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Q2 2024 Revenue Increases 32% YoY to $35.4 Million

Q2 2024 Net Income Increases 36% YoY to $2.8 Million

New Production, Distribution and Product Initiatives Fueling Rapid Growth

GARLAND, Texas, Aug. 12, 2024 /PRNewswire/ — Massimo Group (NASDAQ: MAMO) (“Massimo”), a manufacturer and distributor of powersports vehicles and pontoon boats, has reported its financial and operational results for the second quarter ended June 30, 2024.

Key Financial Q2 2024 and Subsequent Operational Highlights and Business Updates

• Revenue increased 32% to $35.4 million in Q2 2024 compared to $26.7 million in Q2 2023.
• Gross profit increased 42% to $11.5 million in Q2 2024 from $8.1 million in Q2 2023. Gross margin increased 217 basis points to 32.5% in Q2 2024 from 30.3% in Q2 2023.
• Net income increased 36% to $2.8 million in Q2 2024, or $0.07 per basic and diluted share, as compared to net income of $2.1 million, or $0.05 per basic and diluted share, in Q2 2023.
• Announced the adoption of a new automated vehicle assembly robot line to be installed in the third calendar quarter at its 376,000 square foot factory in Garland, Texas to support production of its ATV and UTV vehicles lines.
• 90,000 sq. ft. expansion of its manufacturing facility in Garland, Texas, to support increased production across its motor and marine product verticals.
• Entered into strategic partnership agreement with Armlogi Holding Corp (“Armlogi”), a U.S.-based warehousing and logistics service provider, to provide access to Armlogi warehousing facilities and tailored logistics services for fast order fulfillment of UTVS, ATVs, Go-Karts and Golf Carts.
• Entered into an ongoing national agreement with a global omnichannel retailer for its youth series Mini Tractor and Mini 125 Go Karts to be sold in stores.
• Entered into an ongoing agreement with Fleet Farm, a retailer serving active, outdoor, suburban and farm communities in the Midwest U.S., for its UTV, ATV, and youth series product lines to be sold in stores.
• Launched new GKD 350 All-Terrain Go Kart, combining iconic styling with powerful performance in a rugged two-seater go-kart perfect for conquering any terrain.
• Exhibited Massimo Motor vehicles at the Outdoor Power Equipment Hoedown for Mid-States Distributing Company, Inc., held at the Gaylord Opryland in Nashville, TN.
• Closed $5.85 million initial public offering, listing on Nasdaq Capital Market under the ticker symbol “MAMO” on April 4, 2024.
• Company rang the closing bell at the Nasdaq MarketSite in Times Square, New York on Monday, July 15, 2024.

Management Commentary

“During the second quarter we focused on strategic expansions in production, distribution and products to support ongoing revenue momentum,” said David Shan, Founder, Chairman & CEO. “With significant top and bottom-line growth on strong sales and margin improvement, we continue to build manufacturing capacity aimed at enhancing flexibility and increasing annual production. We continued to add new distribution partners and retailers to increase our national footprint and drive sales across our existing and new diversified product portfolio.

“Several production initiatives during the quarter are positioning us to further expand output levels each month. A new expansion has added 90,000 sq. ft. to our manufacturing facility in Garland, Texas to support increased production across motor and marine product verticals. At this facility we are also launching a new automated vehicle assembly robot line expected to be installed in the coming weeks. This automation is expected to improve efficiency by 50% and enhance safety for production of ATV and UTV vehicles lines.

“In addition to our facility expansion projects to accommodate growth initiatives, during the quarter we partnered with Armlogi, a U.S.-based warehousing and logistics service provider, to provide access to Armlogi warehousing facilities and tailored logistics services for fast order fulfillment of our UTVS, ATVs, Go-Karts and Golf Carts. Armlogi will receive containers of Massimo vehicle kits arriving from Asian suppliers at our warehouses in Savannah, GA, Edison, NJ, and Walnut, CA. We will provide vehicle assembly at the warehouses, and Armlogi will supply inventory management, storage services, logistics, and delivery to final order destinations. This partnership will enhance our operational capabilities and efficiencies by putting delivery of vehicle components, assembly and shipping closer to order destinations.

“In-store distribution channels also grew during the quarter with new agreements with Tractor Supply, Fleet Farm and a global omnichannel retailer. Building on the success of our current agreement with Tractor Supply providing our full Massimo Motor product lineup online and in stores.

We signed an ongoing national agreement with a global omnichannel retailer for the youth series Mini Tractor and Mini 125 Go Kart to be sold in stores. The retailer’s online marketplace currently features over 100 Massimo products, and with the expanded partnership, the two products have been eligible to be stocked at over 1,300 stores in 13 states since May 2024. We also entered into an ongoing agreement with Fleet Farm for six UTV, ATV, and youth series products to be sold in stores and featured on the retailer’s online marketplace. These national in-store opportunities with retailers position us for accelerating sales across the U.S.

“Looking ahead, our expanding production capabilities, including an automated vehicle assembly robot line and the Armlogi partnership, are expected to allow Massimo to meet the growing demand of our products. We believe with increased operating efficiencies we can further enhance margins while continuing to grow our revenue and expand our product line with new models and capabilities like our new GKD 350 All-Terrain Go Kart. We continue to focus on new distribution channels and additional products with existing partners, which now stands at over 2,800 retail locations promoting our brand in 48 states. Taken together, we are rapidly leveraging our position to build market share and deliver long-term value to our shareholders,” concluded Mr. Shan.

Second Quarter 2024 Financial Results

For the three months ended June 30, 2024, revenues increased by $8.7 million, or 32.4%, to $35.4 million, compared to $26.7 million in the prior year period. The increase in revenue was primarily due to the combined effect of rising demand in the U.S. ATV and UTV market and a modified sales strategy.

Revenue from sales of UTVs, ATVs and e-bikes increased by $11.9 million, or 53.3%, from $22.3 million in the second quarter of fiscal 2023, to $34.2 million in the second quarter of fiscal 2024. The increase in revenue was attributable to the expansion into more large retail stores in the US and to a shift in sales strategy, focusing mostly on in-store sales, which generally involve larger volumes and fewer returns.

Revenue from sales of pontoon boats decreased by $3.2 million, or 73.5%, from $4.4 million in the second quarter of fiscal 2023, to $1.2 million in the second quarter of fiscal 2024. The decrease in revenue was primarily attributable to the fact that the company shifted from retailing to dealer sales starting in fiscal 2024 and the dealers have experienced high rejection rates at the floorplan financing providers such as Northpoint. This is consistent with the industry-wide trend.

Gross profit increased by $3.4 million, or 41.9%, from $8.1 million in the second quarter of fiscal 2023, to $11.5 million in the second quarter of fiscal 2024. Gross profit margin was 32.5% in the second quarter of fiscal 2024, compared with 30.3% in the same period last year. The increase in the gross profit margin was primarily attributable to higher net sales partly due to decreased return, which was partly offset by higher cost of sales due to increased freight costs in the second quarter of fiscal 2023 as compared to last year.

The cost of revenue on UTVs, ATVs and e-bikes increased by $8.2 million, or 55.7%, from $14.8 million in the second quarter of fiscal 2023 to $23.0 million in the second quarter of fiscal 2024, and the gross profit increased by $3.6 million, or 48.6%, from $7.6 million in the second quarter of fiscal 2023 to $11.2 million in the second quarter of fiscal 2024. The gross margin decreased by 1.1%, from 33.9% in the second quarter of fiscal 2023 to 32.8% in the second quarter of fiscal 2024. The increase in the cost of revenue was in line with the increase in sales. The slight decrease in gross margin was mainly due to a rise in global container freight in the second quarter of fiscal 2024. Freight costs increased in the second quarter of fiscal 2024 when compared with last year.

The cost of revenue on pontoon boats decreased by $3.0 million, or 76.5%, from $3.9 million in the second quarter of fiscal 2023 to $0.9 million in the second quarter of fiscal 2024, and the gross profit decreased by $0.3 million, or 51.6%, from $0.5 million in the second quarter of fiscal 2023 to $0.3 million in the second quarter of fiscal 2024. Gross margin increased from 12.3% in the second quarter of fiscal 2023 to 22.4% in the second quarter of fiscal 2024. The increase in gross margin was primarily because of strategically focusing on selling higher-margin models of pontoon boats.

Selling and marketing expenses increased by $0.6 million, or 24.6%, from $2.5 million in the second quarter of fiscal 2023 to $3.1 million in the second quarter of fiscal 2024. The increase in selling expenses was mainly due to an increase in shipping and handling fees.

General and administrative expenses increased by $0.8 million, or 22.7%, from $3.3 million in the second quarter of fiscal 2023 to $4.1 million in the second quarter of fiscal 2024. The increase was mainly due to increased salaries and benefits, a one-time impairment loss, and rent expense, which were partly offset by a decrease in professional and legal fees.

Total operating expenses increased 36.2% to $7.9 million for the three months ended June 30, 2024, compared to $5.8 million in the prior year second quarter.

Net income for the three months ended June 30, 2024, was $2.8 million, or $0.07 per basic and diluted share, as compared to net income of $2.1 million, or $0.05 per basic and diluted share, in the three months ended June 30, 2023.

Cash and cash equivalents totaled $1.3 million at June 30, 2024, as compared to $0.8 million at December 31, 2023. On April 24, 2024, Massimo closed its initial public offering with aggregate gross proceeds, before deducting underwriting discounts and commissions and other offering expenses payable by Massimo, of $5.85 million.

Net cash used by operating activities was $7.1 million for the six months ended June 30, 2024, compared to net cash provided of $2.7 million in the six months ended June 30, 2023, primarily due to increases in accounts receivable and inventory of $1.9 million and $5.0 million, respectively, and a decrease in accounts payable of $4.5 million. This is consistent with the company using part of the IPO proceeds as working capital to grow sales.

About Massimo Group

Massimo Group (NASDAQ: MAMO) is a manufacturer and distributor of powersports vehicles and pontoon boats. Founded in 2009, Massimo Motor believes it offers some of the most value packed UTV’s, off-road, and on-road vehicles in the industry. The company’s product lines include a wide selection of farm and ranch tested utility UTVs, recreational ATVs, and Americana style mini-bikes. Massimo Marine manufacturers and sells Pontoon and Tritoon boats with a dedication to innovative design, quality craftsmanship, and great customer service. Massimo is also developing electric versions of UTVs, golf-carts and pontoon boats. The company’s 376,000 square foot factory is in the heart of the Dallas / Fort Worth area of Texas in the city of Garland. For more information, visit massimomotor.com, massimomarine.com and www.massimoelectric.com.

Forward-Looking Statements

This press release contains statements that constitute “forward-looking statements,” including with respect to the initial public offering and the use of proceeds thereof. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “predict,” “project,” “target,” “potential,” “seek,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “plan,” and other words and terms of similar meaning. These forward-looking statements include information concerning statements regarding future cash needs, future operations, business plans and future financial results; and any other statements that are not historical facts. No assurance can be given that the proceeds of the offering will be used as indicated. Forward-looking statements are subject to numerous conditions, many of which are beyond the control of Massimo, including those set forth in the “Risk Factors” section of Massimo’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”). Copies are available on the SEC’s website, www.sec.gov. Massimo undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.

Company

Dr. Yunhao Chen

Chief Financial Officer

Massimo Group

[email protected]

Investor Relations 

Chris Tyson 

Executive Vice President

MZ North America

Direct: 949-491-8235

[email protected]

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Longstanding partnership elevates with co-creation of performance tennis rackets and accessories

CHICAGO, Aug. 8, 2024 /PRNewswire/ — Wilson Sporting Goods Co. today announces the launch of the RF Collection, a revolutionary tennis equipment line inspired, designed and developed in partnership with Roger Federer. The collection is rooted in legacy, driven by performance and innovated for the future, representing Federer’s profound impact on the sport and his unwavering dedication to excellence. The RF Collection by Wilson will launch globally today, coinciding with Roger Federer’s birthday.

“Wilson’s partnership with Roger over the last 20 years has been one of the most remarkable relationships in the history of sport, and we are thrilled to take it to the next level with the RF Collection,” says Jason Collins, Global General Manager of Wilson Racquet Sports. “This collection has been years in the making, inclusive of in-depth racket testing, designing and collaborating with Roger; we are excited to finally bring it to the court for professionals and future generations of tennis players to continue his everlasting legacy. Roger is a powerful force on the global stage, and his influence will undoubtedly continue to drive the sport of tennis and industry as a whole forward.”

In 2022, Roger Federer began collaborating with Wilson’s innovation team to create a racket for his remaining time on tour. The main goals were to increase racket head speed and maintain his versatile style against heavy baseliners, while retaining a familiar Wilson racket feel. Despite retiring that year, Roger and Wilson utilized these insights to develop the RF 01, devoting countless hours to testing and reviewing the designs to create the most premium performance tennis racket line. This collaboration will keep Roger actively involved in tennis, partnering with Wilson to continue growing the sport, with the RF 01 being the first line in this signature collection.

“Having spent my whole career playing with Wilson rackets, I’m excited about the new RF Collection that we’ve created together,” says Roger Federer. “I’m honored that Wilson is continuing my legacy by further innovating the game I love, and I hope the collection inspires the stars of today as much as I was inspired the first time that I picked up a Wilson racket.”

The RF Collection is a testament to Roger’s illustrious career with Wilson, his enduring influence on the tennis world and inspiration to play it forward. With game-changing innovations, iconic design and elevated performance, this racket collection is set to redefine the game. The RF 01 line is inclusive of three rackets models, all designed and tested by Federer himself:

• RF 01 PRO: Roger’s personally built racket* and the most playable, authentic RF frame ever created ($299).
• RF 01: Built for the advanced adult player who prefers a standard weight performance frame ($279).
• RF 01 FUTURE: Ideal for the advanced next generation player utilizing a lighter frame to develop their game. The lighter weight and adjusted balance point enhance comfort and power needed by young players ($259).

Wilson technological innovations include the SABR™ FRAME DESIGN for superior performance versatility, GLIDE GUARD for reduced air resistance, BRAIDED 45 TECHNOLOGY for enhanced ball pocketing and stability and FEEL FILL for optimized vibration dampening. Style elements draw inspiration from Roger’s personal and professional life, including the iconic RF logo, as well as a unique peak design that represents the mountains of Roger’s native Switzerland.

The collection also features performance bags and accessories, such as the RF Tournament Racket Bag 15 Pack ($189), RF Practice Bag 6 Pack ($159), RF Backpack ($129), RF Racket Cover ($49), RF Premium Leather Replacement Grip ($19.95), RF Premium Replacement Grip ($10.95) and RF Dampener Pack ($6.50).

The RF Collection is now available online and in-stores at Wilson for purchase. For more information, please visit Wilson.com and follow @wilson and @wilsontennis on social.

*Pros often customize the racket they use. Racket specifications on endorsed consumer models may vary from the models used by Pros for match-play.

About Wilson:

Chicago, USA-based Wilson Sporting Goods Co. is the world’s leading manufacturer of high-performance sports equipment, apparel, footwear and accessories. The Company brings more than a century of innovation and heritage to the world of sport – celebrating the iconic moments made possible by Wilson across Racquet Sports, Baseball, Softball, American Football, Basketball, Volleyball, Soccer and Golf. In Racquet Sports, Wilson is a global leader in tennis, padel, racquetball, badminton and pickleball. Wilson is part of Amer Sports, a global group of iconic sports and outdoor brands, publicly traded on the New York Stock Exchange.

About Roger Federer:

Roger Federer is widely regarded as one of the greatest athletes and tennis players of all time. With 20 Grand Slam championships and 103 titles in singles, Federer has helped set the standard of excellence in the sport. His legacy of grace, sportsmanship, and versatility on the court endures, as he continues to actively promote and grow the sport of tennis globally.

Off the court, Federer is dedicated to philanthropy through the Roger Federer Foundation, which supports educational projects in southern Africa and Switzerland, reflecting his commitment to giving back to communities and making a positive impact.

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Combination of Iconic, Family-Founded Brands Creates Premier Global Sport and Lifestyle Company

BUFFALO, N.Y. and BOSTON, Aug. 8, 2024 /PRNewswire/ — New Era Cap, LLC (“New Era” or the “Company”), a global lifestyle brand with a deeply rooted connection to sport, fashion and culture, today announced the completion of its acquisition of ’47, a privately held premium sports lifestyle brand. Financial terms of the transaction were not disclosed.

The combined company, comprising two distinct, family-founded brands, is expected to generate approximately $2 billion in annual revenue and deliver an expanded and diversified product portfolio of apparel and accessories globally.

“This transaction is an important milestone in the history of both brands as we continue the next chapter of our growth as a premier global sport and lifestyle company,” said Christopher H. Koch, Chief Executive Officer of New Era. “We look forward to leveraging the complementary talent of our combined teams to continue strengthening our customer relationships and licensing partnerships, enhancing our premier products and delivering premium experiences to fans and consumers around the globe.”

The New Era and ’47 brands will continue to operate separate e-commerce websites and serve consumers independently from each company’s respective headquarters in Buffalo, New York, and Westwood, Massachusetts. The combined company will be led by Christopher H. Koch, Chief Executive Officer of New Era, and the current New Era and ’47 management teams.

About New Era

New Era Cap, LLC is a global lifestyle brand with a deeply rooted connection to sport, fashion and culture, and offering apparel and accessories for men, women and kids. Founded more than a century ago, New Era is recognized around the world for its craftmanship and leadership in headwear, which includes official partnerships with Major League Baseball, the National Football League and the National Basketball Association, in addition to being the headwear of choice for many global sports and events, including European soccer clubs, U.S. and European auto racing teams, Grand Slam tennis tournaments and major golf championships, among others.

Since 1920, New Era has maintained its core values of creativity and self-expression and regularly collaborates with celebrities as well as many of the most prominent and influential designers and creatives. The brand is available at 42,000 points of distribution, including 925 franchise and partner stores across 110+ countries. New Era is proudly headquartered in Buffalo, New York, with offices in 14 countries around the world. For more information, visit www.neweracap.com.

About ’47

’47 is a privately held premium sports lifestyle brand offering apparel and headwear to sports fans everywhere. Since its founding as a single street cart outside Fenway Park in Boston, ’47 has grown into a leading brand that uniquely melds sport and style. ’47 is an official licensee of Major League Baseball, the National Basketball Association, the National Football League, the National Hockey League, NASCAR, over 900 collegiate programs and many international football clubs. ’47 was acquired by New Era in August 2024. For more information, please visit https://www.47brand.com/.

Media Contacts

New Era

Leigh Parrish / Kate Thompson

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

[email protected] / [email protected]

John Mackowiak

The Martin Group

518-618-1175

[email protected]

’47

Rebecca Shapiro / Mikaela Duhs / MC Miskell

Shorefire Media

917-446-2410

[email protected]

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Announces Formal Strategic Review of Topgolf Including Organic and Inorganic Alternatives 

HIGHLIGHTS

• Q2 Net Income of $62 million, Non-GAAP Net Income of $83 million, and Adjusted EBITDA of $206 million were all ahead of expectations.
• Q2 Consolidated Revenues were down 1.9% year-over-year and full year Revenue and Adjusted EBITDA outlook lowered to a range of $4,200 – $4,260 million and $570 – $590 million, respectively.
• Maintained #1 U.S. model market share in Driver, Fairway Woods and Irons with Ai Smoke clubs and continued to drive market share gains in golf ball driven by the new Chrome Tour family of golf balls.
• Successfully completed discretionary $50 million pay down of term loan debt.
• First half cash provided by operations improved by $173 million compared to prior year.

CARLSBAD, Calif., Aug. 7, 2024 /PRNewswire/ — Topgolf Callaway Brands Corp. (the “Company” or “Topgolf Callaway Brands”, “we”, “our”, “us”) (NYSE: MODG) announced its financial results for the second quarter ended June 30, 2024.

“Despite macro headwinds including the cumulative impact of negative FX trends, persistently high inflation and recent softer-than-expected traffic to our Topgolf venues, I am incredibly proud of our team’s ability to drive market share gains in our products business as well as the continued strengthening of the digital capabilities and fundamental venue profitability at Topgolf,” commented Chip Brewer, President and Chief Executive Officer of Topgolf Callaway Brands. “TravisMathew continues to gain market share and grow its highly profitable direct to consumer business with 10 stores opening this year.   Jack Wolfskin successfully rightsized its operations to focus on key markets in Central Europe and China. And our Golf Equipment results remain strong, especially in the U.S. market, where our club market share continues to lead the industry and our ball share continues to grow. The successful rebranding and redesign of our premium Chrome Tour family of balls highlights our excellence in R&D and commitment to innovation.

Mr. Brewer continued “As we look forward, we remain convinced that Topgolf is a high-quality business with significant future opportunity.  It is transforming the game of golf, and we believe it will deliver substantial growth and financial returns over time.  At the same time, we have been disappointed in our stock performance for some time, as well as the more recent same venue sales performance.  As a result, we are in the process of conducting a full strategic review of Topgolf. This review includes the assessment of organic strategies to return Topgolf to profitable same venue sales growth, as well as inorganic alternatives, including a potential spin of Topgolf.  Our strategic review of Topgolf is being conducted with the help of outside advisors and is focused on maximizing long-term shareholder value. We are active in this work at present and expect to complete our strategic review of Topgolf expeditiously.  We will report back on this when the work is complete.”

CONSOLIDATED RESULTS

The Company announced the following GAAP and non-GAAP financial results for the three and six months ended June 30, 2024 and 2023:

NON-GAAP RESULTS

Non-GAAP results exclude certain non-cash and non-recurring adjustments as defined 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 2024 CONSOLIDATED RESULTS COMMENTARY

(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)

The Company’s net revenue of $1,157.8 million decreased 1.9% year-over-year, due to an 8.2% decrease in Golf Equipment as a result of a planned shift in equipment launch timing compared to last year. Active Lifestyle revenue decreased 3.2% primarily due to expected lower sales at Jack Wolfskin. Topgolf segment revenues increased 5.0% year-over-year driven by revenue from additional venues.

Income from operations decreased $13.0 million on a GAAP basis and $5.9 million on a non-GAAP basis primarily due to unfavorable changes in foreign currency.

Net income decreased $55.3 million on a GAAP basis and increased $7.5 million on a non-GAAP basis compared to the same period in the prior year. The decrease in net income on a GAAP basis was primarily attributable to a decrease in income tax benefit, the decrease in operating income previously mentioned, and higher interest expense related to new venues. On a non-GAAP basis, the increase in net income was due to a decline in income tax expense as well as lower interest expense as a result of our debt refinancing.

Adjusted EBITDA of $205.6 million was approximately flat (-0.3%) vs. the prior year, exceeding the high-end of our Q2 2024 guidance range, driven by reduced costs and strong operational efficiencies.

SEGMENT RESULTS

SEGMENT NET REVENUES

The table below provides net revenues by segment for the periods presented:

SEGMENT OPERATING INCOME

The table below provides the breakout of segment operating income for the periods presented:

SECOND QUARTER 2024 SEGMENT COMMENTARY

(All comparisons to prior periods are calculated on a year-over-year basis, unless otherwise noted)

Topgolf

• Segment revenue increased $23.6 million or 5.0%, to $494.4 million, driven primarily by new venues.
• Same venue sales of -8% were below expectations driven by softer-than-expected traffic as the business navigates the current cyclical macro challenges.
• Segment operating income increased $12.1 million, or 27.5%, to $56.1 million and Segment Adjusted EBITDA increased $17.4 million, or 18.9%, to $109.5 million primarily due to increased revenue from new venues and strong operating efficiencies.

Golf Equipment

• Segment revenue decreased $37.2 million or 8.2% to $413.8 million, in line with expectations. The decline was primarily due to the lapping effect of last year’s Big Bertha woods and irons launch, as well as changes in foreign exchange rates.
• Segment operating income decreased $19.0 million, primarily due to lower revenue, higher air freight costs and changes in foreign exchange rates, partially offset by management of operating expenses.

Active Lifestyle

• Segment revenue decreased $8.3 million or 3.2% to $249.6 million resulting primarily from previously expected lower wholesale revenue at Jack Wolfskin.
• Segment operating income decreased $4.8 million due to the decrease in revenue previously mentioned.

The following is a reconciliation of total segment operating income to income before income taxes for the periods presented:

2024 BALANCE SHEET HIGHLIGHTS

• Inventory decreased $192.7 million year-over-year to $647.1 million, across all three segments.
• The Company made a $50 million discretionary payment against the outstanding principal of its term loan debt at the end of May.
• Available liquidity, which is comprised of cash on hand plus availability under the Company’s credit facilities, increased $136 million compared to June 30, 2023.

 BUSINESS OUTLOOK

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 7, 2024, to discuss the Company’s financial results, outlook and business. The call will be webcast live on our investor relations website at https://www.topgolfcallawaybrands.com/news-and-events/presentations. 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://www.topgolfcallawaybrands.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 and Non-cash Adjustments. The Company provided information excluding certain non-cash amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to the Company’s merger with Topgolf, acquisitions of Jack Wolfskin, TravisMathew and OGIO, and reacquisition of distribution rights in the Korea apparel market. 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 2024, non-recurring items include charges related to restructuring and reorganization in the Active Lifestyle segment, currency translation adjustments for the dissolution of a foreign subsidiary, the 2024 debt repricing, a 2023 cybersecurity incident, impairment and abandonment of the Shankstars media game, and IT integration and implementation costs stemming primarily from the merger with Topgolf. For 2023, non-recurring items include legal costs, credit agency fees, and losses associated with our 2023 debt modification, combined with IT integration and implementation costs stemming primarily from the merger with Topgolf, charges related to the impairment and abandonment of the Shankstars media game, and restructuring and reorganization charges in our Topgolf and Active Lifestyle segments.

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.

Adjusted Free Cash Flow. The Company defines Adjusted Free Cash Flow as cash flows from operating activities, less capital expenditures net of proceeds from lease financing and net of proceeds from government grants.

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, non-GAAP diluted earnings per share, and Topgolf Adjusted EBITDA (together, the “Projected Non-GAAP Measures”) information provided in this release, reconciliation of such Projected Non-GAAP Measures to the most closely comparable GAAP financial measures are 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 in the future but would not impact the Projected Non-GAAP measures. 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, and other non-recurring costs and non-cash adjustments. Historically, the Company has excluded these items from the Projected Non-GAAP Measures. The Company currently expects to continue to exclude these items in future disclosures of the Projected Non-GAAP Measures 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 GAAP financial measures.

Definitions

Same venue sales. The Company defines same venue sales for its Topgolf business as sales for the comparable venue base, which is defined as the number of Company-operated venues with at least 24 full fiscal months of operations in the year of comparison.

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 (and its segments’) third quarter and full year 2024 guidance (including net revenues, Topgolf revenues, Adjusted EBITDA, Topgolf Adjusted EBITDA, non-GAAP diluted earnings per share, same venue sales growth, cash generation and diluted shares outstanding), strength and demand of the Company’s products and services, continued brand momentum, demand for golf and outdoor activities and apparel, continued investments in the business, consumer trends and behavior, future industry and market conditions, foreign currency effects and their impacts, tax rates, the completion of any strategic transaction, 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; costs, expenses or difficulties related to the merger with Topgolf, including the integration of the Topgolf business; failure to realize the expected benefits and synergies of the Topgolf merger in the expected timeframes or at all; 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 and services; any changes in U.S. 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 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 and services 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, 2023 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 Topgolf Callaway Brands

Topgolf Callaway Brands Corp. (NYSE: MODG) is an unrivaled tech-enabled Modern Golf and active lifestyle company delivering leading golf equipment, apparel, and entertainment, with a portfolio of global brands including Topgolf, Callaway Golf, TravisMathew, Toptracer, Odyssey, OGIO, Jack Wolfskin, and World Golf Tour (“WGT”). “Modern Golf” is the dynamic and inclusive ecosystem that includes both on-course and off-course golf. For more information, please visit https://www.topgolfcallawaybrands.com.

Investor Contact

Katina Metzidakis

[email protected]