Q3 Financial Reports – Key Takeaways

  • Big Q3 sales numbers for Acushnet, even bigger numbers for Callaway
  • Callaway’s $826 million in sales is a company record, paced by Topgolf
  • Acushnet sales hit $521 million despite a drop in ball sales
  • Callaway expects to top $3 billion in sales in 2021

If the Q3 financial reports for golf’s two top companies tell us anything, it’s this:

It’s a one-horse race, baby.

Callaway and Acushnet have battled neck and neck in terms of overall size, sales and profits. But with Callaway merging with/acquiring Topgolf this year, it’s no longer even a contest.

The top line tells the story: Acushnet is reporting Q3 sales of $521.6 million. A nice eight-percent jump over Q3 of last year and a full 25 percent better than the pre-pandemic Q3 of 2019.

Callaway? Try $826 million in Q3 sales.

That’s 80 percent more than Q3 of last year and nearly 100 percent more than Q3 of 2019.

As a well-seasoned and cynical journalist, all I can say is …


Callaway Q3 financial reports

Q3 Financials: Callaway

Let’s put Callaway’s Q3 net sales of $826 million into perspective.

If you were to combine the total annual sales of Mizuno, COBRA, Wilson and Cleveland/Srixon/XXIO, you might—might—be within shouting distance of Callaway’s Q3 sales.


How did Callaway do it? You could say it was a team effort but February’s addition of Topgolf is like adding Babe Ruth, Ted Williams and Sandy Koufax at the trade deadline.

“Topgolf’s fun, inclusive, social environment is in high demand among customers of all skill levels and ages,” Callaway CEO Chip Brewer said in a statement. “This powerful combination of off-course and on-course golf, entertainment, dining and outdoor living is unlike any other company in the market today.”

Callaway Q3 financial report

Earlier this year, Callaway realigned into three business segments: Topgolf, Golf Equipment and Apparel, Gear and Other. In Q3, Topgolf was Callaway’s biggest unit with topline sales of $334 million. Golf Equipment totaled $290 million for the quarter (up eight percent over last year, up 38 percent over Q3 of 2019). Apparel, Gear and Other sales hit $233 million, up 12 percent over last year and eight percent over 2019.

Looking at those numbers another way, two-thirds of Callaway’s Q3 revenue came from outside the golf equipment segment.

The Topgolf Impact

Same-venue sales for existing Topgolf locations are working their way back up to pre-pandemic levels. Walk-in traffic and, particularly, social event bookings are back up and two new venues opened in Q3: Long Island, N.Y., and Colorado Springs, Colo. Callaway expects several more to open by the end of the year, bringing the total to 67 Topgolf facilities in the U.S. to go along with three in the U.K.

The $334 million in Q3 sales brings the Topgolf year-to-date total to $752 million since the end of February. Quarterly operating profit for Topgolf operations was $24 million for a profit margin of just over seven percent.


A survey this year by the National Golf Foundation (commissioned by Callaway) uncovered some interesting Topgolf tidbits. First off, more than half of Topgolf guests identify themselves as non-golfers. Of those non-golfers who visited Topgolf, 75 percent say they’re now interested in taking up the game for real.

Also in Q3, Callaway paid $30 million for a minority stake in the privately held Five Iron Golf, an urban indoor golf and entertainment chain. Five Iron Golf is like your local bowling alley but with golf. It features simulators, entertainment, food and drink along with lessons and club fittings. Select locations feature The Fitting Lab, a Golf Digest Top 100 club fitter.

There are nine Five Iron Golf locations in cities such as New York Chicago, Baltimore, Vegas, Philly, DC and Pittsburgh, plus an international location in Singapore. Seven more are in the pipeline.

The deal includes a non-exclusive marketing agreement allowing customers to demo Callaway gear.

Five iron golf

The Rest of The Story

Yeah, Topgolf is a big story but the rest of the report is plenty fascinating. The Q3 financial report shows golf club sales up 9.5 percent over last year at nearly $230 million. Golf ball sales were up slightly over last year ($60 million versus $58 million) but were up nearly 42 percent compared to Q3 2019.

Golf equipment operating income, however, was down nearly 20 percent compared to last year due to much higher freight costs.

Year-to-date club sales are nearly $866 million, a 40-percent increase over last year. Golf ball sales are at $202 million, up nearly 33 percent. Apparel sales are up 41 percent for the year while Gear and Other are up more than 28 percent.

Regionally, U.S. sales for Q3 hit $552 million (up 158 percent over last year). Sales in Europe, Japan and what Callaway calls the Rest of World are also up 12 to 19 percent.

Year-to-date sales in the U.S. sit at nearly $1.6 BILLION, a 162-percent increase over 2020. Europe, Japan and Rest of World are also up bigly.

In total, Callaway’s year-to-date sales for the first three quarters sit at $2.422 BILLION. To put that into perspective, Callaway’s 12-month sales were $1.6 billion in 2020 and $1.7 billion in 2019.

It’s no understatement to say Callaway is playing a completely different corporate game today than it was just 10 months ago.

Q3 Financial Reports: Acushnet

Clearly, Acushnet isn’t playing the same game as Callaway.

Despite fewer “holy crap” moments, Acushnet’s Q3 financial report shows what you’d expect: solid, steady, profitable growth. Q3 sales reached $521 million, an increase of eight percent over last year and 25 percent from 2019.

Acushnet Q3 financial report

Year-to-date sales numbers are equally impressive, topping $1.7 billion. That’s up 45 percent over last year and 32 percent over 2019. Like Callaway, Acushnet has already exceeded its total sales from 2020. Acushnet is also showing a $39-million net profit for the quarter, down nearly $24 million from last year. We’ll look at that in more detail in a moment.

“The company delivered a strong third-quarter performance … despite being constrained by supply chain disruptions across all segments,” said Acushnet CEO David Maher in a statement. “Looking ahead, we anticipate supply chain disruptions to continue throughout the fourth quarter and into 2022.”

Supply chain issues hit Acushnet in two of its strengths in Q3: golf balls and wedges.

For the quarter, ball sales were down nearly two percent compared to 2020. Acushnet says the drop is due to supply chain disruptions impacting its lower-priced performance ball lines as well as the AVX line. Surlyn is one of the many materials in short supply globally and, while it’s used as a cover material for lower-tier balls, it’s used as the mantle layer for premium balls such as the Pro V1. If there’s only so much Surlyn to go around, it would make sense to use it for the company’s flagship product.

Acushnet Q3 financial report

Additionally, I don’t know if you tried to buy a Vokey anywhere in Q3 but Acushnet says wedge shortages hurt sales considerably in Q3. Putters were also in short supply but the new TSi metal woods fueled a 12-percent overall increase in club sales.

A Deeper Look

Specifically, Acushnet ball sales topped $167 million in Q3 (as mentioned, a nearly two-percent drop from last year). Club sales were nearly $136 million and Titleist gear sales (hats, bags, etc.) were just under $47 million (up five percent over 2020).

FootJoy was the other big winner in Q3 with sales topping $138 million, up 19 percent over last year. Apparel and footwear paced that growth, although Acushnet says glove sales were down due to supply chain issues.

Year-to-date numbers show club sales at $444 million, a 55 percent increase over 2020. Titleist gear sales stand at $165 million (up 37 percent) and FootJoy is at $462 million (up 47 percent). And despite the down quarter, Acushnet’s golf ball sales remain otherworldly, topping $543 million. That’s a 40-percent jump (nearly $155 million) compared to 2020.


Because perspective is all, Callaway’s year-to-date ball sales are at just over $202 million, a nearly 33-percent jump over 2020. Callaway may be a freight train and a powerful No. 2 in ball sales but the numbers suggest it’s losing ground.

Now About That Profit Number …

When you’re talking about billion-dollar enterprises, quarterly profits and losses are often accounting maneuvers. Public companies will usually provide GAAP (Generally Accepted Accounting Principles) and Non-GAAP numbers, along with EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) figures to give investors the warm fuzzies.

There’s nothing shady or sneaky about it. It’s just that sometimes you have to re-value a recent acquisition or show other one-time accounting expenses that aren’t indicative of the overall health of the business.

That’s why the Q3 net profit numbers for both Acushnet and Callaway are so interesting.

Acushnet’s Q3 financial report shows a net profit of just more than $39 million on sales of more than $521 million. That’s down 38 percent from last year’s Q3 net profit, despite overall sales being up. There are a couple of reasons.

First, the cost of doing business is back to what might be considered normal levels. During the pandemic, salespeople weren’t traveling and every company was watching all of its costs. Acushnet’s Selling, General and Administrative Expense line item includes costs such as commissions, marketing and promotions. In Q3 of 2020, that line item totaled just less than $153 million. This year, it was nearly $200 million.

As you’d expect, Acushnet’s year-to-date net profit is way up compared to 2020, standing at $205 million versus $74 million last year.

And while it wasn’t in the press release headlines, Callaway actually posted a GAAP $16-million net loss for Q3 (Non-GAAP showed a $26-million net profit).

Why the loss? Picking through the numbers shows a $90-million increase in Selling, General and Administrative Expenses compared to Q3 last year. Additionally, there’s an additional $20 million in expenses listed as “other” that Callaway says includes increased interest costs related to the Topgolf merger.

Q3 Financial Reports: What Does It All Mean?

As always, this is the part where we say we are by no means financial experts or investment counselors. We’re just folks who love the business of golf and like to read.

That said, the Q3 financial reports tell us that golf’s two biggest players may be competitors but they’re not playing the same game.

Not by a long shot.

Callaway has been in acquisition mode over the last half-dozen years, buying up Ogio, TravisMathew, Jack Wolfskin and Topgolf. It has morphed into something unique: a hybrid golf/lifestyle/entertainment giant that doesn’t depend on club sales to make money. Year-to-date numbers do show equipment sales have the highest profit margin for Callaway at 21 percent (although current freight costs take a bite out of that). However, operating profit from Topgolf and Apparel for Q3 exceeded Golf Equipment by $13 million or just over 22 percent.

Acushnet, on the other hand, doesn’t appear to be trying to morph into anything other than what it already is: a golf and apparel company. The numbers clearly show Acushnet’s dominance in the golf ball market and it still sells plenty of sticks with which to hit those balls.

While both companies mentioned supply chain challenges in their Q3 financial reports, Acushnet felt those challenges perhaps a little more deeply. But, then again, it didn’t have Topgolf to fall back on. In fact, if you take Topgolf out of the equation, Acushnet and Callaway are virtually tied in overall sales.

As it stands, however, Callaway is looking at Acushnet in the rear-view mirror.

Full-Year Projections

Both companies are updating their full-year sales projections, which is also something investors like. For the year, Callaway expects sales to top $3.1 billion, give or take a few million. Let that sink in for a second.

And don’t think the company is due for a fall, either. Size matters and Callaway continues to spend on equipment R&D. And don’t snooze on the Five Iron Golf deal, either. That’s exactly how Callaway got started with Topgolf.

Callaway stock closed at $29.01 yesterday, just prior to the Q3 financial report release. We’ll see what happens today.

Acushnet, for its part, projects year-end sales in the $2-billion range. The company is clearly confident in where it’s going, as it authorized an additional $100 million to repurchase common stock in October, bringing the repurchase program total to $200 million.

Acushnet stock stands at $56.30 this morning.

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