Callaway Golf Co

Previous wording

In September 2024, we announced a strategic plan to pursue a separation of our business into two independent companies: Callaway, a leader in golf equipment with a highly complementary Active Lifestyle business; and Topgolf, a category leading, high-growth, pure-play venue-based golf entertainment business. We expect to effect the separation through a spin-off of the Topgolf business to our shareholders in a transaction that is intended to be tax-free to both us and our shareholders for U.S. federal income tax purposes. While we expect that a spin-off of Topgolf into a stand-alone public company is the most likely separation path, we will continue to evaluate other options for separation in order to maximize shareholder value. We expect to complete the spin-off of Topgolf in the second half of 2025, but there can be no assurance regarding the ultimate timing, terms, or form of the separation, or that the separation will ultimately occur.

Current wording

In September 2024, we announced a strategic plan to pursue a separation of our business into two independent companies: Callaway, a leader in golf equipment with a highly complementary Active Lifestyle business; and Topgolf, a pure-play venue-based golf entertainment business which we believe has potential for high growth. Our Board of Directors is committed to exploring all opportunities to execute the separation in a manner that maximizes shareholder value, including possible options such as a spin-off, sale, or other transaction. We expect to complete the separation of Topgolf in the second half of 2025, but there can be no assurance regarding the ultimate timing, terms, or form of the separation, or that the separation will ultimately occur.

Previous wording

In addition to the financial results contained in this report, which have been prepared and presented in accordance accounting principles generally accepted in the United States of America (“GAAP”), we have also included supplemental information concerning our financial results on a non-GAAP basis. This non-GAAP information includes the following:

Current wording

In addition to the financial results contained in this report, which have been prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we have also included supplemental information concerning our financial results on a non-GAAP basis. This non-GAAP information includes the following:

Previous wording

•Net income and diluted earnings per share excluding certain non-recurring charges, as further detailed below.

Current wording

•Net income and diluted earnings per share excluding certain non-cash and non-recurring charges, as further detailed below.

Previous wording

•Same venue sales, which is defined as sales for the comparable Topgolf venue base, which includes Company-operated venues with at least 24 full fiscal months of operations as of the year of comparison.

Current wording

•Same venue sales, which is defined as sales for the comparable Topgolf venue base, which includes Company-owned and operated venues with 24 or more full fiscal months of operations as of the year of comparison.

Previous wording

We are a technology-enabled modern golf company offering golf entertainment, golf equipment, and apparel under our portfolio of global brands which includes Topgolf, Callaway Golf, Odyssey, TravisMathew, Jack Wolfskin, OGIO, Toptracer and World Golf Tour. Our products and brands are reported under our Topgolf, Golf Equipment, and Active Lifestyle operating segments.

Current wording

We are a technology-enabled modern golf company offering golf entertainment, golf equipment, and apparel under our portfolio of global brands which includes Topgolf, Callaway Golf, Odyssey, TravisMathew, Jack Wolfskin, OGIO and Toptracer. Our products and brands are reported under our Topgolf, Golf Equipment, and Active Lifestyle operating segments.

Previous wording

Our Topgolf operating segment is primarily comprised of Company-operated domestic and international Topgolf venues, which are equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces. Our Company-operated venues also offer advertising partnerships to corporate sponsors to feature their names and logos at Topgolf venues and on other media platforms. Revenue from Company-operated venues is primarily derived from the sale of food and beverage, gameplay, and events. As of September 30, 2024, we had 98 Company-operated venues, including 92 Topgolf venues and two Company-owned BigShots venues, throughout the United States, and four Company-operated venues in the United Kingdom. In addition to our Company-operated venues, we also have five international franchised Topgolf venues from which we receive royalties.

Current wording

Our Topgolf operating segment is primarily comprised of Company-owned and operated domestic and international Topgolf venues, which are equipped with technology-enabled hitting bays, multiple bars, dining areas and event spaces. Our Company-owned and operated venues also offer advertising partnerships to corporate sponsors to feature their names and logos at Topgolf venues and on other media platforms. Revenue from Company-owned and operated venues is primarily derived from the sale of food and beverage, gameplay, and events. As of March 31, 2025, we had 100 Company-owned and operated venues, including 96 Topgolf venues throughout the United States, and four Company-operated venues in the United Kingdom. In addition to our Company-owned and operated venues, we also have eight international franchised Topgolf venues from which we receive royalties.

Previous wording

Our Topgolf operating segment also includes other business lines comprised of our Toptracer ball-flight tracking technology as well as our WGT virtual golf game. Toptracer ball-flight tracking technology is used by independent driving ranges and during televised golf broadcasts, as well as in many of our Company-operated and franchised Topgolf venues in order to enhance the Topgolf gaming experience. WGT is an online multiplayer virtual golf game that enables players to gather in an online community and participate in simulated gameplay.

Current wording

Our Topgolf operating segment also includes other business lines comprised of our Toptracer ball-flight tracking technology as well Topgolf Media. Toptracer ball-flight tracking technology is used by independent driving ranges and during televised golf broadcasts, as well as in many of our Company-owned and operated and franchised Topgolf venues in order to enhance the Topgolf gaming experience.

Previous wording

Operating results for our Topgolf operating segment fluctuate from quarter to quarter due to seasonal factors. Historically, our venues experience higher second and third quarter revenues associated with the spring and summer, while the first and fourth quarters have historically had lower revenues, with the first quarter being the lowest, due to cooler temperatures and fewer corporate events. Given that seasonality is an expected factor in Topgolf’s results of operations, adverse weather may impact peak seasons at our venues, which may result in a disproportionate effect on our operating results.

Current wording

Operating results for our Topgolf operating segment fluctuate from quarter to quarter due to seasonal factors. Historically, our venues experience higher second and third quarter revenues associated with the spring and summer, while the first and fourth quarters have historically had lower revenues, with the first quarter being the lowest, due to cooler temperatures and fewer corporate events. Adverse weather may impact the results of operations of Topgolf, especially during peak season.

Previous wording

Our Active Lifestyle operating segment is comprised of Callaway Golf, TravisMathew, Jack Wolfskin and OGIO soft goods products. The Callaway Golf soft goods brand offers a full line of premium golf apparel, footwear, gear and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. Under the Jack Wolfskin brand, we offer a full line of premium outdoor apparel, gear and accessories. The OGIO brand offers a full line of premium personal storage gear for sport and personal use and accessories. On certain soft goods products, we receive royalties from the licensing of our trademarks and service marks.

Current wording

Our Active Lifestyle operating segment is comprised of Callaway Golf, TravisMathew, Jack Wolfskin and OGIO soft goods products. The Callaway Golf soft goods brand offers a full line of premium golf apparel, footwear, gear and accessories. TravisMathew offers a full line of premium golf and lifestyle apparel as well as footwear and accessories. Under the Jack Wolfskin brand, we offer a full line of premium outdoor apparel, gear and accessories. The OGIO brand offers a full line of premium personal storage gear for sport and personal use and accessories. On certain soft goods products, we receive royalties from the licensing of our trademarks and service marks. On April 10, 2025, we announced that we entered into a definitive agreement to sell our Jack Wolfskin business, as discussed above.

Previous wording

Our products and services are considered to be non-essential items and are therefore discretionary purchases for consumers. As a result, the demand for our products and services is sensitive to unfavorable macroeconomic conditions. In the third quarter of 2024, we continued to experience soft market conditions as macroeconomic factors, including sustained inflation and high interest rates, continued to put downward pressure on consumer and corporate discretionary spending. While we generally try to mitigate the impact of such macroeconomic factors by closely monitoring changes in consumer retail spending behavior and through the implementation of various strategic initiatives, the persistence of these trends may have an adverse impact on our operating results depending on the severity and length of the changes.

Current wording

Our products and services are considered to be non-essential items and are therefore discretionary purchases for consumers. In addition, our Topgolf venues business also depends on corporate discretionary spending relative to its leisure and entertainment-based offerings. As a result, demand for our products could be impacted by downturns in the economy and the corresponding impact on discretionary consumer and corporate spending. Macroeconomic factors including sustained inflation and high interest rates continue to put downward pressure on consumer and corporate discretionary spending. While we generally try to mitigate the impact of such macroeconomic factors by closely monitoring changes in consumer retail spending behavior and through the implementation of various strategic initiatives, the persistence of these trends may have an adverse impact on our operating results depending on the severity and length of the changes.

Previous wording

A significant portion of our business is conducted outside of the United States in currencies other than the U.S. dollar. Therefore, we enter into foreign currency forward contracts to mitigate the effects that changes in foreign currency rates may have on our financial results. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates in the short-term, they do not eliminate those effects, which can be significant, and they do not mitigate their effects over the long-term. These effects include (i) the translation and remeasurement of results denominated in foreign currency into U.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of our foreign currency forward contracts. In general, our overall financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For thethree andnine months ended September 30, 2024, foreign currency fluctuations had a favorable impact of $2.1 million and anunfavorable impact of $16.5 million on international net revenues, respectively.

Current wording

A significant portion of our business is conducted outside of the United States in currencies other than the U.S. dollar. Therefore, we enter into foreign currency forward contracts to mitigate the effects that changes in foreign currency rates may have on our financial results. While these foreign currency forward contracts can mitigate the effects of changes in foreign currency rates in the short-term, they do not eliminate those effects, which can be significant, and they do not mitigate their effects over the long-term. These effects include (i) the translation and remeasurement of results denominated in foreign currency into U.S. dollars for reporting purposes, (ii) the mark-to-market adjustments of certain intercompany balance sheet accounts denominated in foreign currencies and (iii) the mark-to-market adjustments of our foreign currency forward contracts. In general, our overall financial results are affected positively by a weaker U.S. dollar and negatively by a stronger U.S. dollar as compared to the foreign currencies in which we conduct our business. For thethree months ended March 31, 2025, foreign currency fluctuations had anunfavorable impact of $8.9 million on international net revenues.

Previous wording

For the three and nine months ended September 30, 2024, the increase in Topgolf net revenues was primarily due to the continued opening of new Company-operated venues, partially offset by a decline in same venue sales due to softer walk-in traffic and a weaker events business. The decrease in operating income for the three months ended September 30, 2024 was primarily due to a decline in operating leverage due to lower same venue sales, partially offset by improvements in operational efficiencies and cost management at the venues. The increase in operating income for the nine months ended September 30, 2024 was primarily due to incremental revenues from the opening of new Company-operated venues combined with improved operating leverage resulting from favorable food and beverage costs and labor efficiencies, in addition to lower corporate overhead and venue pre-opening expenses, partially offset by a decrease in same venue sales.

Current wording

During the three months ended March 31, 2025, Topgolf net revenues decreased $29.1 million (6.9%) and segment operating income decreased $14.8 million compared to the same period in 2024. The decrease in Topgolf net revenues was primarily due to a decline in same venue sales due to softer walk-in traffic and a weaker events business, partially offset by the opening of new Company-owned and operated venues since the first quarter of 2024. The decrease in segment operating income for the three months ended March 31, 2025 was primarily due to the decrease in net revenues discussed above, partially offset by lower operational costs from ongoing cost reduction initiatives, management of labor costs and other operational efficiencies.

Previous wording

During the three and nine months ended September 30, 2024, net revenues in Asia decreased$3.7 million (2.8%) and$55.4 million (13.2%) compared tothe three andnine months ended September 30, 2023, primarily due to continued soft market conditions in the golf equipment and apparel markets in Korea, combined with unfavorable foreign currency impacts primarily in Japan and Korea. These decreases were partially offset by an increase in sales in the Jack Wolfskin China business.

Current wording

During the three months ended March 31, 2025, net revenues in Asia increased$1.2 million (0.9%) compared tothe three months ended March 31, 2024, primarily due to anincrease in sales in the Jack Wolfskin business in China, partially offset bycontinued soft market conditions in the golf equipment and apparel markets in Korea combined with the impact of unfavorable foreign currency exchange rates in Japan and Korea.

Previous wording

During the three and nine months ended September 30, 2024, net revenues in Rest of World increased by$1.6 million (6.9%) and$4.0 million (3.6%), respectively, compared tothe three and nine months ended September 30, 2023, primarily due to increased Golf Equipment and Active Lifestyle sales in Canada and Australia.

Current wording

During the three months ended March 31, 2025, net revenues in Rest of World decreased by$3.2 million (6.9%) compared tothe three months ended March 31, 2024 primarily due to a decrease in sales of golf equipment and soft good products in Canada and Australia.

Previous wording

Forthe three and nine months ended September 30, 2024, foreign currency exchange rates had afavorable impact of $2.1 million and anunfavorable impact of$16.5 million, respectively, on international net revenues.

Current wording

Forthe three months ended March 31, 2025, foreign currency exchange rates had anunfavorable impact of$8.9 million on international net revenues.

Previous wording

Cost of products is variable in nature and fluctuates relative to sales volumes. Cost of products includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties and shipping charges, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. During the three and nine months ended September 30, 2024, cost of products decreased $8.6 million (2.6%) and$50.2 million (4.3%), respectively, compared to thethree and nine months ended September 30, 2023, respectively. These decreases were primarily due to decreased sales in our Active Lifestyle operating segment, partially offset by increased freight costs in the Golf Equipment operating segment.

Current wording

Cost of products is variable in nature and fluctuates relative to sales volumes. Cost of products includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties and shipping charges, depreciation and amortization, and retail merchandise costs for products sold in retail shops within Topgolf venue facilities. During the three months ended March 31, 2025, cost of products decreased $27.2 million (6.6%) compared to thethree months ended March 31, 2024. The decreases were primarily due to a decline in sales in our Active Lifestyle operating segment, partially offset by lower product costs in the Golf Equipment operating segment.

Previous wording

Other venue expenses primarily consist of depreciation and amortization, venue employee costs, rent, utilities, marketing and other costs associated with Topgolf venues. During the three and nine months ended September 30, 2024, other venue expenses increased $13.5 million (4.3%) and $53.7 million (5.7%), respectively, compared tothe three andnine months ended September 30, 2023, primarily due to the addition of new Company-operated Topgolf venues since September 30, 2023, partially offset by operational efficiencies in the venues.

Current wording

Other venue expenses primarily consist of depreciation and amortization, venue employee costs, rent, utilities, marketing and other costs associated with Topgolf venues. During the three months ended March 31, 2025, other venue expenses decreased $2.2 million (0.7%) compared tothe three months ended March 31, 2024, primarily due tooperational efficiencies in the venues, partially offset by incremental costs from the addition of new Company-owned and operated Topgolf venues since March 31, 2024.

Previous wording

Selling, general and administrative (“SG&A”) expenses primarily consist of non-venue employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation charges (excluding those related to manufacturing, distribution, and venue operations), amortization, and other miscellaneous expenses. During the three and nine months ended September 30, 2024, SG&A expenses increased $8.1 million (3.3%) and decreased $7.5 million (0.9%), respectively, compared tothe three and nine months ended September 30, 2023.

Current wording

Selling, general and administrative (“SG&A”) expenses primarily consist of non-venue employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation charges (excluding those related to manufacturing, distribution and venue operations), amortization and other miscellaneous expenses. During the three months ended March 31, 2025, SG&A expenses decreased $15.1 million (5.5%) compared tothe three months ended March 31, 2024, primarily related to a $12.1 million gain recognized from a lease termination incentive in the first quarter of 2025, in addition to lower employee benefits and payroll-related costs due to a decrease in corporate headcount, and a decrease in selling and marketing costs primarily related to cost reduction efforts. These decreases were partially offset by the recognition of a $7.0 million impairment loss on assets held for sale associated with our Jack Wolfskin business.

Previous wording

Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. During the three and nine months ended September 30, 2024, research and development expenses decreased $0.6 million (2.7%) and increased$4.8 million (7.1%), respectively, compared to thethree andnine months ended September 30, 2023.

Current wording

Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. During the three months ended March 31, 2025, research and development expenses decreased $1.9 million (8.2%) compared to thethree months ended March 31, 2024, primarily due toreduced employee costs as a result of selling the WGT business in the fourth quarter of 2024 and reduced headcount from our restructuring initiatives.

Previous wording

Venue pre-opening costs are primarily related to the costs associated with activities prior to the opening of new Company-operated Topgolf venues, and consist of, but are not limited to, labor, rent and occupancy costs, and travel and marketing expenses. These costs fluctuate based on the planned timing, size and location of new venues. During the three and nine months ended September 30, 2024, venue pre-opening costs decreased $3.0 million (43.5%) and $6.4 million (39.3%), respectively, compared tothe three and nine months ended September 30, 2023 due to fewer planned venue openings in 2024.

Current wording

Venue pre-opening costs are primarily related to the costs associated with activities prior to the opening of new Company-owned and operated Topgolf venues, and consist of, but are not limited to, labor, rent and occupancy costs, and travel and marketing expenses. These costs fluctuate based on the planned timing, size and location of new venues. During the three months ended March 31, 2025, venue pre-opening costs decreased $2.6 million (81.3%) compared tothe three months ended March 31, 2024 due to fewer planned venue openings in 2025.

Previous wording

Interest expense, net increased $5.4 million (10.3%) and $19.9 million (13.0%) during the three and nine months ended September 30, 2024 as compared tothe three andnine months ended September 30, 2023, primarily due to an increase in venue financing interest as the result of the opening of new Topgolf venues, partially offset by decreased interest expense on our term loan as a result of the debt repricing that took place during the first quarter of 2024 combined with lower outstanding balances.

Current wording

Interest expense, net increased $0.8 million (1.4%) during the three months ended March 31, 2025 as compared tothe three months ended March 31, 2024, primarily due to an increase in venue financing interest as the result of the addition of new Topgolf venues, partially offset by decreased interest expense on our term loan as a result of the debt repricing that took place during the first quarter of 2024, combined with lower outstanding balances.

Previous wording

Other income, net decreased $4.2 million (80.8%) during the three months ended September 30, 2024 as compared to the three months ended September 30, 2023, primarily due to an increase in net foreign currency losses, partially offset bythe receipt of dividends on our money market accounts.

Current wording

Other income, net decreased $0.3 million (8.8%) during the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, primarily due to an increase in net losses on foreign currency transactions, a loss on debt repricing recognized in the first quarter of 2024 that did not recur, and the receipt of dividends in our money market accounts.

Previous wording

Income taxes decreased $16.4 million to an income tax benefit of $19.4 million for the three months ended September 30, 2024, compared to an income tax benefit of $3.0 million forthe three months ended September 30, 2023. As a percentage of pre-tax income, our effective tax rate for the three months ended September 30, 2024 increased to 84.3% compared to (10.8)% in the comparable period of 2023. Our effective tax rate for the three months ended September 30, 2024 was impacted by valuation allowances accrued year-to-date associated with the forecasted mix of jurisdictional earnings, and forecasted U.S. income tax credits. Our effective tax rate for the three months ended September 30, 2023 was impacted by a change in the forecasted full year earnings.

Current wording

The provision for income tax increased $4.5 million to $9.5 million for the three months ended March 31, 2025, compared to $5.0 million forthe three months ended March 31, 2024. As a percentage of pre-tax income, our effective tax rate for the three months ended March 31, 2025 increased to 81.6% compared to 43.3% in the comparable period of 2024. The increase in our effective tax rate for the three months ended March 31, 2025 was primarily associated with stock compensation adjustments and the estimated loss on assets held for sale related to our Jack Wolfskin business, which we expect will not be deductible for income tax purposes. Our effective tax rate for the three months ended March 31, 2024 was impacted due to tax adjustments related to stock-based compensation and the establishment of valuation allowances on certain deferred tax assets.

Previous wording

The following table presents a reconciliation of our results for the three months ended September 30, 2024 and 2023 to our non-GAAP results for the same periods (in millions, except per share information):

Current wording

The following table presents a reconciliation of our GAAP results for the three months ended March 31, 2025 and 2024 to our non-GAAP results for the same periods (in millions, except per share information):

Previous wording

On a GAAP basis, net income decreased to a net loss of $3.6 million for the three months ended September 30, 2024 compared to net income of $29.7 million for the three months ended September 30, 2023. Diluted loss per share was $(0.02) for the three months ended September 30, 2024 as compared to diluted earnings per share of $0.16 for the same period in 2023. On a non-GAAP basis, excluding the items described in the table above, our net income and diluted earnings per share for the three months ended September 30, 2024 would have been $4.3 million and $0.02 per share, respectively, compared to $35.8 million and $0.19 per share, respectively, for the same period in 2023. The decrease in GAAP and non-GAAP net income was primarily due to a decrease in segment operating income as discussed below, combined with the unfavorable impact of foreign currency fluctuations and an increase in interest expense.

Current wording

On a non-GAAP basis, excluding the items described in the table above, our net income and diluted earnings per share for the three months ended March 31, 2025 would have been $20.3 million and $0.11 per share, respectively, compared to $14.4 million and $0.08 per share, respectively, for the same period in 2024. The increase in non-GAAP net income for the three months ended March 31, 2025 was primarily due to an increase in segment operating income as discussed above, partially offset by an increase in the provision for income taxes.

Previous wording

Our cash and cash equivalents, including restricted cash, increased $48.7 million to $447.5 million at September 30, 2024 from $398.8 million at December 31, 2023. During the nine months ended September 30, 2024, we used our cash and cash equivalents in addition to proceeds received from lease financings to fund operations, purchase capital expenditures, repurchase stock, and complete the BigShots acquisition. Additionally, during the second quarter of 2024, we made a $50.0 million partial repayment of the outstanding principal of our Term Loan B. We believe that our existing funds and existing sources of and access to capital and any future financings, as necessary, are adequate to fund our future operations. For further information related to our financing arrangements, see Note 6 “Financing Arrangements,” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.

Current wording

Our cash and cash equivalents, including restricted cash, decreased $127.6 million to $322.7 million at March 31, 2025 from $450.3 million at December 31, 2024. The seasonal decrease in cash and cash equivalents was primarily related to cash used in operating activities of $85.2 million and cash used in investing activities of $70.0 million, partially offset by cash provided by financing activities of $25.1 million. During the three months ended March 31, 2025, we used our cash and cash equivalents in addition to proceeds received from lease financings to fund operations and purchase capital expenditures. We believe that our existing funds and existing sources of capital are adequate to fund our future operations, as necessary. For further information related to our financing arrangements, see Note 5 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.

Previous wording

Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. Our Active Lifestyle accounts receivable balances are generally higher during the third and fourth quarters, primarily due to the seasonal concentration of sales for the Jack Wolfskin business during the fall and winter seasons. Our Topgolf venue business primarily records revenue and collects payment at point-of-sale, therefore, Topgolf’s accounts receivable balance is smaller than our other business segments and primarily consists of media partnership receivables. As of September 30, 2024, our consolidated net accounts receivable increased to $286.4 million from $200.5 million at December 31, 2023. The increase reflects the seasonality of our golf equipment sales. Net accounts receivable as of September 30, 2024 decreased $18.2 million compared to September 30, 2023, primarily due to decreased net sales.

Current wording

Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. Our Active Lifestyle accounts receivable balances are generally higher during the third and fourth quarters, primarily due to the seasonal concentration of sales for the Jack Wolfskin business during the fall and winter seasons. Our Topgolf venue business primarily records revenue and collects payment at point-of-sale, and therefore, Topgolf’s accounts receivable balance is lower than our other business segments and primarily consists of media partnership receivables. As of March 31, 2025, our consolidated net accounts receivable increased to $372.2 million from $175.7 million at December 31, 2024. The increase primarily reflects the seasonality of our golf equipment sales. Net accounts receivable as of March 31, 2025 decreased $51.7 million compared to March 31, 2024, primarily due to decreased net sales as well as $17.0 million of Jack Wolfskin accounts receivable which has been reported as part of our current assets held for sale.

Previous wording

Our inventory balance fluctuates throughout the year as a result of the general seasonality of certain operating segments within our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. Active Lifestyle inventory levels start to increase during the second quarter and continue to increase into the third and fourth quarters primarily due to the seasonal nature of our Jack Wolfskin business, whose products are significantly geared towards the fall and winter seasons. Topgolf is primarily a service-based business which maintains lower inventory balances than our other business segments, primarily consisting of food and beverages as well as retail merchandise and Toptracer inventory. As of September 30, 2024, our inventory decreased $128.0 million to $666.4 million, compared to December 31, 2023, which reflects the general seasonality of our business combined with the sell-through of out-of-season inventory in our Active Lifestyle business. Our inventory decreased $70.1 million as of September 30, 2024, compared to September 30, 2023, also primarily due to inventory reduction initiatives.

Current wording

Our inventory balance fluctuates throughout the year as a result of the general seasonality of certain operating segments within our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. Active Lifestyle inventory levels start to increase during the second quarter and continue to increase into the third and fourth quarters primarily due to the seasonal nature of our Jack Wolfskin business, whose products are significantly geared towards the fall and winter seasons. Topgolf is primarily a service-based business which maintains lower inventory balances than our other business segments, primarily consisting of food and beverages as well as retail merchandise and Toptracer inventory. As of March 31, 2025, our inventory decreased $103.4 million to $653.9 million, compared to December 31, 2024. Our inventory decreased $49.0 million as of March 31, 2025, compared to March 31, 2024. The decrease compared to December 31, 2024 and March 31, 2024 was primarily due to the $75.3 million reclassification of Jack Wolfskin inventory to assets held for sale.

Previous wording

Our principal sources of liquidity consist of our existing cash and cash equivalent balances, funds expected to be generated from operations and available funds from our credit facilities. Based on our current cash balances, estimates of funds expected to be generated from operations, and the current and projected availability under current or future credit facilities, we believe we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q.

Current wording

Our principal sources of liquidity consist of our existing cash and cash equivalent balances, funds expected to be generated from operations and available funds from our credit facilities. Based on our current cash balances, estimates of funds expected to be generated from operations, and the current and projected availability under current credit facilities, we believe we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q.

Previous wording

Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products and services, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023).

Current wording

Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024).

Previous wording

On March 19, 2024 we entered into an amendment to the 2023 Term Loan B in order to decrease the interest rate and future interest expense on the 2023 Term Loan B and on May 31, 2024, we made an additional discretionary $50.0 million principal payment on the 2023 Term Loan B. As of September 30, 2024, we had $863.0 million in cash and availability under our credit facilities, which is an increase of $129.0 million compared to September 30, 2023. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.

Current wording

On March 19, 2024 we entered into an amendment to the 2023 Term Loan B in order to decrease the interest rate and future interest expense on the 2023 Term Loan B. As of March 31, 2025, we had $805.0 million in cash and availability under our credit facilities, which is an increase of $85.3 million compared to March 31, 2024. Information about our credit facilities and long-term debt is presented in Note 5 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.

Previous wording

As of September 30, 2024, approximately 38% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.

Current wording

As of March 31, 2025, approximately 44% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.

Previous wording

The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the nine months ended September 30, 2024 was not material to our financial position, results of operations or cash flows.

Current wording

The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the three months ended March 31, 2025 was not material to our financial position, results of operations or cash flows.

Previous wording

Total estimated capital expenditures, net of reimbursements by third party real estate financing partners, for the year ending December 31, 2024, are expected to be approximately $190.0 million, comprised of $60.0 million for our legacy business and $130.0 million for the Topgolf business.

Current wording

Total estimated capital expenditures, net of reimbursements by third party real estate financing partners, for the year ending December 31, 2025, are expected to be approxim ately $155.0 million, comprised of $60.0 million for our core business and $95.0 million for the Topgolf business.

Previous wording

For the nine months ended September 30, 2024, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024.

Current wording

For the three months ended March 31, 2025, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on March 3, 2025.