Callaway Golf Company — Third Quarter 2026 Earnings Summary

Financial Performance

• Q3 2026 net sales were $436.9 million, a 5.6% decrease year-over-year from $462.6 million, though the result exceeded expectations.
• Year-to-date (nine months) net sales increased 2.6% to $1,736.6 million from $1,692.6 million.
• Q3 GAAP gross margin increased 1,210 basis points year-over-year to 51.9%, while Non-GAAP gross margin increased 520 basis points to 45.0%.
• Nine-month GAAP gross margin was 49.5% compared to 43.2% in the prior year period.
• Q3 GAAP income from continuing operations was $48.1 million versus a loss of $4.1 million in the prior year; Non-GAAP income from continuing operations was $22.9 million versus a loss of $11.1 million.
• Nine-month GAAP income from continuing operations was $198.8 million, an 89.7% increase from $104.8 million; Non-GAAP income from continuing operations was $208.5 million, a 145.6% increase from $84.9 million.
• Q3 Adjusted EBITDA was $35.9 million, a 17.3% increase year-over-year from $30.6 million.
• Nine-month Adjusted EBITDA was $324.5 million, a 31.1% increase year-over-year from $247.5 million.
• Year-to-date operating cash from continuing operations, excluding $44 million in tariff refunds, increased 45% to $228 million.
• GAAP operating expense increased 1.4% in Q3 and Non-GAAP operating expense increased 0.8%.
• Inventory increased $5.4 million year-over-year to $536.2 million as of September 30, 2026.
• The Company held $434 million in unrestricted cash and cash equivalents and $76 million in debt outstanding (including $26 million in financing leases) as of September 30, 2026.
• Deferred revenue was $17.4 million as of September 30, 2026, down from $21.5 million at the end of 2025.

Guidance and Future Outlook

• Full-year 2026 net sales outlook raised to $2.065 billion – $2.078 billion (previously $2.045 billion – $2.070 billion).
• Full-year 2026 Adjusted EBITDA outlook raised to $272 million – $280 million (previously $246 million – $260 million).
• Q4 2026 net sales are expected to be $328 million – $341 million, down from $368 million in Q4 2025.
• Q4 2026 Adjusted EBITDA is expected to be a loss of $53 million – $45 million, compared to a loss of $25 million in Q4 2025.
• Management expects Q4 results to be down year-over-year due to strategic shifts in launch timing, rationalization of lower margin business, investments in fitting, and reduced dividend income.
• The Company anticipates revenue growth for the full year 2026 and a significant improvement in full-year Adjusted EBITDA.

Business Segments and Product Lines

• Golf Equipment segment net sales decreased 7.9% in Q3 to $281.5 million but increased 3.2% year-to-date to $1,198.0 million.
• Apparel, Gear and Other segment net sales decreased 1.1% in Q3 to $155.4 million and increased 1.4% year-to-date to $538.6 million.
• Golf Equipment segment operating income increased 16.7% in Q3 to $27.2 million and 21.8% year-to-date to $245.1 million.
• Apparel, Gear and Other segment operating income increased 42.3% in Q3 to $19.5 million and 33.8% year-to-date to $104.9 million.
• Golf Clubs net sales decreased 8.9% in Q3 to $213.3 million; Golf Balls decreased 4.5% to $68.2 million; Gear, Accessories & Other decreased 7.3% to $55.9 million.
• Apparel net sales increased 2.8% in Q3 to $99.5 million.
• Successful launches included Mini Spinner fairway woods and TRTL putters in Asia.
• TravisMathew net sales increased in the quarter.
• Foreign exchange headwinds in Asia negatively impacted net sales in Q3.
• The Company is investing in new 3D printing capabilities to support long-term growth.

Market and Competitive Landscape

• The Company is focused on a "pure-play golf company" strategy following the separation of Topgolf.
• Gross margin initiatives included select price increases, cost reductions, and rationalizing lower margin business.
• The Company shifted irons launch timing to improve long-term profitability.
• The Company successfully sold the Jack Wolfskin business in 2025 and the Topgolf business in 2026, utilizing cash to pay off over $1.4 billion of debt in the first half of 2026.
• The Company sold its investment in Full Swing, recognizing a $15.4 million gain.
• The Company holds a net cash position with a strong balance sheet.

Risks and Challenges

• Q4 2026 results are expected to be down year-over-year due to strategic shifts and lower dividend income.
• Foreign exchange headwinds in Asia negatively impacted Q3 sales.
• The Company faces risks related to global economic conditions, inflation, and consumer demand.
• Potential impacts from changes in U.S. or foreign trade, tax, or import tariff policies.
• Risks include delays in supply chains, increased costs for components, and decreased participation levels in golf.
• The Company cannot provide a reconciliation of forward-looking Adjusted EBITDA to net income without unreasonable efforts due to the unpredictability of non-cash depreciation, amortization, taxes, and interest expense.

Management Commentary and Tone

• Chip Brewer, President and CEO, stated the company is "pleased with our third quarter results" and noted revenue and Adjusted EBITDA exceeded expectations.
• Management highlighted "continued strong progress on gross margins" and the benefits of the return to a focused, pure-play golf company.
• Brewer expressed confidence in the ability to strengthen the business and create long-term shareholder value, citing a "strong balance sheet and a resilient golf consumer."
• Management noted the company is continuing to return capital to shareholders while investing for growth.

Other Key Points

• The Company repurchased $135 million of common shares year-to-date through September 2026.
• Approximately 9 million shares were repurchased year-to-date, with $70 million remaining repurchase authority.
• The Company paid off over $1.4 billion of debt during the first half of 2026.
• GAAP results for Q3 and YTD included $33.5 million and $44.3 million, respectively, in IEEPA tariff refunds.
• The Company recognized a $15.4 million gain on its investment in Full Swing following the sale of the business.
• The Company recognized a $4.3 million gain on its investment in Five Iron.
• The Company incurred $1.6 million in costs to relocate to a new UK warehouse following the sale of the Jack Wolfskin business.
• The Company incurred $0.3 million in restructuring charges associated with the Transformation Plan in Q3.
• The Company recognized a $46.6 million loss from equity method investments in Q3, primarily related to Topgolf's net losses.
• The Company will hold a conference call on November 5, 2026, at 2:00 p.m. Pacific time to discuss results.