GAAP Depreciation and Amortization

$52

$15

$67

Non-Cash Lease Amortization Expense2

Non-Cash Stock Comp Expense

Other Income

Adjusted Segment EBITDA

$44

$123

$167

Less: Venue Financing Cash Interest3

$28

Adj EBITDA less Venue Financing Cash Interest

$16

$123

$139

Interest Expense

$34

$24

$58

Note: Numbers may not foot due to rounding.

See appendix for calculation methodologies of non-GAAP D&A, non-cash lease amortization expense, adjusted segment EBITDA, venue financing cash interest and adjusted EBITDA less VFCI. See slide 2 for disclaimers on the use of non-GAAP measures and the appendix for reconciliations to GAAP.

This is essentially non-cash rent.

Assume ~$2.5-$3.0M per venue per year in 2024-2025 and $2.75-$3.25M after 2026.

Metric1

($ in millions)

As of March 31, 2025

As of March 31, 2024

Cash and Cash Equivalents

$317

$234

Inventory

$654

$703

Available Liquidity

$805

$720

Net Debt

$2,738

$2,684

REIT Adjusted Net Debt

$1,222 $1,381

Net Debt Leverage Ratio

4.6x 4.5x

REIT Adj. Net Debt Leverage Ratio

2.5x 2.7x

Metric1

($ in millions)

Three Months Ended March 31,

2025

Three Months Ended March 31,

2024

Gross Capital Expenditures2

$70

$65

Net Capital Expenditures3

$46

$38

Non-GAAP Depreciation & Amortization

$67

$63

See appendix for calculation methodologies of available liquidity, net debt, REIT adjusted net debt, net debt leverage ratio, REIT adjusted net debt leverage ratio, net capital expenditures and non-GAAP depreciation and amortization. See slide 2 for disclaimers on the use of non-GAAP measures and appendix for reconciliations to GAAP.

Does not include financed additions of capital expenditures. During the course of the construction of venues, certain financing partners remit funds directly to our construction vendors on our behalf rather than providing the construction advances to us. These funds are presented as non-cash investing and financing activities within our cash flow statement.

For 2025, Net Capital Expenditures includes $69.9 million of Gross Capital Expenditures net of $23.9 million of proceeds from lease financing. For 2024, Net Capital Expenditures includes $65.4 million of Gross Capital Expenditures net of $27.2 million of proceeds from lease financing. In the first quarter of 2025 we did not open or acquire any new venues. In the first quarter of 2024 we acquired 1 new venue.

($ in millions)

March 31, 2025

March 31, 2024

Total Principal - Long term debt & ABL credit facilities

$1,538.2

$1,613.5

Topgolf Venue Financing Liabilities

$304.6

$289.6

Deemed Landlord Financing Obligations

$1,211.9

$1,013.8

Equipment Financing lease liabilities

$0.5

$0.9

Less: Unrestricted Cash

$(317.0)

$(233.9)

Total Net Debt(1)

Trailing twelve month Adjusted EBITDA

(2)

$2,738.2

$594.1

$2,683.9

$600.2

Total Net Debt Leverage Ratio (1)

4.6 x

4.5 x

Less: DLF obligations & Venue lease liabilities

$(1,516.5)

$(1,303.4)

REIT Adjusted Net Debt (1)

$1,221.7

$1,380.5

Venue Financing ("VF") Cash Interest (1)

$(103.5)

$(80.3)

Trailing 12-Month Adj. EBITDA less VF Cash Interest (1)

$490.6

$519.9

REIT Adjusted Net Debt Leverage Ratio (1)

2.5 x

2.7 x

See "Definitions of Certain Financial Measures" slide for the calculation methodologies of net debt, net debt leverage ratio, REIT adjusted net debt, REIT adjusted net debt leverage ratio and venue financing cash interest, and see slide 2 for further information on the use of non-GAAP measures.

See "Adjusted EBITDA Reconciliation" slide for reconciliation to the most directly comparable GAAP measure (net income).

US Golf Datatech combined channel on-course and off-course, excluding sporting goods, mass channel, club, and some ecommerce, through 12/31/2021.

US Golf Datatech and the National Golf Foundation estimated rounds played data through 12/31/2021.

Driver Topgolf Ranking

Fun

Atmosphere Food & Drink Value

Price

External research shows Topgolf is winning in Fun, F&B and Atmosphere and has an opportunity in Price and Value

#15

#18

HundredX data representing a set of 21 peers for trailing six months ending 3/25/2025.

HundredX, Inc. ("HundredX") data is sourced from customer feedback across ~4,000 brands including the "Company" and relevant peer businesses. Neither HundredX, the Company, nor the Company's advisors make any representations as to the accuracy or completeness of the data.

Returns on Venues Open For 5 or More Years

MEAN RETURNS

Mean Cash-on-Cash Returns1

~50%

Mean Return on Gross Investment2

~20%

Venue return metrics remain within target ranges, despite softer same venue sales trends

Note: Data represents pre-2020 venues as of 2024

Cash-on-Cash Return: [EBITDAR - Building Rent - Maintenance Capex] / [Construction Costs After Financing] 16

Return on Gross Investment: [EBITDAR - Ground Rent - Maintenance Capex) / [Gross Construction Costs + Pre-Opening]

FY24

Total1

'24 vs '23

-7%

-8%

-11%

-8%

-9%

1-2 Bay2

'24 vs '23

-5%

-8%

-9%

-10%

-8%

3+ Bay3

'24 vs '23

-16%

-9%

-19%

-5%

-11%

Note: Numbers may not foot due to rounding.

Same venue sales (SVS) represents sales for the comparable venue base, which is defined as the number of Company-operated venues with at least 24 full fiscal months of operations.

1-2 bay represents US same venue sales primarily to non-corporate or "consumer" customers

3+ bay represents US same venue sales primarily to corporate customers

Adjusted EBITDA Less Venue Financing Cash Interest - a non-GAAP measure calculated as Adjusted EBITDA less Venue Financing Cash Interest obligations.

Adjusted EBITDA Margin - a non-GAAP measure calculated as Adjusted EBITDA divided by revenue.

Adjusted Free Cash Flow - a non-GAAP measure calculated as cash from operations, less capital expenditures net of proceeds from lease financing and net of proceeds from government grants.

Available Liquidity - comprised of cash on hand, plus availability under revolving credit facilities.

Gross Debt - calculated as debt, including all Venue Financing Liabilities related to the Topgolf venues, less the Company's $258.3 million in Convertible Notes.

Net Capital Expenditures - capital expenditures net of proceeds from lease financing and proceeds from government grants.

Net Debt - a non-GAAP measure calculated as total debt, venue financing liabilities, DLF obligations and equipment financing lease obligations, less the Company's unrestricted cash.

Net Debt Leverage Ratio - a non-GAAP measure calculated as Net Debt divided by trailing 12-month Adjusted EBITDA.

Non-Cash Lease Amortization expense - excludes purchase price amortization related to the Topgolf merger.

Non-GAAP Depreciation & Amortization - excludes pre-tax amortization of acquired intangible assets. Please see Non-GAAP reconciliation slides for specific amounts excluded.

REIT Adjusted Net Debt - a non-GAAP measure calculated as Net Debt less DLF & Venue Financing Lease Liabilities.

REIT Adjusted Net Leverage Ratio - a non-GAAP measure calculated as REIT Adjusted Net Debt divided by Adjusted EBITDA less Venue Financing Cash Interest.

Topgolf Segment Adjusted Free Cash Flow - calculated as Topgolf segment operating cash flows, less Topgolf net capital expenditures, net of proceeds from lease financing and proceeds from government grants.

Venue Financing Cash Interest (VFCI) - primarily represents cash paid for interest on Venue Financing Lease Liabilities.

Venue Financing Interest - interest expense on Venue Financing Lease Liabilities.

Venue Financing Lease Liability - the sum of venue finance lease liability and deemed landlord financing obligations.

Supplemental Financial Information ($ in millions, except percentages) (Unaudited)

Three Months Ended March 31,

2025

2024

Change

Topgolf

(11.9)

2.9

n/m

% of segment revenue

(3.0) %

0.7 %

(370)

bps

Golf Equipment

101.6

82.1

23.8

% of segment revenue

22.9 %

18.2 %

470

bps

Active Lifestyle

30.6

24.7

23.9

% of segment revenue

12.0 %

9.1 %

290

bps

Total Segment Operating Income

120.3

109.7

9.7

% of segment revenue

11.0 %

9.6 %

140

bps

Constant Currency

Total Segment Operating Income (1)

14.6 %

(1) Segment Operating income excludes corporate general and administrative expenses not utilized by management in determining segment profitability as well as the amortization of acquired intangibles.

Supplemental Financial Information ($ in millions, except percentages) (Unaudited)

Non-Cash Acquisition

Three Months Ended March 31,

2025 2024

Non-Cash Acquisition

Non-Recurring

Non-

Non-Recurring

Non-

GAAP

Amortization(1)

Items(2)

GAAP

Amortization(1)

Items(3)

GAAP

Income from operations

$ 66.5

$ (2.6)

$ (18.7)

$ 87.8

$ 66.9

$ (2.9)

(2.8)

$ 72.6

Net income

$ 2.1

$ (2.2)

$ (16.0)

$ 20.3 $

6.5

$ (2.2)

$ (5.7)

$ 14.4

Earnings per share - diluted (4)

$ 0.01

$ (0.01)

$ (0.09)

$ 0.11 $

0.04

$ (0.01)

$ (0.03)

$ 0.08

(1) Includes amortization of acquired intangible assets related to acquisitions. Non-cash depreciation and amortization related to purchase accounting adjustments for the fair value step-up of PP&E, leases, and debt, stemming from acquisitions is excluded from our Non-GAAP adjustments. Prior period amounts have been recast in order to conform with the current period presentation. For the three months ended March 31, 2024, non-cash depreciation and amortization related to these purchase accounting adjustments was $1.9 million.

(2) Primarily includes a $7.0 million impairment charge on assets held for sale related to the sale of the Jack Wolfskin business, and $11.4 million in total restructuring, reorganization and separation related charges related to the planned separation of Topgolf and the sale of the Jack Wolfskin business.

(3) Primarily includes $5.7 million in charges related to our 2024 debt repricing, IT costs related to a 2023 cybersecurity incident and acquisition-related IT integration and implementation costs.

(4) When aggregated, earnings per share amounts may not add across due to rounding.

Supplemental Financial Information ($ in millions, except percentages) (Unaudited)

2025 Trailing Twelve Month Adjusted EBITDA 2024 Trailing Twelve Month Adjusted EBITDA Quarter Ended Quarter Ended

June 30, September 30, December 31, March 31, June 30, September 30, December 31, March 31,

Net income (loss)

62.1 $

(3.6) $

(1,512.7) $

2.1 $ (1,452.1) $

117.4 $

29.7 $

(77.1) $

6.5 $

76.5

2024 2024 2024 2025 Total 2023 2023 2023 2024 Total

Interest expense, net 57.0 57.7 57.7 58.0 230.4 51.7 52.3 56.6 58.8 219.4

Income tax (benefit) provision (9.7) (19.4) (1.4) 9.5 (21.0) (45.8) (3.0) (7.2) 5.0 (51.0)

Non-cash stock compensation and stock warrant expense, net

7.0

7.8

9.0

7.0

30.8

12.3

13.2

8.4

14.2

48.1

Non-cash depreciation and amortization expense 65.8 68.1 69.1 69.1 272.1 58.6 61.0 64.0 65.4 249.0

Non-cash lease amortization expense 3.6 2.8 3.2 2.9 12.5 4.4 4.5 4.4 3.5 16.8

Non-cash goodwill & trade name impairment - - 1,452.0 - 1,452.0 - - - - -

Acquisitions & other non-recurring costs, before

taxes(1) 19.8 6.4 24.5 18.7 69.4 7.6 5.6 20.7 7.5 41.4

Adjusted EBITDA $ 205.6 $ 119.8 $ 101.4 $ 167.3 $ 594.1 $ 206.2 $ 163.3 $ 69.8 $ 160.9 $ 600.2

(1) In 2025, amounts include impairment charges and other additional restructuring, reorganization and separation related costs associated with the planned separation of Topgolf and the planned sale of the Jack Wolfskin business. In 2024, amounts include restructuring and reorganization charges, costs incurred related to the planned separation of Topgolf, charges related to the 2024 debt repricing, currency translation adjustments reclassified into earnings due to the dissolution of the Jack Wolfskin Russia entity, charges related to the impairment and abandonment of the Shankstars media game, a loss on disposal on the sale on the WGT business, IT integration costs associated with the implementation of a new cloud based HRM system, and IT costs related to a 2023 cybersecurity incident. In 2023, amounts include charges related to the impairment and abandonment of the Shankstars media game, restructuring and reorganization charges related to our Topgolf and Active Lifestyle segments, IT integration and implementation costs stemming primarily from the merger with Topgolf, charges in connection with the 2023 debt modification, and costs related to a cybersecurity incident.

Supplemental Financial Information ($ in millions, except percentages) (Unaudited)

Three Months Ended March 31,

Twelve Months Ended

December 31,

2025

2024

Topgolf Segment operating (loss) income(1):

(11.9)

2.9

114.2

Depreciation and amortization expense

51.8

48.5

199.9

Non-cash stock compensation expense

1.2

5.2

10.3

Non-cash lease amortization expense

2.8

3.2

12.4

Other expense, net

0.4

Adjusted Segment EBITDA

43.9

59.8

337.2

(1) We do not calculate GAAP net income at the operating segment level, but have provided Topgolf's segment income from operations as a relevant measurement of profitability. Segment income from operations does not include interest expense and taxes as well as other non-cash and non-recurring items. Segment operating income is reconciled to the Company's consolidated pre-tax income in the Segment Results section of this release.

Disclaimer

TopGolf Callaway Brands Corp. published this content on May 12, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on May 12, 2025 at 20:32 UTC.