Callaway Golf is reporting a strong second quarter performance and a very solid first half.

“These results show that we are building momentum as a focused pure-play golf company, and our performance reflects healthy market conditions, strong product acceptance, meaningful gross margin improvement and disciplined execution across the business,” commented company CEO Chip Brewer during a Tuesday, August 4, conference call with analysts. But he also wanted to remind call participants, as he did on the Q1 call, that the company, and those that work there, have had quite an active year already.

“In late May of last year, we completed the sale of Jack Wolfskin. And then in January of this year, we completed the sale of a 60 percent interest in Topgolf,” Brewer noted. “Since the beginning of this year, we announced a new $200 million share repurchase program and then repurchased approximately $42 million worth of our stock in both Q1 and Q2. We also paid off in full our $1.2 billion of term loan debt and our $258 million of convertible notes.”

The CEO said these moves returned the company to “a cash-generating pure-play golf company with a terrific balance sheet and a clear capital allocation strategy aimed at steadily returning capital to shareholders.”

That would be quite a mission statement if it had been framed that way before the year started.

“We are now only six months into this renewed journey as a pure play, but we’re showing clear progress strengthening the business and delivering against our stated financial and capital allocation goals,” Brewer continued with his prepared remarks on the August 4 call. “And based on the strengths of our business and our history of performance in this space, this is a journey that we are confident in going forward.”

Second Quarter Summary
Callaway Golf company (CALY) reported net sales from the company’s continuing operations amounted to $612.2 million, representing a 2.0 percent year-over-year (y/y) increase. The company also reported a 36 percent y/y jump in Adjusted EBITDA for the quarter.

The growth was said to be due to a 4.5 percent increase in the Golf Equipment segment, driven by strength across both Clubs and Balls, “partially offset” by a 3.6 percent decrease in the Apparel, Gear and Other segment as a result of the timing of shipments between the first and second quarters of this year, foreign exchange headwinds in Asia, partially offset by an increase in TravisMathew sales.

Brewer said healthy golf participation and sell-through data continue to be supported by a committed and enthusiastic player base.

“Consumer interest in the game and overall participation trends remain positive, just as they have been for several years now,” he said. “In the U.S., rounds played through Q2 are up approximately 4 percent year-to-date. Similarly, we estimate that golf equipment sell-through at key accounts was up low- to mid-singles digits for both the quarter and year-to-date. In the UK and Europe, we estimate that our trade partners sell-through is up low- to mid-single digits year-to-date, but that the rounds played are down simply due to unfavorable weather year-over-year. In Japan, the market was up low- to mid-single digits in Q2 and is now up slightly for the full year, while market conditions in Korea remained down approximately 10 percent.” 

Using this data as a backdrop for the year-to-date (YTD, H1, first half) period, Brewer believes the company has grown its Golf Equipment revenue faster than the market in all major regions. He shared that first half revenue increased 6 percent and adjusted EBITDA increased 33 percent.

“And as you step back and think more deeply about this data, in the face of dynamic global macroeconomic and political conditions, low consumer confidence readings, increased gas prices, increased golf equipment pricing and the World Cup, one can’t help but be impressed by the resilience of the golf consumer,” the CEO commented.

Golf Equipment Segment
In Golf Equipment, Brewer said the portfolio continues to show strength across several important categories. CALY posted a 4 percent y/y increase in Golf Equipment net sales in Q2, said to be driven by strength across both Clubs and Balls.

In Golf Balls, the Chrome Tour family and Super Soft franchises continued to resonate with consumers, and our share progress continues to validate the investments we’ve made in product performance, manufacturing capabilities and green grass distribution.

Golf Ball revenue was up 15 percent y/y and H1 was up 8 percent y/y. Brewer said this level was achieved despite the company intentionally reducing volume via the elimination of low-margin SKUs to support improved efficiency.

“Our June 2026 U.S. market share established another record high for us, up 250 basis points year-over-year to just over 23 percent overall and with Oncore share just over 24 percent,” Brewer shared.

In Clubs, the Quantum family of woods and irons reportedly continued to receive positive market feedback. 

“The Quantum driver with Tri force technology demonstrates the strength of our product engine, and its performance has been encouraging,” Brewer highlighted. “In the U.S., both our year-to-date driver and total wood share is approximately 25 percent, [with growth] of 110 basis points and 120 basis points, respectively.” 

Within the woods category, high-lofted fairways were said to have been a particularly strong area for the industry overall and for Callaway.” 

“Building on this and leveraging our tradition of innovation, last Friday we announced the addition of a new approach to high-lofted fairways we call mini spinners, available on 7, 9 and 11 woods,” the CEO shared. “These clubs are easier to hit and for many consumers, a more effective approach to high-lofted fairways. They will be shipping to retail later this month, and we anticipate a positive reaction.” 

In the Putter segment, Brewer said MyGolfspa recently named the Odyssey AI Dual Square to Square No.7, the best overall Zero Torque putter of 2026 as well as the best Zero Torque putter for long puts. 

“Recognition like this is another proof point of our ability to develop and bring differentiated technology to market,” the CEO concluded. 

Apparel and Gear Segment
Brewer said the Callaway brand performed roughly in line with expectations in the Apparel and Gear segment. He said TravisMathew maintained its strong start to the year and performed “slightly ahead of expectations.” CFO Lynch said Golf Goods net sales decreased 4 percent, primarily due to the timing of shipments between Q1 and Q2 and FX headwinds in Asia, while TravisMathew grew slightly in the quarter.

At TravisMathew, consumer response to the women’s offering reportedly remains positive, and Brewer said the brand continues to gain ground in the men’s golf category, supported by “clearer product pillars, more focused marketing and exciting new products.”

“We are in the early innings of this men’s product merchandising strategy shift,” Brewer explained. “But based on the consumer reaction thus far, I’m optimistic regarding its potential.” He said the TravisMathew business grew in its direct-to-consumer (DTC) business in the first half and also had strong performance with key wholesale partners.

Brewer added one other important factor for the brand, stating that management was now at liberty to discuss the planned closure of four TravisMathew stores that were not hitting financial targets.

“These stores will close in Q4 of this year, and the financial charges for these closures were included in our Q2 financials,” Brewer noted. “This will leave us with a stronger and more profitable retail fleet of 61 stores going into 2027. Similar to our previously mentioned SKU rationalization across both the Callaway and TravisMathew brands, this is another strong example of us making disciplined long-term decisions as we refocus on our core business.”

Gross Margins & Tariffs
CFO Brian Lynch reported that Q2 non-GAAP gross margin increased 460 basis points y/y to 48.5 percent, driven primarily by continued progress on gross margin initiatives, including “select price increases, cost reductions and rationalizing select lower-margin business, with tariffs providing a slight positive impact on the year-over-year, non-GAAP gross margin expanded 360 basis points in the first half.

Second quarter GAAP gross margins increased approximately 620 basis points y/y to 50.1 percent of net sales.

Brewer said the tariff conversation continues to be a dynamic area, but they have been a tailwind for CALY relative to the company’s expectations going into the year. The CEO did say that, to protect inter-year comparability and to provide what they believe is a cleaner look at performance, CALY made the decision to back out the IEEPA refunds from its non-GAAP numbers and forecasts.

Excluding the tariff benefit, Q2 gross margin increased 440 basis points year-over-year.

The improvement was said to be broad-based with gross margin expansion in both the Golf Equipment and Softgoods segments.

“This reflects continued progress against our margin initiatives and the benefits of portfolio actions designed to improve the long-term quality of our revenue and earnings,” Lynch commented. “This gross margin improvement is a step in the right direction and a testament to the cost management and margin improvement projects that we have been focused on over the last year and that will continue to be a focus for us going forward.”

Lynch provide a deeper dive on the tariff situation and the company’s response to the issue. He reminded everyone of the expiration on July 24 of the temporary 10 percent global minimum tariffs under Section 122 of the Trade Act of 1974 and the implementation of new Section 301 forced labor tariffs, which took effect the following day and range between 10 percent and 12.5 percent, depending on the country.

“The tariff situation remains dynamic, and there is some speculation additional tariffs under Section 301 or otherwise will be forthcoming,” he shared. “Since we don’t actually know if such additional tariffs will be implemented or when or in what amount, our guidance today incorporates only the forced labor tariffs under Section 301 that began on July 25.”

The CFO said they had previously assumed tariffs would increase to 20 percent once the temporary tariffs expired, so the recently announced Section 301 tariffs are upside versus the company’s previous guidance.

“We now expect that the full year gross tariff expense for 2026 will be approximately $43 million, a net improvement of approximately $7 million compared to our prior guidance,” he detailed. “The full year gross tariff expense in 2025 was $34 million.”

He said they continue to believe that they have the opportunity to obtain refunds for tariffs paid up to just under $50 million in the aggregate over the course of the refund program.

“We have applied for both Phase 1 and Phase 2 refunds, representing approximately $11 million and $32 million, respectively, and have received all of the Phase 1 refunds to date and almost $7 million of the Phase 2 refunds,” Lynch explained. “We expect to receive the balance of the Phase 2 refunds in the second half of this year. There also should be another almost $7 million to apply for in Phase 3, which brings our refund potential to approximately $50 million, consistent with what we discussed last quarter.”

Lynch offered one additional final point “for the sake of clarity.”

On a GAAP basis, he said recognized $10.8 million in Q2 for the tariff refunds and excluded those refunds from non-GAAP results to give a clearer picture of period-over-period results.

“The almost $7 million of Phase 2 refunds we received were recognized in Q3,” he explained. “We will continue to account for additional refunds as we receive them, and we will continue to exclude the refunds from our non-GAAP results. The cost pressures we discussed last quarter from broader geopolitical activity continue.”

Lynch reminded participants that this includes increases in certain commodities and strategic metals such as tungsten, which have increased multiples over 2025 costs. In addition, he said conflict in the Middle East has led to increased petrochemical-based cost pressures as well, including increased energy costs for CALY and its suppliers, and increased petrochemical-based raw material costs, primarily those used in golf balls. These cost pressures are reportedly included in the guidance the company provided.

Profitability
GAAP operating expense increased 1.5 percent y/y, while non-GAAP operating expense increased 0.7 percent versus the prior-year Q2 period. The modest increase in expense was said to be primarily due to cost-of-living increases and inflationary pressures in the Golf Equipment and Apparel, Gear and Other segments, largely offset by corporate overhead savings.

Operating Profit 

Net income from continuing operations was $75.8 million on a GAAP basis and $73.8 million on a non-GAAP basis.

Adjusted EBITDA from continuing operations was reported at $124.9 million, which represents a 35.8 percent increase year-over-year. The increase in Adjusted EBITDA was reportedly driven primarily by higher net sales and improved gross margins.

2026 Full-Year Outlook
(in millions, except where noted otherwise)

Full-Year Assumptions:

  • Approx. $43M gross tariff impact, a $7M reduction from our previous $50M forecast.
  • CapExof ~$40M ▪ Non-GAAP Gross Margins projected to be up year-over-year Approx.
  • 23 percent non-GAAP Tax Rate

 

2026 Third Quarter Outlook
(in millions)

Q3 Assumptions

  • High-single digit dollar Net Sales headwind from FX
  • Mid-single digit dollar EBITDA headwind from lapping higher prior-year dividend income

Image courtesy Callaway Golf Company