NOONAN! TopGolf-Callaway Slices 2024 Guidance and Hits 52 Week Low
TopGolf-Callaway (MODG) reported its Q3 results that topped estimates on both EPS at $0.02 vs FactSet ($0.17) and revenues of $1.01Bn vs FactSet $981.8M. However, its outlook took a bogey as guidance came in below expectations on Q4 revenue ($885M vs FactSet $926.8M) and Q4 adjusted EBITDA ($74-$84M vs FactSet $104.7M). Additionally, the company lowered its FY24 EPS guidance to $0.08-$0.13 from its previous range of $0.11-$0.21 which also came in below consensus of $0.13.
The company’s legacy Golf Equipment business benefited from product shipment timing, while Topgolf continued to drive operational efficiencies despite a decline in same-venue sales. Looking ahead, the company is lowering its full-year 2024 revenue guidance by $30 million, due to lower-than-expected consumer activity in Q3. This is expected to impact sell-through in Q4 as well. However, the company believes this is short-term volatility rather than a new trend, as consumer activity has since improved.
Despite the sell off on the announcement which had shares reaching its 52 week low of $8.54, the company remains confident in the long-term outlook for its core markets and product categories, and is focused on managing costs, improving operational efficiency, and strengthening its financial position.
On its conference call the company highlighted that Topgolf’s same-venue sales were roughly consistent with expectations, down 11% in Q3. The performance was balanced between traffic and spend per visit. The company remains engaged on the process of separating Topgolf, evaluating both spin and sale options, with a target of mid-2025 for a potential spin-off. Additionally, Topgolf’s 3+ Bay event business saw more volatility, with a 19% decline in Q3, though there are signs of potential improvement in Q4. There is limited visibility on when Topgolf’s same-venue sales may return to positive territory, with the company not providing specific guidance for 2025 at this time.
