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 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. The increase in Golf Equipment was said to be “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, as well as foreign exchange headwinds in Asia, partially offset by an increase in TravisMathew sales.

Profitability & Expenses Summary
GAAP gross margins increased approximately 620 basis points y/y to 50.1 percent of net sales and non-GAAP gross margins improved 460 basis points y/y to 48.5 percent. The increases in gross margin were reportedly due to continued progress on the company’s gross margin initiatives, including select price increases, cost reductions and rationalizing lower margin business.

GAAP gross margin also reportedly benefited from approximately $10.8 million of non-recurring benefits from tariff refunds, which were excluded from the Non-GAAP results.

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.

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.

Balance Sheet and CashFlow Summary
Inventory decreased $49.7 million year-over-year to $518.2 million, said to be largely driven by strong sell-through and higher net sales, the company’s working capital initiatives and the timing of inventory shipments.

As of June 30, 2026, the company was in a net cash position with $74 million in debt outstanding (including $23 million in financing leases) and unrestricted cash and cash equivalents of $278 million.

During the second quarter, the company repaid in full its $258 million in convertible notes and the remaining $163 million outstanding under its term loan B facility.

Year-to-date through June 30, 2026, the company has repurchased 5.9 million shares of its common stock and has $120 million remaining repurchase authority under its current repurchase program.

Tariff Update
On July 24, 2026, the temporary 10 percent global minimum tariffs under Section 122 of the Trade Act of 1974 expired and new Section 301 forced labor tariffs were implemented and took effect the following day, ranging between 10 percent – 12.5 percent depending on the country. The company said it had previously assumed tariffs would increase to 20 percent once the temporary tariffs expired so the recently announced Section 301 tariffs are upside versus its previous guidance.

The company now expects that the full year gross tariff expense for 2026 will be approximately $43 million, a net improvement of approximately $7 million compared to its prior guidance. The full year gross tariff expense in 2025 was $34 million. The company continues to believe that it has the opportunity to obtain refunds of up to just under $50 million in the aggregate over the course of the refund program. The company said it has applied for both Phase 1 and Phase 2 refunds, representing approximately $11 million and $32 million, respectively. The company has reportedly received all of the Phase 1 refunds to-date, which were recognized in Q2, and almost $7 million of the Phase 2 refunds, which will be recognized in the third quarter.

CALY said it expects to receive the balance of the Phase 2 refunds in the second half of this year. The company expects there will be almost $7 million to apply for in Phase 3, which brings its refund potential to approximately $50 million.

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

2026 Third Quarter Outlook
(in millions)

Image courtesy The Gardens Mall; Data and tables courtesy Callaway Golf Company

***

See below for more in-depth SGB Executive coverage of commentary from company CEO Chip Brewer and CFO Brian Lynch.

EXEC: Callaway Golf CEO Talks Renewed Company Progress as a Golf Pure-Play