Callaway Golf rung up record financial results for its seasonally strong second quarter, led by Topgolf’s continued rebound from the pandemic and resilient demand from avid golfers who are shrugging off higher prices.
The Carlsbad company reported revenue of $1.12 billion, up 22 percent from the same quarter last year.
Net income reached $105.4 million, or 53 cents per share, under Generally Accepted ing Principles. That’s up 13 percent over $93 million a year earlier.
Those results beat Wall Street analysts forecasts of $1.1 billion in revenue and earnings of 42 cents per share.
Golf participation, which had been flat or declining for more than a decade, rebounded during the pandemic as players viewed the game as a safe outdoor activity during lockdowns. Rounds played increased 5.5 percent in the U.S. last year, according to research firm Golf Datatech.
Industry watchers were concerned, however, that golf would begin to lose players again as inflation squeezes discretionary spending. But so far that hasn’t happened, said Chief Executive Oliver “Chip” Brewer.
“Earlier this year there was a lot of concern about a reversion in golf consumption,” said Brewer in a conference call with investors. “Clearly halfway through the year, the data shows there has been no reversion.”
Callaway’s core club and ball business reached $452 million in revenue in the quarter, up 13 percent year-over-year. Its “Active Lifestyle” segment, which includes TravisMathew, OGIO, Jack Wolfskin and Callaway apparel and accessory brands, gained 40 percent to $260 million.
Callaway also continued to benefit from Topgolf, a trendy a driving range/sports bar mash up that it acquired in March 2021 in an all-stock deal valued at more than $3 billion.
Topgolf revenue increased 24 percent to $404 million in the quarter. Same venue sales — which excludes new locations — rose nearly 8 percent. Two new Topgolf venues opened — one in El Segundo and the other in Seattle. Eight more are expected to debut by yearend.
“Inflation has been an issue for us, as it has for most companies,” said Brewer. “But across all of our business segments, the data thus far shows we can (increase) price to largely offset it.”
The strong dollar also has pressured the company’s results by making its products more expensive in Europe, Japan and other overseas markets, which made up more than one-third of the company’s revenue last year. But Brewer noted that Callaway has managed foreign exchange headwinds before. He said the company is positioned to withstand a certain amount of economic turmoil because of its “concentration in healthy, growing business segments where consumers are both well off and ionate.”
Callaway released its results Thursday after markets closed. Its shares ended trading down 5 cents at $23.24 on the New York Stock Exchange.
