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Topgolf Callaway Brands Corp. (MODG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue of $924.4M grew 3.0% YoY and exceeded the company’s prior Q4 outlook of approximately $885M; Adjusted EBITDA of $101.4M rose 45% YoY and beat the guidance range of $74–$84M. Bold beats driven by Topgolf venue margins and Golf Equipment strength .
  • GAAP net loss of $1,512.7M was driven by a noncash impairment of $1,452.0M to Topgolf goodwill/intangibles; liquidity and operations were not impacted per CFO commentary .
  • 2025 outlook embeds significant headwinds: revenue $4.0–$4.185B and Adjusted EBITDA $415–$505M, reflecting ~$105M revenue and ~$120M EBITDA headwinds (FX, tariffs, calendar change, WGT sale, incentive comp reset), plus ~$50M separation costs and ~$15M Topgolf standalone OpEx; organic EBITDA down slightly at mid-point excluding headwinds .
  • Strategic catalyst: management continues to evaluate separation options for Topgolf (spin or sale) with progress ongoing and intent to ensure strong financial/strategic positioning at separation; venue-level profitability and free cash flow remain key positives amid same-venue sales headwinds .

What Went Well and What Went Wrong

  • What Went Well
    • Golf Equipment revenue +12.7% YoY to $224.8M; seasonal operating loss improved by $17.2M to $(2.7)M on higher volume and better gross margins; success in Ai-One Square to Square putters and Chrome family of balls highlighted .
    • Topgolf achieved record Q4 venue-level EBITDAR margins (~36%) and Q4 Adjusted EBITDA +14% YoY to ~$83–84M; same-venue sales (-8%) were slightly better than expected on improving traffic and holiday events .
    • Cash generation: operating cash flow $382.0M and Adjusted Free Cash Flow $203.1M in 2024, supported by Topgolf efficiencies, working capital improvements, and lower capex .
  • What Went Wrong
    • A noncash goodwill/intangible impairment of $1,452.0M drove GAAP loss from operations of $(1,460.8)M and GAAP net loss of $(1,512.7)M; impairment recognized due to decline in Topgolf same-venue sales in 2024 .
    • Same-venue sales at Topgolf were -8% in Q4, and Q1 2025 guidance anticipates -10% to -13% with ~5pt adverse weather impact and ~1pt fewer days; spend per visit headwinds tied to lower alcohol attach and check management .
    • 2025 headwinds: ~$(60)M Core revenue from FX, rising tariffs, calendar/reporting structure changes, sale of WGT, incentive comp reset; Topgolf standalone public company costs and other dis-synergies weigh on EBITDA .

Financial Results

Quarterly performance – sequential (oldest → newest)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$1,157.8 $1,012.9 $924.4
GAAP Diluted EPS ($USD)$0.32 $(0.02) $(8.23)
Non-GAAP Diluted EPS ($USD)$0.42 $0.02 $(0.33)
Adjusted EBITDA ($USD Millions)$205.6 $119.8 $101.4
Consensus (S&P Global)N/A (unavailable)N/A (unavailable)N/A (unavailable)

Year-over-year comparison – Q4 2023 vs Q4 2024

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$897.1 $924.4
GAAP Diluted EPS ($USD)$(0.42) $(8.23)
Non-GAAP Diluted EPS ($USD)$(0.31) $(0.33)
Adjusted EBITDA ($USD Millions)$69.8 $101.4

Segment breakdown – revenue and operating income (Q4)

SegmentNet Revenues ($USD Millions) Q4 2023Net Revenues ($USD Millions) Q4 2024YoY Change (%)
Topgolf$439.0 $439.0 — %
Golf Equipment$199.4 $224.8 12.7%
Active Lifestyle$258.7 $260.6 0.7%
Total$897.1 $924.4 3.0%
SegmentOperating Income ($USD Millions) Q4 2023Operating Income ($USD Millions) Q4 2024Margin (% of segment revenue) Q4 2023Margin (% of segment revenue) Q4 2024
Topgolf$23.1 $26.9 5.3% 6.1%
Golf Equipment$(19.9) $(2.7) (10.0%) (1.2%)
Active Lifestyle$20.2 $23.6 7.8% 9.1%
Total Segment OI$23.4 $47.8 2.6% 5.2%

KPIs

KPIQ4 2024Notes
Topgolf same-venue sales-8% Slightly better than expectations on improving traffic
Topgolf Adjusted Segment EBITDA ($USD Millions)$83.5 +14.1% YoY
Venue-level EBITDAR margin~36% (Q4 record) Full-year ~34%
Topgolf new venues opened in Q42 9 in Q4 2023
Topgolf owned & operated venues YE 2024100 +7 net, incl. one BigShots acquisition
Operating cash flow (2024) ($USD Millions)$382.0 +5% YoY
Adjusted Free Cash Flow (2024) ($USD Millions)$203.1 +27% YoY

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net RevenuesFY 2024$4.20B–$4.26B Approx. $4.20B Lowered
Consolidated Adjusted EBITDAFY 2024$620M–$640M $560M–$570M Lowered
Topgolf Adjusted EBITDAFY 2024Approx. $310M Approx. $315M Raised
Non-GAAP Diluted EPSFY 2024$0.31–$0.39 $0.08–$0.13 Lowered
Consolidated Net RevenuesFY 2025N/A$4.0B–$4.185B New
Consolidated Adjusted EBITDAFY 2025N/A$415M–$505M New
Core Business RevenueFY 2025N/A$2.275B–$2.35B New
Topgolf RevenueFY 2025N/A$1.725B–$1.835B New
Topgolf Adjusted EBITDAFY 2025N/A$240M–$300M New
Topgolf Same-venue SalesFY 2025N/ADown mid-single digits New
Consolidated Net RevenuesQ1 2025N/A$1.045B–$1.085B New
Consolidated Adjusted EBITDAQ1 2025N/A$125M–$145M New
One-time separation costsFY 2025N/A~$50M expected New
Topgolf standalone public company costsFY 2025N/A~$15M incremental OpEx New
Headwinds vs 2024 (Revenue/EBITDA)FY 2025N/A~$105M revenue / ~$120M EBITDA headwinds New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current PeriodTrend
Same-venue salesQ2: Topgolf SSS -8%, below expectations amid macro; Q3: SSS -11%, roughly consistent with expectations Q4: SSS -8% and slightly better than expected; Q1 guide -10% to -13% with ~5pt weather impact and ~1pt fewer days Sequential improvement but still negative; weather and macro pressure persist; initiatives underway
Value/promotions & player experienceQ2/Q3: Not a major call focusQ4: Booking fees removed system-wide; $30/hr TG Nights (Thu–Sat) & Sunday Funday; improved “likelihood to return,” fun and value scores (+100–240 bps) Accelerating value offers and engagement; leading indicators improving
FX/tariffs/macroQ2: FX headwinds; lowered FY guidance; Q3: ongoing macro softness; FY guide maintained/adjusted 2025 headwinds in Core (~$60M FX, tariffs, incentive comp reset); Topgolf calendar/WGT sale effects Headwinds intensify in 2025; organic EBITDA down slightly at mid-point
Product performance (clubs/balls/putters)Q2: Maintained #1 model share in woods/irons; Chrome Tour gains Q3: Maintained #1 U.S. club share; record U.S. ball share Q4: Ai-One Square to Square putters sold through strongly; Elite product line launch; Chrome Tour TD variant
Regional trends (Active Lifestyle)Q2: Europe/Asia declines; Jack Wolfskin rightsizing Q3: Europe down; liquidity improved Q4: Europe wholesale at Jack Wolfskin down; China strong; TravisMathew momentum
Topgolf separationQ2: Strategic review incl. potential spin; advisors engaged Q3: Separation believed to create shareholder value; fully engaged Q4: Evaluating spin/possible sale; ~$50M separation costs; intent to delever via retained stake

Management Commentary

  • “We are pleased with our strong finish to the year with fourth quarter revenue, adjusted EBITDA and adjusted free cash flow exceeding expectations… Looking forward to 2025, improving same venue sales at Topgolf is a top priority for us… we are confident we will work through these short-term headwinds and return to growth” — Chip Brewer, President & CEO .
  • “On a consolidated basis for 2025, we're guiding towards the midpoint of approximately $460 million in EBITDA, and we once again expect to be free cash flow positive… we are productively working towards the separation of Topgolf, evaluating both the spin… and a potential sale” — Chip Brewer .
  • “We tested removing booking fees… drove higher website conversion. We removed booking fees system-wide in January… TG Nights ($30 per hour) and Sunday Funday… traffic gains have exceeded our expectations… larger group sizes and strong F&B spend per visit” — Artie Starrs, CEO of Topgolf .
  • “Our GAAP results were impacted by the $1.45 billion noncash accounting charge… purchase price recorded at $3.1 billion… remaining carrying value… $1.6 billion. Importantly, this noncash charge does not impact our liquidity or operational flexibility” — Brian Lynch, CFO & Chief Legal Officer .

Q&A Highlights

  • Neutral-weather same-venue trends: neutral markets running down low to mid-single digits; easier laps expected; conviction in base guide with improving player metrics and targeted value .
  • Events vs walk-in: corporate events benefited from local flexibility and scaling learnings; 2025 expectation for walk-in to be slightly better than events; holiday events remain strong .
  • Core business outlook: FX (~$60M) is the primary driver of core revenue decline; competitive launch cadence and fewer H2 launches also weigh on Golf Equipment; deliberate Jack Wolfskin rightsizing .
  • Leverage post-separation: intent to use retained stake to delever; Board committed to ensuring strong financial/strategic positions for both businesses at separation .
  • Topgolf free cash flow guidance: management did not provide specific Topgolf FCF guidance, but reiterated total company and Topgolf expected FCF positivity in 2025 .

Estimates Context

  • S&P Global consensus estimates (EPS and revenue) for MODG Q4 2024 were unavailable due to a provider rate-limit error at retrieval time; as a result, comparisons vs Street consensus cannot be shown. We benchmarked against company guidance instead.
  • Relative to company outlook, Q4 revenue of $924.4M and Adjusted EBITDA of $101.4M were above the prior Q4 guidance of approximately $885M and $74–$84M, respectively, suggesting potential upward bias to near-term estimate revisions for segment profitability despite ongoing macro/FX headwinds .

Key Takeaways for Investors

  • Strong operational performance into year-end: revenue and Adjusted EBITDA exceeded Q4 guidance, with Topgolf venue-level margins at record Q4 levels and Golf Equipment momentum in clubs/balls/putters supporting the beat .
  • The GAAP loss is optics-heavy but noncash: the $1.452B impairment drove reported losses; liquidity and operating flexibility remain intact per CFO, limiting fundamental impact .
  • 2025 will be a reset year: management framed meaningful FX/tariff/calendar/separation-related headwinds ($105M revenue/$120M EBITDA) but expects FCF positivity and slight organic EBITDA decline at the mid-point excluding headwinds .
  • Same-venue sales improvement is the #1 operational focus: early signs from pricing/value and experience initiatives (booking fee removal; $30 TG Nights; Sunday Funday; POS/menu improvements) show encouraging traffic/F&B trends in model markets .
  • Separation remains the strategic catalyst: options (spin or sale) are active; expect separation costs and standalone OpEx. Management intends to use a retained stake to delever, potentially enhancing Core’s post-separation profile .
  • Cash flow profile improved: 2024 operating cash flow of $382M and Adjusted Free Cash Flow of $203M strengthen flexibility heading into 2025 headwinds .
  • Segment watch: monitor Topgolf same-venue trajectory and Core FX/tariff dynamics; Golf Equipment faces competitive launch intensity in 2025 but maintains strong brand share and product pipeline .

Additional Source Documents Reviewed (for trend and context)

  • Q3 2024 press release: results above expectations; FY 2024 guidance updated; Topgolf EBITDA guidance raised; liquidity improved .
  • Q2 2024 press release: strategic review of Topgolf announced; FY guidance lowered; Topgolf revenue growth from new venues; Golf Equipment share leadership .
  • Q4 relevant press releases: Sonic game launch to drive engagement; venue openings (Ridgeland MS; Burlingame CA) consistent with development pipeline .