CALLAWAY GOLF COMPANY ANNOUNCES RECORD FOURTH QUARTER AND FULL YEAR 2021 RESULTS; PROVIDES INITIAL 2022 OUTLOOK

February 10, 2022 at 4:20 PM EST
Full Year Revenue Nearly Doubled to Over $3 Billion
Fourth Quarter Outperformance Driven by Strong Topgolf Same Venue Sales
Expect All Business Segments to Grow in 2022
--Full Year 2021 consolidated net revenue of $3.1 billion, +97% year-over-year; Q4 2021 consolidated net revenue increased $337 million (+90% compared to Q4 2020) to $712 million
--Full Year 2021 net income of $322 million and non-GAAP net income of $138 million; Q4 2021 GAAP net loss of $(26) million and non-GAAP net loss of $(35) million
--Full Year 2021 Adjusted EBITDA increased $281 million (+170% year-over-year) to $445 million; Q4 2021 Adjusted EBITDA increased $27 million (+214% compared to Q4 2020) to $14 million, led by $46 million in Topgolf segment Adjusted EBITDA
--Introduced full year 2022 revenue outlook of $3,780 million to $3,820 million and Adjusted EBITDA guidance of $490 million to $515 million

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.

 

Callaway Golf Company Logo. (PRNewsFoto/Callaway Golf Company) (PRNewsfoto/Callaway Golf Company)

 

 

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SOURCE Callaway Golf Company