CALY

Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge. Callaway Golf stock has gained 67.0% over the past year, yet the valuation signals are pulling in different directions as the Discounted Cash Flow (DCF) intrinsic value estimate points to upside while market based multiples lean expensive. Callaway Golf’s 67.0% one year return puts the focus squarely on whether recent optimism has already been reflected in the share price. Expectations for cash flow growth can support the DCF based view of upside, while any pressure on profitability or balance sheet flexibility may weigh on how much investors are willing to pay. On Simply Wall St’s broader checks, Callaway Golf screens as a mixed picture rather than a clear bargain or clear overvaluation, with 3 of 6 valuation tests pointing to value. The issue now is whether Callaway Golf’s current price already reflects its intrinsic value or still leaves a meaningful margin of safety for long term investors. Callaway Golf delivered 67.0% returns over the last year. See how this stacks up to the rest of the Leisure industry. The Discounted Cash Flow (DCF) model estimates what Callaway Golf might be worth today based on its projected future free cash flows. For the latest twelve months, the company generated free cash flow of about $280.3 million. The model assumes that cash flows are growing from here rather than shrinking, with a 2 Stage Free Cash Flow to Equity approach used to capture an initial adjustment period followed by steadier conditions. On these assumptions, the DCF model points to an intrinsic value of about $27 per share. Against the current share price, this implies an intrinsic discount of 38.1%, indicating that the model’s output is higher than the market price based on Callaway Golf’s projected cash flows. Investors should still judge whether the growth profile behind those projections feels reasonable, since the valuation depends on cash flow holding up over time. Overall, the DCF workup indicates that, under its assumptions, Callaway Golf stock appears undervalued relative to today’s price. Our Discounted Cash Flow (DCF) analysis suggests Callaway Golf is undervalued by 38.1%. Track this in your watchlist or portfolio, or discover 51 more high quality undervalued stocks. Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Callaway Golf. The P/E ratio is a useful way to see what investors are currently paying for each dollar of Callaway Golf earnings. For Callaway Golf, this lens helps you compare today’s share price directly to its profit base. Callaway Golf currently trades on a P/E of about 36.5x. That sits well above the wider Leisure industry average of 18.7x and also above the peer group average of 23.5x. A tailored fair P/E for Callaway Golf, which blends its industry, size, risk profile and analyst expectations, comes out closer to 28.3x. The gap between 36.5x and this fair ratio indicates that investors are already paying a premium for the stock’s earnings. When you set this richer P/E against both sector benchmarks and the modelled fair multiple, Callaway Golf does not screen as a bargain on earnings. On the P/E multiple, Callaway Golf stock currently appears overvalued relative to what the model suggests would be a more grounded earnings-based price. See what the numbers say about this price — find out in our valuation breakdown. Simply Wall St Narratives for Callaway Golf pick up where this valuation puzzle leaves off and spell out what would need to happen to Callaway Golf’s growth, margins and earnings for the stock to be worth materially more or less than today’s price, all in one place on the Community page. Each narrative ties a fair value to a particular mix of potential catalysts and risks, so you can track which storyline appears to be unfolding over time. Community views on Callaway Golf sit far apart, with one camp focused on execution upside and the other fixated on structural risks. Bull case: 20% undervalued Read the full Bull Case to see why Callaway Golf could be undervalued Bear case: 65% overvalued Read the full Bear Case to see why Callaway Golf could be overvalued Do you think there's more to the story for Callaway Golf? Head over to our Community to see what others are saying! For Callaway Golf, the Discounted Cash Flow (DCF) work suggests meaningful upside based on projected cash flows, while the richer P/E multiple argues the stock is already priced at a premium to peers. That split reflects a clash between what the cash generation could support over time and what investors are currently willing to pay for earnings. Broader checks sit in the middle. The key issue now is whether Callaway Golf can deliver the growth and margin profile that turns the current valuation gap into genuine value rather than a value trap. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include CALY. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Callaway Golf Company’s second quarter results reflected the benefits of its transformation into a focused golf equipment and apparel business. Management credited both healthy consumer demand and targeted operational decisions for the quarter’s performance, with CEO Chip Brewer highlighting strong product acceptance in the equipment segment—particularly in golf balls—and meaningful gross margin improvement. Brewer explained, “Our Q2 golf ball revenue was up 15% as the Chrome Tour family and Super Soft franchises continued to resonate with consumers.” The company also pointed to disciplined execution and cost control as key to its operating leverage. Is now the time to buy CALY? Find out in our full research report (it’s free). Revenue: $612.2 million vs analyst estimates of $604.3 million (2% year-on-year growth, 1.3% beat) Adjusted EPS: $0.39 vs analyst estimates of $0.35 (10% beat) Adjusted EBITDA: $124.9 million vs analyst estimates of $105.2 million (20.4% margin, 18.7% beat) The company slightly lifted its revenue guidance for the full year to $2.06 billion at the midpoint from $2.04 billion EBITDA guidance for the full year is $253 million at the midpoint, above analyst estimates of $229.5 million Operating Margin: 18.8%, up from 12.4% in the same quarter last year Market Capitalization: $3.04 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Simeon Gutman (Morgan Stanley) asked about the decision to lengthen product life cycles and its industry implications. CEO Chip Brewer explained that fewer launches are aimed at increasing profitability and that similar moves by competitors could benefit the market overall. Matthew Boss (JPMorgan Securities) questioned the drivers behind second-quarter revenue growth and the rationale for the guidance update. Brewer attributed performance to resilient golf demand and strong consumer engagement, especially in equipment, while CFO Brian Lynch detailed the bridge to higher EBITDA guidance. Jonathan Keypour (Goldman Sachs) inquired about the softer fourth-quarter sales outlook. Brewer clarified that the shift is due to launch timing rather than a change in underlying business trends, with no major deviation in expectations for the year. Anna Glaessgen (B. Riley Securities) asked if there were any one-time drivers behind the golf ball revenue surge. Brewer confirmed that growth was fundamental and not driven by any unusual factors, highlighting ongoing strength from product investments. Noah Zatzkin (KeyBanc Capital Markets) sought clarification on the structural gross margin improvement opportunity. Lynch responded that margins are approaching historical highs, but future gains will depend on factors like FX rates and tariffs. In the coming quarters, the StockStory team will monitor (1) progress on gross margin improvements and the impact of cost savings initiatives, (2) the performance of new product launches—particularly the mini spinner fairway woods and TravisMathew’s women’s collection, and (3) the execution of store closures and SKU rationalization in the apparel segment. We will also track how ongoing tariff and commodity cost dynamics influence profitability. Callaway Golf Company currently trades at $17.06, down from $19.57 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Tuesday, Aug. 4, 2026 at 5 p.m. ET President and Chief Executive Officer - Oliver Brewer Chief Financial Officer and Chief Legal Officer - Brian Lynch Senior Vice President of Investor Relations and Treasurer - Patrick Burke Operator: Good day, and welcome to the Callaway Golf Company Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Patrick Burke, Senior Vice President of Investor Relations and Treasurer. Please go ahead. Patrick Burke: Good afternoon, and welcome to Callaway Golf Company's Second Quarter Earnings Conference Call. I'm Patrick Burke, Senior Vice President of Investor Relations and Treasury. Joining me on today's call are Chip Brewer, our President and Chief Executive Officer; and Brian Lynch, our Chief Financial Officer and Chief Legal Officer. Earlier today, the company issued a press release announcing its second quarter 2026 financial results. Our earnings presentation as well as the earnings press release are both available on our Investor Relations website under the Financial Results tab. Aside from revenue, the financial numbers reported and discussed on today's call are non-GAAP measures. We identify these non-GAAP measures in the presentation and reconcile the measures to the corresponding GAAP measures in accordance with Regulation G. Please note that this call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. Please review the safe harbor statements contained in the presentation and the press release for a more complete description. With that, I would like to turn the call over to Chip. Oliver Brewer: Thank you, Patrick. Good afternoon, everyone, and thank you for joining our call today. I'm pleased to report that our company delivered a strong second quarter and a very solid first half. These results show that we are building momentum as a focused pure-play golf company, and our performance reflects healthy market conditions, strong product acceptance, meaningful gross margin improvement and disciplined execution across the business. I want to thank our teams for their continued focus and contributions. These teams are executing well in a dynamic environment and managing the business with the right balance of confidence, agility and discipline. I'd also like to remind everyone of the significant transformation our company has accomplished over the last year. In late May of last year, we completed the sale of Jack Wolfskin. And then in January of this year, we completed the sale of a 60% interest in Topgolf. Since the beginning of this year, we announced a new $200 million share repurchase program and then repurchased approximately $42 million worth of our stock in both Q1 and Q2. We also paid off in full our $1.2 billion of term loan debt and our $258 million of convertible notes. These moves returned us to a cash-generating pure-play golf company with a terrific balance sheet and a clear capital allocation strategy aimed at steadily returning capital to shareholders. We are now only six months into this renewed journey as a pure play, but we're showing clear progress strengthening the business and delivering against our stated financial and capital allocation goals. And based on the strengths of our business and our history of performance in this space, this is a journey that we are confident in going forward. Turning to our results. Q2 revenue was $612 million, up 2% year-over-year, and adjusted EBITDA was $125 million, up 36% versus the prior year. Both of these results were ahead of expectations as we exceeded the midpoint of our Q2 guidance by approximately $15 million in revenue and $22 million in adjusted EBITDA. The revenue upside was driven by healthy market conditions as well as continued strength in the equipment segment, especially in golf balls. The adjusted EBITDA upside reflected the flow-through from the revenue beat as well as continued progress on our gross margin initiatives. For the first half, revenue increased 6% and adjusted EBITDA increased 33%, highlighting the operating leverage and execution benefits of our more focused golf platform. We believe this performance was better than the broader market across both the Callaway and Travis Mathew brands. Gross margin expanded 460 basis points in Q2 and 360 basis points in the first half. This reflects continued progress against our margin initiatives and the benefits of portfolio actions designed to improve the long-term quality of our revenue and earnings. This gross margin improvement is a step in the right direction and a testament to the cost management and margin improvement projects that we have been focused on over the last year and that will continue to be a focus for us going forward. Turning to market conditions. Healthy golf participation and sell-through data continues to be supported by a committed and enthusiastic player base. Consumer interest in the game and overall participation trends remain positive, just as they have been for several years now. In the U.S., rounds played through Q2 are up approximately 4% year-to-date. Similarly, we estimate that golf equipment sell-through at key accounts was up low to mid-single digits for both the quarter and year-to-date. In the U.K. and Europe, we estimate that our trade partner sell-through is up low to mid-single digits year-to-date, but that the rounds played are down simply due to unfavorable weather year-over-year. In Japan, the market was up low to mid-single digits in Q2 and is now up slightly for the full year, while market conditions in Korea remained down approximately 10%. Using this data as a backdrop, for the year-to-date, we appear to have grown our golf equipment revenue faster than the market in all major regions. And as you step back and think more deeply about this data, in the face of dynamic global macroeconomic and political conditions, low consumer confidence readings, increased gas prices, increased golf equipment pricing and the World Cup, one can't help but be impressed by the resilience of the golf consumer. Now turning to look at our business by segment. In Golf Equipment, the portfolio continues to show strength across several important categories. In golf ball, the Chrome Tour family and Super Soft franchises continue to resonate with consumers, and our share progress continues to validate the investments we've made in product performance, manufacturing capabilities and green grass distribution. Our Q2 golf ball revenue was up 15% with our first half up 8%, even with intentionally reducing volume via the elimination of low-margin SKUs to support improved efficiency. Our June 2026 U.S. market share established another record high for us, up 250 basis points year-over-year to just over 23% overall and with Oncore share just over 24%. In clubs, the Quantum family of woods and irons has continued to receive positive market feedback. The Quantum driver with Tri force technology demonstrates the strength of our product engine and its performance has been encouraging. In the U.S., both our year-to-date driver and total wood share is approximately 25% of 110 basis points and 120 basis points, respectively. Within the woods category, high-lofted fairways have been a particularly strong area for the industry overall and for Callaway. Building on this and leveraging our tradition of innovation, last Friday, we announced the addition of a new approach to high-lofted fairways we call mini spinners, available on 7, 9 and 11 wood. These clubs are easier to hit and for many consumers, a more effective approach to high-lofted fairways. They will be shipping to retail later this month, and we anticipate a positive reaction. In the putter segment, MyGolfspa recently named the Odyssey AI Dual Square to Square #7, the best overall Zero Torque putter of 2026 as well as the best Zero Torque putter for long puts. Recognition like this is another proof point of our ability to develop and bring differentiated technology to market. Turning to the Apparel and Gear segment. The Callaway brand performed roughly in line with expectations, while TravisMathew maintained its strong start to the year and performed slightly ahead of expectations. At TravisMathew, consumer response to the women's offering remains positive, and the brand continues to gain ground in the important men's golf category, supported by clearer product pillars, more focused marketing and exciting new products. We are in the early innings of this men's product merchandising strategy shift. But based on the consumer reaction thus far, I'm optimistic regarding its potential. Accordingly, in the first half of this year, the TravisMathew business grew in its direct-to-consumer business and also had strong performance with key wholesale partners. One additional area that we are at liberty to discuss now is the planned closure of 4 TravisMathew stores that were not hitting our financial targets. These stores will close in Q4 of this year, and the financial charges for these closures was included in our Q2 financials. This will leave us with a stronger and more profitable retail fleet of 61 stores going into 2027. Similar to our previously mentioned SKU rationalization across both the Callaway and TravisMathew brands, this is another strong example of us making disciplined long-term decisions as we refocus on our core business. Turning to tariffs. These continue to be a dynamic area, but have been a tailwind for us relative to our expectations going into the year. We have also recently begun receiving refunds for the IEPA tariffs with more expected in the future. Brian will add more color on actual and forecast tariffs in his section. It is worth calling out, though, to protect inter-year comparability and to provide what we believe is a cleaner look at our performance, we made the decision to back out the AEPA refunds from our non-GAAP numbers and forecasts. Now moving to our forward guidance. Given the strength of our first half performance and the continued resilience we are seeing in the golf market, we are increasing our full year revenue forecast by $15 million at the midpoint. This increase reflects the $15 million Q2 outperformance and a $5 million organic increase in our second half outlook, partially offset by a $5 million negative adjustment due to updated FX rates. On the bottom line, we are increasing the midpoint of our full year EBITDA guidance by $31 million. This represents a Q2 beat, improved second half tariff estimates based on the new 301 tariff rates, the flow-through from the increase in second half organic revenue and modestly better gross margin expectations. As you look at our financial results and expectations, I think it's clear that we are anticipating a good year and that the core business is strengthening. The first half speaks for itself with results that we believe outperform the market and show that our profitability initiatives are working. For the second half, it's worth reminding everyone that, as mentioned on our previous two calls, we are expecting our revenues and profit in the second half of the year to be impacted by strategic initiatives designed to enhance long-term profitability. This includes extending product life cycles in our iron business by pushing a significant launch out of this year into next, rationalizing lower-margin portions of our business and increasing our investment in fitting. While these actions will negatively impact the back half of this year, they represent a deliberate, disciplined approach to driving sustainable margin expansion, revenue growth and stronger free cash flow over time. In closing, we are encouraged by the fact that the game of golf remains healthy. Our brands and products are resonating well with both consumers and retail partners, thus allowing us to grow faster than the market for the first 6 months of the year and our profitability initiatives are bearing fruit. And perhaps more importantly, as we are now 6 months into our return to being a focused pure-play golf company, we are both enjoying and benefiting from the added focus that our new structure provides. This gives us increased confidence that we will be able to further strengthen our business going forward, and we're energized by these prospects. With that, I'll turn the call over to Brian to review our financial results in more detail. Brian Lynch: Thank you, Chip, and good afternoon, everyone. We are pleased with our second quarter results and encouraged by the progress we have made on our transformation back to a pure-play golf company. In the first 6 months of this year, we have significantly improved the profitability of our business, fortified our capital structure and started returning capital to shareholders. While there is more work to be done, we are energized by the progress to date and excited by what lies ahead. Now let's turn to our financial results in more detail. Please note that on today's call, I will be discussing our non-GAAP financial results from continuing operations unless otherwise noted. We have provided in our earnings release today a reconciliation of these non-GAAP results to the GAAP results, and we provided additional information about the discontinued operations. With that said, second quarter consolidated net sales increased 2% year-over-year to $612 million. This performance reflected a 4% increase in Golf Equipment net sales, driven by strength across both clubs and balls. Golf Goods net sales decreased 4%, primarily due to the timing of shipments between Q1 and Q2 and FX headwinds in Asia, while TravisMathew grew slightly in the quarter. Q2 gross margin increased 460 basis points to 48.5%, driven primarily by continued progress on our gross margin initiatives, including select price increases, cost reductions and rationalizing select lower-margin business. with tariffs providing a slight positive impact to the year-over-year increase. Excluding the tariff benefit, Q2 gross margin increased 440 basis points year-over-year. The improvement was broad-based with gross margin expansion in both the Golf Equipment and Soft Goods segments. Q2 operating expenses increased approximately $1 million or less than 1% as cost of living increases and inflationary pressures in the Golf Equipment and Soft Goods segments were largely offset by a $4 million or 13% decrease in corporate overhead expenses, primarily due to the company's strategic transformation and related cost savings initiatives. Adjusted EBITDA of $125 million increased 36% year-over-year. This improvement was driven primarily by higher net sales, improved gross margins and corporate cost savings with tariffs providing a slight incremental benefit in the quarter. Moving to liquidity. We ended the quarter in a net cash position. As of June 30, 2026, we had $74 million of outstanding debt, including $23 million of finance leases and $278 million of cash and cash equivalents. Total available liquidity, which consists of cash on hand and availability under our credit facilities, was $775 million at the end of the second quarter of 2026 compared to $1.16 billion at the same time last year, a decrease of $387 million, which is primarily due to cash used for our debt paydown of $1.4 billion in the first half of 2026. During the quarter, our $258 million of convertible notes matured on May 1, and we settled the notes in cash. Additionally, on May 29, we paid in full the remaining $163 million outstanding under our Term Loan B facility. We also continued to return cash to shareholders and have now repurchased 5.9 million shares through June for a total cost of approximately $84 million. Broken down by quarter, we repurchased approximately $42 million of stock in the first quarter and approximately $42 million in the second quarter. As of June 30, 2026, we had approximately $120 million of repurchase authority remaining under our current program. Looking ahead, Callaway Golf's capital allocation priorities remain unchanged as we focus on: one, reinvesting in our business; two, maintaining a healthy balance sheet; and three, returning capital to shareholders through the $200 million stock repurchase program authorized earlier this year. As we continue to generate free cash flow in excess of our business needs, we will work with our Board to balance cash needed to reinvest in the business and returning capital to shareholders. We still expect to end the year in a net cash leverage position. With regard to future share repurchases, no decisions on the magnitude or timing of repurchases have been made at this point. However, based on our expected continued performance and subject to market conditions and buying opportunities from time to time, we plan to continue to steadily return capital to shareholders at some level while maintaining a strong balance sheet. And to be clear, the purpose of the share repurchases is not only to reduce dilution from equity awards, but also to reduce share count meaningfully over time. Next, I want to give a quick update on tariffs following the expiration on July 24 of the temporary 10% global minimum tariffs under Section 122 of the Trade Act of 1974 and the implementation of new Section 301 forced labor tariffs, which took effect the following day and range between 10% and 12.5%, depending on the country. The tariff situation remains dynamic, and there is some speculation additional tariffs under Section 301 or otherwise will be forthcoming. Since we don't actually know if such additional tariffs will be implemented or when or in what amount, our guidance today incorporates only the forced labor tariffs under Section 301 that began on July 25. We had previously assumed tariffs would increase to 20% once the temporary tariffs expired, so the recently announced Section 301 tariffs are upside versus our previous guidance. We now expect that the full year gross tariff expense for 2026 will be approximately $43 million, a net improvement of approximately $7 million compared to our prior guidance. The full year gross tariff expense in 2025 was $34 million. We continue to believe that we have the opportunity to obtain refunds for tariffs paid up to just under $50 million in the aggregate over the course of the refund program. We have applied for both Phase 1 and Phase 2 refunds, representing approximately $11 million and $32 million, respectively, and have received all of the Phase 1 refunds to date and almost $7 million of the Phase 2 refunds. We expect to receive the balance of the Phase 2 refunds in the second half of this year. There also should be another almost $7 million to apply for in Phase 3, which brings our refund potential to approximately $50 million, consistent with what we discussed last quarter. One final point for the sake of clarity. On a GAAP basis, we recognized $10.8 million in Q2 for the tariff refunds. We excluded those refunds from our non-GAAP results to give a clearer picture of period-over-period results. The almost $7 million of Phase 2 refunds we received were recognized in Q3. We will continue to account for additional refunds as we receive them, and we will continue to exclude the refunds from our non-GAAP results. The cost pressures we discussed last quarter from broader geopolitical activity continue. As a reminder, these include increases in certain commodities and strategic metals such as tungsten, which have increased multiples over 2025 costs. In addition, conflict in the Middle East has led to increased petrochemical-based cost pressures, including increased energy costs for us and our suppliers and increased petrochemical-based raw material costs, primarily those used in golf balls. These cost pressures are included in the guidance we provided today. Now turning to our full year and third quarter 2026 outlook. Given our strong first half results and general health of the golf market, we now expect full year 2026 net sales of $2.045 billion to $2.070 billion, an increase of approximately $15 million at the midpoint. The increase reflects the flow-through of our Q2 net sales beat as well as an additional $5 million organic raise in the second half of the year, partially offset by approximately $5 million of additional foreign exchange risk. As a reminder, our net sales in the second half of this year will be impacted by fewer new product launches compared to 2025 as well as the continued rationalization of select lower-margin business. We continue to believe these actions will strengthen our business and support higher overall margins over the long term. With regard to EBITDA, we are increasing our adjusted EBITDA expectations to $246 million to $260 million, an increase of $31 million at the midpoint of guidance. This increase represents the following: $21 million of the increase is related to the flow-through of the non-tariff Q2 EBITDA exceed, plus an additional $3 million from the flow-through of our improved net sales outlook and a slightly improved gross margin outlook, plus an additional $7 million from the revised tariff estimates I discussed earlier. As a reminder, lower dividend income will be an approximate $12 million year-over-year headwind to adjusted EBITDA in the second half. This is due to the excess cash we held in the back half of last year generated from the business and the sale of Jack Wolfskin, which we subsequently used along with proceeds from the Topgolf sale to pay down $1.4 billion of debt in the first half of this year. While this reduces EBITDA versus last year, it is a net benefit to free cash flow given the higher cost of debt relative to the yield we are earning on cash. Turning to cash flow and margins. We expect 2026 capital expenditures of approximately $40 million. While we are not providing specific free cash flow guidance, we do expect the increase in our adjusted EBITDA to generally flow through to additional cash flow. For gross margin, a reminder that due to the seasonality of our business, gross margins are meaningfully lower in the second half compared to the first half. In addition, while we continue to expect improvement year-over-year, we anticipate second half gross margins to increase less than the first half due to the lower volumes related to the change in launch cadence we mentioned earlier. And lastly, remember that our cost savings initiatives began in the second half of 2025, which will affect year-over-year second half comparisons. As a result, while we expect corporate overhead expenses to decrease for the full year, second half corporate overhead expenses will likely increase compared to last year due to cost of living and other inflationary pressures. Now turning to Q3 guidance. For Q3, we are forecasting net sales of $415 million to $435 million and adjusted EBITDA of $10 million to $20 million. The year-over-year increase in revenue primarily reflects the change in launch cadence, tougher second half comparisons following 8% U.S. sell-through growth last year and FX headwinds. The year-over-year decrease in adjusted EBITDA is primarily driven by the flow-through of our lower revenue, lower dividend income and cost of living increases, partially offset by continued gross margin improvement and more favorable tariffs. Over the past year, we have greatly simplified our business and strategy. We have sold our Jack Wolfskin business and 60% of our Topgolf business. We have returned to a pure-play golf company and significantly improved our profitability. We have also significantly improved our capital structure, having paid down $1.4 billion in debt and eliminated recourse to Callaway for the Topgolf debt, resulting in a net cash position. And our shareholder value creation strategy is straightforward. That is grow revenue over time faster than the golf market, continue to improve the profitability of our business, generate cash and return capital to shareholders. We are excited by our progress over the last 6 months and look forward to creating additional shareholder value by continuing to execute upon this strategy. With that said, I will turn the call back over to the operator for Q&A. Operator: [Operator Instructions] And our first question today will come from Simeon Gutman with Morgan Stanley. Simeon Gutman: Nice quarter. I wanted to ask about the industry and competitive launch calendar. You're making some changes this year in the back half and into next year. And it sounds like a couple of competitors are as well. And it feels like they're healthy for the industry, so maybe less new introductions or on a more staggered schedule. Can you talk about your outlook for that? And is that in response to industry pushing up against any inflationary limitations or maybe just too much innovation at once and trying to make it easier on the consumer? Oliver Brewer: Simeon, thank you. This is Chip. We certainly have taken a look at our launch cadence over the last several years and made the decision to lengthen some of our product life cycles. And this is all in response to our desire to continue to increase the profitability of our business. So we believe that in certain instances, when we can lengthen the product life cycles, we can increase the overall profitability of that product through the life cycle. It's certainly a balancing act there, Simeon, because the market also does respond well to new innovation and new launches and the energy that comes with those. But longer life cycles as we are executing in the iron category, we think is the right thing for our business and will be positive for the market. And you are correct. There are others that are making similar decisions out there, which I do believe will be a positive for the market in the long run. Simeon Gutman: Okay. And then the follow-up, the third quarter outlook, even taking into account the adjustments you've made to your calendar, did that change at all vis-a-vis the last quarter or so? Or is the outlook almost identical or if not better than what you were thinking about before? Oliver Brewer: We raised the organic outlook about $5 million in revenue for the second half of the year. Operator: The next question will come from Matthew Boss with JPMorgan Securities. Matthew Boss: So Chip, on the resilience of the golf industry, can you speak to underlying revenue growth that you saw in the second quarter outside of strategic actions or any timing shifts? And then to that point on the back half and the raise, could you just walk through the drivers of the constant currency revenue guidance raise that you just cited? Oliver Brewer: Sure. So first half, Matt, we saw the market in general up low to mid-single digits. We saw rounds play up approximately 4%, and that really extended through the first half and Q2. We were really pleased with that because the market is up nicely in what could have been a challenging time. and that's consistent with what we've historically seen from the golf consumer. They're not sensitive to mild economic disturbances or even mild recessions and the long-term tailwinds that we see in golf seem to be clearly intact. As we look into the second half of our year, obviously, we're heavily impacted by the change in our launch quantity and over -- on a year-over-year basis, and that accounts for most of the change in the year-over-year revenue. There's a little bit of noise around FX. There's a little bit of organic growth uptick that we put into this forecast vis-a-vis our previous one. But it's worth reminding everybody that last year, the market was up considerably during the second half. So it had -- it was a second half-driven year. and the market was up roughly 8% in the second half of last year. So we're also dealing with tougher comps in the second half of the year. We expect the year to be a good one. We expect the second half comps for the market to be positive on a 2-year stack basis, but a little bit slower potentially than we saw in the first half. Matthew Boss: Great. And then, Brian, maybe just a follow-up. Could you speak to the drivers of gross margin expansion in the second quarter and how best to think about puts and takes between pricing and mix in the back half of the year? Brian Lynch: Sure, Matt. We are very pleased with our gross margin initiatives this year. I won't speak for Chip, but we've made improvements a little faster than I was expecting with 460 basis point improvement in Q2 and 360 basis points for the full year. We still expect gross margin to be up meaningfully year-over-year, but the rate of improvement will slow down in the second half versus the first. And that's really related to what Chip just talked about with fewer new product launches, which typically have higher margins and then also some due to seasonality and less volumes in the second half, so less for overhead absorption. And then really, one of the main things was that the market was better than we expected and the consumer hung in better than we expected. So that does provide some sales leverage and allowed us to be a little less promotional. Operator: The next question will come from John Keypour with Goldman Sachs. Jonathan Keypour: Very nice quarter. Just wondering... I guess the 4Q sales guide was a little bit softer than I think we were expecting. I mean I get that 3Q looked better. So there's some phasing issues. I'm just wondering if we could go over the -- what shapes that phasing exactly and why that kind of shift from what was perceived before? Oliver Brewer: Yes. We hadn't provided any quarterly forecast for the second half previously. So what you're seeing in our current guide where we start to provide it by quarter is just the impact of the launch timing on a year-over-year basis. So nothing meaningfully forecast different between the various quarters other than the timing of launches year-over-year. And obviously, we believe we're on track for a positive year. Jonathan Keypour: Got it. And then lastly, just on the full year guide, the high end of the sales range wasn't raised. I'm just wondering, I guess, what conservatism is being baked into that number, that high-end number? And what would you need to see to kind of push that a bit higher? Brian Lynch: Well, it was, in a sense, raised by $5 million. So we gave you the full second quarter beat, and then we took it up 5% organically. It was just that the FX rates offset that $5 million increase, but the underlying business on a currency-neutral basis did go up by $5 million. Operator: The next question will come from Anna Glaessgen with B. Riley Securities. Anna Glaessgen: First, I wanted to ask on golf ball, a nice 15% growth in the quarter. Was there anything like onetime in there? I'm just trying to understand drivers behind that growth? Oliver Brewer: Anna, yes, we had a terrific quarter in golf ball and a terrific first half. So first half being up 8%. A little bit of timing between quarters just in terms of when we normally ship green grass and -- but nothing onetime in any of the results, all just fundamental improvement. We've made great investments in the ball business over the last several years, green grass distribution, product manufacturing capabilities, and we're seeing the results of those. Anna Glaessgen: Perfect. And then I just wanted to ask on the split or the implied margin between 3Q and 4Q in the back half. The sales decline is pretty comparable between the 2 quarters, as we've already discussed, not having the same launch cadence. But it feels like the margin degradation in the fourth quarter is a little bit heavier. Maybe could you explain maybe it speaks to like the cost of living increases embedded in the corporate expenses, maybe that falls more in the fourth quarter, but anything to understand there? Brian Lynch: The gross margin is somewhat just -- there's less volume typically in the fourth quarter, which would affect the gross margins. But I think the way Chip explained the first half -- the second half is right. Operator: The next question will come from Noah Zatzkin with KeyBanc Capital Markets. Noah Zatzkin: I guess, first, maybe just another one on kind of the gross margin improvement in the quarter. Is there any way to kind of think about -- I think, Brian, you mentioned maybe some of the work kind of came together faster than expected. So wondering if there's any way to kind of think about what inning you're in there on maybe the structural margin improvements? And then just how to think about maybe the magnitude of the structural margin improvement opportunity? Brian Lynch: Yes. We're very pleased with our progress to date, as we mentioned, it's been very exciting, and I'm glad it's working. It will continue to be a focus of ours going forward. But we're already getting back close to the high watermark levels for 2017 to 2019 in gross margins. And back then, they had more favorable FX rates and no tariffs. So our future rates will depend somewhat on the FX rates and tariffs. But other than that, we'll continue to work on it as we can, but we're not providing any specific long-term guidance at this point. Noah Zatzkin: Okay. Very helpful. And maybe just one on TravisMathew. Obviously, you mentioned you closed, I think, a couple of stores. How are you thinking about the long-term opportunity of the business? And has anything changed there? Oliver Brewer: Yes. Noah, the -- I'm really pleased with the TravisMathew results. So that business grew during the quarter. We've had a successful launch of the women's category that continues to do well. And year-to-date, really pleased with impact of our revised men's strategy where we've changed some of our focus, our product pillars, our merchandising strategy. And we've seen nice results both direct-to-consumer and that wholesale there. So I feel great about the outlook for Travis, I have seen some really positive results year-to-date. We are planning to close 4 stores in Q4. We've announced 2 of those stores now, and that's why we're at liberty to discuss it at this point. But that shouldn't be thought of as anything different than what we've been doing very tentatively over the last year. And that's being disciplined and focused in our approach to improving the long-term structure and profitability of our business. Things such as SKU rationalization, portfolio change and this attention to the store portfolio, all fall in the same ilk, and we're optimistic that those will provide great value to the shareholder as we continue to implement them. Operator: The next question will come from Joseph Altobello with Raymond James. Joseph Altobello: I guess, Chip, I just wanted to follow up on the answer you gave to Noah regarding the 4 Travis stores getting closed. I think I heard you say that the charges in the second quarter were included in adjusted EBITDA. Is that correct? Oliver Brewer: That's correct. We left -- those are in our financial results, both GAAP and non-GAAP. Joseph Altobello: And how much were they? Oliver Brewer: I don't know that we broke that out, but roughly $1.5 million. Joseph Altobello: Okay. So not too meaningful. And then second, you mentioned incremental commodity cost pressures in the second half, which is obviously reflected in the guide. The EBITDA guide for the second half on an operational basis, still up $3 million. How much additional commodity cost pressures is baked into that number? Oliver Brewer: I don't know whether, again, we're going to break that out specifically for you, but we have, to the best of our ability, baked in the cost pressures that we see at this point in time. Obviously, dynamic. The price of oil is a major factor in that, and the price of oil seems to be fairly volatile, although improved today. And we're comfortable that we're going to be able to manage through it. We wanted to call out that they do exist and that they -- but also want to call out that we're working through them and are comfortable with our ability to do it at the current levels. Operator: The next question will come from Arpine Kocharyan with UBS. Arpine Kocharyan: I did want to go back to the full year guidance upgrade, nice uptick there in EBITDA, up something like, I think, $31 million, if I'm not mistaken, at midpoint and certainly more than sort of the Q2 beat. But more importantly, flow-through also is pretty healthy. I wanted to -- I was wondering if you could give a little bit more color on that bridge and whether -- and to maybe frame for us kind of what would be an upside scenario to that outlook? I know you're probably looking at a lot of volatility. You just talked about input costs being something that's really tough to write pinpoint here given how volatile that has been. But as we think about sort of revenue that you think you can do in the back half and sort of this healthy flow-through that you're looking at and maybe try to bridge that sort of full year upside versus the strong performance we saw in the quarter. Oliver Brewer: Sure. Brian, why don't you do the bridge, and then I'll take the latter part of this. Brian Lynch: Okay, sure. For Eeva, you're correct, it is up $31 million at the midpoint. And that represents the $21 million of the Q2 EBITDA beat. There's $21 million of that, that we're giving. And then there was -- we talked about that $5 million organic revenue raise. So there's about $3 million that flows through to EBITDA. And then there was a $7 million improvement in our tariff estimates based on the new rates. Oliver Brewer: Upsides and potential risk in the second half, we think that we're fairly balanced on both upside and potential risk. It's certainly -- our guidance reflects the best information we have at this time. And I think it's -- you mentioned as well that this is a fairly dynamic environment right now with macroeconomic and political factors that are almost changing daily. So there's potentially a wider range of outcomes than normal in the second half. We've shown our ability to manage through this. We feel really good about the strengthening of the business that we've delivered and the resilience of our markets. So we feel really good. But we think the guidance is balanced in terms of risk and opportunity. Arpine Kocharyan: Great. That's super helpful. I was hoping if you could comment at all on maybe July retail trends here in terms of just sell-through as well as what you're seeing from green grass versus other channels. Anything you could give us in terms of sort of current in the quarter demand trends? Oliver Brewer: Sure. We've certainly factored into our guidance, the July results. We saw a little bit of softening in the market around World Cup. It improved subsequent to that. We have factored that all into our guidance. And I guess that's all I have on that at this stage. Operator: And this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Chip Brewer for any closing remarks. Please go ahead. Arpine Kocharyan: Thank you, everybody, for tuning in. We're proud of our results and the progress we've made strengthen the business year-to-date. We look forward to updating you again at the end of Q3. Thanks for dialing in. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Callaway Golf, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Callaway Golf wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool recommends Callaway Golf. The Motley Fool has a disclosure policy. Callaway Golf (CALY) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

This article first appeared on GuruFocus. Revenue: Q2 revenue was $612 million, up 2% year-over-year. Adjusted EBITDA: Q2 adjusted EBITDA was $125 million, up 36% year-over-year. Gross Margin: Q2 gross margin expanded 460 basis points to 48.5%. Golf Equipment Revenue: Q2 golf equipment net sales increased 4% year-over-year. Soft Goods Revenue: Q2 soft goods net sales decreased 4% year-over-year. Golf Ball Revenue: Q2 golf ball revenue was up 15% year-over-year. Operating Expenses: Q2 operating expenses increased approximately $1 million or less than 1% year-over-year. Corporate Overhead: Corporate overhead expenses decreased $4 million or 13% year-over-year. Cash Position: Ended Q2 with $278 million in cash and cash equivalents and $74 million of outstanding debt. Share Repurchases: Repurchased approximately $42 million of stock in Q2 and $84 million in the first half of 2026. Store Closures: Planned closure of four Travis Matthew stores in Q4 2026, leaving 61 stores. Full-Year Revenue Guidance: Increased full-year 2026 net sales guidance to $2.045 billion to $2.070 billion. Full-Year Adjusted EBITDA Guidance: Increased full-year 2026 adjusted EBITDA guidance to $246 million to $260 million. Q3 Revenue Guidance: Q3 2026 net sales forecast of $415 million to $435 million. Q3 Adjusted EBITDA Guidance: Q3 2026 adjusted EBITDA forecast of $10 million to $20 million. Warning! GuruFocus has detected 11 Warning Signs with CALY. Is CALY fairly valued? Test your thesis with our free DCF calculator. Release Date: August 04, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Callaway Golf Co (NYSE:CALY) delivered a strong Q2 2026 with revenue of $612 million, up 2% year-over-year, and adjusted EBITDA of $125 million, up 36%, both exceeding guidance. Gross margin expanded significantly by 460 basis points in Q2 and 360 basis points in the first half, driven by successful margin initiatives and portfolio actions. The company has transformed into a pure-play golf company with a fortified balance sheet, paying off $1.4 billion in debt and ending the quarter in a net cash position. Golf ball revenue grew 15% in Q2, with US market share reaching a record high of over 23%, up 250 basis points year-over-year. The company raised its full-year adjusted EBITDA guidance by $31 million at the midpoint, reflecting strong first-half performance and improved tariff estimates. Capital returns to shareholders are underway, with approximately $84 million in share repurchases completed in the first half of 2026. Callaway Golf Co (NYSE:CALY) faces ongoing cost pressures from geopolitical activity, including increased prices for commodities like tungsten and petrochemical-based raw materials. The company expects second-half revenue and profit to be negatively impacted by strategic initiatives, including extending product life cycles and rationalizing lower-margin business. Q3 2026 guidance indicates a year-over-year decrease in adjusted EBITDA, driven by lower revenue, reduced dividend income, and cost of living increases. The company is experiencing FX headwinds, which negatively impacted the full-year revenue guidance by approximately $5 million. Market conditions in Korea remain weak, with the market down approximately 10%, and the company anticipates tougher second-half comparisons following strong prior-year growth. The planned closure of four Travis Matthew stores in Q4 will incur financial charges, reflecting ongoing portfolio rationalization. Q: Can you provide a bridge for the full-year EBITDA guidance increase of $31 million at the midpoint, and what would be an upside scenario to that outlook?A: Brian Lynch (CFO) explained that the $31 million increase consists of $21 million from the flow-through of the Q2 EBITDA beat, $3 million from the flow-through of the improved net sales outlook and slightly improved gross margin, and $7 million from improved tariff estimates based on the new Section 301 rates. CEO Chip Brewer added that the guidance is balanced between upside and risk, noting the dynamic macroeconomic environment but expressing confidence in the business's strengthening performance and market resilience. Q: What drove the strong 15% growth in golf ball revenue in Q2, and was there anything one-time in that result?A: Chip Brewer (CEO) stated that the golf ball growth was fundamental, driven by investments in product performance, manufacturing capabilities, and green grass distribution. He noted a slight timing benefit between quarters for green grass shipments but confirmed there were no one-time items, with the first half up 8% overall. Q: Can you discuss the drivers of the gross margin expansion in Q2 and how to think about pricing and mix in the back half of the year?A: Brian Lynch (CFO) highlighted that gross margin improved 460 basis points in Q2, driven by progress on margin initiatives including price increases, cost reductions, and rationalizing lower-margin business. He noted the rate of improvement will slow in the second half due to fewer new product launches (which typically carry higher margins), seasonality, and lower volumes affecting overhead absorption. The better-than-expected market also allowed for less promotional activity. Q: How is the company thinking about the industry's competitive launch calendar, and is the decision to lengthen product life cycles a response to inflationary pressures?A: Chip Brewer (CEO) confirmed the company is intentionally lengthening product life cycles, particularly in the iron category, to increase overall product profitability. He acknowledged this is a balancing act since the market responds well to innovation, but believes longer life cycles are positive for both Callaway and the industry, noting competitors are making similar decisions. Q: What is the outlook for the Travis Matthew business, and can you provide details on the planned store closures?A: Chip Brewer (CEO) expressed optimism about Travis Matthew, citing growth in the quarter, a successful women's launch, and positive results from the revised men's strategy. He confirmed four underperforming stores will close in Q4, with charges of approximately $1.5 million included in Q2 results. This is part of broader disciplined actions including SKU rationalization to improve long-term profitability. Q: Can you elaborate on the Q3 and Q4 sales phasing, and why the fourth quarter guide appears softer than expected?A: Chip Brewer (CEO) clarified that the company had not previously provided quarterly forecasts for the second half. The current phasing reflects the impact of launch timing on a year-over-year basis, with no meaningful forecast differences between quarters other than launch timing. Brian Lynch (CFO) added that the full-year sales range was effectively raised by $5 million organically, offset by $5 million in FX headwinds. Q: What are the drivers behind the underlying revenue growth in Q2 outside of strategic actions, and what is the outlook for the back half?A: Chip Brewer (CEO) noted the market was up low to mid-single-digits in the first half with rounds played up approximately 4%, demonstrating the resilience of the golf consumer. For the second half, the company faces tougher comps (market was up roughly 8% in the second half of 2025) and the impact of launch cadence changes, but expects positive two-year stack growth. Q: How much additional commodity cost pressure is baked into the second-half guidance, and how is the company managing these pressures?A: Chip Brewer (CEO) acknowledged cost pressures from geopolitical activity, including increased tungsten costs and petrochemical-based raw material costs for golf balls due to Middle East conflict. While not breaking out specific amounts, he confirmed these pressures are included in guidance and expressed confidence in the company's ability to manage through them at current levels. Q: Can you provide an update on tariffs and the refund program, and how are these reflected in guidance?A: Brian Lynch (CFO) detailed that full-year 2026 gross tariff expense is now expected to be approximately $43 million, a $7 million improvement versus prior guidance due to the new Section 301 rates being lower than assumed. The company has received all Phase I refunds (~$11 million) and almost $7 million of Phase II refunds, with the balance expected in the second half. An additional ~$7 million in Phase III refunds brings total refund potential to approximately $50 million. Refunds are excluded from non-GAAP results for cleaner comparability. Q: What are the current retail trends in July, and how are they factored into guidance?A: Chip Brewer (CEO) noted a slight softening in the market around the World Cup, which improved subsequently. These trends have been factored into the company's guidance, which reflects the best available information in a dynamic environment. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Callaway Golf (CALY) came out with quarterly earnings of $0.39 per share, beating the Zacks Consensus Estimate of $0.35 per share. This compares to earnings of $0.24 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +11.43%. A quarter ago, it was expected that this maker of golf equipment and accessories would post earnings of $0.42 per share when it actually produced earnings of $0.56, delivering a surprise of +33.33%. Over the last four quarters, the company has surpassed consensus EPS estimates four times. Callaway, which belongs to the Zacks Leisure and Recreation Products industry, posted revenues of $612.2 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 1.77%. This compares to year-ago revenues of $1.11 billion. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Callaway shares have added about 63.6% since the beginning of the year versus the S&P 500's gain of 11%. While Callaway has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Callaway was favorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #2 (Buy) for the stock. So, the shares are expected to outperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is breakeven on $433.35 million in revenues for the coming quarter and $0.75 on $2.06 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Leisure and Recreation Products is currently in the top 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, MasterCraft Boat Holdings, Inc. (MCFT), has yet to report results for the quarter ended June 2026. This sport boats maker is expected to post quarterly earnings of $0.61 per share in its upcoming report, which represents a year-over-year change of +52.5%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. MasterCraft Boat Holdings, Inc.'s revenues are expected to be $119.25 million, up 50% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Callaway Golf Company (CALY) : Free Stock Analysis Report MASTERCRAFT BOAT HOLDINGS, INC. (MCFT) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Second Quarter Net Sales (+2%), GAAP Net Income from Continuing Operations (+67%) and Adjusted EBITDA (+36%) Raises Full-Year Guidance HIGHLIGHTS Q2 GAAP and Non-GAAP Gross Margin increased 620 basis points and 460 basis points year-over-year, respectively. Repurchased $84 million of common shares year to date through June 2026. In Q2, the Company repaid in full the $258 million of convertible notes and the $163 million outstanding under its term loan B facility. Raises full year 2026 Adjusted EBITDA outlook to $246 million - $260 million with a revised net sales outlook of $2.045 billion - $2.070 billion. CARLSBAD, CA, Aug. 4, 2026 /PRNewswire/ -- Callaway Golf Company (the "Company," "Callaway," "we," "our," "us") (NYSE: CALY) announced its financial results for the second quarter ended June 30, 2026. "We are very pleased with our second quarter results with our revenue growth, gross margin improvement and Adjusted EBITDA all exceeding expectations," commented Chip Brewer, President and Chief Executive Officer of Callaway Golf Company. "We also continued to make significant progress on our capital allocation strategy with the repurchase of an additional $42 million of our common stock and the repayment in full of our $258 million of convertible notes and the $163 million that was remaining on our term loan B. While there is more opportunity ahead, we are pleased with the significant progress we have made, both operationally and financially, only six months into our return as a pure play golf company. We also remain encouraged by overall market conditions and the continued resilience of the golf consumer." CONSOLIDATED RESULTS The Company announced the following GAAP and non-GAAP financial results for the three and six months ended June 30, 2026 and 2025: NON-GAAP RESULTS Non-GAAP results (1) exclude certain non-cash and non-recurring adjustments, (2) include certain adjustments to interest expense that were otherwise presented in discontinued operations, and (3) exclude the $10.8 million tariff refund benefit, all as further explained in the Additional Information and Disclosures section of this release. The Company has also provided a reconciliation of the non-GAAP information to the most directly comparable GAAP information in the tables to this release. SECOND QUARTER 2026 CONSOLIDATED RESULTS COMMENTARY (All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted) The Company's net sales from continuing operations of $612.2 million increased 2.0% due to a 4.5% increase in the Golf Equipment segment, driven by strength across both clubs and balls. The increase in Golf Equipment was partially offset by a 3.6% decrease in the Apparel, Gear and Other segment as a result of the timing of shipments between the first and second quarters of this year, as well as foreign exchange headwinds in Asia, partially offset by an increase in TravisMathew sales. GAAP and non-GAAP gross margins increased approximately 620 basis points and 460 basis points to 50.1% and 48.5%, respectively. The increases in gross margin were due to continued progress on our gross margin initiatives, including select price increases, cost reductions and rationalizing lower margin business. GAAP gross margin also benefited from approximately $10.8 million of non-recurring benefits from tariff refunds, which were excluded from the Non-GAAP results. GAAP operating expense increased 1.5%, while non-GAAP operating expense increased 0.7%. The modest increase in expense was primarily due to cost-of-living increases and inflationary pressures in the Golf Equipment and Apparel, Gear and Other segments, largely offset by corporate overhead savings. Net income from continuing operations was $75.8 million on a GAAP basis and $73.8 million on a non-GAAP basis. Adjusted EBITDA from continuing operations was $124.9 million, which represents a 35.8% increase year-over-year. The increase in Adjusted EBITDA was driven primarily by higher net sales and improved gross margins. SEGMENT RESULTS SEGMENT NET SALES The table below provides net sales by segment for the periods presented: SEGMENT OPERATING INCOME The table below provides the breakout of segment operating income for the periods presented: The following is a reconciliation on a GAAP basis of total segment operating income to income before income taxes for the periods presented: BALANCE SHEET AND CASH FLOW HIGHLIGHTS Inventory decreased $49.7 million year-over-year to $518.2 million, largely driven by strong sell-through and higher net sales, the Company's working capital initiatives and the timing of inventory shipments. As of June 30, 2026, the Company was in a net cash position with $74 million in debt outstanding (including $23 million in financing leases) and unrestricted cash and cash equivalents of $278 million. During the second quarter, the Company repaid in full its $258 million in convertible notes and the remaining $163 million outstanding under its term loan B facility. Year-to-date through June 30, 2026, the Company has repurchased 5.9 million shares of its common stock and has $120 million remaining repurchase authority under its current repurchase program. TARIFF UPDATE On July 24, 2026, the temporary 10% global minimum tariffs under Section 122 of the Trade Act of 1974 expired and new Section 301 forced labor tariffs were implemented and took effect the following day, ranging between 10% - 12.5% depending on the country. The Company had previously assumed tariffs would increase to 20% once the temporary tariffs expired so the recently announced Section 301 tariffs are upside versus its previous guidance. The Company now expects that the full year gross tariff expense for 2026 will be approximately $43 million, a net improvement of approximately $7 million compared to its prior guidance. The full year gross tariff expense in 2025 was $34 million. The Company continues to believe that it has the opportunity to obtain refunds of up to just under $50 million in the aggregate over the course of the refund program. The Company has applied for both Phase 1 and Phase 2 refunds, representing approximately $11 million and $32 million, respectively. The Company has received all of the Phase 1 refunds to date, which were recognized in Q2, and almost $7 million of the Phase 2 refunds, which will be recognized in Q3. We expect to receive the balance of the Phase 2 refunds in the second half of this year. The Company expects there will be almost $7 million to apply for in Phase 3, which brings its refund potential to approximately $50 million. 2026 OUTLOOK Given the strength of the Company's first half results and general health of the golf market, the Company increased its full-year guidance. As the Company previously reported, the Company's second half results will be impacted by fewer new product launches compared to 2025, including the shift of a new irons launch into 2027, and the rationalization of certain lower margin business to improve the Company's profitability. The Company also expects less dividend income in the second half of 2026 due to the use of cash to pay off over $1.4 billion of debt during the first half of 2026. The Company's guidance also reflects its revised tariff forecast discussed above. ADDITIONAL INFORMATION AND DISCLOSURES Conference Call and Webcast The Company will be holding a conference call at 2:00 p.m. Pacific time today, August 4, 2026, to discuss the Company's financial results, outlook and business. The call will be webcast live on our investor relations website at https://ir.callawaygolf.com/news-and-events/presentations. The Company's earnings presentation will be available ahead of the call and will include additional details. A replay of the conference call will be available approximately two hours after the call ends. The replay may be accessed through the Investor Relations section of the Company's website at https://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 of America ("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" or as "constant currency" results. This information estimates the impact of changes in foreign currency exchange 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, Non-cash and Interest Expense Adjustments. The Company provided information excluding certain non-cash amortization of acquired intangible assets, including customer and distributor relationships and acquired developed technology related to the Company's acquisitions of TravisMathew and OGIO (together, the "Acquisitions"). While the amortization of acquired intangible assets is excluded from the calculation of non-GAAP net income, the revenue and operating costs associated with these acquired companies is reflected in non-GAAP net income calculations, as well as the acquired assets that contribute to revenue generation. For specific non-recurring adjustment items, including the exclusion of the $10.8 million tariff benefit, please see the Supplemental Financial Information and Non-GAAP Reconciliation section of this release. Non-recurring adjustments include, among other things, subtraction of costs related to a plan intended to optimize organizational efficiencies and decrease operating costs under the separate business structures that are anticipated after the separation of Topgolf (the "Transformation Plan"). Costs incurred related to Non-Recurring and Non-Cash Adjustments are excluded from the measurement of segment profitability for internal and external reporting purposes. In addition, we have added back to certain of our non-GAAP results interest expense relating to debt incurred at the corporate level that is categorized under discontinued operations in order to burden continuing operations with the full impact of the Company's total term debt. Adjusted EBITDA. The Company provides information about its results excluding interest, taxes, depreciation and amortization expenses, 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, and, in some cases, financial condition, of the Company's business with regard to these items. For forward-looking Adjusted EBITDA from Continuing Operations, a reconciliation to net income (loss) from continuing operations, the most closely comparable GAAP financial measure, 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 from continuing operations in the future but would not impact Adjusted EBITDA from Continuing Operations. 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, interest expense, which varies based upon the amount of borrowing to fund the business, and other non-recurring costs and non-cash adjustments. Historically, the Company has excluded these items from Adjusted EBITDA from Continuing Operations. The Company currently expects to continue to exclude these items in future disclosures of Adjusted EBITDA from Continuing Operations 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 from continuing operations. Equity Method Investments. The Company also removes any income or losses from equity method investments from non-GAAP net income from continuing operations and Adjusted EBITDA. 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 third quarter and full year 2026 guidance (including net sales, and Adjusted EBITDA from Continuing Operations), strength and demand of the Company's products and services, continued brand momentum, positioning of the Company's brands to gain market share, demand for golf and outdoor activities and apparel, continued investments in the business, consumer trends and behavior, future industry and market conditions, product launch schedules, completion of any share repurchases, including the timing and amount thereof, return of capital to shareholders and positioning to create shareholder value, dividend income, profitability and gross margins, cash balances and future liquidity, foreign currency effects and their impacts, tariff and tax rates and the effectiveness of mitigation efforts relating thereto, potential refunds of IEEPA tariffs, 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," "would," "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 uncertainty regarding global economic conditions, including relating to inflation, decreases in consumer demand and spending, and any severe or prolonged economic downturn or economic recession; 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; any changes in U.S. or foreign trade, tax or other policies, including restrictions on imports or an increase in import tariffs; future retailer purchasing activity, which can be significantly negatively affected by adverse industry and economic conditions and overall retail inventory levels; the level of promotional activity in the marketplace; 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 on the economy generally, on the level of demand for the Company's and its subsidiaries' products 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. 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, 2025 as well as other risks and uncertainties detailed from time to time in the Company's reports on Forms 10-K, 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: CALY), is a premium golf equipment, gear and apparel company with a portfolio of global brands, including Callaway Golf, Odyssey, TravisMathew, and OGIO. Through an unwavering commitment to innovation and premium craftsmanship, Callaway designs, manufactures, and sells high-performance golf clubs, golf balls, apparel, bags, and other accessories—setting the standard for performance in the game of golf. For more information, please visit https://ir.callawaygolf.com. Investor ContactPatrick [email protected] (1) Calculated by applying 2025 exchange rates to 2026 reported net sales in regions outside the U.S.Net Sales by RegionThree Months Ended June 30,Growth/(Decline)Constant Currencyvs. 2025(1)20262025DollarsPercentPercentNet sales:United States$ 414.7$ 401.1$ 13.63.4 %3.4 %Europe64.864.60.20.3 %(1.2 %)Asia90.391.9(1.6)(1.7 %)6.3 %Rest of world42.442.8(0.4)(0.9 %)(4.0 %)Total net sales$ 612.2$ 600.4$ 11.82.0 %2.8 %(1) Calculated by applying 2025 exchange rates to 2026 reported net sales in regions outside the U.S.Operating Segment InformationThree Months Ended June 30,Growth/(Decline)Constant Currencyvs. 2025(1)20262025DollarsPercentPercentNet sales:Golf Equipment$ 430.3$ 411.8$ 18.54.5 %5.3 %Apparel, Gear and Other181.9188.6(6.7)(3.6 %)(2.5 %)Total net sales$ 612.2$ 600.4$ 11.82.0 %2.8 %Segment operating income (loss):Golf Equipment$ 100.3$ 76.2$ 24.131.6 %Apparel, Gear and Other33.429.34.114.0 %Total segment operating income133.7105.528.226.7 %Non-recurring items (2)7.5(0.9)8.4n/mCorporate costs and expenses (3)(26.4)(30.3)3.9(12.9 %)Income (loss) from operations114.874.340.554.5 %Interest income (expense), net(4.6)(15.3)10.7(69.9 %)Other income (expense), net1.4(0.4)1.8n/mTotal other income (expense), net(3.2)(15.7)12.5(79.6 %)Income (loss) from equity method investments(1.0)—(1.0)n/mTotal income (loss) from continuing operations, before income taxes$ 110.6$ 58.6$ 52.088.7 %(1) Calculated by applying 2025 exchange rates to 2026 reported net sales in regions outside the U.S.(2) Includes certain non-recurring and non-cash items as described in the below schedules to this release.(3) Includes corporate general and administrative expenses not utilized by management in determining segment profitability. For 2025, corporate costs and expenses also includes adjustments for discontinued operations related to indirect costs that were previously allocated to the Topgolf and Jack Wolfskin businesses. View original content to download multimedia:https://www.prnewswire.com/news-releases/callaway-golf-company-announces-second-quarter-2026-results-302842773.html

Callaway Golf (CALY) reported $612.2 million in revenue for the quarter ended June 2026, representing a year-over-year decline of 44.9%. EPS of $0.39 for the same period compares to $0.24 a year ago. The reported revenue represents a surprise of +1.77% over the Zacks Consensus Estimate of $601.56 million. With the consensus EPS estimate being $0.35, the EPS surprise was +11.43%. While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to determine their next move, some key metrics always offer a more accurate picture of a company's financial health. Since these metrics play a crucial role in driving the top- and bottom-line numbers, comparing them with the year-ago numbers and what analysts estimated about them helps investors better project a stock's price performance. Here is how Callaway performed in the just reported quarter in terms of the metrics most widely monitored and projected by Wall Street analysts: Net Sales by Product Category- Gear, Accessories & Other: $76.7 million compared to the $83.93 million average estimate based on three analysts. The reported number represents a change of -14.7% year over year. Net Sales by Product Category- Apparel: $105.2 million compared to the $104.32 million average estimate based on three analysts. The reported number represents a change of -15% year over year. Net Sales- Golf Equipment: $430.3 million compared to the $415.48 million average estimate based on three analysts. The reported number represents a change of +4.5% year over year. Net Sales by Product Category- Golf Clubs: $316.5 million versus the three-analyst average estimate of $316.07 million. The reported number represents a year-over-year change of +1.2%. Net Sales by Product Category- Golf Balls: $113.8 million versus the three-analyst average estimate of $99.42 million. The reported number represents a year-over-year change of +15.1%. Net Sales- Apparel, Gear and Other: $181.9 million compared to the $188.26 million average estimate based on three analysts. Segment operating income- Apparel, Gear and Other: $33.4 million versus $33.56 million estimated by two analysts on average. Segment operating income- Golf Equipment: $100.3 million versus $85.55 million estimated by two analysts on average. View all Key Company Metrics for Callaway here>>> Shares of Callaway have returned +4.4% over the past month versus the Zacks S&P 500 composite's +1.7% change. The stock currently has a Zacks Rank #2 (Buy), indicating that it could outperform the broader market in the near term. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Callaway Golf Company (CALY) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Golf entertainment and gear company Callaway Golf Company (NYSE:CALY) will be reporting results this Tuesday after market hours. Here’s what you need to know. Callaway Golf Company beat analysts’ revenue expectations last quarter, reporting revenues of $687.5 million, up 9.2% year on year. It was a very strong quarter for the company, with EBITDA guidance for next quarter exceeding analysts’ expectations and a beat of analysts’ EPS estimates. Is Callaway Golf Company a buy or sell going into earnings? Read our full analysis here, it’s free for active Edge members. This quarter, the market is expecting Callaway Golf Company’s revenue to be flat year on year, improving from the 2.3% decrease it recorded in the same quarter last year. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business will stay the course heading into earnings. Looking at Callaway Golf Company’s peers in the consumer discretionary - leisure facilities segment, some have already reported their Q2 results, giving us a hint as to what we can expect. AMC Entertainment delivered year-on-year revenue growth of 14.2%, beating analysts’ expectations by 8.7%, and Sphere Entertainment reported revenues up 11%, topping estimates by 1.8%. AMC Entertainment traded up 13.4% following the results while Sphere Entertainment was also up 2.2%. Read our full analysis of AMC Entertainment’s results here and Sphere Entertainment’s results here. Over the past year, investors have repeatedly shifted their focus from one macro narrative to another (AI disruption and AI capex spending to geopolitics, interest rates, and the broader health of the economy). While some of the consumer discretionary - leisure facilities stocks have shown solid performance in this choppy environment, the group has generally underperformed, with share prices down 2.4% on average over the last month. Callaway Golf Company is up 1% during the same time and is heading into earnings with an average analyst price target of $18.80 (compared to the current share price of $18.46). ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention. AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.