Callaway Golf Explores Price Increases as Energy, Commodity Costs Soar

Callaway Golf - Inflation Costs - Energy, Freight, Commodities
Callaway costs related to freight, energy, and commodities have skyrocketed due to inflation. (Callaway Golf)

Callaway Golf Chief Financial Officer Brian Lynch said the company will “explore price increases” due to a difficult labor market, increased freight costs and increased commodity expenses.

“These are impacting all aspects of our business,” Lynch told Wall Street analysts on May 10. “We are seeing increased freight costs in terms of increased container prices, but also increased air freight expense as well.

“We’re also seeing an increase in commodity prices from steel to titanium, from rubber urethane to textiles and from cheese to chicken wings.”

Callaway Golf the past couple of years has placed its financial guidance close to the vest, but in the May 10 earnings report for Q1 of 2021, company President Chip Brewer said expects that revenue and earnings for full year 2021 for the “legacy” Callaway business will exceed 2019 levels and for the Topgolf business to “meet or exceed” the full 12-month, 2019 levels.

For reference, in 2019, the Callaway reported revenue of $1.70 billion and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $211 million; the Topgolf business reported revenue of $1.06 billion and Adjusted EBITDA of $59 million.

Callaway’s reported full year 2021 financial results will only include 10 months of Topgolf results (excluding January and February), which were in the aggregate $143 million in revenue and $2.3 million in Adjusted EBITDA.

Those combined top line numbers of Callaway’s legacy business and Topgolf will make Callaway the golf industry’s first $2 billion company. With the additions of Topgolf, apparel companies Travis Mathew and Jack Wolfskin, and luggage company Ogio, Callaway has become more diversified, and transitioned from a pure golf equipment brand to a golf entertainment and lifestyle company.


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