CARLSBAD, Calif., Feb. 10, 2022 /PRNewswire/ -- Callaway Golf
Company (the "Company" or "Callaway") (NYSE: ELY) announced today
its financial results for the fourth quarter and full year ended
December 31, 2021.
"I am pleased to announce another quarter of strong results,
driven primarily by Topgolf domestic venues, which benefited from
increased social and corporate events bookings and high walk-in
guest turnout, along with continued momentum in our apparel and
golf equipment businesses," commented Chip
Brewer, President and Chief Executive Officer of Callaway.
"The quarter topped off a truly outstanding year for Callaway and I
am extremely proud of the global team for their efforts. This was a
record year in many aspects, and I am excited about the opportunity
to build on this strong foundation as we look ahead to 2022 and
beyond."
"The combination of Topgolf and Callaway early in the year was
transformational and we have been thrilled by the strong revenue
growth and profitability, with both exceeding our initial
expectations. We believe our strong pipeline for new venues, along
with the rapid expansion of our Toptracer range technology, will
deliver significant long-term shareholder value," continued Mr.
Brewer. "In our golf equipment business, we proved our ability to
adapt and flex our operations to meeting the growing demand for the
sport of golf. Given current trends and positive industry
fundamentals, we believe this segment will continue to grow in
2022. Lastly, our apparel concepts performed extremely well across
all channels and all regions and have strong brand momentum moving
into the year ahead. Overall, we have never been more confident in
the direction of this business and the opportunity for growth
ahead."
GAAP AND NON-GAAP RESULTS
In addition to the
Company's results prepared in accordance with GAAP, the Company
provided information on a non-GAAP basis. The manner in which this
non-GAAP information is derived is discussed further toward the end
of this release, and the Company has provided in the tables to this
release a reconciliation of the non-GAAP information to the most
directly comparable GAAP information.
SUMMARY OF FINANCIAL RESULTS
The Company announced the
following GAAP and non-GAAP financial results for the fourth
quarter and twelve months ended December 31,
2021 (in millions, except EPS):
GAAP RESULTS
|
Q4 2021
|
Q4 2020
|
Change
|
|
FY 2021
|
FY 2020
|
Change
|
Net
Revenues
|
$712
|
$375
|
$337
|
|
$3,133
|
$1,589
|
$1,544
|
(Loss)/Income from
Operations
|
$(55)
|
$(32)
|
$(23)
|
|
$205
|
$(106)
|
$311
|
Other Expense,
net
|
$(41)
|
$(15)
|
$(26)
|
|
$146
|
$(22)
|
$168
|
(Loss)/ Income before
Income Taxes
|
$(96)
|
$(48)
|
$(48)
|
|
$351
|
$(127)
|
$478
|
Net (Loss)/
Income
|
$(26)
|
$(41)
|
$15
|
|
$322
|
$(127)
|
$449
|
(Loss)/ Earnings Per
Share - diluted
|
$(0.14)
|
$(0.43)
|
$0.29
|
|
$1.82
|
$(1.35)
|
$3.17
|
NON-GAAP RESULTS
|
Q4 2021
|
Q4 2020
|
Change
|
|
FY 2021
|
FY 2020
|
Change
|
Net
Revenues
|
$712
|
$375
|
$337
|
|
$3,133
|
$1,589
|
$1,544
|
(Loss)/ Income from
Operations
|
$(43)
|
$(22)
|
$(21)
|
|
$256
|
$95
|
$161
|
Other Expense,
net
|
$(37)
|
$(13)
|
$(24)
|
|
$(91)
|
$(16)
|
$(75)
|
(Loss)/Income before
income taxes
|
$(80)
|
$(35)
|
$(45)
|
|
$164
|
$79
|
$85
|
Net (Loss)/
Income
|
$(35)
|
$(31)
|
$(4)
|
|
$138
|
$64
|
$74
|
(Loss)/ Earnings Per
Share - diluted
|
$(0.19)
|
$(0.33)
|
$0.14
|
|
$0.78
|
$0.67
|
$0.11
|
Adjusted
EBITDA
|
$14
|
$(13)
|
$27
|
|
$445
|
$165
|
$280
|
Fourth Quarter 2021 Financial Highlights
(All
comparisons to prior periods are calculated on a year-over-year
basis)
- Net revenue increased 90%, driven by the addition of Topgolf,
which benefited from strong walk-in traffic and social event
bookings, along with better-than-expected corporate events
business, as well as growth in the Apparel, Gear and Other
segment.
- Non-GAAP income from operations decreased $21 million year-over-year, due to a planned
decrease in golf equipment sales as the Company shifted production
of golf equipment to build 2022 new launch product during the
fourth quarter of 2021 and increased operating expenses. In
addition, Callaway launched several new products in the comparable
fourth quarter 2020 creating an uneven year-over-year
comparison.
- Non-GAAP other income/(expense), net decreased
$(24) million to $(37) million, primarily due to a
$28 million increase in interest
expense related to the addition of Topgolf.
- Non-GAAP loss per share was ($0.19) in the fourth quarter of 2021, compared
to a loss of ($0.33) per share in
2020. Diluted shares were 186 million shares of common stock, an
increase of 92 million shares compared to 94 million shares in the
fourth quarter of 2020. The increased share count is primarily
related to the issuance of additional shares in connection with the
Topgolf merger.
- Fourth quarter 2021 Adjusted EBITDA increased $27 million, driven by a $46 million contribution from the Topgolf
business, partially offset by lower adjusted EBITDA in the golf
equipment and apparel businesses. On a full year basis, Topgolf
Adjusted EBITDA contribution was $177
million. Due to the timing of the Topgolf acquisition on
March 8, 2021, Callaway's full year
results for 2021 only include approximately 10 months of Topgolf
results and therefore do not include January and February results,
which were in the aggregate $2.3
million in Adjusted EBITDA.
- During the fourth quarter 2021, Callaway repurchased a total of
946,637 shares at an average price of $26.41. There remains approximately $25 million in the Company's authorized share
repurchase program announced on December 13,
2021.
SEGMENT RESULTS
The following is a reconciliation of income before income taxes
to total segment operating income (in millions) for the fourth
quarter and twelve months ended December 31,
2021 and 2020:
|
Q4 2021
|
Q4 2020
|
Change1
|
|
FY 2021
|
FY 2020
|
Change1
|
Total Segment
Operating (Loss)/Income
|
$(21)
|
$(6)
|
$(15)
|
|
$331
|
$149
|
$182
|
Reconciling
Items2
|
$(34)
|
$(27)
|
$(7)
|
|
$(126)
|
$(81)
|
$(45)
|
Goodwill and
Trademark Impairment
|
$—
|
$—
|
$—
|
|
$—
|
$(174)
|
$174
|
(Loss)/Income from
Operations
|
$(55)
|
$(32)
|
$(23)
|
|
$205
|
$(106)
|
$311
|
Gain on Topgolf
Investment
|
$—
|
$—
|
$—
|
|
$253
|
$—
|
$253
|
Interest
Expense
|
$(41)
|
$(13)
|
$(28)
|
|
$(116)
|
$(47)
|
$(69)
|
Other
Income
|
$(1)
|
$(3)
|
$2
|
|
$9
|
$25
|
$(16)
|
(Loss)/Income Before
Income Taxes
|
$(96)
|
$(48)
|
$(48)
|
|
$351
|
$(127)
|
$478
|
|
|
1.
|
Amounts may not foot
due to rounding.
|
2.
|
Reconciling items
exclude corporate overhead and certain non-recurring and non-cash
items as described in the
schedules to this release.
|
The table below provides the breakout of segment revenues and
segment operating income for the fourth quarter and twelve months
ended December 31, 2021:
Segment Net Revenue
|
Q4 2021
|
Q4 2020
|
Change1
|
|
FY 2021
|
FY 2020
|
Change1
|
Topgolf
|
$336
|
n/a
|
$336
|
|
$1,088
|
n/a
|
$1,088
|
Golf
Equipment
|
$161
|
$214
|
$(52)
|
|
$1,229
|
$983
|
$246
|
Apparel, Gear and
Other
|
$215
|
$161
|
$54
|
|
$817
|
$607
|
$210
|
Total Segment Net Revenue
|
$712
|
$375
|
$337
|
|
$3,133
|
$1,589
|
$1,544
|
|
Total Segment Operating Income
|
Q4 2021
|
Q4 2020
|
Change1
|
|
FY 2021
|
FY 2020
|
Change1
|
Topgolf
|
$6
|
n/a
|
$6
|
|
$58
|
n/a
|
$58
|
% of segment
revenue
|
1.8%
|
n/a
|
n/a
|
|
5.3%
|
n/a
|
n/a
|
Golf
Equipment
|
$(25)
|
$4
|
$(29)
|
|
$204
|
$149
|
$55
|
% of segment
revenue
|
(15.5)%
|
1.9%
|
(1,740)
bps
|
|
16.6%
|
15.2%
|
140 bps
|
Apparel, Gear and
Other
|
$(2)
|
$(10)
|
$7
|
|
$69
|
$1
|
$68
|
% of segment
revenue
|
0.9%
|
6.2%
|
(530) bps
|
|
8.4%
|
0.2%
|
820 bps
|
Total segment operating income
|
$(21)
|
$(6)
|
$(15)
|
|
$331
|
$149
|
$182
|
% of segment revenue
|
(3.0)%
|
(1.6)%
|
(140) bps
|
|
10.6%
|
9.4%
|
120 bps
|
|
|
1.
|
Amounts may not foot
due to rounding.
|
Fourth Quarter 2021 Segment Highlights
(All
comparisons to prior periods are calculated on a year-over-year
basis)
- Topgolf
-
- Contributed $336 million of
revenue and $6 million of segment
operating income in the fourth quarter of 2021, driven primarily by
strong walk-in traffic, continued demand for social events and
better-than-expected corporate event bookings.
- Same venue sales surpassed expectations in the quarter,
increasing 6% compared to the 2019 level and generating strong
flow-through to Adjusted EBITDA.
- Opened a total of nine new domestic venues in 2021, including
one new location in Ft. Myers, FL during the fourth quarter of
2021.
- Golf Equipment
-
- Revenue decreased 24.5% year-over-year due to a planned shift
in production to build 2022 new launch product and increased
operating expenses. In addition, Callaway launched several new
products in the comparable fourth quarter 2020 creating an uneven
year-over-year comparison. Compared to fourth quarter 2019
pre-pandemic levels, revenue increased 5.7%.
- Golf Equipment segment operating income decreased $(29) million due primarily to lower revenue
compared to 2020.
- Apparel, Gear and Other
-
- Revenue increased 33.4% year-over-year, driven by a 39.8%
increase in apparel sales and a 19.3% increase in gear and other
sales across TravisMathew, Jack Wolfskin and Callaway brands.
- Operating income for the Apparel, Gear and Other segment
increased $7 million year-over-year
to $(2) million in the fourth quarter
of 2021.
FULL YEAR 2022 BUSINESS OUTLOOK
The full year 2022 projections set forth below are based on the
Company's best estimates at this time. They include the estimated
impact of certain factors, including (1) ongoing impact of COVID-19
on the supply chain and staffing levels at our Topgolf venues, (2)
changes in foreign currency effects, which are estimated to have a
negative full year impact of $54
million on net sales and $38
million on pretax income, and (3) increased freight
costs.
FULL YEAR 2022 OUTLOOK
|
(in millions)
|
2022 Estimate
|
2021 Results1
|
Net
Revenue
|
$3,780 -
$3,820
|
$3,133
|
Adjusted
EBITDA
|
$490 -
$515
|
$445
|
|
|
1.
|
Due to the timing of
the Topgolf acquisition on March 8, 2021, Callaway's reported full
year financial results for 2021 only include approximately ten
months of Topgolf results and therefore do not include January and
February results which were in the aggregate $142.9 million in
revenue and $2.3 million in Adjusted EBITDA.
|
Net Revenue: Full year 2022 net revenue estimate assumes
Topgolf segment revenue of approximately $1.5 billion for the twelve months ended
December 31, 2022, as well as
continued positive demand fundamentals for Callaway's Golf
Equipment and Apparel, Gear and Other segments.
Adjusted EBITDA: Full year 2022 Adjusted EBITDA estimate
assumes the Topgolf segment will deliver $210 - $220 million
in Adjusted EBITDA for the twelve months ended December 31, 2022.
FIRST QUARTER 2022 BUSINESS OUTLOOK
The first quarter 2022 projections set forth below are based on
the Company's best estimates at this time. They include the
estimated impact of certain factors, including (1) ongoing impact
of COVID-19 Omicron variant, (2) changes in foreign currency
effects, which are estimated to have a negative impact of
$21 million on net sales and
$21 million on pretax income
(including Q1 2021 hedge gains that do not repeat), and (3)
increased freight costs.
FIRST QUARTER 2022 OUTLOOK
|
(in millions)
|
2022 Estimate
|
2021 Results1
|
Net
Revenue
|
$1,005 -
$1,025
|
$652
|
Adjusted
EBITDA
|
$130 -
$145
|
$128
|
|
|
1.
|
Due to the timing of
the Topgolf acquisition on March 8, 2021, Callaway's reported full
year financial results for 2021 only include approximately ten
months of Topgolf results and therefore do not include January and
February results which were in the aggregate $142.9 million in
revenue and $2.3 million in Adjusted EBITDA.
|
ADDITIONAL INFORMATION AND DISCLOSURES
Conference Call and Webcast
The Company will be holding a conference call at 2:00 p.m. Pacific time today, February 10, 2022, to discuss the Company's
financial results, outlook and business. The call will be broadcast
live over the Internet and can be accessed at
http://ir.callawaygolf.com/. A replay of the conference call will
be available approximately two hours after the call ends, and will
remain available through 9:00 p.m. Pacific
time on February 17,
2022. The replay may be accessed through the Internet at
http://ir.callawaygolf.com/.
Non-GAAP Information
The GAAP results contained in this press release and the
financial statement schedules attached to this press release have
been prepared in accordance with accounting principles generally
accepted in the United States
("GAAP"). To supplement the GAAP results, the Company has
provided certain non-GAAP financial information as follows:
Constant Currency Basis. The Company provided certain
information regarding the Company's financial results or projected
financial results on a "constant currency basis." This information
estimates the impact of changes in foreign currency rates on the
translation of the Company's current or projected future period
financial results as compared to the applicable comparable
period. This impact is derived by taking the current or
projected local currency results and translating them into U.S.
dollars based upon the foreign currency exchange rates for the
applicable comparable period. It does not include any other effect
of changes in foreign currency rates on the Company's results or
business.
Non-Recurring and Non-cash Adjustments. The Company
provided information excluding certain non-cash amortization and
depreciation of intangibles and other assets related to the
Company's acquisitions (including an impairment charge of
$174 million recorded in 2020),
non-cash amortization of the debt discount related to the Company's
convertible notes, acquisition and other non-recurring items
(including a $253 million non-cash
gain in 2021 resulting from the Company's pre-merger equity
position in Topgolf), and a non-cash valuation allowance recorded
against certain of the Company's deferred tax assets as a result of
the Topgolf merger.
Adjusted EBITDA. The Company provides information
about its results excluding interest, taxes, depreciation and
amortization expenses, non-cash stock compensation expense,
non-cash lease amortization expense, and the non-recurring and
non-cash items referenced above.
In addition, the Company has included in the schedules attached
to this release a reconciliation of certain non-GAAP information to
the most directly comparable GAAP information. The non-GAAP
information presented in this release and related schedules should
not be considered in isolation or as a substitute for any measure
derived in accordance with GAAP. The non-GAAP information may also
be inconsistent with the manner in which similar measures are
derived or used by other companies. Management uses such
non-GAAP information for financial and operational decision-making
purposes and as a means to evaluate period-over-period comparisons
and in forecasting the Company's business going forward. Management
believes that the presentation of such non-GAAP information, when
considered in conjunction with the most directly comparable GAAP
information, provides additional useful comparative information for
investors in their assessment of the underlying performance of the
Company's business with regard to these items. The Company has
provided reconciling information in the attached schedules.
For forward-looking Adjusted EBITDAinformation provided in this
release, reconciliation of such forward-looking Adjusted EBITDA to
the most closely comparable GAAP financial measure (net income) is
not provided because the Company is unable to provide such
reconciliation without unreasonable efforts. The inability to
provide a reconciliation is because the Company is currently unable
to predict with a reasonable degree of certainty the type and
extent of certain items that would be expected to impact net income
in the future but would not impact Adjusted EBITDA. These items may
include certain non-cash depreciation, which will fluctuate based
on the Company's level of capital expenditures, non-cash
amortization of intangibles related to the Company's acquisitions,
income taxes, which can fluctuate based on changes in the other
items noted and/or future forecasts, and other non-recurring costs
and non-cash adjustments. Historically, the Company has excluded
these items from Adjusted EBITDA. The Company currently expects to
continue to exclude these items in future disclosures of Adjusted
EBITDA and may also exclude other items that may arise. The events
that typically lead to the recognition of such adjustments are
inherently unpredictable as to if or when they may occur, and
therefore actual results may differ materially. This unavailable
information could have a significant impact on net income.
Definitions
Same venue sales. Callaway defines same venue sales for
its Topgolf business as 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 in the year of comparison.
Forward-Looking Statements
Statements used in this press release that relate to future
plans, events, financial results, performance, prospects, or growth
opportunities, including statements relating to the Company's and
Topgolf's first quarter and full year 2022 guidance (including net
revenue and Adjusted EBITDA), continued impact of the COVID-19
pandemic on the Company's business and the Company's ability to
improve and recover from such impact, impact of any measures taken
to mitigate the effect of the pandemic, strength and demand of the
Company's products and services, continued brand momentum, demand
for golf and outdoor activities and apparel, continued investments
in the business, increases in shareholder value, post-pandemic
consumer trends and behavior, future industry and market
conditions, the benefits of the Topgolf merger, including the
anticipated operations, venue/bay expansion plans, financial
position, liquidity, performance, prospects or growth and scale
opportunities of the Company, Topgolf or the combined company, and
statements of belief and any statement of assumptions underlying
any of the foregoing, are forward-looking statements as defined
under the Private Securities Litigation Reform Act of 1995. The
words "believe," "expect," "estimate," "could," "should," "intend,"
"may," "plan," "seek," "anticipate," "project" and similar
expressions, among others, generally identify forward-looking
statements, which speak only as of the date the statements were
made and are not guarantees of future performance. These statements
are based upon current information and expectations. Accurately
estimating the forward-looking statements is based upon various
risks and unknowns, including disruptions to business operations
from additional regulatory restrictions in response to the COVID-19
pandemic (such as travel restrictions, government-mandated
shut-down orders or quarantines) or voluntary "social distancing"
that affects employees, customers and suppliers; costs, expenses or
difficulties related to the merger with Topgolf, including the
integration of the Topgolf business; failure to realize the
expected benefits and synergies of the Topgolf merger in the
expected timeframes or at all; production delays, closures of
manufacturing facilities, retail locations, warehouses and supply
and distribution chains; staffing shortages as a result of remote
working requirements or otherwise; uncertainty regarding global
economic conditions, particularly the uncertainty related to the
duration and ongoing impact of the COVID-19 pandemic, and related
decreases in customer demand/spending and ongoing increases in
operating and freight costs; global supply chain constraints and
challenges; the Company's level of indebtedness; continued
availability of credit facilities and liquidity and ability to
comply with applicable debt covenants; effectiveness of capital
allocation and cost/expense reduction efforts; continued brand
momentum and product success; growth in the direct-to-consumer and
e-commerce channels; ability to realize the benefits of the
continued investments in the Company's business; consumer
acceptance of and demand for the Company's and its subsidiaries'
products and services; cost of living and inflationary
pressures; any changes in U.S. trade, tax or other policies,
including restrictions on imports or an increase in import tariffs;
future consumer discretionary purchasing activity, which can be
significantly adversely affected by unfavorable economic or market
conditions; future retailer purchasing activity, which can be
significantly negatively affected by adverse industry conditions
and overall retail inventory levels; and future changes in foreign
currency exchange rates and the degree of effectiveness of the
Company's hedging programs. Actual results may differ materially
from those estimated or anticipated as a result of these risks and
unknowns or other risks and uncertainties, including the effect of
terrorist activity, armed conflict, natural disasters or pandemic
diseases, including expanded outbreak of COVID-19 and its variants,
on the economy generally, on the level of demand for the Company's
and its subsidiaries' products and services or on the Company's
ability to manage its operations, supply chain and delivery
logistics in such an environment; delays, difficulties or increased
costs in the supply of components or commodities needed to
manufacture the Company's products or in manufacturing the
Company's products; and a decrease in participation levels in golf
generally, during or as a result of the COVID-19 pandemic. For
additional information concerning these and other risks and
uncertainties that could affect these statements and the Company's
business, see the Company's Annual Report on Form 10-K for the year
ended December 31, 2020 as well as
other risks and uncertainties detailed from time to time in the
Company's reports on Forms 10-Q and 8-K subsequently filed with the
Securities and Exchange Commission. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no
obligation to republish revised forward-looking statements to
reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
About Callaway Golf Company
Callaway Golf Company
(NYSE: ELY) is an unrivaled tech-enabled golf company delivering
leading golf equipment, apparel and entertainment, with a portfolio
of global brands including Callaway Golf, Topgolf, Odyssey, OGIO,
TravisMathew and Jack Wolfskin. Through an unwavering
commitment to innovation, Callaway manufactures and sells premium
golf clubs, golf balls, golf and lifestyle bags, golf and lifestyle
apparel and other accessories, and provides world-class golf
entertainment experiences through Topgolf, its wholly-owned
subsidiary. For more information please visit
www.callawaygolf.com, www.topgolf.com,
www.odysseygolf.com, www.OGIO.com,
www.travismathew.com, and
www.jack-wolfskin.com.
Investor Contacts
Brian
Lynch
Lauren Scott
(760) 931-1771
invrelations@callawaygolf.com
CALLAWAY GOLF COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
|
|
|
December 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
352,221
|
|
|
$
366,119
|
Restricted
Cash
|
|
1,164
|
|
|
—
|
Accounts receivable,
net
|
|
105,331
|
|
|
138,482
|
Inventories
|
|
533,457
|
|
|
352,544
|
Other current
assets
|
|
173,580
|
|
|
55,482
|
Total current
assets
|
|
1,165,753
|
|
|
912,627
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
1,451,402
|
|
|
146,495
|
Operating lease
right-of-use assets, net
|
|
1,384,501
|
|
|
194,776
|
Goodwill and
intangible assets, net
|
|
3,488,708
|
|
|
540,997
|
Other
assets
|
|
257,416
|
|
|
185,705
|
Total
assets
|
|
$
7,747,780
|
|
|
$
1,980,600
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
accrued expenses
|
|
$
491,176
|
|
|
$
276,209
|
Accrued employee
compensation and benefits
|
|
128,867
|
|
|
30,937
|
Asset-based credit
facilities
|
|
9,096
|
|
|
22,130
|
Current operating
lease liabilities
|
|
72,326
|
|
|
29,579
|
Construction
advances
|
|
22,943
|
|
|
—
|
Deferred
revenue
|
|
93,873
|
|
|
2,546
|
Other current
liabilities
|
|
47,744
|
|
|
29,871
|
Total current
liabilities
|
|
866,025
|
|
|
391,272
|
|
|
|
|
|
|
Long-term
debt
|
|
1,025,278
|
|
|
650,564
|
Long-term operating
leases
|
|
1,385,364
|
|
|
177,996
|
Deemed landlord
financing
|
|
460,634
|
|
|
—
|
Deferred tax
liability
|
|
163,591
|
|
|
58,628
|
Long-term
liabilities
|
|
163,986
|
|
|
26,496
|
Total shareholders'
equity
|
|
3,682,902
|
|
|
675,644
|
Total liabilities and
shareholders' equity
|
|
$
7,747,780
|
|
|
$
1,980,600
|
CALLAWAY GOLF COMPANY
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
(In thousands, except per share
data)
|
|
|
|
Three Months Ended
December 31,
|
|
|
2021
|
|
2020
|
Net
revenues:
|
|
|
|
|
Products
|
|
$
380,290
|
|
$
374,629
|
Services
|
|
331,434
|
|
—
|
Total net
revenues
|
|
711,724
|
|
374,629
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Cost of
products
|
|
222,624
|
|
235,506
|
Cost of services,
excluding depreciation and amortization
|
|
39,669
|
|
—
|
Other venue
expenses
|
|
247,932
|
|
—
|
Selling, general and
administrative expense
|
|
236,931
|
|
158,477
|
Research and
development expense
|
|
19,231
|
|
12,901
|
Total costs and
expenses
|
|
766,387
|
|
406,884
|
|
|
|
|
|
Loss from
operations
|
|
(54,663)
|
|
(32,255)
|
Other expense,
net
|
|
(41,028)
|
|
(15,445)
|
Loss before income
taxes
|
|
(95,691)
|
|
(47,700)
|
Income tax
benefit
|
|
(69,465)
|
|
(7,124)
|
Net loss
|
|
$
(26,226)
|
|
$
(40,576)
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
Basic
|
|
$(0.14)
|
|
$(0.43)
|
Diluted
|
|
$(0.14)
|
|
$(0.43)
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
185,971
|
|
94,185
|
Diluted
|
|
185,971
|
|
94,185
|
|
|
|
|
|
|
|
Twelve Months Ended
December 31,
|
|
|
2021
|
|
2020
|
Net
revenues:
|
|
|
|
|
Products
|
|
$
2,058,722
|
|
$
1,589,460
|
Services
|
|
1,074,725
|
|
—
|
Total net
revenues
|
|
3,133,447
|
|
1,589,460
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Cost of
products
|
|
1,136,626
|
|
931,875
|
Cost of services,
excluding depreciation and amortization
|
|
133,510
|
|
—
|
Other venue
expenses
|
|
731,549
|
|
—
|
Selling, general and
administrative expense
|
|
849,671
|
|
542,531
|
Research and
development expense
|
|
68,000
|
|
46,300
|
Goodwill and tradename
impairment
|
|
—
|
|
174,269
|
Venue pre-opening
costs
|
|
9,376
|
|
—
|
Total costs and
expenses
|
|
2,928,732
|
|
1,694,975
|
|
|
|
|
|
Income (loss) from
operations
|
|
204,715
|
|
(105,515)
|
Gain on Topgolf
investment
|
|
252,531
|
|
—
|
Other expense,
net
|
|
(106,604)
|
|
(21,963)
|
Income (loss) before
income taxes
|
|
350,642
|
|
(127,478)
|
Income tax provision
(benefit)
|
|
28,654
|
|
(544)
|
Net income
(loss)
|
|
$
321,988
|
|
$
(126,934)
|
|
|
|
|
|
Earnings (loss) per
common share:
|
|
|
|
|
Basic
|
|
$1.90
|
|
$(1.35)
|
Diluted
|
|
$1.82
|
|
$(1.35)
|
Weighted-average
common shares outstanding:
|
|
|
|
|
Basic
|
|
169,101
|
|
94,201
|
Diluted
|
|
176,925
|
|
94,201
|
On March 8, 2021, the
Company completed its merger with Topgolf International, Inc.
("Topgolf") and has included the results of operations for Topgolf
in its consolidated statements of operations from that date
forward. Additionally, the Company has modified the presentation of
its consolidated statements of operations for the three and twelve
months ended December 31, 2020 to conform with the current
year presentation.
|
CALLAWAY GOLF COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH
FLOW
(Unaudited)
(In thousands)
|
|
|
Twelve Months Ended
December 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
(loss)
|
$
321,988
|
|
$
(126,934)
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and amortization
|
155,822
|
|
39,508
|
Lease
amortization expense
|
79,952
|
|
32,730
|
Accretion
of deemed landlord financing
|
11,566
|
|
—
|
Amortization of debt issuance costs
|
5,297
|
|
4,200
|
Debt
discount amortization
|
14,049
|
|
6,331
|
Impairment loss
|
—
|
|
174,269
|
Deferred
taxes, net
|
8,415
|
|
(12,507)
|
Non-cash
share-based compensation
|
38,685
|
|
10,927
|
Loss on
disposal of long-lived assets
|
381
|
|
336
|
Gain on
Topgolf investment
|
(252,531)
|
|
—
|
Gain on
conversion of note receivable
|
—
|
|
(1,252)
|
Unrealized net gains on hedging instruments and foreign
currency
|
276
|
|
2,750
|
Acquisition costs
|
(16,199)
|
|
—
|
Changes in assets and
liabilities
|
(89,444)
|
|
97,880
|
Net cash provided by
operating activities
|
278,257
|
|
228,238
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Cash acquired in
merger
|
171,294
|
|
—
|
Capital
expenditures
|
(322,274)
|
|
(39,262)
|
Investment in
golf-related ventures
|
(30,000)
|
|
(19,999)
|
Proceeds from sale of
investment in golf-related ventures
|
19,096
|
|
—
|
Proceeds from sale of
property and equipment
|
20
|
|
49
|
Net cash used in
investing activities
|
(161,864)
|
|
(59,212)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Repayments of
long-term debt
|
(200,693)
|
|
(12,437)
|
Proceeds from
borrowings on long-term debt
|
26,175
|
|
37,728
|
Proceeds from
(repayments of) credit facilities, net
|
(13,034)
|
|
(122,450)
|
Proceeds from issuance
of convertible notes
|
—
|
|
258,750
|
Premium paid for
capped call confirmations
|
—
|
|
(31,775)
|
Debt issuance
cost
|
(5,441)
|
|
(9,102)
|
Payment on contingent
earn-out obligation
|
(3,577)
|
|
—
|
Repayments of
financing leases
|
(830)
|
|
(792)
|
Proceeds from lease
financing
|
89,198
|
|
—
|
Exercise of stock
options
|
22,270
|
|
248
|
Dividends
paid
|
(3)
|
|
(1,891)
|
Acquisition of
treasury stock
|
(38,137)
|
|
(22,213)
|
Net cash (used in)
provided by financing activities
|
(124,072)
|
|
96,066
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(752)
|
|
(5,639)
|
Net (decrease)
increase in cash, cash equivalents and restricted cash
|
(8,431)
|
|
259,453
|
Cash, cash
equivalents and restricted cash at beginning of period
|
366,119
|
|
106,666
|
Cash, cash
equivalents and restricted cash at end of period
|
$
357,688
|
|
$
366,119
|
CALLAWAY GOLF COMPANY
Consolidated Net Revenues and Operating Segment
Information
(Unaudited)
(In thousands)
|
|
|
Net Revenues by Product
Category(1)
|
|
|
Three Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs. 2020(2)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
|
$
311,872
|
|
$
—
|
|
$
311,872
|
|
n/m
|
|
n/m
|
Topgolf other business
lines
|
|
23,926
|
|
—
|
|
23,926
|
|
n/m
|
|
n/m
|
Golf Clubs
|
|
128,808
|
|
170,452
|
|
(41,644)
|
|
(24.4%)
|
|
(23.4%)
|
Golf Balls
|
|
32,611
|
|
43,342
|
|
(10,731)
|
|
(24.8%)
|
|
(23.7%)
|
Apparel
|
|
153,930
|
|
110,071
|
|
43,859
|
|
39.8%
|
|
42.1%
|
Gear, Accessories
& Other
|
|
60,577
|
|
50,764
|
|
9,813
|
|
19.3%
|
|
22.2%
|
Total net
revenues
|
|
$
711,724
|
|
$
374,629
|
|
$
337,095
|
|
90.0%
|
|
91.6%
|
|
|
|
|
|
|
|
|
|
|
|
(1)On March 8, 2021, the Company
completed its merger with Topgolf. Accordingly, the Company's
revenue categories for 2021 were expanded to include Topgolf's
revenue categories
|
(2)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by Region
|
|
|
Three Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs. 2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
483,196
|
|
$
174,764
|
|
$
308,432
|
|
176.5%
|
|
176.5%
|
Europe
|
|
112,974
|
|
91,484
|
|
21,490
|
|
23.5%
|
|
25.5%
|
Japan
|
|
46,660
|
|
53,538
|
|
(6,878)
|
|
(12.8%)
|
|
(5.3%)
|
Rest of
world
|
|
68,894
|
|
54,843
|
|
14,051
|
|
25.6%
|
|
26.0%
|
Total net
revenues
|
|
$
711,724
|
|
$
374,629
|
|
$
337,095
|
|
90.0%
|
|
91.6%
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment Information
|
|
|
Three Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs. 2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
335,798
|
|
$
—
|
|
$
335,798
|
|
n/m
|
|
n/m
|
Golf
equipment
|
|
161,419
|
|
213,794
|
|
(52,375)
|
|
(24.5%)
|
|
(23.4%)
|
Apparel, Gear &
Other
|
|
214,507
|
|
160,835
|
|
53,672
|
|
33.4%
|
|
35.8%
|
Total net
revenues
|
|
$
711,724
|
|
$
374,629
|
|
$
337,095
|
|
90.0%
|
|
91.6%
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
6,139
|
|
$
—
|
|
$
6,139
|
|
n/m
|
|
|
Golf
equipment
|
|
(24,979)
|
|
3,993
|
|
(28,972)
|
|
(725.6%)
|
|
|
Apparel, Gear &
Other
|
|
(2,281)
|
|
(9,720)
|
|
7,439
|
|
(76.5%)
|
|
|
Total segment
operating loss
|
|
(21,121)
|
|
(5,727)
|
|
(15,394)
|
|
268.8%
|
|
|
Corporate G&A and
other(2)
|
|
(33,542)
|
|
(26,528)
|
|
(7,014)
|
|
26.4%
|
|
|
Total operating
loss
|
|
(54,663)
|
|
(32,255)
|
|
(22,408)
|
|
69.5%
|
|
|
Interest expense,
net
|
|
(40,502)
|
|
(12,927)
|
|
(27,575)
|
|
213.3%
|
|
|
Other expense,
net
|
|
(526)
|
|
(2,518)
|
|
1,992
|
|
(79.1%)
|
|
|
Total loss before
income taxes
|
|
$
(95,691)
|
|
$
(47,700)
|
|
$
(47,991)
|
|
100.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
(2)Amount includes corporate general and
administrative expenses not utilized by management in determining
segment profitability, including non-cash amortization expense for
intangible assets acquired in connection with the Jack Wolfskin,
TravisMathew and OGIO acquisitions. In addition, the amount for
2021 includes (i) $8.5 million of non-cash amortization expense for
intangible assets acquired in connection with the merger with
Topgolf, combined with depreciation expense from the fair value
step-up of Topgolf property, plant and equipment and amortization
expense related to the fair value adjustments to Topgolf leases;
(ii) $1.1 million of transition and other non-recurring costs
associated with the merger with Topgolf completed on March 8, 2021;
and (iii) $0.8 million of costs related to the implementation of
new IT systems for Jack Wolfskin. The amount for the fourth quarter
of 2020 includes (i) $8.0 million of professional fees, legal fees,
employee costs and other fees associated with the acquisition of
Topgolf; and (ii) $0.7 million of costs related to the
implementation of new IT systems for Jack Wolfskin.
|
CALLAWAY GOLF COMPANY
Consolidated Net Revenues and Operating Segment
Information
(Unaudited)
(In thousands)
|
|
|
|
Net Revenues by Product
Category(1)
|
|
|
Twelve Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency vs. 2020(2)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Venues
|
|
$
1,014,106
|
|
$
—
|
|
$
1,014,106
|
|
n/m
|
|
n/m
|
Topgolf other business
lines
|
|
73,565
|
|
—
|
|
73,565
|
|
n/m
|
|
n/m
|
Golf Clubs
|
|
994,479
|
|
787,072
|
|
207,407
|
|
26.4%
|
|
24.5%
|
Golf Balls
|
|
234,696
|
|
195,603
|
|
39,093
|
|
20.0%
|
|
18.3%
|
Apparel
|
|
490,872
|
|
349,272
|
|
141,600
|
|
40.5%
|
|
38.9%
|
Gear, Accessories
& Other
|
|
325,729
|
|
257,513
|
|
68,216
|
|
26.5%
|
|
24.5%
|
Total net
revenues
|
|
$
3,133,447
|
|
$
1,589,460
|
|
$
1,543,987
|
|
97.1%
|
|
95.1%
|
|
|
|
|
|
|
|
|
|
|
|
(1)On March 8, 2021, the Company
completed its merger with Topgolf. Accordingly, the Company's
revenue categories for 2021 were
expanded to include Topgolf's revenue categories.
|
(2)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Revenues by Region
|
|
|
Twelve Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs. 2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
United
States
|
|
$
2,067,070
|
|
$
778,600
|
|
$
1,288,470
|
|
165.5%
|
|
165.5%
|
Europe
|
|
499,533
|
|
372,957
|
|
126,576
|
|
33.9%
|
|
28.1%
|
Japan
|
|
243,848
|
|
212,055
|
|
31,793
|
|
15.0%
|
|
17.7%
|
Rest of
world
|
|
322,996
|
|
225,848
|
|
97,148
|
|
43.0%
|
|
35.5%
|
Total net
revenues
|
|
$
3,133,447
|
|
$
1,589,460
|
|
$
1,543,987
|
|
97.1%
|
|
95.1%
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Segment Information
|
|
|
Twelve Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Non-GAAP
Constant
Currency
vs. 2020(1)
|
|
|
2021
|
|
2020
|
|
Dollars
|
|
Percent
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
1,087,671
|
|
$
—
|
|
$
1,087,671
|
|
n/m
|
|
n/m
|
Golf
Equipment
|
|
1,229,175
|
|
982,675
|
|
246,500
|
|
25.1%
|
|
23.2%
|
Apparel, Gear &
Other
|
|
816,601
|
|
606,785
|
|
209,816
|
|
34.6%
|
|
32.8%
|
Total net
revenues
|
|
$
3,133,447
|
|
$
1,589,460
|
|
$
1,543,987
|
|
97.1%
|
|
95.1%
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income:
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
58,225
|
|
$
—
|
|
$
58,225
|
|
n/m
|
|
|
Golf
Equipment
|
|
203,846
|
|
148,578
|
|
55,268
|
|
37.2%
|
|
|
Apparel, Gear and
Other
|
|
68,511
|
|
679
|
|
67,832
|
|
9990.0%
|
|
|
Total segment
operating income
|
|
330,582
|
|
149,257
|
|
181,325
|
|
121.5%
|
|
|
Corporate G&A and
other(2)
|
|
(125,867)
|
|
(80,503)
|
|
(45,364)
|
|
56.4%
|
|
|
Goodwill and tradename
impairment(3)
|
|
—
|
|
(174,269)
|
|
174,269
|
|
(100.0%)
|
|
|
Total operating
income (loss)
|
|
204,715
|
|
(105,515)
|
|
310,230
|
|
294.0%
|
|
|
Gain on Topgolf
investment(4)
|
|
252,531
|
|
—
|
|
252,531
|
|
n/m
|
|
|
Interest expense,
net
|
|
(115,565)
|
|
(46,932)
|
|
(68,633)
|
|
146.2%
|
|
|
Other income,
net
|
|
8,961
|
|
24,969
|
|
(16,008)
|
|
(64.1%)
|
|
|
Total income (loss)
before income taxes
|
|
$
350,642
|
|
$
(127,478)
|
|
$
478,120
|
|
375.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Calculated by applying 2020 exchange
rates to 2021 reported sales in regions outside the U.S.
|
(2)Amount includes corporate general and
administrative expenses not utilized by management in determining
segment profitability, including non-cash amortization expense for
intangible assets acquired in connection with the Jack Wolfskin,
TravisMathew and OGIO acquisitions. In addition, the amount for
2021 includes (i) $22.3 million of non-cash amortization expense
for intangible assets acquired in connection with the merger with
Topgolf, combined with depreciation expense from the fair value
step-up of Topgolf property, plant and equipment and
amortization expense related to the fair value adjustments to
Topgolf leases, (ii)$21.2 million of transaction, transition and
other non-recurring costs associated with the merger with Topgolf
completed on March 8, 2021, and (iii) $2.8 million of costs related
to the implementation of new IT systems for Jack Wolfskin. The
amount for 2020 also includes certain non-recurring costs,
including (i) $8.5 million in transaction, transition, and other
non-recurring costs associated with the Topgolf Merger Agreement,
(ii) $4.8 million of non-cash amortization of the debt discount on
the convertible notes issued in May 2020, (iii) $3.7 million of
costs associated with the Company's transition to its new North
America Distribution Center; (iv) $3.8 million related to
cost-reduction initiatives, including severance charges associated
with workforce reductions due to the COVID-19 pandemic, and (v)
$1.5 million related to the implementation of new IT systems for
Jack Wolfskin.
|
(3)Represents an impairment charge
related to Jack Wolfskin recognized in the second quarter of
2020.
|
(4)Amount represents a gain recorded to
write-up the Company's former investment in Topgolf to its fair
value in connection with the merger.
|
CALLAWAY GOLF COMPANY
Consolidated Net Revenues and Operating Segment
Information
(Unaudited)
(In thousands)
|
|
|
Operating Segment Information
|
|
|
Three Months Ended
December 31,
|
|
Growth/(Decline)
|
|
Twelve Months Ended
December 31,
|
|
Growth
|
|
|
2021
|
|
2019
|
|
Dollars
|
|
Percent
|
|
2021
|
|
2019
|
|
Dollars
|
|
Percent
|
Net
revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
335,798
|
|
$
—
|
|
$
335,798
|
|
n/m
|
|
$
1,087,671
|
|
$
—
|
|
$
1,087,671
|
|
n/m
|
Golf
Equipment
|
|
161,419
|
|
152,699
|
|
8,720
|
|
5.7%
|
|
1,229,175
|
|
979,173
|
|
250,002
|
|
25.5%
|
Apparel, Gear &
Other
|
|
214,507
|
|
159,242
|
|
55,265
|
|
34.7%
|
|
816,601
|
|
721,890
|
|
94,711
|
|
13.1%
|
Total net
revenues
|
|
$
711,724
|
|
$
311,941
|
|
$
399,783
|
|
128.2%
|
|
$
3,133,447
|
|
$
1,701,063
|
|
$
1,432,384
|
|
84.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Topgolf
|
|
$
6,139
|
|
$
—
|
|
$
6,139
|
|
n/m
|
|
$
58,225
|
|
$
—
|
|
$
58,225
|
|
n/m
|
Golf
equipment
|
|
(24,979)
|
|
(8,467)
|
|
(16,512)
|
|
(195.0%)
|
|
203,846
|
|
140,316
|
|
63,530
|
|
45.3%
|
Apparel, Gear &
Other
|
|
(2,281)
|
|
6,582
|
|
(8,863)
|
|
(134.7%)
|
|
68,511
|
|
75,490
|
|
(6,979)
|
|
(9.2%)
|
Total segment
operating (loss) income
|
|
(21,121)
|
|
(1,885)
|
|
(19,236)
|
|
(1020.5%)
|
|
330,582
|
|
215,806
|
|
114,776
|
|
53.2%
|
Corporate G&A and
other(1)
|
|
(33,542)
|
|
(20,771)
|
|
(12,771)
|
|
(61.5%)
|
|
(125,867)
|
|
(83,138)
|
|
(42,729)
|
|
(51.4%)
|
Total operating
(loss) income
|
|
(54,663)
|
|
(22,656)
|
|
(32,007)
|
|
141.3%
|
|
204,715
|
|
132,668
|
|
72,047
|
|
54.3%
|
Gain on Topgolf
investment(2)
|
|
—
|
|
—
|
|
—
|
|
n/m
|
|
252,531
|
|
—
|
|
252,531
|
|
n/m
|
Interest expense,
net
|
|
(40,502)
|
|
(9,049)
|
|
(31,453)
|
|
347.6%
|
|
(115,565)
|
|
(38,493)
|
|
(77,072)
|
|
200.2%
|
Other (loss) income,
net
|
|
(526)
|
|
135
|
|
(661)
|
|
(489.6%)
|
|
8,961
|
|
1,594
|
|
7,367
|
|
462.2%
|
Total (loss) income
before income taxes
|
|
$
(95,691)
|
|
$
(31,570)
|
|
$
(64,121)
|
|
(203.1%)
|
|
$
350,642
|
|
$
95,769
|
|
$
254,873
|
|
266.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Amount includes corporate general and
administrative expenses not utilized by management in determining
segment profitability, including non-cash amortization expense for
intangible assets acquired in connection with the Jack Wolfskin,
TravisMathew and OGIO acquisitions. In addition, the amount for the
three and twelve months ended December 31, 2021 includes (i) $1.1
million and $21.2 million, respectively, of transaction, transition
and other non-recurring costs associated with the merger with
Topgolf completed on March 8, 2021; (ii) $8.5 million and $22.3
million, respectively, of non-cash amortization expense for
intangible assets acquired in connection with the merger with
Topgolf, combined with depreciation expense from the fair value
step-up of Topgolf property, plant and equipment and
amortization expense related to the fair value adjustments to
Topgolf leases; and (iii) $0.8 million and $2.8 million,
respectively, of costs related to the implementation of new IT
systems for Jack Wolfskin. The amount for the three and twelve
months ended December 31, 2019 also includes $3.9 million and $26.4
million, respectively, of non-recurring transaction fees and
transition costs associated with the acquisition of Jack Wolfskin
completed in January 2019, as well as other non-recurring advisory
fees.
|
(2)Amount represents a gain recorded to
write up the Company's former investment in Topgolf to its fair
value in connection with the merger.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALLAWAY GOLF COMPANY
Supplemental Financial Information and Non-GAAP
Reconciliation
(Unaudited)
(In thousands)
|
|
Three Months Ended December 31,
|
|
2021
|
|
2020
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-Cash
Amortization
of Discount
on
Convertible Notes(2)
|
|
Acquisition
& Other
Non-Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization(1)
|
|
Non-Cash
Amortization
of Discount
on
Convertible
Notes(2)
|
|
Other Non-
Recurring Items(3)
|
|
Non-
GAAP
|
Net
revenues
|
$
711,724
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
711,724
|
|
$
374,629
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
374,629
|
Total costs and
expenses
|
766,387
|
|
9,606
|
|
—
|
|
1,843
|
|
—
|
|
754,938
|
|
406,884
|
|
1,255
|
|
—
|
|
8,607
|
|
397,022
|
Loss from
operations
|
(54,663)
|
|
(9,606)
|
|
—
|
|
(1,843)
|
|
—
|
|
(43,214)
|
|
(32,255)
|
|
(1,255)
|
|
—
|
|
(8,607)
|
|
(22,393)
|
Other expense,
net
|
(41,028)
|
|
(940)
|
|
(2,728)
|
|
(306)
|
|
—
|
|
(37,054)
|
|
(15,445)
|
|
—
|
|
(2,474)
|
|
(44)
|
|
(12,927)
|
Income tax
benefit
|
(69,465)
|
|
(2,531)
|
|
(655)
|
|
(516)
|
|
(20,977)
|
|
(44,786)
|
|
(7,124)
|
|
(288)
|
|
(569)
|
|
(1,990)
|
|
(4,277)
|
Net (loss)
income
|
$
(26,226)
|
|
$
(8,015)
|
|
$
(2,073)
|
|
$
(1,633)
|
|
$
20,977
|
|
$
(35,482)
|
|
$
(40,576)
|
|
$
(967)
|
|
$
(1,905)
|
|
$
(6,661)
|
|
$
(31,043)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted (loss)
earnings per share:
|
$
(0.14)
|
|
$
(0.04)
|
|
$
(0.01)
|
|
$
(0.01)
|
|
$
0.11
|
|
$
(0.19)
|
|
$
(0.43)
|
|
$
(0.01)
|
|
$
(0.02)
|
|
$
(0.07)
|
|
$
(0.33)
|
Diluted
weighted-average shares outstanding:
|
185,971
|
|
185,971
|
|
185,971
|
|
185,971
|
|
185,971
|
|
185,971
|
|
94,185
|
|
94,185
|
|
94,185
|
|
94,185
|
|
94,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents non-cash amortization
expense of intangible assets in connection with the acquisitions of
OGIO, TravisMathew and Jack Wolfskin. 2021 also includes non-cash
amortization of Topgolf intangible assets, depreciation expense
from the fair value step-up of Topgolf property, plant and
equipment and amortization expense related to the fair value
adjustments to Topgolf leases and Topgolf debt, all recorded in
connection with the Topgolf merger.
|
(2)Represents the non-cash amortization
of the debt discount on the Company's convertible notes issued in
May 2020.
|
(3)In 2021, non-recurring costs include
transition costs associated with the Topgolf merger and costs
related to the implementation of new IT systems for Jack Wolfskin.
In 2020, non-recurring costs include costs associated with the
Company's transition to its new North America Distribution Center,
costs associated with the acquisition of Topgolf, implementation of
new IT systems for Jack Wolfskin, and severance related to the
Company's cost reduction initiatives.
|
(4)As Topgolf's losses exceed Callaway's
income in prior years, the Company has recorded a valuation
allowance against certain of its deferred tax assets until the
Company can demonstrate sustained cumulative earnings.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CALLAWAY GOLF COMPANY
Supplemental Financial Information and Non-GAAP
Reconciliation
(Unaudited)
(In thousands)
|
|
Twelve Months Ended December
31,
|
|
2021
|
|
2020
|
|
GAAP
|
|
Non-Cash
Amortization
and
Depreciation(1)
|
|
Non-Cash
Amortization
of
Discount on
Convertible Notes(2)
|
|
Acquisition
& Other
Non-Recurring
Items(3)
|
|
Tax
Valuation
Allowance(4)
|
|
Non-
GAAP
|
|
GAAP
|
|
Non-Cash
Amortization
and
Impairment
Charges(1)
|
|
Non-Cash
Amortization
of Discount
on
Convertible Notes(2)
|
|
Acquisition
& Other
Non-Recurring
Items(3)
|
|
Non-
GAAP(5)
|
Net
revenues
|
$
3,133,447
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
3,133,447
|
|
$
1,589,460
|
|
$
—
|
|
$
—
|
|
$
—
|
|
$
1,589,460
|
Total costs and
expenses
|
2,928,732
|
|
27,226
|
|
—
|
|
23,929
|
|
—
|
|
2,877,577
|
|
1,694,975
|
|
179,116
|
|
—
|
|
21,133
|
|
1,494,726
|
Income (loss) from
operations
|
204,715
|
|
(27,226)
|
|
—
|
|
(23,929)
|
|
—
|
|
255,870
|
|
(105,515)
|
|
(179,116)
|
|
—
|
|
(21,133)
|
|
94,734
|
Other
income/(expense), net
|
145,927
|
|
(3,633)
|
|
(10,524)
|
|
251,514
|
|
—
|
|
(91,430)
|
|
(21,963)
|
|
—
|
|
(6,388)
|
|
(44)
|
|
(15,531)
|
Income tax provision
(benefit)
|
28,654
|
|
(7,406)
|
|
(2,526)
|
|
(5,987)
|
|
18,006
|
|
26,567
|
|
(544)
|
|
(9,038)
|
|
(1,469)
|
|
(4,871)
|
|
14,834
|
Net income
(loss)
|
$
321,988
|
|
$
(23,453)
|
|
$
(7,998)
|
|
$
233,572
|
|
$
(18,006)
|
|
$
137,873
|
|
$
(126,934)
|
|
$
(170,078)
|
|
$
(4,919)
|
|
$
(16,306)
|
|
$
64,369
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings
(loss) per share:
|
$
1.82
|
|
$
(0.13)
|
|
$
(0.05)
|
|
$
1.32
|
|
$
(0.10)
|
|
$
0.78
|
|
$
(1.35)
|
|
$
(1.81)
|
|
$
(0.05)
|
|
$
(0.17)
|
|
$
0.67
|
Diluted
weighted-average shares outstanding:
|
176,925
|
|
176,925
|
|
176,925
|
|
176,925
|
|
176,925
|
|
176,925
|
|
94,201
|
|
94,201
|
|
94,201
|
|
94,201
|
|
96,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Represents non-cash amortization
expense of intangible assets in connection with the acquisitions of
OGIO, TravisMathew and Jack Wolfskin. 2021 also includes non-cash
amortization of Topgolf intangible assets, depreciation expense
from the fair value step-up of Topgolf property, plant and
equipment and amortization expense related to the fair value
adjustments to Topgolf leases and Topgolf debt, all recorded in
connection with the Topgolf merger. In addition, 2020 includes an
impairment charge of $174.3 million related to the write-down of
goodwill and intangible assets associated with Jack
Wolfskin.
|
(2)Represents the non-cash amortization
of the debt discount on the Company's convertible notes issued in
May 2020.
|
(3)Acquisition and other non-recurring
items in 2021 includes transaction, transition and other
non-recurring costs associated with the merger with Topgolf
completed on March 8, 2021, the recognition of a $252.5 million
gain on the Company's pre-merger investment in Topgolf, and
expenses related to the implementation of new IT systems for Jack
Wolfskin. 2020 includes costs associated with the Company's
transition to its new North America Distribution Center, costs
associated with the acquisition of Topgolf, implementation costs
related to new IT systems for Jack Wolfskin, and severance charges
associated with workforce reductions due to the COVID-19
pandemic.
|
(4)As Topgolf's losses exceed Callaway's
income in prior years, the Company has recorded a valuation
allowance against certain of its deferred tax assets until the
Company can demonstrate sustained cumulative earnings.
|
(5) Non-GAAP diluted earnings per
share for the twelve months ended December 31, 2020 and 2021 was
calculated using the diluted weighted average outstanding shares,
as earnings on a non-GAAP basis resulted in net income after giving
effect to pro forma adjustments.
|
CALLAWAY GOLF COMPANY
Non-GAAP Reconciliation and Supplemental Financial
Information
(Unaudited)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021 Trailing Twelve Month Adjusted
EBITDA
|
|
2020 Trailing Twelve Month Adjusted
EBITDA
|
|
Quarter Ended
|
|
Quarter Ended
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
|
|
|
2021
|
|
2021
|
|
2021
|
|
2021
|
|
Total
|
|
2020
|
|
2020
|
|
2020
|
|
2020
|
|
Total
|
Net income
(loss)
|
$
272,461
|
|
$
91,744
|
|
$
(15,991)
|
|
$
(26,226)
|
|
$
321,988
|
|
$
28,894
|
|
$
(167,684)
|
|
$
52,432
|
|
$
(40,576)
|
|
$
(126,934)
|
Interest expense,
net
|
17,457
|
|
28,876
|
|
28,730
|
|
40,502
|
|
115,565
|
|
9,115
|
|
12,163
|
|
12,727
|
|
12,927
|
|
46,932
|
Income tax provision
(benefit)
|
47,743
|
|
(15,853)
|
|
66,229
|
|
(69,465)
|
|
28,654
|
|
9,151
|
|
(7,931)
|
|
5,360
|
|
(7,124)
|
|
(544)
|
Depreciation and
amortization expense
|
20,272
|
|
43,270
|
|
44,377
|
|
47,903
|
|
155,822
|
|
8,997
|
|
9,360
|
|
10,311
|
|
10,840
|
|
39,508
|
JW goodwill and trade
name impairment(1)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
174,269
|
|
—
|
|
—
|
|
174,269
|
Non-cash stock
compensation and stock warrant expense, net
|
4,609
|
|
11,039
|
|
10,832
|
|
11,964
|
|
38,444
|
|
1,861
|
|
2,942
|
|
3,263
|
|
2,861
|
|
10,927
|
Non-cash lease
amortization expense
|
872
|
|
2,103
|
|
2,792
|
|
7,748
|
|
13,515
|
|
264
|
|
207
|
|
(99)
|
|
(76)
|
|
296
|
Acquisitions &
other non-recurring costs, before taxes(2)
|
(235,594)
|
|
3,274
|
|
1,875
|
|
1,843
|
|
(228,602)
|
|
1,516
|
|
5,856
|
|
4,402
|
|
8,607
|
|
20,381
|
Adjusted EBITDA
|
$
127,820
|
|
$
164,453
|
|
$
138,844
|
|
$
14,269
|
|
$
445,386
|
|
$
59,798
|
|
$
29,182
|
|
$
88,396
|
|
$
(12,541)
|
|
$
164,835
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
In 2020, amounts
include an impairment charge of $174.3 million related to Jack
Wolfskin.
|
(2)
|
In 2021, amounts
include transaction, transition and other non-recurring costs
associated with the merger with Topgolf completed on March 8, 2021,
the recognition of a $252.5 million gain to step-up the Company's
former investment in Topgolf to its fair value in connection
with the merger, and expenses related to the implementation of new
IT systems for Jack Wolfskin. In 2020, amounts include costs
associated with the Company's transition to its new North America
Distribution Center, costs associated with the acquisition of
Topgolf, and the
implementation of new IT systems for Jack Wolfskin, as well as
severance related to the Company's cost reduction
initiatives.
|
CALLAWAY GOLF
COMPANY
2021 Topgolf Non-GAAP Reconciliation and Supplemental Financial
Information
(Unaudited)
(In millions)
|
|
|
|
|
Three Months Ended
|
|
December 31, 2021
|
|
|
Segment operating
income(1):
|
$6.1
|
Depreciation and
amortization expense
|
29.0
|
Non-cash stock
compensation expense
|
4.4
|
Non-cash lease
amortization expense
|
6.4
|
|
|
Adjusted segment EBITDA
|
$45.9
|
|
|
|
|
(1)
|
The Company does not
calculate GAAP net income at the operating segment level, but has
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
Consolidated Net Revenues and Operating Segment Information
included in this release.
|
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SOURCE Callaway Golf Company