Callaway Golf Co 10-Q for FY2026 Q3
Callaway Golf Co (CALY)
10-Q
2026-11-05
For: 2026-09-30
View Original
Added on
November 05, 2026
About this 10-Q
Callaway Golf Co filed this 10-Q on November 5, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Callaway Golf Company reported nine-month 2026 net sales growth of 2.6% and segment operating income growth of 25.1%. GAAP net income from continuing operations was $198.8 million, aided by $42.6 million in tariff refunds. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $436.9M
- down 5.6% from $462.6M a year earlier
- Net income
- $45.7M
- compared with a net loss of $14.7M a year earlier
- Diluted EPS
- $0.25
- compared with -$0.08 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| Form | |||||
| Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended September 30, 2026
OR
| Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
Commission file number 001-10962
| (Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(760 ) 931-1771
(Address, including zip code, and telephone number, including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ý
As of October 29, 2026, the number of shares outstanding of the Registrant’s common stock was 175,176,059 .
Important Notice to Investors Regarding Forward-Looking Statements: This report contains “forward-looking statements” as defined under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “may,” “should,” “will,” “could,” “would,” “anticipate,” “plan,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” and similar references to future periods. Forward-looking statements include, among others, statements that relate to future plans, events, liquidity, financial results, performance, prospects or growth and scale opportunities including, but not limited to, statements relating to our intention to repurchase shares of our common stock pursuant to a stock repurchase program, the anticipated timing, amount and impact of the stock repurchase program, delivering long-term value for shareholders, further growth and investments in our core business, the anticipated benefits and other effects of the sale of the majority stake of our Topgolf business, the expected financial and operational performance of, and future opportunities for, each of the two independent companies following the sale, the tax treatment of the sale, future industry and market conditions, strength and demand of our products and services, continued brand momentum, demand for golf and outdoor activities and apparel, continued investments in the business, consumer trends and behavior, the strength of our brands, product lines and e-commerce business, pending litigation, availability of capital under our credit facilities, the capital markets or other sources, our cost reduction and margin improvement efforts, compliance with debt covenants, projected capital expenditures, future contractual obligations, the realization of deferred tax assets, including loss and credit carryforwards, future income tax provision, the future impact of new accounting standards, the impacts of inflation and changes in foreign exchange rates, the impact of tariffs and the timing and amount of any tariff refunds, and future prospects and growth of our businesses, including TravisMathew, LLC (“TravisMathew”) and OGIO International, Inc. (“OGIO”). These statements are based upon current information and our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. As a result of these uncertainties and because the information on which these forward-looking statements is based may ultimately prove to be incorrect, actual results may differ materially from those anticipated. Important factors that could cause actual results to differ include, among others, the following:
•certain risks and uncertainties, including changes in capital markets or economic conditions, particularly the uncertainty related to inflation, decreases in consumer demand and spending and any severe or prolonged economic downturn;
•the potential failure to realize the expected benefits of strategic transactions, in the expected timeframes or at all, including our recent divestitures of Jack Wolfskin and 60% of our Topgolf and Toptracer businesses;
•consumer acceptance of and demand for our products;
•future retailer purchasing activity, which can be significantly affected by adverse industry conditions and overall retail inventory levels;
•unfavorable changes in trade or other policies by the U.S. government or foreign governments, including restrictions on imports, increases in U.S. import tariffs, retaliatory tariffs imposed by other countries on U.S. imports, and the potential negative economic consequences thereof, including increased costs, unavailability of materials, inflation, decreased customer demand, an economic slowdown or general economic uncertainty;
•the level of promotional activity in the marketplace;
•future consumer discretionary purchasing activity, which can be significantly adversely affected by unfavorable economic or market conditions;
•future changes in foreign currency exchange rates and the degree of effectiveness of our hedging programs;
•our ability to manage international business risks;
•our ability to recognize operational synergies and scale opportunities across our supply chain and global business platform;
•adverse changes in the credit markets or continued compliance with the terms of our credit facilities;
•our ability to monetize our investments, including without limitation, our remaining stake in Topgolf;
•our ability to successfully operate and, if applicable, expand the retail stores of TravisMathew and our Japan and Korea apparel businesses;
•delays, difficulties or increased costs in the supply of components needed to manufacture our products or in manufacturing our products, including our dependence on a limited number of suppliers for some of our products;
2
•Delays, difficulties or increased costs in the manufacturing, supply or transportation of such components or products due to increases in the price of oil and other raw materials;
•adverse weather conditions and seasonality;
•any rule changes or other actions taken by the United States Golf Association or other golf associations that could have an adverse impact upon demand or supply of our products;
•our ability to protect our intellectual property rights;
•a decrease in participation levels in golf;
•the effect of terrorist activity, armed conflict, natural disasters or pandemic diseases, on the economy generally, on the level of demand for our products or on our ability to manage our supply and delivery logistics in such an environment; and
•the general risks and uncertainties applicable to us and our business.
Investors should not place undue reliance on these forward-looking statements, which are based on current information and speak only as of the date hereof. We undertake no obligation to update any forward-looking statements to reflect new information or events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Investors should also be aware that while we from time to time communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential commercial information. Furthermore, we have a policy against distributing or confirming financial forecasts or projections issued by analysts and any reports issued by such analysts are not our responsibility. Investors should not assume that we agree with any report issued by any analyst or with any statements, projections, forecasts or opinions contained in any such report. For details concerning these and other risks and uncertainties, see our most recent Annual Report on Form 10-K, as well as our quarterly reports on Form 10-Q and current reports on Form 8-K subsequently filed with the Securities and Exchange Commission from time to time.
3
CALLAWAY GOLF COMPANY
INDEX
| Item 1. | ||||||||
Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 | ||||||||
Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025 | ||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2026 and 2025 | ||||||||
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025 | ||||||||
Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 30, 2026 and 2025 | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
(Unaudited)
| September 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Restricted cash | |||||||||||
Accounts receivable, less allowance of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses | |||||||||||
| Other current assets | |||||||||||
Current assets of discontinued operations (Note 3) | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets, net | |||||||||||
| Trade names and trademarks | |||||||||||
| Other intangible assets, net | |||||||||||
| Goodwill | |||||||||||
Equity method investments (Note 9) | |||||||||||
Deferred tax assets, long-term | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Accrued employee compensation and benefits | |||||||||||
| Long-term debt, current portion | |||||||||||
| Asset-based credit facilities | |||||||||||
| Operating lease liabilities, short-term | |||||||||||
| Deferred revenue | |||||||||||
| Other current liabilities | |||||||||||
Current liabilities of discontinued operations (Note 3) | |||||||||||
| Total current liabilities | |||||||||||
Long-term debt, net | |||||||||||
| Operating lease liabilities, long-term | |||||||||||
| Other long-term liabilities | |||||||||||
Commitments and contingencies (Note 12) | |||||||||||
| Shareholders’ equity: | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings (accumulated deficit) | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Less: Common stock held in treasury, at cost, | ( | ( | |||||||||
| Total shareholders’ equity | |||||||||||
| Total liabilities and shareholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative expense | |||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||
| Total operating expenses | |||||||||||||||||||||||
Income (loss) from operations | |||||||||||||||||||||||
Interest income (expense), net | ( | ( | ( | ||||||||||||||||||||
| Other income (expense), net | |||||||||||||||||||||||
| Total other income (expense), net | ( | ( | |||||||||||||||||||||
| Income (loss) from equity method investments | ( | ( | |||||||||||||||||||||
| Income (loss) from continuing operations, before income taxes | ( | ||||||||||||||||||||||
| Income tax provision (benefit) | ( | ||||||||||||||||||||||
| Net income (loss) from continuing operations | ( | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Net earnings (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Diluted earnings (loss) per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Net earnings (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In millions)
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Change in derivative instruments | ( | ( | ( | ||||||||||||||||||||
| Cumulative translation adjustments recognized from the sales of business lines | ( | ||||||||||||||||||||||
| Foreign currency translation adjustments | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss), before income tax | ( | ||||||||||||||||||||||
| Income tax provision (benefit) on derivative instruments | ( | ( | |||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
7
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (Unaudited)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income (loss) from continuing operations | $ | $ | |||||||||
| Adjustments to reconcile net income (loss) from continuing operations to net cash provided by (used in) operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Loss from equity method investments | |||||||||||
| Gain on lease termination incentive | ( | ||||||||||
| Deferred taxes, net | |||||||||||
| Share-based compensation | |||||||||||
| Loss from debt extinguishment | |||||||||||
| Unrealized net losses (gains) on hedging instruments and foreign currency | ( | ( | |||||||||
| Gain on sale of investment in golf-related ventures | ( | ||||||||||
| Gain on investment from golf-related ventures | ( | ||||||||||
| Other | |||||||||||
| Change in assets and liabilities | |||||||||||
| Accounts receivable, net | ( | ( | |||||||||
| Inventories | |||||||||||
| Other assets | ( | ||||||||||
| Accounts payable and accrued expenses | ( | ( | |||||||||
| Deferred revenue | ( | ||||||||||
| Accrued employee compensation and benefits | ( | ||||||||||
| Lease assets and liabilities, net | |||||||||||
| Income taxes receivable/payable, net | ( | ||||||||||
| Other liabilities | ( | ( | |||||||||
| Net cash provided by (used in) operating activities - continuing operations | |||||||||||
| Net cash provided by (used in) operating activities - discontinued operations | |||||||||||
| Net cash provided by (used in) operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | ( | ( | |||||||||
| Proceeds from sale of investment in golf-related ventures | |||||||||||
| Investment in golf-related ventures | ( | ( | |||||||||
| Acquisition of intangible assets | ( | ||||||||||
| Distributions from equity method investments | |||||||||||
| Proceeds from sale of business line, net of cash retained | |||||||||||
| Net cash provided by (used in) investing activities - continuing operations | |||||||||||
| Net cash provided by (used in) investing activities - discontinued operations | ( | ||||||||||
| Net cash provided by (used in) investing activities | |||||||||||
| Cash flows from financing activities: | |||||||||||
| Repayments of long-term debt | ( | ( | |||||||||
| Proceeds (repayments) on credit facilities, net | |||||||||||
| Debt issuance costs | ( | ||||||||||
| Repayments of financing leases | ( | ( | |||||||||
| Exercise of stock options | |||||||||||
| Acquisition of treasury stock | ( | ( | |||||||||
| Net cash provided by (used in) financing activities - continuing operations | ( | ||||||||||
| Net cash provided by (used in) financing activities - discontinued operations | |||||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | |||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash at end of period | |||||||||||
| Less: restricted cash of continuing and discontinued operations at end of period | ( | ( | |||||||||
| Cash and cash equivalents of continuing operations at end of period | $ | $ | |||||||||
Supplemental disclosures (1): | |||||||||||
| Cash paid for income taxes, net | $ | $ | |||||||||
| Cash paid for interest and fees | $ | $ | |||||||||
| Non-cash investing and financing activities: | |||||||||||
| Issuance of treasury stock and common stock for compensatory stock awards released from restriction | $ | $ | |||||||||
| Accrued capital expenditures | $ | $ | |||||||||
| Financed additions of capital expenditures | $ | $ | |||||||||
| Share-based compensation capitalized to equity method investment | $ | $ | |||||||||
(1) For 2026, Supplemental disclosures and Non‑cash investing and financing activities relate solely to continuing operations. For 2025, Supplemental disclosures and Non‑cash investing and financing activities include amounts related to both continuing and discontinued operations. For 2025, $ | |||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
8
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2024 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2025 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Impact from dissolution of foreign subsidiary | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2025 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2025 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
9
CALLAWAY GOLF COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In millions)
(Unaudited)
| Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Capital contribution to equity method investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Cumulative translation adjustments recognized from the sale of Topgolf | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2026 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Capital contribution to equity method investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2026 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
| Acquisition of treasury stock | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Compensatory awards released from restriction | — | — | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Capital contribution to equity method investments | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Equity adjustment from foreign currency translation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of tax | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2026 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
10
CALLAWAY GOLF COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. The Company and Basis of Presentation
The Company
Callaway Golf Company (together with its wholly-owned subsidiaries, referred to as “we,” “our,” “us,” “the Company,” or “Callaway” unless otherwise specified), a Delaware corporation, is a premium golf equipment, gear and apparel company that designs, manufactures and sells high-performance golf clubs, golf balls, apparel, bags, and other accessories through our family of brand names, which include Callaway Golf, Odyssey, TravisMathew, and OGIO.
Our products and brands are reported under two
Basis of Presentation
We have prepared the accompanying condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and accounting principles generally accepted in the United States of America (“GAAP”). We have condensed or omitted certain information and disclosures that are normally included in our annual consolidated financial statements which are prepared in accordance with GAAP. In the opinion of management, these condensed consolidated financial statements include all normal and recurring adjustments necessary for the fair presentation of the financial position, results of operations and cash flows for the periods and dates presented. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2026, or any other future periods.
We translate the financial statements of our foreign subsidiaries using end-of-period exchange rates for assets and liabilities and average exchange rates during each reporting period for results of operations. All intercompany balances and transactions have been eliminated during consolidation.
Fiscal Year End
Our annual financial results are reported on a calendar year basis.
Note 2. Summary of Significant Accounting Policies
Our significant accounting policies are described in Note 2 to our audited consolidated financial statements for the year ended December 31, 2025, which are included in our Annual Report on Form 10-K which was filed with the SEC on February 27, 2026.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances at that time. We evaluate our estimates on an ongoing basis to ensure that these estimates appropriately reflect changes in our business or as new information becomes available. Actual results may differ from our estimates.
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Recently Issued Accounting Standards
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires disclosure, on an annual and interim basis, of specific information about cost and expense related items within the notes to our condensed consolidated financial statements. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on either a prospective or retrospective basis with early adoption permitted. We are in the process of evaluating the impact that ASU 2024-03 will have on our condensed consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, “Intangibles — Goodwill and Other — Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which clarifies the difference between expensed costs and capitalized costs by removing all references to software development project stages so that the guidance is neutral to different software development methods, including methods that entities may use to develop software in the future. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are evaluating the impact of ASU 2025-06 and do not expect adoption of the standard to have a material impact on our consolidated financial statements and related disclosures.
Recently Adopted Accounting Standards
In May 2026, the FASB issued ASU No. 2026-02, “Environmental Credits and Environmental Credit Obligations (Topic 818)” (“ASU 2026-02”), which provides specific authoritative guidance for environmental credits and environmental credit obligations. ASU 2026-02 is effective for fiscal years beginning after December 15, 2027, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We elected to early adopt this ASU effective for our quarter ended June 30, 2026. The adoption of this ASU did not have a material impact on our consolidated financial statements or related disclosures for the period ended September 30, 2026.
Note 3. Discontinued Operations
Divestiture of the Topgolf Business
Effective January 1, 2026, we completed the sale of a 60 % equity interest in the Topgolf and Toptracer businesses (“Topgolf”) to private equity funds managed by Leonard Green & Partners, L.P. based upon an equity value of approximately $1,100.0 million. In connection with the sale and related financing transactions, we received net proceeds of $820.1 million, net of working capital adjustments and cash retained. In the fourth quarter of 2025, we recorded an estimated loss on sale before income taxes of $143.1 million. During the first quarter of 2026, we recorded net working capital adjustments of $2.5 million, resulting in a total loss on sale of $140.6 million after these adjustments.
The results of operations and cash flows of Topgolf are classified as discontinued operations for all periods presented and our retained ownership interest in Topgolf is accounted for under the equity method of accounting. During the second quarter of 2026, our ownership interest decreased from 40.0 % to 39.3 % following the sale of additional dilutive units by Topgolf, which decreased our non-controlling interest. In addition to our 39.3 % equity interest, we have continuing involvement with Topgolf through ongoing commercial agreements (see Note 9) and a transition services agreement.
For the three and nine months ended September 30, 2026, we recognized $1.0 million and $3.3 million, respectively, associated with amounts billed under the transition services agreement with Topgolf, which were recognized in other income (expense), net on the condensed consolidated statement of operations.
Due to the amendment of our 2023 Term Loan B, which required a mandatory prepayment of $500.0 9.7 million and $28.8 million of related interest expense to discontinued operations for the three and nine months ended September 30, 2025, respectively.
Divestiture of the Jack Wolfskin Business
On May 31, 2025, pursuant to the Sale & Purchase Agreement dated April 10, 2025, we completed the sale of 100 % of the equity interests in Callaway Germany Holdco GmbH, which operated the Jack Wolfskin business, for $290.0 million, net of cash retained, and recorded a $26.2 million loss upon completion of the sale. The operating results of Jack Wolfskin are presented as discontinued operations for all periods presented.
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Results of Discontinued Operations
The following is a summary of the results of discontinued operations on the condensed consolidated statement of operations for the periods presented below (in millions). Results for the three months ended September 30, 2026 are related to the recognition of income tax impacts in connection with the sale of Topgolf. Results for the nine months ended September 30, 2026 are primarily related to the settlement of certain indemnification obligations and costs directly related to our divestitures of Topgolf and Jack Wolfskin as well as income tax impacts in connection with the sale of Topgolf.
Three Months Ended September 30, 2026 | Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||
| Topgolf | Jack Wolfskin | Total | Topgolf | Jack Wolfskin | Total | ||||||||||||||||||||||||||||||
| Selling, general and administrative expense | $ | $ | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||
| Total costs and expenses | ( | ( | |||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations | ( | ||||||||||||||||||||||||||||||||||
| Other income (expense), net | ( | ( | |||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations before income taxes | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | ( | ( | |||||||||||||||||||||||||||||||||
| Net income (loss) from discontinued operations | $ | ( | $ | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||
Three Months Ended September 30, 2025 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Topgolf | Jack Wolfskin | Total | Topgolf | Jack Wolfskin | Total | ||||||||||||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||||||||||||||
| Products | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Services | |||||||||||||||||||||||||||||||||||
| Total net revenues | |||||||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Cost of products | |||||||||||||||||||||||||||||||||||
| Cost of services, excluding depreciation and amortization | |||||||||||||||||||||||||||||||||||
| Other venue expense | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | |||||||||||||||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||||||||||||||
| Venue pre-opening costs | |||||||||||||||||||||||||||||||||||
| Total costs and expenses | |||||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations | ( | ( | |||||||||||||||||||||||||||||||||
| Interest income (expense), net | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
| Other income (expense), net | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations before income taxes | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Income tax provision (benefit) | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||
| Net income (loss) from discontinued operations | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||
13
Assets and Liabilities of Discontinued Operations
The following table summarizes the assets and liabilities of discontinued operations on the condensed consolidated balance sheet as of December 31, 2025 (in millions). There are no assets or liabilities of discontinued operations as of September 30, 2026, as the sales transactions of Jack Wolfskin and Topgolf were completed on May 31, 2025 and January 1, 2026, respectively.
As of December 31, 2025 | |||||
| Topgolf | |||||
| Current assets of discontinued operations | |||||
| Accounts receivable | $ | ||||
| Inventories | |||||
| Other current assets | |||||
| Total current assets of discontinued operations | |||||
| Long-term assets of discontinued operations | |||||
| Property, plant and equipment, net | |||||
| Operating lease right-of-use assets, net | |||||
| Trade names and trademarks | |||||
| Other intangible assets, net | |||||
| Other assets, net | |||||
| Total long-term assets of discontinued operations | |||||
| Total assets of discontinued operations | $ | ||||
| Current liabilities of discontinued operations | |||||
| Accounts payable and accrued expenses | $ | ||||
| Accrued employee compensation and benefits | |||||
| Operating lease liabilities, short-term | |||||
| Construction advances | |||||
| Deferred revenue | |||||
| Other current liabilities | |||||
| Total current liabilities of discontinued operations | |||||
| Long-term liabilities of discontinued operations | |||||
Long-term debt, net | |||||
| Operating lease liabilities, long-term | |||||
| Deemed landlord financing obligations | |||||
| Other long-term liabilities | |||||
| Total long-term liabilities of discontinued operations | |||||
| Total liabilities of discontinued operations | $ | ||||
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Note 4. Revenue Recognition
We recognize revenue from the sale of our products. The following table presents our net sales disaggregated by operating and reportable segment and major product category (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net Sales by Operating and Reportable Segment and Major Product Category | |||||||||||||||||||||||
| Golf Equipment: | |||||||||||||||||||||||
| Golf clubs | $ | $ | $ | $ | |||||||||||||||||||
| Golf balls | |||||||||||||||||||||||
| Total Golf Equipment | $ | $ | $ | $ | |||||||||||||||||||
| Apparel, Gear and Other: | |||||||||||||||||||||||
| Apparel | $ | $ | $ | $ | |||||||||||||||||||
| Gear, accessories & other | |||||||||||||||||||||||
| Total Apparel, Gear and Other | $ | $ | $ | $ | |||||||||||||||||||
| Total Consolidated | $ | $ | $ | $ | |||||||||||||||||||
Net sales
We sell our Golf Equipment products and Apparel, Gear and Other products in the United States and internationally, with our principal international regions being Europe and Asia. Golf Equipment product sales are generally higher than Apparel, Gear and Other sales in all regions.
The following table summarizes sales by geographical region (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net Sales by Major Geographic Region: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Europe | |||||||||||||||||||||||
| Asia | |||||||||||||||||||||||
| Rest of World | |||||||||||||||||||||||
| Total Consolidated | $ | $ | $ | $ | |||||||||||||||||||
Licensing and royalties
We have licensing and royalty income from licensing agreements for apparel and soft good products in our Apparel, Gear and Other operating segment. The following table summarizes the licensing and royalty income recognized in net sales for the periods presented (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Apparel, Gear and Other | $ | $ | $ | $ | |||||||||||||||||||
Deferred revenue
Our short-term deferred revenue balance consists primarily of revenue from the sale of gift cards and accrued customer loyalty points.
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The following table provides a reconciliation of activity related to our short-term deferred revenue balance for the periods presented (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Beginning Balance (1) | $ | $ | $ | $ | |||||||||||||||||||
| Deferral of revenue | |||||||||||||||||||||||
| Revenue recognized | ( | ( | ( | ( | |||||||||||||||||||
Foreign currency translation and other | ( | ( | |||||||||||||||||||||
| Ending Balance | $ | $ | $ | $ | |||||||||||||||||||
(1) Beginning balances for the three months ended September 30, 2026 and 2025 represent ending balances as of June 30, 2026 and 2025, respectively. Beginning balances for the nine months ended September 30, 2026 and 2025 represent ending balances as of December 31, 2025 and 2024, respectively. | |||||||||||||||||||||||
Deferred revenue recognized during both the three months ended September 30, 2026 and 2025 from gift card redemptions that were included in the deferred revenue balance at the end of the prior year period was $0.4 2.4 million and $2.8 million, respectively. The increase in revenue recognized during the three and nine months ended September 30, 2026, includes the impact of the transition to a new customer loyalty program related to our TravisMathew business. We have recognized $1.5 million and $9.5 million, respectively, of deferred revenue related to expired loyalty points during the three and nine months ended September 30, 2026.
Variable Consideration
We recognize revenue based on the amount of consideration we expect to receive from customers for the sale of our products adjusted for estimates of variable consideration related to sales returns, discounts and allowances, sales promotions and sales programs, and price concessions. These estimates are based on the amounts earned or expected to be claimed by customers.
As of September 30, 2026 and December 31, 2025, the balances for our short-term sales incentive program included in accounts receivable, net on our condensed consolidated balance sheets, were $35.9 million and $15.0 million, respectively.
16
Note 5. Leases
Operating leases and financing leases
Supplemental balance sheet information related to our operating and financing right of use (“ROU”) assets and lease liabilities is as follows (in millions):
| Balance Sheet Location | September 30, 2026 | December 31, 2025 | |||||||||||||||
| Assets | |||||||||||||||||
| Operating lease ROU assets, net | Operating lease ROU assets, net | $ | $ | ||||||||||||||
| Financing lease ROU assets, net | $ | $ | |||||||||||||||
| Liabilities | |||||||||||||||||
| Current | |||||||||||||||||
| Operating lease liabilities, short-term | Operating lease liabilities, short-term | $ | $ | ||||||||||||||
| Financing lease liabilities, short-term | $ | $ | |||||||||||||||
| Non-current | |||||||||||||||||
| Operating lease liabilities, long-term | Operating lease liabilities, long-term | $ | $ | ||||||||||||||
| Financing lease liabilities, long-term | Other long-term liabilities | $ | $ | ||||||||||||||
Lease Termination Incentive
During the first quarter of 2025, we signed an agreement with the landlord of our Japanese subsidiary’s headquarters to terminate a lease prior to its original end date in exchange for a cash incentive of 1,800.0 million Yen (approximately $12.0 million). As a result, we recognized a $12.0 million gain on lease termination, which was recorded within selling, general and administrative expenses in our condensed consolidated statement of operations.
The components of lease expense, excluding the impact from the lease termination incentive, included in our condensed consolidated statement of operations for the periods presented below are as follows (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Operating lease costs | $ | $ | $ | $ | |||||||||||||||||||
| Financing lease costs: | |||||||||||||||||||||||
| Amortization of ROU assets | |||||||||||||||||||||||
| Interest on lease liabilities | |||||||||||||||||||||||
| Total financing lease costs | |||||||||||||||||||||||
| Variable lease costs | |||||||||||||||||||||||
| Total lease costs | $ | $ | $ | $ | |||||||||||||||||||
Other supplemental information related to leases (in millions):
| Nine Months Ended September 30, | ||||||||||||||
| Supplemental Cash Flows Information | 2026 | 2025 | ||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||||||||
| Operating cash flows from operating leases | $ | $ | ||||||||||||
| Operating cash flows from financing leases | $ | $ | ||||||||||||
| Financing cash flows from financing leases | $ | $ | ||||||||||||
| Lease liabilities arising from new ROU assets: | ||||||||||||||
| Operating leases | $ | $ | ||||||||||||
| Financing leases | $ | $ | ||||||||||||
17
| September 30, 2026 | December 31, 2025 | ||||||||||
| Weighted-average remaining lease term (years): | |||||||||||
| Operating leases | |||||||||||
| Financing leases | |||||||||||
| Weighted-average discount rate: | |||||||||||
| Operating leases | % | % | |||||||||
| Financing leases | % | % | |||||||||
As of September 30, 2026, our future minimum lease obligations were as follows (in millions):
| Operating Leases | Financing Leases | Total | |||||||||||||||
| Remainder of 2026 | $ | $ | $ | ||||||||||||||
| 2027 | |||||||||||||||||
| 2028 | |||||||||||||||||
| 2029 | |||||||||||||||||
| 2030 | |||||||||||||||||
| Thereafter | |||||||||||||||||
| Total future lease payments | |||||||||||||||||
| Less: imputed interest | |||||||||||||||||
| Total | $ | $ | $ | ||||||||||||||
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Note 6. Financing Arrangements
Our credit facilities and long-term debt obligations are summarized as follows (in millions, except interest rates):
| September 30, | December 31, | |||||||||||||||||||||||||
| Maturity Date | Interest Rate | 2026 | 2025 | |||||||||||||||||||||||
| Short-Term Credit Facilities | ||||||||||||||||||||||||||
2023 ABL Credit Facility | March 16, 2028 | $ | $ | |||||||||||||||||||||||
| 2025 Japan ABL Credit Facility | January 21, 2028 | |||||||||||||||||||||||||
| Total Principal Amount | $ | $ | ||||||||||||||||||||||||
| Unamortized Debt Issuance Costs | $ | $ | ||||||||||||||||||||||||
| Balance Sheet Location | ||||||||||||||||||||||||||
| ABL Credit Facilities | Asset-based credit facilities | $ | $ | |||||||||||||||||||||||
| Unamortized Debt Issuance Costs - Current | Prepaid expenses | $ | $ | |||||||||||||||||||||||
| Unamortized Debt Issuance Costs - Non-current | Other assets, net | $ | $ | |||||||||||||||||||||||
| September 30, | December 31, | |||||||||||||||||||||||||
| Maturity Date | Interest Rate | 2026 | 2025 | |||||||||||||||||||||||
| Long-Term Debt and Credit Facilities | ||||||||||||||||||||||||||
| 2023 Term Loan B | N/A | N/A | $ | $ | ||||||||||||||||||||||
| Convertible Notes | May 1, 2026 | |||||||||||||||||||||||||
| Equipment Notes | December 15, 2026 - December 21, 2027 | |||||||||||||||||||||||||
| Financed Tenant Improvements | February 1, 2035 | |||||||||||||||||||||||||
| Total Principal Amount | $ | $ | ||||||||||||||||||||||||
| Less: Unamortized Debt Issuance Costs | ||||||||||||||||||||||||||
| Total Debt, net of Unamortized Debt Issuance Costs | $ | $ | ||||||||||||||||||||||||
| Balance Sheet Location | ||||||||||||||||||||||||||
| Long-Term Debt - Current | Long-term debt, current portion | $ | $ | |||||||||||||||||||||||
| Long-Term Debt - Non-current | Long-term debt, net | |||||||||||||||||||||||||
| Total Debt, net of Unamortized Debt Issuance Costs | $ | $ | ||||||||||||||||||||||||
Total interest and amortization expense related to our credit facilities and long-term debt obligations, which were recognized in interest income (expense), net on the condensed consolidated statement of operations, is summarized as follows (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Short-Term Credit Facilities | |||||||||||||||||||||||
| 2025 Japan ABL Credit Facility | $ | $ | $ | $ | |||||||||||||||||||
| 2023 ABL Credit Facility | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Long-Term Debt and Credit Facilities | |||||||||||||||||||||||
| 2023 Term Loan B | $ | $ | $ | $ | |||||||||||||||||||
| Convertible Notes | |||||||||||||||||||||||
| Equipment Notes | |||||||||||||||||||||||
| Financed Tenant Improvements | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Short-Term Credit Facilities and Available Liquidity
2025 Japan ABL Credit Facility & 2023 ABL Credit Facility
Our 2025 Japan ABL Credit Facility provides a line of credit to our Japan subsidiary of up to 9,000.0 million Yen (or approximately $57.2 million using the exchange rate in effect as of September 30, 2026), and our 2023 ABL Credit Facility has an aggregate principal amount of up to $485.0 million. Both facilities are subject to certain restrictions and covenants related to pledged collateral and financial performance, and, among other things, include provisions that limit certain financing and operational activities and require ongoing compliance with specified performance‑based or availability‑related conditions, as applicable under the respective agreements. In addition, the 2023 ABL Credit Facility requires compliance with a minimum fixed charge coverage ratio of 1.0 to 1.0 during periods in which the borrowing base availability falls below 10 % of the maximum aggregate principal amount of the facility.
As of September 30, 2026, we were in compliance with the covenants and other requirements applicable under the 2025 Japan ABL Credit Facility and the 2023 ABL Credit Facility.
Consolidated Available Liquidity
As of September 30, 2026, our consolidated available liquidity, which is comprised of cash on hand and amounts available under our short-term credit facilities, less outstanding letters of credit and outstanding borrowings, was $815.1 million. Our average availability and weighted-average interest rate under our 2023 ABL Credit Facility and 2025 Japan ABL Credit Facility were as follows for the periods presented (in millions except interest rates):
| September 30, 2026 | |||||
| 2023 ABL Credit Facility | |||||
| Average availability | $ | ||||
| Weighted-average interest rate | % | ||||
| 2025 Japan ABL Credit Facility | |||||
| Average availability | $ | ||||
| Weighted-average interest rate | % | ||||
Long-Term Debt and Credit Facilities
2023 Term Loan B
On December 1, 2025, in connection with the sale of the Topgolf business, our 2023 Term Loan B was amended to designate certain Topgolf entities as unrestricted subsidiaries and release them as guarantors, amend certain definitions and covenant provisions, and require a $500.0 million mandatory partial repayment upon consummation of the sale.
On January 2, 2026, in connection with the completion of the sale of Topgolf, we repaid $1,000.0 million under the 2023 Term Loan B comprised of a $500.0 million mandatory repayment and an additional discretionary repayment of $500.0 million. In conjunction with the repayment, we recognized a $15.0 million loss from the partial debt extinguishment to write off the proportionate amount of unamortized debt issuance costs and debt discounts. Of this amount, $7.5 million was allocated to continuing operations and was recognized in other income (expense), net on the condensed consolidated statement of operations during the three months ended March 31, 2026. The remaining $7.5 million was allocated to discontinued operations and represents the portion of the write‑off related to the mandatory prepayment of the loan required upon completion of the Topgolf sale.
On May 29, 2026, we repaid the remaining $162.5 million principal balance outstanding under the 2023 Term Loan B. In connection with the repayment, we recognized a $2.3 million loss from debt extinguishment to write off the remaining unamortized debt issuance costs and debt discounts, which were recognized in other income (expense), net on the condensed consolidated statement of operations during the three months ended June 30, 2026.
Convertible Notes & Capped Call
We had Convertible Notes outstanding that were convertible into shares of our common stock at an initial conversion rate of 56.8 shares per $1,000 principal amount (equivalent to a conversion price of $17.62 per share) and bore interest payable semi-annually on May 1 and November 1. The Convertible Notes could be settled in cash, shares, or a combination thereof at our election and became convertible at the holders’ option upon the occurrence of certain contingent conversion events beginning February 1, 2026. In connection with the Convertible Notes, we entered into capped call transactions covering the shares initially underlying the Convertible Notes, which were intended to reduce potential dilution and/or offset cash payments upon conversion. The capped calls had an exercise price of $17.62 per share and a cap price of $23.71 per share, were subject to customary adjustments, and were recorded as a reduction to additional paid-in capital.
On May 1, 2026, we settled our outstanding Convertible Notes at maturity in accordance with their terms, including the payment of accrued and unpaid interest. The settlement was completed entirely in cash, and no shares of common stock were issued. In connection with the settlement, the related capped call transactions expired unexercised.
Equipment Notes
We have long-term financing agreements (the “Equipment Notes”) with various lenders related to various capital investments in certain facilities and information technology equipment. The loans are secured by the related underlying equipment.
Financed Tenant Improvements
We have a long-term financing agreement (the “Financed Tenant Improvements”) with our landlord related to leasehold improvements at one of our leased properties. The financing agreement is secured in accordance with the respective terms of the lease agreement. On September 11, 2026, we repaid the remaining $0.7 million principal balance outstanding under one of the two existing agreements.
Aggregate Amount of Long-Term Debt Maturities
The following table presents our combined aggregate amount of maturities for our long-term debt and credit facilities over the next five years and thereafter as of September 30, 2026 (in millions):
| Remainder of 2026 | $ | |||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| Thereafter | ||||||||
| Total aggregate amount of maturities | $ | |||||||
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Note 7. Earnings (Loss) Per Common Share
The following table summarizes the computation of basic and diluted earnings per common share for the periods presented (in millions, except per share data):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Earnings (loss) per common share—basic | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ( | ( | ( | ||||||||||||||||||||
| Net income (loss) | $ | $ | ( | $ | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average common shares outstanding | |||||||||||||||||||||||
| Basic earnings (loss) per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Net earnings (loss) per common share | $ | $ | ( | $ | $ | ||||||||||||||||||
| Earnings (loss) per common share—diluted | |||||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
Add: Interest expense attributable to Convertible Notes, net of tax | |||||||||||||||||||||||
| Income (loss) from continuing operations and assumed conversions | ( | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | ( | ( | ( | ||||||||||||||||||||
Net income (loss) attributable to earnings per common share | $ | $ | ( | $ | $ | ||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Weighted-average common shares outstanding—basic | |||||||||||||||||||||||
| Incremental shares for assumed conversion of Convertible Notes | |||||||||||||||||||||||
| Outstanding options, restricted stock units and performance share units | |||||||||||||||||||||||
Weighted-average common shares outstanding—diluted(1) | |||||||||||||||||||||||
| Diluted earnings (loss) per common share: | |||||||||||||||||||||||
| Continuing operations | $ | $ | ( | $ | $ | ||||||||||||||||||
| Discontinued operations | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||
| Net diluted earnings (loss) per common share | $ | $ | ( | $ | $ | ||||||||||||||||||
(1) Components of diluted weighted-average common shares outstanding may not be additive due to rounding. | |||||||||||||||||||||||
Anti-Dilutive Securities
For both of the three and nine months ended September 30, 2026, approximately 0.3
For the three months ended September 30, 2025, approximately 16.3 million securities outstanding, comprised of shares that were subject to conversion from the Convertible Notes, stock options and restricted stock units, were excluded from the calculation of diluted earnings per common share as they would be anti-dilutive. For the nine months ended September 30, 2025, approximately 2.5 million securities outstanding, comprised of stock options and restricted stock units, were excluded from the calculation of diluted earnings per common share as they would be anti-dilutive.
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Note 8. Goodwill and Intangible Assets
Changes in the carrying amount of goodwill by operating and reportable segment are as follows (in millions):
| Golf Equipment | Apparel, Gear and Other | Total | ||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||||||||||
| Foreign currency translation and other | ( | ( | ||||||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | |||||||||||||||||
Intangible assets by major asset class are as follows (in millions, except useful life amounts):
| Indefinite-lived: | Amortizing: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Trade names and Trademarks | Patents | Customer/ Distributor Relationships and Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Useful Life (Years) | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross as of December 31, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disposals | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross as of September 30, 2026 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated amortization | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net book value, September 30, 2026 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gross as of December 31, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated amortization | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency and other | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net book value, December 31, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
We recognized $0.3 0.7
As of September 30, 2026, intangible asset amortization expense is expected to be incurred for the periods presented as follows (in millions):
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| Total | $ | ||||
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Note 9. Investments
Investment in Topgolf
Upon completion of the sale of our 60 % ownership interest in Topgolf effective January 1, 2026, we retained a 40 % non-controlling interest with an initial value of $248.5 million. The retained investment is accounted for under the equity method and was recorded at fair value using Level 3 inputs based on the equity value of Topgolf which was derived from the transaction price and adjusted for working capital and other transaction specific adjustments. The carrying amount of the investment is subsequently adjusted to reflect our proportionate share of Topgolf’s income or losses and dividends and distributions received. During the second quarter of 2026, Topgolf sold additional dilutive units which decreased our non-controlling interest to 39.3 %.
The following table presents summarized information for Topgolf for the periods presented (amounts in millions). Amounts presented represent the results of operations of Topgolf and do not represent our proportionate share:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2026 | ||||||||||||||||||||||
| Net revenues | $ | $ | |||||||||||||||||||||
| Depreciation and amortization expense | $ | $ | |||||||||||||||||||||
| Income (loss) from operations | $ | $ | |||||||||||||||||||||
| Interest expense | $ | $ | |||||||||||||||||||||
| Net income (loss) | $ | ( | $ | ( | |||||||||||||||||||
For the three and nine months ended September 30, 2026, we recognized $17.9 million and $46.6 million, respectively, of equity method investment loss for our respective share of Topgolf’s earnings, which is recorded in income (loss) from equity method investments in the condensed consolidated statement of operations. During the second quarter of 2026, we recognized a $6.5 million distribution from Topgolf, which reduced the carrying value of our investment. We classify cash flows from equity method investment distributions using the cumulative earnings approach. Based on this approach, we determined the distribution was a return of investment and it was therefore classified within investing activities in the condensed consolidated statements of cash flows. As of September 30, 2026, the carrying value of our investment in Topgolf was $195.2 million and is included in equity method investments on our condensed consolidated balance sheets.
For the three and nine months ended September 30, 2026, we recognized $1.6 million and $6.9 million, respectively, in net sales for products sold under our commercial agreement with Topgolf. Our share of intra-entity profits on certain sales transactions with Topgolf are eliminated until realized. As of September 30, 2026, we had $2.1 million in open receivables due from Topgolf related to product sales and services under the commercial and transition service agreements.
Investment in Full Swing
We held an ownership interest of less than 20.0 % in Full Swing Golf Holdings, LLC (“Full Swing”), owners of multi-sport indoor virtualization and simulation technology. The initial investment was accounted for at cost and is subsequently adjusted for observable changes in fair value or impairments. As of December 31, 2025, the carrying value of our investment in Full Swing was $9.3 million, and was included in other assets, net on our condensed consolidated balance sheets.
On July 6, 2026, Versant Media Group, Inc. announced that it had entered into a definitive agreement to acquire the Full Swing business in its entirety. The transaction closed on August 3, 2026, and we received cash proceeds of $24.6 million. Based on the carrying value of our investment as of the date of the sale, we recognized a gain of approximately $15.4 million, which was included in other income (expense), net in the condensed consolidated statement of operations during the three months ended September 30, 2026.
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Investment in Five Iron Golf
We have an ownership interest of less than 20.0 % in The Range NYC, LLC (“Five Iron Golf”), an urban indoor golf experience company which hosts a golf simulation technology and serves food and beverage. The initial investment was accounted for at cost and is subsequently adjusted for observable changes in fair value or impairments. During the nine months ended September 30, 2026, we recognized a $4.6 million fair value step-up in our investment primarily based on Level 3 inputs related to an observable market transaction that occurred during the first quarter of 2026. As of September 30, 2026 and December 31, 2025, the carrying value of our investment in Five Iron Golf was $38.5 million and $33.9 million, respectively, and is included in other assets, net on our condensed consolidated balance sheets.
Other Investments
In addition to the investments above, as of September 30, 2026 and December 31, 2025, we had other investments of approximately $5.3 million and $4.4 million, respectively, which are classified in other assets, net on our condensed consolidated balance sheets. The investments are accounted for at cost less impairments and are adjusted for observable changes in fair value.
Note 10. Selected Financial Data
Selected financial data as of the dates presented below is as follows (in millions, except useful life data):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| Inventories: | |||||||||||||||||
| Finished goods | $ | $ | |||||||||||||||
| Work in process | |||||||||||||||||
| Raw materials | |||||||||||||||||
| Total inventories | $ | $ | |||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| Other current assets: | |||||||||||||||||
| Credit card and other receivables | $ | $ | |||||||||||||||
| Sales return reserve cost recovery asset | |||||||||||||||||
| Taxes receivable | |||||||||||||||||
| Other | |||||||||||||||||
| Total other current assets | $ | $ | |||||||||||||||
| Estimated Useful Life | September 30, 2026 | December 31, 2025 | |||||||||||||||
| Property, plant and equipment, net: | |||||||||||||||||
| Land | $ | $ | |||||||||||||||
| Buildings and leasehold improvements | |||||||||||||||||
| Machinery and equipment | |||||||||||||||||
| Furniture, computer hardware and equipment | |||||||||||||||||
| Internal-use software | |||||||||||||||||
| Production molds | |||||||||||||||||
| Construction-in-process | |||||||||||||||||
| Total property, plant, and equipment, gross | |||||||||||||||||
| Less: Accumulated depreciation | |||||||||||||||||
| Total property, plant, and equipment, net | $ | $ | |||||||||||||||
Depreciation expense is recognized in cost of sales, research and development expense, and selling, general and administrative expense on the condensed consolidated statement of operations, consistent with the use of the underlying asset. For the three months ended September 30, 2026 and 2025, we recorded total depreciation expense of $10.3 million and $10.5 million, respectively, in our condensed consolidated statements of operations. For the nine months ended September 30, 2026 and 2025, we recorded total depreciation expense of $30.2 million and $33.0 million, respectively, in our condensed consolidated statements of operations.
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| (in millions) | September 30, 2026 | December 31, 2025 | |||||||||
| Accounts payable and accrued expenses: | |||||||||||
| Accounts payable | $ | $ | |||||||||
| Accrued expenses | |||||||||||
| Accrued inventory | |||||||||||
| Total accounts payable and accrued expenses | $ | $ | |||||||||
Note 11. Income Taxes
We calculate our interim income tax provision in accordance with ASC Topic 270, “Interim Reporting,” and ASC Topic 740, “Accounting for Income Taxes.” At the end of each interim period, we estimate our annual effective tax rate and apply that rate to our ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur.
We recorded an income tax benefit of $0.3 million and an income tax provision of $2.7 million for the three months ended September 30, 2026 and 2025, respectively. As a percentage of pre-tax income, our effective tax rate was (0.6 )% and (192.9 )% for the three months ended September 30, 2026 and 2025, respectively. For the three months ended September 30, 2026, the difference between the statutory tax rate and the effective tax rate is primarily due to the use of capital loss carryforwards to fully offset the taxable gain on the sale of our investment in Full Swing, partially offset by the impacts of valuation allowances related to our investment in Topgolf. For the three months ended September 30, 2025, the difference between the statutory tax rate and the effective tax rate is primarily due to minimum taxes on our foreign earnings and discrete tax adjustments related to share-based compensation. The net impact of these items on the effective tax rate for the third quarter of 2026 and 2025 resulted in a tax provision that is not directly proportional to the quarter’s pre-tax income/ loss.
We recorded an income tax provision of $67.2 million and $43.0 million for the nine months ended September 30, 2026 and 2025, respectively. As a percentage of pre-tax income, our effective tax rate was 25.3 % and 29.1 % for the nine months ended September 30, 2026 and 2025, respectively. For the nine months ended September 30, 2026, the difference between the statutory tax rate and the effective tax rate is primarily due to the impacts of valuation allowances related to our investment in Topgolf, partially offset by the use of capital loss carryforwards to fully offset the taxable gain on the sale of our investment in Full Swing. For the nine months ended September 30, 2025, the difference between the statutory tax rate and the effective tax rate is primarily due to minimum taxes on our foreign earnings and discrete tax adjustments related to share-based compensation.
As of September 30, 2026, the gross liability for income taxes associated with uncertain tax positions was $19.1 million. Of this amount, $10.5 million would benefit our condensed consolidated financial statements and effective income tax rate if favorably settled. We recognize interest and penalties related to income tax matters in income tax expense.
Note 12. Commitments & Contingencies
Legal Matters
We are subject to routine legal claims, proceedings, and investigations associated with the normal conduct of our business activities, including commercial disputes and employment matters. We also receive from time-to-time information claiming that products we sell infringe or may infringe patent, trademark, or other intellectual property rights of third parties. One or more such claims of potential infringement could lead to litigation, the need to obtain licenses, the need to alter a product to avoid infringement, a settlement or judgment, or some other action or material loss, which could adversely affect our overall ability to protect our product designs and ultimately limit our future success in the marketplace. Additionally, we are occasionally subject to non-routine claims, proceedings, or investigations.
24
We regularly assess such matters to determine the degree of probability that we will incur a material loss as a result of such matters, as well as the range of possible loss. An estimated loss contingency is accrued in our financial statements if it is probable we will incur a loss and the amount of the loss can be reasonably estimated. Historically, the claims, proceedings, and investigations brought against us, individually and in the aggregate, have not had a material adverse effect on our condensed consolidated results of operations, cash flows or financial position. While it is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that some of these actions could be decided unfavorably, we do not believe that the matters currently pending against us will have a material adverse effect on our business, condensed consolidated results of operations, cash flows or financial position.
Commitments
During the normal course of our business, we enter into agreements to purchase goods and services, including commitments for endorsement agreements with professional athletes and other endorsers, consulting and service agreements, intellectual property licensing agreements pursuant to which we are required to pay royalty fees, and signed retail lease agreements of which we have not taken possession as of period-end. The amounts listed below approximate the minimum future commitments we are obligated to pay under these agreements. The actual amounts paid under some of the agreements may be higher or lower than these amounts due to the variable nature of these obligations.
As of September 30, 2026, the minimum obligation we are required to pay under these agreements over the next five years and thereafter is as follows (in millions):
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Other Contingent Contractual Obligations
During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. The duration of these indemnities, commitments and guarantees varies, and in certain cases, may be indefinite and the majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our condensed consolidated financial statements. The fair value of indemnities, commitments and guarantees that we issued during the three and nine months ended, and as of September 30, 2026, was not material to our financial position, results of operations or cash flows.
We have also made certain indemnities under which we may be required to make payments in relation to divestitures of the Topgolf and Jack Wolfskin businesses. These include indemnities against (i) damages arising from certain ongoing litigation matters, (ii) certain exempted claims and (iii) certain pre-closing tax and other liabilities. As of September 30, 2026, we have $2.1 million of indemnities recorded related to the disposals of our businesses (see Note 3), which are reported in other long-term liabilities on the condensed consolidated balance sheet.
Tariff Refunds
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs previously imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized by statute. In March 2026, the U.S. Court of International Trade issued an order directing U.S. Customs and Border Protection (“CBP”) to begin processing refunds of certain IEEPA tariffs. As a result, we identified approximately $49.5 million of potential refund claims related to previously paid IEEPA tariffs, of which approximately $42.6 million has been received as of September 30, 2026. The remaining potential refund claims have not yet been filed and remain subject to applicable eligibility, filing, and recovery requirements.
25
We account for potential recoveries related to these tariff refund claims under the gain contingency guidance in ASC 450 and recognize refunds only when they are deemed realizable. The principal portion of the refunds is reflected as a reduction of cost of sales for amounts related to goods already sold and any associated interest income received on the tariff refunds is recognized within interest income (expense), net in the condensed consolidated statements of operations. During the three and nine months ended September 30, 2026, we recognized IEEPA tariff refund benefits of $33.5 million and $44.3 million, respectively, of which $31.8 million and $42.6 million were recognized in cost of sales, respectively, and $1.7
Note 13. Share-Based Compensation
Share-Based Awards Granted
We granted the following awards under our stock compensation plans during the periods presented (in millions, except per share data):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
Shares Granted(1) | Weighted-average grant date fair value per share | Shares Granted | Weighted-average grant date fair value per share | Shares Granted | Weighted-average grant date fair value per share | Shares Granted(2) | Weighted-average grant date fair value per share | |||||||||||||||||||||||||||||||
| Restricted stock units | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Performance based restricted share unit awards(3) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Total | — | |||||||||||||||||||||||||||||||||||||
(1) We granted less than | ||||||||||||||||||||||||||||||||||||||
(2) Shares granted during fiscal year 2025 include awards granted to employees of our discontinued operations certain of which will continue to vest in accordance with the original terms of the respective awards. | ||||||||||||||||||||||||||||||||||||||
(3) Weighted-average grant date fair value per share determined using Monte-Carlo valuation method. | ||||||||||||||||||||||||||||||||||||||
Share-Based Compensation Expense
Share-based compensation expense by award-type, net of estimated forfeitures, recognized in the condensed consolidated statement of operations for the periods presented was (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Restricted stock units | $ | $ | $ | $ | ||||||||||||||||||||||
| Performance based restricted share unit awards | ||||||||||||||||||||||||||
| Share-based compensation expense, before tax | ||||||||||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | ||||||||||||||||||||||
| Share-based compensation expense, after tax | $ | $ | $ | $ | ||||||||||||||||||||||
26
Share-based compensation, net of estimated forfeitures, recognized in the condensed consolidated statement of operations for the periods presented was (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Cost of sales | $ | $ | $ | $ | ||||||||||||||||||||||
| Selling, general and administrative expense | ||||||||||||||||||||||||||
| Research and development expense | ||||||||||||||||||||||||||
| Share-based compensation expense, before tax | ||||||||||||||||||||||||||
| Income tax benefit | ( | ( | ( | ( | ||||||||||||||||||||||
| Share-based compensation expense, after tax | $ | $ | $ | $ | ||||||||||||||||||||||
Note 14. Fair Value of Financial Instruments
Fair Value Measurements
The carrying amounts of our cash and cash equivalents (which include money market funds), accounts receivable, accounts payable, accrued expenses, and certain other short‑term assets and liabilities approximate fair value due to their short‑term nature.
Money Market Funds
As of September 30, 2026 and December 31, 2025, the carrying value of our money market funds was $325.1 million and $791.7 million, respectively, which is included in cash and cash equivalents on our condensed consolidated balance sheets. During the three months ended September 30, 2026 and September 30, 2025, we recognized $2.4 million and $7.0 million, respectively, of dividend income on our money market funds. During the nine months ended September 30, 2026 and September 30, 2025, we recognized $9.1 million and $12.4 million, respectively, of dividend income on our money market funds. Dividend income is included in other income (expense), net in the condensed consolidated statements of operations.
Foreign Currency Forward Contracts
The following table summarizes the valuation of our foreign currency forward contracts (see Note 15) that are measured at fair value on a recurring basis and are categorized within Level 2 of the fair value hierarchy as of the periods presented below (in millions):
| Level 2 Fair Value | |||||||||||||||||||||||
September 30, 2026 | |||||||||||||||||||||||
| Foreign currency forward contracts—asset position | $ | ||||||||||||||||||||||
| Foreign currency forward contracts—liability position | ( | ||||||||||||||||||||||
| Total | $ | ( | |||||||||||||||||||||
December 31, 2025 | |||||||||||||||||||||||
| Foreign currency forward contracts—asset position | $ | ||||||||||||||||||||||
| Foreign currency forward contracts—liability position | ( | ||||||||||||||||||||||
| Total | $ | ( | |||||||||||||||||||||
There were no transfers of financial instruments between the levels of the fair value hierarchy during the three and nine months ended September 30, 2026 or 2025.
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Disclosures about the Fair Value of Financial Instruments
The table below presents information about the fair value of our financial liabilities, and is provided for comparative purposes only relative to the carrying values recognized in the condensed consolidated balance sheets as of the periods presented below (in millions):
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||
| Measurement Level | Carrying Value | Fair Value | Carrying Value | Fair Value | |||||||||||||||||||||||||
| 2025 Japan ABL Credit Facility | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| 2023 Term Loan B | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Convertible Notes | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Equipment Notes | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
| Financed Tenant Improvements | Level 2 | $ | $ | $ | $ | ||||||||||||||||||||||||
Non-recurring Fair Value Measurements
We measure certain long-lived assets, goodwill, non-amortizing intangible assets and investments at fair value on a non-recurring basis, at least annually or more frequently if impairment indicators are present. Our cost-basis investments are also subject to fair value remeasurements from observable market transactions. For more detail see Note 9.
As part of our initiative to rationalize lower margin business, we performed a review of the TravisMathew business including certain warehouse equipment and retail locations. As part of this review, we decided to exit certain retail locations which did not meet our profitability thresholds, resulting in impairment charges of $0.1 million and $1.9 million recorded during the three and nine months ended September 30, 2026, respectively. This assessment was based on the estimated future cash flows generated over the remaining lease terms and expected asset lives. As a result, we recognized impairment losses to reduce the carrying values of these assets to their fair values which are categorized within Level 3 of the fair value hierarchy. We recognized $1.5 0.4
Note 15. Derivatives and Hedging
The following table summarizes the fair value of our derivative instruments as well as the location of the asset and/or liability on the condensed consolidated balance sheets as of the periods presented below (in millions):
| Balance Sheet Location | Fair Value of Asset Derivatives | ||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| Derivatives designated as cash flow hedging instruments: | |||||||||||||||||
| Foreign currency forward contracts | Other current assets | $ | $ | ||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Foreign currency forward contracts | Other current assets | ||||||||||||||||
| Total asset position | $ | $ | |||||||||||||||
| Balance Sheet Location | Fair Value of Liability Derivatives | ||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||||||||
| Derivatives designated as cash flow hedging instruments: | |||||||||||||||||
| Foreign currency forward contracts | Accounts payable and accrued expenses | $ | $ | ||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||
| Foreign currency forward contracts | Accounts payable and accrued expenses | ||||||||||||||||
| Total liability position | $ | $ | |||||||||||||||
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Our derivative instruments are subject to a master netting agreement with each respective counterparty bank and are therefore net settled at their maturity date. Although we have the legal right of offset under the master netting agreements, we have elected not to present these contracts on a net settlement amount basis, and therefore present these contracts on a gross basis on the accompanying condensed consolidated balance sheets as of September 30, 2026 and December 31, 2025. Gains and losses related to our derivative instruments are presented as an adjustment to reconcile net income to net cash provided by or used in operating activities in the condensed consolidated statements of cash flows.
Derivatives Designated as Cash Flow Hedging Instruments
We only use derivative instruments, including foreign currency forward contracts and interest rate swaps, to manage market risks related to foreign currency exposure across our global operations and exposure to variable‑rate debt.
As of September 30, 2026, the notional amount of our foreign currency forward contracts designated as cash flow hedges was $28.5 million. As of December 31, 2025, there were no outstanding cash flow hedges. During the fourth quarter of 2025, we closed out our interest rate swaps in connection with an amendment to the 2023 Term Loan B. As of September 30, 2026, we did not have any outstanding interest rate swap agreements.
The following tables summarize the net effect of all cash flow hedges for each of our derivative contracts on the condensed consolidated financial statements for the periods presented (in millions):
Net Gain/(Loss) Recognized in Other Comprehensive Income | ||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| Derivatives designated as cash flow hedging instruments | 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Foreign currency forward contracts | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
| Interest rate swap contracts | ( | |||||||||||||||||||||||||
| Total | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Net Gain/(Loss) Reclassified from Other Comprehensive Income into Earnings | ||||||||||||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
Derivatives designated as cash flow hedging instruments | Statement of Operations Location | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||
| Foreign currency forward contracts | Cost of sales | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||||||
| Interest rate swap contracts | Interest expense | |||||||||||||||||||||||||||||||
| Total | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||
For the three months ended September 30, 2026 and 2025, $0.4 million and $0.5 million, respectively, of net gains related to the amortization of forward points were released from accumulated other comprehensive income and recognized in cost of sales. For both of the nine months ended September 30, 2026 and 2025, $2.0
Based on the current valuation of our foreign currency forward contracts, we expect to release net losses of $0.6 million related to our foreign currency forward contracts from accumulated other comprehensive income into earnings over the next 12 months.
Derivatives Not Designated as Hedging Instruments
As of September 30, 2026 and December 31, 2025, the notional amounts of our foreign currency forward contracts not designated as cash flow hedges were approximately $96.9 million and $88.4 million, respectively.
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The following table summarizes the location of net gains and losses on foreign currency forward contracts recognized in the condensed consolidated statements of operations for the periods presented (in millions):
| Location of Net Gain/(Loss) Recognized in Income on Derivative Instruments | Net Gain/(Loss) Recognized in Income on Derivative Instruments | |||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Foreign currency forward contracts | Other income (expense), net | $ | ( | $ | $ | $ | ( | |||||||||||||||||||||||||
Note 16. Accumulated Other Comprehensive Loss
The following table details the amounts reclassified from accumulated other comprehensive loss and foreign currency translation adjustments for the three and nine months ended September 30, 2026 (in millions):
| Derivative Instruments | Foreign Currency Translation | Total | ||||||||||||||||||
Accumulated other comprehensive income (loss), June 30, 2026, after tax | $ | $ | ( | $ | ( | |||||||||||||||
| Change in derivative instruments | ( | — | ( | |||||||||||||||||
| Net (gains) losses reclassified to cost of sales | ( | — | ( | |||||||||||||||||
| Income tax impact on derivative instruments | — | |||||||||||||||||||
| Foreign currency translation adjustments | — | |||||||||||||||||||
| Foreign currency translation adjustments attributable to equity method investment | — | ( | ( | |||||||||||||||||
Accumulated other comprehensive income (loss), September 30, 2026, after tax | $ | $ | ( | $ | ( | |||||||||||||||
| Derivative Instruments | Foreign Currency Translation | Total | ||||||||||||||||||
Accumulated other comprehensive income (loss), December 31, 2025, after tax | $ | $ | ( | $ | ( | |||||||||||||||
| Change in derivative instruments | ( | — | ( | |||||||||||||||||
| Net (gains) losses reclassified to cost of sales | — | |||||||||||||||||||
| Foreign currency translation adjustments | — | |||||||||||||||||||
| Cumulative foreign currency translation adjustments recognized upon the sale of Topgolf | — | ( | ( | |||||||||||||||||
| Foreign currency translation adjustments attributable to equity method investment | — | ( | ( | |||||||||||||||||
Accumulated other comprehensive income (loss), September 30, 2026, after tax | $ | $ | ( | $ | ( | |||||||||||||||
Note 17. Segment Information
Our operating segments are based on how our Chief Executive Officer as the designated Chief Operating Decision Maker (“CODM”) makes decisions about assessing performance and allocating resources. Our CODM primarily evaluates segment performance using segment operating income (loss), which is calculated by taking total segment net sales less segment operating expenses. Segment operating expenses include operating expenses directly attributable to the segment as well as certain shared corporate administration services and other costs which are allocated to the reportable segments. Segment operating expenses exclude certain non-recurring items and other corporate costs, such as interest expense, interest income and taxes. Our CODM evaluates the profitability of each reportable segment based on segment operating income (loss) because it provides insight to operational leverage and other key operational metrics for each segment. Segment operating income (loss) is also used in the annual budget and forecasting process, and budget-to-actual and forecast-to-actual variances are considered when determining the appropriate allocation of company resources to each of our segments. Our CODM does not evaluate a measure of assets when assessing segment performance.
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We have two
•Golf Equipment, which is comprised of product sales and expenses that encompass golf club and golf ball products, including Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, Callaway Golf-branded golf balls and sales of pre-owned golf clubs; and
•Apparel, Gear and Other, which is comprised of product sales and expenses for the TravisMathew golf and lifestyle apparel and accessories business, the Callaway soft goods business and the OGIO business, which consists of golf apparel and accessories (including golf bags), and storage gear for sport and personal use. This segment also includes royalties from licensing of our trademarks and service marks for various soft goods products.
There were no significant intersegment transactions during the three and nine months ended September 30, 2026 or 2025.
The following table contains information utilized by our CODM to evaluate our operating segments for the periods presented below (in millions):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Golf Equipment: | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Less: Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Less: Selling, general and administrative expense | |||||||||||||||||||||||
| Less: Research and development expense | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Apparel, Gear and Other: | |||||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Less: Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Less: Selling, general and administrative expense | |||||||||||||||||||||||
| Less: Research and development expense | |||||||||||||||||||||||
| Income (loss) before income taxes | $ | $ | $ | $ | |||||||||||||||||||
| Segment income (loss) from continuing operations | $ | $ | $ | $ | |||||||||||||||||||
| Reconciling items: | |||||||||||||||||||||||
Non-recurring items (1) | ( | ( | |||||||||||||||||||||
Corporate costs and expenses (2) | ( | ( | ( | ( | |||||||||||||||||||
| Total reconciling items: | ( | ( | ( | ( | |||||||||||||||||||
Income (loss) from operations | |||||||||||||||||||||||
Interest income (expense), net | ( | ( | ( | ||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||
Total other income (expense), net | ( | ( | |||||||||||||||||||||
| Income (loss) from equity method investments | ( | ( | |||||||||||||||||||||
Income (loss) from continuing operations, before income taxes | $ | $ | ( | $ | $ | ||||||||||||||||||
(1) Includes non-cash amortization of acquired intangible assets and non-recurring items primarily consisting of tariff refunds, costs related to a relocation to a new warehouse in the United Kingdom as a result of the sale of the Jack Wolfskin business, restructuring and reorganization charges relating to the Transformation Plan (see Note 18), and the write-off of software assets stemming from our separation from Topgolf. | |||||||||||||||||||||||
(2) Corporate costs and expenses include corporate general and administrative expenses not utilized by management in determining segment profitability as well as adjustments for discontinued operations related to indirect costs that were previously allocated to a segment. | |||||||||||||||||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Depreciation and amortization: | |||||||||||||||||||||||
| Golf Equipment | $ | $ | $ | $ | |||||||||||||||||||
| Apparel, Gear and Other | |||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
We market our products in the United States and internationally, with our principal international markets being Asia and Europe. The tables below contain information about the geographical areas in which we operate. Net sales are attributed to the location to which the product was shipped. Long-lived assets are based on location of domicile.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
(in millions) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net sales: | |||||||||||||||||||||||
| United States | $ | $ | $ | $ | |||||||||||||||||||
| Europe | |||||||||||||||||||||||
| Asia | |||||||||||||||||||||||
| Rest of World | |||||||||||||||||||||||
| Total net sales | $ | $ | $ | $ | |||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||
| Long-lived assets | |||||||||||
| United States | $ | $ | |||||||||
| Europe | |||||||||||
| Asia | |||||||||||
| Rest of World | |||||||||||
| Total long-lived assets | $ | $ | |||||||||
Note 18. Restructuring
Our restructuring costs primarily consist of severance and termination benefits, asset disposals, write-offs and impairments and other exit and disposal costs. Severance costs generally include severance payments, outplacement services, health insurance coverage and legal costs.
Transformation Plan
In connection with the September 2024 announcement of our intended separation of the Topgolf business, we initiated a plan which is intended to optimize organizational efficiencies and decrease operating costs under the separate business structures that were anticipated after the separation (the “Transformation Plan”). For the three and nine months ended September 30, 2026, costs incurred under the Transformation Plan were primarily related to employee termination and severance costs. We expect to incur up to $8.0 million in costs related to the Transformation Plan, which we expect to be substantially complete by the end of 2026. As of September 30, 2026, we incurred cumulative costs of $6.2 million under this plan.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this report, and the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2026, or any other future periods. See “Important Notice to Investors Regarding Forward-Looking Statements” on page 2 of this report. References to the “Company,” “Callaway Golf Company,” “we,” “our,” or “us” in this report refer to Callaway Golf Company, together with our wholly-owned subsidiaries.
Divestitures of Topgolf and Jack Wolfskin
In 2025, we executed a strategic realignment to focus on our core Golf Equipment and complementary soft goods businesses, which included the sale of Jack Wolfskin on May 31, 2025, for approximately $290.0 million and the sale of a 60% stake in our Topgolf and Toptracer business (“Topgolf”) based upon an equity value of approximately $1,100.0 million. The Topgolf transaction closed effective January 1, 2026, resulting in net proceeds to us of $820.1 million from the sale and related financing transactions, net of working capital adjustments and cash retained. Our remaining 39.3% interest in Topgolf (following the sale by Topgolf of additional dilutive units in April 2026, which decreased our non-controlling interest) is accounted for under the equity method.
As a result of these divestitures, the operating results of Jack Wolfskin and Topgolf are classified as discontinued operations for all periods presented, while our proportionate share of earnings and losses related to our remaining equity method investment in Topgolf is included in continuing operations. For more information, please refer to Note 3 of this Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2025.
Discussion of Non-GAAP Measures
In addition to the financial results contained in this report, which have been prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we have also included supplemental information concerning our financial results on a non-GAAP basis. This non-GAAP information includes the following:
•A constant currency measure on net sales in order to demonstrate the impact of foreign currency fluctuations on these results. This information represents an estimate for comparative purposes and is calculated by taking current period local currency results and translating them into U.S. dollars based on the foreign currency exchange rates for the applicable comparable prior period.
•Net income and diluted earnings per share from continuing operations excluding the non-cash amortization associated with acquired intangible assets, including acquired customer and distributor relationships and acquired developed technology related to our acquisitions of TravisMathew and OGIO (collectively, the “Acquisitions”). While the amortization of these assets is excluded from our calculation of non-GAAP net income, the revenue, operating costs and associated acquired assets that contribute to the revenue generation associated with these acquired companies is reflected in our calculation of non-GAAP net income from continuing operations.
•Net income and diluted earnings per share from continuing operations excluding certain non-cash and non-recurring items, as further detailed below, as well as the income (loss) from our equity method investment in Topgolf. In addition, for periods presented for fiscal year 2025, net income and diluted earnings per share from continuing operations were adjusted to include interest expense associated with term loan debt that was recognized as part of discontinued operations in order to show the full effect of consolidated interest expense from our corporate debt.
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We have included information in this report to reconcile non-GAAP information for the periods presented to the most directly comparable GAAP information. Non-GAAP information in this report should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP and may also be inconsistent with the manner in which similar measures are derived or used by other companies. We use such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate the underlying performance of our business and/or in forecasting our business. We believe that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful information for investors in their assessment of the underlying performance of our business.
Segment and Related Information
Our products and brands are reported under two operating segments: Golf Equipment, which includes the operations of our golf clubs and golf balls business; and Apparel, Gear and Other, which includes the operations of our soft goods business marketed under the Callaway, TravisMathew and OGIO brand names.
Golf Equipment
Our Golf Equipment operating segment is comprised of Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, and Callaway Golf branded golf balls, as well as sales of pre-owned golf clubs. Our golf equipment products are designed to be technologically advanced and are for golfers of all skill levels, from beginner to professional.
Operating results for our Golf Equipment segment fluctuate due to seasonal factors, as the game of golf is primarily played on a seasonal basis in most of the regions where we conduct business. Weather conditions in most parts of the world, including our primary geographic markets, generally restrict golf from being played throughout the entire year, with many of our on-course customers closing during the cold weather months. Operating results are also impacted by the timing of our product launches. In general, we launch new products for the new golf season during the first quarter of the year. This initial sell-in period typically continues into the second quarter, while third-quarter sales are generally dependent on reorders and may also include smaller new product launches. Fourth-quarter sales are generally less than the other quarters due to the end of the golf season in many of our key regions. In addition to this seasonality, our Golf Equipment sales may also be impacted by other factors, including the timing of new product introductions. As a result of these factors, a majority of our Golf Equipment sales, and most, if not all, of the profitability from our Golf Equipment operating segment generally occurs during the first half of the year.
Apparel, Gear and Other
Our Apparel, Gear and Other segment is comprised of high quality soft good products which we design, develop and sell under the Callaway, TravisMathew and OGIO brands. These brands deliver a range of premium performance and lifestyle products in the United States and select international markets. We are focused on maintaining strong brand momentum by category and market share growth with key trade partners by enhancing our digital marketing, e-commerce and retail store presence, which we believe will increase direct-to-consumer sales and drive increased profitability over time.
Sales of Callaway‑branded golf apparel and accessories generally follow the same seasonal patterns as golf equipment and are therefore typically higher during the first half of the year. Sales of TravisMathew and OGIO branded products, which include golf and lifestyle apparel, accessories, and performance products, are more diversified and therefore are more evenly distributed throughout the year due to broader product offerings and a greater mix of direct‑to‑consumer sales.
For further information about our segments, see Note 17 “Segment Information” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
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Current Economic Conditions
Macroeconomic Factors
Our products are discretionary purchases, and demand may be adversely affected by changes in macroeconomic conditions that impact consumer discretionary spending. These conditions include, among other factors, inflationary pressures, interest rate environments, changes in trade policies or tariffs, and geopolitical tensions that may create an uncertain environment for global trade and contribute to volatility in commodity, energy, and other input costs. While we seek to mitigate the effects of such factors through monitoring consumer spending behavior and implementing strategic initiatives, prolonged or severe adverse economic conditions could negatively impact our operating results.
Tariffs
In 2025, the U.S. government implemented reciprocal tariffs affecting many countries in which we do business, increasing costs for our products, components, and raw materials, a significant portion of which are sourced from outside the United States, including Asia and other regions, which may adversely affect product availability, pricing, and demand. On February 20, 2026, the United States Supreme Court struck down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977 (“IEEPA”). As a result, we identified approximately $49.5 million of potential refund claims related to previously paid IEEPA tariffs, of which approximately $42.6 million has been received as of September 30, 2026. The remaining potential refund claims have not yet been filed and remain subject to applicable eligibility, filing, and recovery requirements.
We account for tariff refund claims as gain contingencies and recognize refunds when they are deemed realized or realizable. During the three and nine months ended September 30, 2026, we recognized IEEPA tariff refund benefits of $33.5 million and $44.3 million, respectively, of which $31.8 million and $42.6 million were recognized in cost of sales, respectively, and $1.7 million was recognized in interest income (expense), net, in each period. Significant uncertainty remains regarding future U.S. trade policy and the amount and timing of any additional tariff refunds, including as a result of potential additional tariffs under alternative statutory authorities and ongoing legal, regulatory and administrative proceedings.
Foreign Currency
A significant portion of our operations is conducted outside the United States in currencies other than the U.S. dollar. We use foreign currency forward contracts to partially mitigate the short‑term effects of exchange rate fluctuations on our financial results; however, these instruments do not eliminate currency impacts or address long‑term exposure. Foreign currency fluctuations affect our results primarily through the translation of foreign‑currency‑denominated results into U.S. dollars and mark‑to‑market adjustments on certain intercompany balances and foreign currency forward contracts. For the three and nine months ended September 30, 2026, foreign currency fluctuations had unfavorable impacts of $4.0 million and $1.5 million, respectively, on international net revenues.
Results of Operations
We have reclassified certain prior-year amounts related to our discontinued operations to conform to the current year’s presentation. Unless otherwise specified, our discussion below reflects continuing operations only and prior period financial information related to discontinued operations has been reclassified and is separately presented in the condensed consolidated financial statements and accompanying notes. Unless otherwise specified, comparisons below reflect the current year period as compared to the same period in 2025.
Net sales and operating segment results (in millions, except percentages)
Net sales for the three months ended September 30, 2026 decreased $25.7 million or 5.6% (4.7% on a constant currency basis) as compared to the three months ended September 30, 2025. Segment operating income increased $9.7 million or 26.2% driven by increases in both our Golf Equipment and Apparel, Gear and Other operating segments.
Net sales for the nine months ended September 30, 2026 increased $44.0 million or 2.6% (2.7% on a constant currency basis) as compared to the nine months ended September 30, 2025. Segment operating income increased $70.3 million or 25.1% driven by increases in both our Golf Equipment and Apparel, Gear and Other operating segments.
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| Three Months Ended September 30, | Increase/(Decrease) | Non-GAAP Constant Currency Growth vs. 2025(1) | Nine Months Ended September 30, | Increase/(Decrease) | Non-GAAP Constant Currency Growth vs. 2025(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Dollars | Percent | Percent | 2026 | 2025 | Dollars | Percent | Percent | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net sales: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Golf clubs | $ | 213.3 | $ | 234.1 | $ | (20.8) | (8.9) | % | (8.0)% | $ | 910.4 | $ | 886.8 | $ | 23.6 | 2.7 | % | 2.6% | |||||||||||||||||||||||||||||||||||||||||
| Golf balls | 68.2 | 71.4 | (3.2) | (4.5) | % | (4.2)% | 287.6 | 274.4 | 13.2 | 4.8 | % | 4.4% | |||||||||||||||||||||||||||||||||||||||||||||||
| Golf Equipment | 281.5 | 305.5 | (24.0) | (7.9) | % | (7.1)% | 1,198.0 | 1,161.2 | 36.8 | 3.2 | % | 3.1% | |||||||||||||||||||||||||||||||||||||||||||||||
| Apparel | 99.5 | 96.8 | 2.7 | 2.8 | % | 3.9% | 307.4 | 299.1 | 8.3 | 2.8 | % | 3.7% | |||||||||||||||||||||||||||||||||||||||||||||||
| Gear, accessories, & other | 55.9 | 60.3 | (4.4) | (7.3) | % | (6.3)% | 231.2 | 232.3 | (1.1) | (0.5) | % | (0.5)% | |||||||||||||||||||||||||||||||||||||||||||||||
| Apparel, Gear and Other | 155.4 | 157.1 | (1.7) | (1.1) | % | —% | 538.6 | 531.4 | 7.2 | 1.4 | % | 1.9% | |||||||||||||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 436.9 | $ | 462.6 | $ | (25.7) | (5.6) | % | (4.7)% | $ | 1,736.6 | $ | 1,692.6 | $ | 44.0 | 2.6 | % | 2.7% | |||||||||||||||||||||||||||||||||||||||||
| Segment operating income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Golf Equipment | $ | 27.2 | $ | 23.3 | $ | 3.9 | 16.7 | % | $ | 245.1 | $ | 201.3 | $ | 43.8 | 21.8 | % | |||||||||||||||||||||||||||||||||||||||||||
| Apparel, Gear and Other | 19.5 | 13.7 | 5.8 | 42.3 | % | 104.9 | 78.4 | 26.5 | 33.8 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Total segment operating income (loss) | 46.7 | 37.0 | 9.7 | 26.2 | % | 350.0 | 279.7 | 70.3 | 25.1 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
Non-recurring items (2) | 28.5 | (0.5) | 29.0 | n/m | 32.0 | (2.7) | 34.7 | n/m | |||||||||||||||||||||||||||||||||||||||||||||||||||
Corporate costs and expenses (3) | (30.5) | (31.7) | 1.2 | (3.8) | % | (84.3) | (94.8) | 10.5 | (11.1) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from operations | 44.7 | 4.8 | 39.9 | n/m | 297.7 | 182.2 | 115.5 | 63.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income (expense), net | 0.5 | (14.8) | 15.3 | (103.4) | % | (9.9) | (45.0) | 35.1 | (78.0) | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other income (expense), net | 20.5 | 8.6 | 11.9 | 138.4 | % | 24.8 | 10.6 | 14.2 | 134.0 | % | |||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity method investments | (17.9) | — | (17.9) | n/m | (46.6) | — | (46.6) | n/m | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Income (loss) from continuing operations, before income taxes | $ | 47.8 | $ | (1.4) | $ | 49.2 | n/m | $ | 266.0 | $ | 147.8 | $ | 118.2 | 80.0 | % | ||||||||||||||||||||||||||||||||||||||||||||
(1) Calculated by applying 2025 exchange rates to 2026 reported sales in regions outside the United States. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) Includes non-cash amortization of acquired intangible assets and non-recurring items primarily consisting of tariff refunds, costs related to the relocation to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025, restructuring and reorganization charges related to the Transformation Plan, and the write-off of software assets stemming from our separation from Topgolf. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) Corporate costs and expenses include corporate general and administrative expenses not utilized by management in determining segment profitability as well as adjustments from discontinued operations related to indirect costs that were previously allocated to a segment. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Golf Equipment
Net sales
The $24.0 million (7.9%) decrease in Golf Equipment net sales for the three months ended September 30, 2026 was due to an 8.9% decrease in golf club sales and a 4.5% decrease in golf ball sales. The decrease in golf club sales resulted primarily from a planned decrease in product launches in the second half of 2026 driven by the strategic decision to lengthen lifecycles in the irons category and shift launch timing, combined with the unfavorable impact from changes in foreign currencies. This decrease was partially offset by better than expected net sales of the current quarter launch of the Mini Spinner fairway woods as well as the TRTL putters in the Asia market, combined with continued sales momentum for products launched earlier in the current year. The decrease in golf ball sales was driven by a decline in sales of lower margin golf ball products primarily related to SKU rationalization initiatives announced earlier this year.
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The $36.8 million (3.2%) increase in Golf Equipment net sales for the nine months ended September 30, 2026 was due to a 2.7% increase in golf club sales driven by strong reception of new product launches, combined with a 4.8% increase in golf ball sales driven by the successful launch of the new Chrome family of golf balls and overall gains in market share, partially offset by a decrease in net sales of irons due to the planned change in launch timing and a decline in sales of lower margin golf ball products primarily related to SKU rationalization initiatives.
Operating income
The $3.9 million (16.7%) increase in Golf Equipment segment operating income for the three months ended September 30, 2026 was primarily driven by an increase in gross margin resulting from ongoing initiatives including cost reductions, select price increases and rationalizing lower margin business, combined with favorable foreign currency impacts and lower tariffs, which more than offset the decrease in net sales and slight increase in operating expenses resulting from cost-of-living increases and inflationary pressures.
The $43.8 million (21.8%) increase in Golf Equipment segment operating income for the nine months ended September 30, 2026 was primarily driven by the increase in net sales noted above, combined with an increase in gross margin resulting from ongoing initiatives including select price increases, cost reductions, and rationalizing lower margin business as well as favorable foreign currency impacts. These increases were partially offset by unfavorable impacts of imposed tariffs and higher operating expenses primarily due to an $8.2 million lease termination incentive gain recognized in the first quarter of 2025, combined with the unfavorable impact from cost-of-living increases and inflationary pressures.
Apparel, Gear and Other
Net sales
The $1.7 million (1.1%) decrease in Apparel, Gear and Other net sales for the three months ended September 30, 2026 was due to a decline in sales of gear and accessories, partially offset by an increase in sales of TravisMathew apparel products primarily related to higher direct-to-consumer sales.
The $7.2 million (1.4%) increase in Apparel, Gear and Other net sales for the nine months ended September 30, 2026 was primarily due to increases in sales of TravisMathew apparel products related to strong overall market demand and higher direct-to-consumer sales, partially offset by a decline in sales of gear and accessories.
Operating income
The $5.8 million (42.3%) increase in segment operating income for the three months ended September 30, 2026 was primarily driven by higher gross margins due to cost savings from ongoing gross margin initiatives combined with lower tariffs, in addition to favorable product mix, which more than offset the decrease in net sales and higher operating expenses due to cost-of-living increases and inflationary pressures.
The $26.5 million (33.8%) increase in segment operating income for the nine months ended September 30, 2026 was primarily driven by the increase in net sales and higher gross margins due to cost savings and select price increases from ongoing gross margin initiatives combined with favorable product mix. These increases were partially offset by an increase in operating expenses primarily due to a $3.8 million lease termination incentive gain recognized in the first quarter of 2025 combined with cost-of-living increases and inflationary pressures.
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Net sales by major geographic region for the periods presented below were as follows (in millions, except percentages):
| Three Months Ended September 30, | Increase/(Decrease) | Non-GAAP Constant Currency Growth vs. 2025 | Nine Months Ended September 30, | Increase/(Decrease) | Non-GAAP Constant Currency Growth vs. 2025 | |||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | Percent | 2026 | 2025 | Dollars | Percent | Percent | |||||||||||||||||||||||||||||||||||||||||
| Net sales: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| United States | $ | 292.8 | $ | 301.9 | $ | (9.1) | (3.0) | % | (3.0) | % | $ | 1,156.3 | $ | 1,119.1 | $ | 37.2 | 3.3 | % | 3.3 | % | ||||||||||||||||||||||||||||||
| Europe | 37.4 | 45.1 | (7.7) | (17.1) | % | (16.4) | % | 185.4 | 174.0 | 11.4 | 6.6 | % | 2.0 | % | ||||||||||||||||||||||||||||||||||||
| Asia | 80.0 | 90.4 | (10.4) | (11.5) | % | (6.9) | % | 273.9 | 289.1 | (15.2) | (5.3) | % | (0.4) | % | ||||||||||||||||||||||||||||||||||||
| Rest of World | 26.7 | 25.2 | 1.5 | 6.0 | % | 4.0 | % | 121.0 | 110.4 | 10.6 | 9.6 | % | 5.4 | % | ||||||||||||||||||||||||||||||||||||
| Total net sales | $ | 436.9 | $ | 462.6 | $ | (25.7) | (5.6) | % | (4.7) | % | $ | 1,736.6 | $ | 1,692.6 | $ | 44.0 | 2.6 | % | 2.7 | % | ||||||||||||||||||||||||||||||
We sell our Golf Equipment and Apparel, Gear and Other products in the United States and internationally, with our principal international regions being Europe and Asia. Apparel, Gear and Other product sales for our TravisMathew business are primarily concentrated in the United States.
United States
The $9.1 million (3.0%) decrease in net sales for the three months ended September 30, 2026 was primarily due to lower sales volumes of golf equipment due to a planned decrease in product launches in the second half of 2026 and decreases in sales of golf bags, partially offset by higher TravisMathew apparel sales. The $37.2 million (3.3%) increase in net sales for the nine months ended September 30, 2026 was primarily due to higher sales of golf equipment and TravisMathew apparel from strong demand.
Europe
The $7.7 million (17.1%) decrease in net sales for the three months ended September 30, 2026 was primarily due to decreases in golf equipment product sales due to a planned decrease in product launches in the second half of 2026. The $11.4 million (6.6%) increase in net sales for the nine months ended September 30, 2026 was primarily due to increases in golf equipment product sales from strong demand combined with the favorable impact of changes in foreign currency.
Asia
The $10.4 million (11.5%) decrease in net sales for the three months ended September 30, 2026 was primarily due to lower sales of golf equipment products due to a planned decrease in product launches in the second half of 2026 combined with unfavorable foreign currency impacts. On a constant currency basis, net sales decreased $6.2 million (6.9%) during the three months ended September 30, 2026. The $15.2 million (5.3%) decrease in net sales for the nine months ended September 30, 2026 was primarily due to unfavorable foreign currency impacts. On a constant currency basis, net sales decreased $1.2 million (0.4%) during the nine months ended September 30, 2026.
Rest of World
The $1.5 million (6.0%) and $10.6 million (9.6%) increases for the three and nine months ended September 30, 2026, respectively, were primarily due to higher golf equipment sales in Canada and Australia.
Gross Profit, Gross Margin and Reconciliation of Non-GAAP Measures (in millions, except percentages)
| Three Months Ended September 30, | Increase/(Decrease) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Amount | Percent | 2026 | 2025 | Amount | Percent | ||||||||||||||||||||||||||||||||||
| Net sales | $ | 436.9 | $ | 462.6 | $ | (25.7) | (5.6) | % | $ | 1,736.6 | $ | 1,692.6 | $ | 44.0 | 2.6 | % | |||||||||||||||||||||||||
| Cost of sales | 210.2 | 278.3 | (68.1) | (24.5) | % | 876.5 | 961.3 | (84.8) | (8.8) | % | |||||||||||||||||||||||||||||||
| Gross profit | $ | 226.7 | $ | 184.3 | $ | 42.4 | 23.0 | % | $ | 860.1 | $ | 731.3 | $ | 128.8 | 17.6 | % | |||||||||||||||||||||||||
| Gross margin | 51.9 | % | 39.8 | % | 12.1 | % | 49.5 | % | 43.2 | % | 6.3 | % | |||||||||||||||||||||||||||||
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The following table presents a reconciliation of our GAAP results for the three and nine months ended September 30, 2026 and 2025 to our non-GAAP results for the same periods (in millions, except per share information):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||
| Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||||||||||||||||||||||||||
| GAAP | $ | 226.7 | 51.9 | % | $ | 184.3 | 39.8 | % | $ | 860.1 | 49.5 | % | $ | 731.3 | 43.2 | % | |||||||||||||||||||||||||||||||
Non-recurring items(1)(2) | 30.0 | 6.9 | % | — | — | % | 38.6 | 2.2 | % | (0.4) | — | % | |||||||||||||||||||||||||||||||||||
| Non-GAAP | $ | 196.7 | 45.0 | % | $ | 184.3 | 39.8 | % | $ | 821.5 | 47.3 | % | $ | 731.7 | 43.2 | % | |||||||||||||||||||||||||||||||
(1) In the three months ended September 30, 2026, amounts primarily include $31.8 million of tariff refunds, partially offset by $1.6 million of costs incurred to relocate to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025. In the nine months ended September 30, 2026, amounts primarily include $42.6 million of tariff refunds, partially offset by $3.2 million of costs incurred to relocate to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025. | |||||||||||||||||||||||||||||||||||||||||||||||
(2) In the nine months ended September 30, 2025, amounts primarily include restructuring and reorganization costs. | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales
Our cost of sales is variable in nature and fluctuates relative to sales volumes. Cost of sales includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties, tariffs and shipping charges, and depreciation and amortization directly related to manufacturing and distribution.
Gross profit and gross margin
During the three months ended September 30, 2026, gross profit increased by $42.4 million (23.0%) as compared to the prior year period. Gross profit as a percent of net sales (“gross margin”) increased to 51.9% for the three months ended September 30, 2026 compared to 39.8% for the three months ended September 30, 2025. The improvement in gross margin was primarily due to the recognition of $31.8 million of tariff refunds in the current period, combined with continued progress on our gross margin initiatives including cost reductions, select price increases and rationalizing lower margin business. On a Non-GAAP basis, excluding tariff refunds and non-recurring items, gross margin increased 520 basis points to 45.0% for the three months ended September 30, 2026 compared to 39.8% in the comparative period in 2025.
During the nine months ended September 30, 2026, gross profit increased by $128.8 million (17.6%) as compared to the prior year period. Gross margin increased to 49.5% for the nine months ended September 30, 2026 compared to 43.2% for the nine months ended September 30, 2025. The improvement in gross margin was primarily due to continued progress on our gross margin initiatives including select price increases, cost reductions and rationalizing lower margin business, combined with a net benefit from the recognition of tariff refunds of $42.6 million in the current period, which more than offset incremental tariff costs. On a Non-GAAP basis, excluding tariff refunds and non-recurring items, gross margin increased 410 basis points to 47.3% for the nine months ended September 30, 2026 compared to 43.2% in the comparative period in 2025.
Operating Expenses (in millions, except percentages)
| Three Months Ended September 30, | Increase/(Decrease) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative expense | $ | 166.3 | $ | 163.6 | $ | 2.7 | 1.7 | % | $ | 515.7 | $ | 501.9 | $ | 13.8 | 2.7 | % | |||||||||||||||||||||||||||||||
| Research and development expense | 15.7 | 15.9 | (0.2) | (1.3) | % | 46.7 | 47.2 | (0.5) | (1.1) | % | |||||||||||||||||||||||||||||||||||||
| Total operating expenses | $ | 182.0 | $ | 179.5 | $ | 2.5 | 1.4 | % | $ | 562.4 | $ | 549.1 | $ | 13.3 | 2.4 | % | |||||||||||||||||||||||||||||||
Selling, general and administrative expense
Selling, general and administrative (“SG&A”) expenses primarily consist of employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation and amortization charges and other miscellaneous expenses.
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The $2.7 million (1.7%) increase in SG&A expenses for the three months ended September 30, 2026 was primarily due to cost-of-living increases and inflationary pressures, which were largely offset by savings from cost reduction initiatives.
The $13.8 million (2.7%) increase in SG&A expenses for the nine months ended September 30, 2026 was primarily due to a $12.0 million gain recognized from a lease termination incentive in the first quarter of 2025, which did not recur in 2026, combined with cost-of-living increases and inflationary pressures. These increases were largely offset by savings from cost reduction initiatives.
Research and development expense
Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense.
The $0.2 million (1.3%) decrease in research and development expenses for the three months ended September 30, 2026 was primarily due to a decrease in employee costs from cost savings initiatives.
The $0.5 million (1.1%) decrease in research and development expenses for the nine months ended September 30, 2026 was primarily due to a decrease in employee costs from cost savings initiatives.
Other Income and Expense (in millions, except percentages)
| Three Months Ended September 30, | Increase/(Decrease) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Other income and expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Interest income (expense), net | $ | 0.5 | $ | (14.8) | $ | 15.3 | (103.4) | % | $ | (9.9) | $ | (45.0) | $ | 35.1 | (78.0) | % | |||||||||||||||||||||||||||||||
| Other income (expense), net | 20.5 | 8.6 | 11.9 | 138.4 | % | 24.8 | 10.6 | 14.2 | 134.0 | % | |||||||||||||||||||||||||||||||||||||
Total other income (expense), net | $ | 21.0 | $ | (6.2) | $ | 27.2 | n/m | $ | 14.9 | $ | (34.4) | $ | 49.3 | (143.3) | % | ||||||||||||||||||||||||||||||||
Interest income (expense), net
The changes in interest income (expense), net for the three and nine months ended September 30, 2026 were primarily due to lower interest expense following the full repayment of our $1,162.5 million term loan facility, including $1,000 million in January 2026 and the remaining $162.5 million in May 2026, as well as the maturity and cash settlement of our Convertible Notes for $258.3 million in May 2026. In addition, the decrease in interest expense reflects the receipt of interest income associated with tariff refunds.
Other income (expense), net
The $11.9 million increase in other income (expense), net for the three months ended September 30, 2026 was primarily due to a $15.4 million gain on our investment in Full Swing following the sale of the business, partially offset by a $4.6 million decrease in dividend income on our money market accounts due to lower average balances resulting from funds being used for debt repayments and stock repurchases.
The $14.2 million increase in other income (expense), net for the nine months ended September 30, 2026 was primarily due to a $15.4 million gain on our investment in Full Swing following the sale of the business and a $4.3 million remeasurement gain on our investment in Five Iron Golf, partially offset by a $9.8 million write-off of unamortized debt issuance costs in connection with the repayment of the term loan.
Income (Loss) from Equity Method Investments (in millions, except percentages)
| Three Months Ended September 30, | Increase/(Decrease) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from equity method investments | $ | (17.9) | $ | — | $ | (17.9) | n/m | $ | (46.6) | $ | — | $ | (46.6) | n/m | |||||||||||||||||||||||||||||||||
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Income (loss) from equity method investments
The $17.9 million and $46.6 million loss during the three and nine months ended September 30, 2026, respectively, represents our proportionate share of Topgolf’s net losses following the completion of the sale of a majority interest in the business effective January 1, 2026.
Income Taxes (in millions, except percentages)
| Three Months Ended September 30, | Increase/(Decrease) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Income tax provision (benefit) | $ | (0.3) | $ | 2.7 | $ | (3.0) | (111.1) | % | $ | 67.2 | $ | 43.0 | $ | 24.2 | 56.3 | % | |||||||||||||||||||||||||||||||
Income tax expense
Income tax expense decreased $3.0 million for the three months ended September 30, 2026 and increased $24.2 million for the nine months ended September 30, 2026. As a percentage of pre-tax income, our effective tax rate for the three months ended September 30, 2026 was (0.6)% compared to (192.9)% in the comparable period of 2025. As a percentage of pre-tax income, our effective tax rate for the nine months ended September 30, 2026 was 25.3% compared to 29.1% in the comparable period of 2025. Our effective tax rate for the three and nine months ended September 30, 2026, was impacted by the valuation allowances related to our investment in Topgolf as well as the gain on the sale of our Full Swing investment, which was offset by available capital loss carryforwards and therefore did not result in incremental tax expense.
Net Income, Diluted Earnings Per Share and Reconciliation of Non-GAAP Measures
The following table presents a reconciliation of our GAAP results for the three months ended September 30, 2026 and 2025 to our non-GAAP results for the same periods (in millions, except per share information):
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | Diluted Earnings per share(5) | Net Income | Diluted Earnings per share(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP net income (loss) from continuing operations | $ | 48.1 | $ | 0.26 | $ | (4.1) | $ | (0.02) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash amortization of acquired intangibles(1) | (0.1) | — | (0.2) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income (expense) and non-recurring items(2)(3) | 39.1 | 0.21 | 7.2 | 0.04 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from equity method investments(4) | (13.8) | (0.08) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) from continuing operations | $ | 22.9 | $ | 0.12 | $ | (11.1) | $ | (0.06) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP diluted weighted-average shares outstanding | 183.3 | 183.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP diluted weighted-average shares outstanding | 183.3 | 183.9 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Includes the amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to our Acquisitions. See “Discussion of Non-GAAP Measures” for more information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) In 2026, amounts primarily include $31.8 million of tariff refunds, $1.7 million of related interest income, and a $15.4 million gain on our investment in Full Swing following the sale of the business, partially offset by $1.6 million of costs incurred related to the relocation to a new UK warehouse following the sale of the Jack Wolfskin business in 2025 and $0.3 million of restructuring charges associated with the Transformation Plan. In addition, for 2026, non-recurring items include $1.0 million of costs incurred under the Transition Services Agreement with Topgolf, which are offset by $1.0 million of cost recovery fees received from Topgolf related to these transition services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) In 2025, amounts primarily include $0.2 million of restructuring charges related to the Transformation Plan. In addition, $9.7 million of term loan interest expense incurred at the corporate level and included in discontinued operations on a GAAP basis is reflected as part of continuing operations on a non-GAAP basis in order to show the full effect of consolidated interest expense. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) In 2026, amounts include our $17.9 million proportionate share of Topgolf’s net losses combined with $4.1 million of favorable tax impacts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) When aggregated, diluted earnings per share amounts may not be additive due to rounding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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GAAP net income from continuing operations
Net income from continuing operations and diluted earnings per share for the three months ended September 30, 2026 were $48.1 million and $0.26 per share, respectively, as compared to net loss from continuing operations and diluted loss per share of $4.1 million and $0.02 per share, respectively, for the three months ended September 30, 2025. These increases were primarily driven by the recognition of $33.5 million of tariff refunds in the current quarter, the recognition of a $15.4 million gain on our investment in Full Swing following the sale of the business, a reduction in interest expense resulting from the full repayment of our term loan debt and the settlement of the Convertible Notes, a $9.7 million increase in segment operating income, and a decrease in the income tax provision (benefit). These increases were partially offset by the loss recognized from our equity method investment in Topgolf.
Non-GAAP net income from continuing operations
On a non-GAAP basis, excluding the items described in the table above, our net income from continuing operations and diluted earnings per share for the three months ended September 30, 2026 would have been $22.9 million and $0.12 per share, respectively, as compared to net loss from continuing operations and diluted loss per share of $11.1 million and $0.06 per share, respectively, for the three months ended September 30, 2025. The increase in non-GAAP net income from continuing operations was primarily due to lower interest expense, a $9.7 million increase in segment operating income, and a decrease in the income tax provision.
The following table presents a reconciliation of our GAAP results for the nine months ended September 30, 2026 and 2025 to our non-GAAP results for the same periods (in millions, except per share information):
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income | Diluted Earnings per share(6)(7) | Net Income | Diluted Earnings per share(6)(7) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP net income (loss) from continuing operations | $ | 198.8 | $ | 1.05 | $ | 104.8 | $ | 0.55 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-cash amortization of acquired intangibles(1) | (0.3) | — | (0.3) | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest income (expense) and non-recurring items(2)(3) | 39.6 | 0.21 | 20.2 | 0.10 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tax valuation allowance(4) | 0.1 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) from equity method investments(5) | (49.1) | (0.26) | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-GAAP net income (loss) from continuing operations | $ | 208.5 | $ | 1.10 | $ | 84.9 | $ | 0.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| GAAP diluted weighted-average shares outstanding | 191.9 | 199.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Non-GAAP diluted weighted-average shares outstanding | 191.9 | 199.8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Includes the amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to our Acquisitions. See “Discussion of Non-GAAP Measures” for more information. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(2) In 2026, amounts primarily include $42.6 million of tariff refunds, $1.7 million of related interest income, a $15.4 million gain on our investment in Full Swing following the sale of the business, and a $4.3 million gain on our investment in Five Iron Golf, partially offset by $9.8 million of write-offs of debt issuance costs associated with the January and May 2026 repayments of our term loan, $3.2 million of costs incurred to relocate to a new UK warehouse following the sale of the Jack Wolfskin business in 2025, $1.5 million of costs associated with the Transformation Plan, and a $0.7 million write-off of software assets stemming from the separation from Topgolf. In addition, non-recurring items for 2026 include $3.3 million of costs incurred under the Transition Services Agreement with Topgolf, which were fully offset by $3.3 million of cost recovery fees received from Topgolf related to those transition services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(3) In 2025, amounts primarily include $1.4 million of costs associated with the Transformation Plan and costs incurred to centralize warehousing and distribution operations to achieve synergies in connection with our acquisitions. In addition, $28.8 million of term loan interest expense incurred at the corporate level and included in discontinued operations on a GAAP basis is reflected as part of continuing operations on a non-GAAP basis in order to show the full effect of consolidated interest expense. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(4) Related to the release of valuation allowances on certain U.S. deferred tax assets related to the disposal of the Topgolf and Jack Wolfskin businesses. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(5) In 2026, amounts include our $46.6 million proportionate share of Topgolf’s net losses combined with $2.5 million of unfavorable tax impacts. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(6) The effect of the Convertible Notes on diluted earnings per share is calculated using the if-converted method, which excludes interest expense related to the Convertible Notes from the calculation of net income through the cash settlement date of May 1, 2026. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(7) When aggregated, diluted earnings per share amounts may not be additive due to rounding. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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GAAP net income from continuing operations
Net income from continuing operations and diluted earnings per share for the nine months ended September 30, 2026 were $198.8 million and $1.05 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $104.8 million and $0.55 per share, respectively, for the nine months ended September 30, 2025. These increases were primarily driven by a $70.3 million increase in segment operating income, the recognition of $44.3 million related to the tariff refunds in the current period, the recognition of a $15.4 million gain on our investment in Full Swing following the sale of the business, and a reduction in interest expense resulting from the full repayment of our term loan debt and the settlement of the Convertible Notes. These increases were partially offset by the loss recognized from our equity method investment in Topgolf and an increase in the income tax provision.
Non-GAAP net income from continuing operations
On a non-GAAP basis, excluding the items described in the table above, our net income from continuing operations and diluted earnings per share for the nine months ended September 30, 2026 would have been $208.5 million and $1.10 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $84.9 million and $0.45 per share, respectively, for the nine months ended September 30, 2025. The increase in non-GAAP net income from continuing operations was primarily due to a $70.3 million increase in segment operating income combined with lower interest expense, partially offset by an increase in the income tax provision.
Discontinued Operations (in millions, except percentages)
| Three Months Ended September 30, | Growth/(Decline) | Nine Months Ended September 30, | Increase/(Decrease) | ||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Dollars | Percent | 2026 | 2025 | Dollars | Percent | ||||||||||||||||||||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | $ | (2.4) | $ | (10.6) | $ | 8.2 | (77.4) | % | $ | 15.2 | $ | (97.1) | $ | 112.3 | (115.7) | % | |||||||||||||||||||||||||||||||
Loss of $2.4 million from discontinued operations, net of tax, for the three months ended September 30, 2026 was related to an adjustment to the income tax benefit recognized in connection with the sale of Topgolf, effective January 1, 2026. Income of $15.2 million, net of tax from discontinued operations for the nine months ended September 30, 2026, was primarily related to the recognition of an income tax benefit in connection with the sale of Topgolf, partially offset by transaction costs directly related to the completion of the sale as well as the settlement of certain indemnification obligations. The $10.6 million and $97.1 million loss from discontinued operations, net of tax for the three and nine months ended September 30, 2025, respectively, was due to net operating losses of both Topgolf and Jack Wolfskin during the period.
Financial Condition
Cash and cash equivalents
Our cash and cash equivalents decreased $469.7 million to $433.5 million at September 30, 2026 as compared to December 31, 2025 and decreased $432.1 million compared to September 30, 2025. These decreases primarily resulted from cash used in financing activities from continuing operations, largely reflecting the full repayment of our 2023 Term Loan B facility and the cash settlement of our Convertible Notes during May 2026, which were funded by cash proceeds from the sale of Topgolf and cash on hand. In addition, we used our cash and cash equivalents to repurchase shares of our common stock pursuant to our stock repurchase program. Cash provided by operating activities from continuing operations increased due to the strong performance of the business in the nine months ended September 30, 2026, and also reflects the favorable impact from the receipt of tariff refunds. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q.
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Accounts receivable
Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. With respect to our Apparel, Gear and Other business, accounts receivable balances for our TravisMathew and OGIO businesses are more evenly distributed throughout the year while accounts receivable balances for our Callaway-branded soft goods are subject to the same general seasonality as our Golf Equipment business. As of September 30, 2026, our consolidated net accounts receivable increased to $186.0 million from $123.2 million at December 31, 2025. The increase primarily reflects the seasonality of Golf Equipment net sales in the first and second quarters. Net accounts receivable as of September 30, 2026 decreased $25.1 million compared to September 30, 2025, primarily due to lower net sales in the third quarter of 2026 compared to 2025 combined with improved cash collections.
Inventory
Our inventory balance fluctuates throughout the year as a result of the general seasonality of our Golf Equipment business, and is also affected by the timing of new product launches and success of new products. With respect to our Golf Equipment business, the buildup of inventory generally begins during the third quarter and continues into the first quarter in order to meet increased demand for the golf season. With respect to our Apparel, Gear and Other business, inventory levels are generally less affected by seasonality due to the diversification of product offerings for our brands. As of September 30, 2026, our inventory decreased $89.1 million to $536.2 million, compared to December 31, 2025, which reflects our seasonality. Our inventory increased $5.4 million as of September 30, 2026, compared to September 30, 2025, primarily due to higher Golf Equipment inventory to support demand and inventory requirements heading into next year, partially offset by lower Apparel, Gear and Other inventory due to product sell through.
Liquidity and Capital Resources
Liquidity
Our principal sources of liquidity consist of our existing cash and cash equivalents, funds expected to be generated from operations and funds from our credit facilities. Based upon our current cash balances, our estimates of funds expected to be generated from operations, as well as from current and projected availability under our current credit facilities, we believe that we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q.
Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025).
Capital resources
As of September 30, 2026, we had $815.1 million in combined cash and availability under our credit facilities, which is a decrease of $440.9 million compared to September 30, 2025 following the full repayment of our 2023 Term Loan B facility and the cash settlement of our Convertible Notes in May 2026, combined with repurchases of shares of our common stock pursuant to our stock repurchase program. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference.
As of September 30, 2026, approximately 25% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes.
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Significant cash obligations
We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements. The table below summarizes certain significant cash obligations as of September 30, 2026 that will affect our future liquidity (in millions):
| Payments Due By Period | |||||||||||||||||||||||||||||
| Total | Remainder of 2026 | 2027 - 2028 | 2029 - 2030 | Thereafter | |||||||||||||||||||||||||
Debt (1) | 50.3 | 1.2 | 46.9 | 0.6 | 1.6 | ||||||||||||||||||||||||
Interest payments (2) | 2.2 | 0.3 | 1.3 | 0.3 | 0.3 | ||||||||||||||||||||||||
Financing leases, including imputed interest (3) | 34.5 | 1.0 | 8.3 | 7.9 | 17.3 | ||||||||||||||||||||||||
Operating leases, including imputed interest (4) | 263.8 | 9.6 | 66.9 | 59.2 | 128.1 | ||||||||||||||||||||||||
Minimum lease payments for leases signed but not yet commenced (5) | 2.9 | — | 0.3 | 0.5 | 2.1 | ||||||||||||||||||||||||
Unconditional purchase obligations (6) | 77.6 | 30.0 | 45.3 | 2.3 | — | ||||||||||||||||||||||||
Uncertain tax contingencies (7) | 1.0 | — | 0.3 | — | 0.7 | ||||||||||||||||||||||||
| Total | $ | 432.3 | $ | 42.1 | $ | 169.3 | $ | 70.8 | $ | 150.1 | |||||||||||||||||||
(1) Excludes unamortized debt discounts, unamortized debt issuance costs, and fair value adjustments. Includes $44.5 million of outstanding ABL borrowings. For further details related to long-term debt, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(2) Long-term debt may have fixed or variable interest rates. For further details, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(3) Represents commitments for future minimum lease payments under financing leases. For further details, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(4) Represents commitments for future minimum lease payments under operating leases. For further details, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(5) Represents future minimum lease payments under lease agreements that have not yet commenced as of September 30, 2026, in relation to future TravisMathew retail stores. For further discussion, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(6) During the normal course of business, we enter into agreements to purchase goods and services, including commitments for endorsement agreements with professional athletes and other endorsers, consulting and service agreements, and intellectual property licensing agreements pursuant to which we are required to pay royalty fees. The amounts listed above approximate the minimum purchase obligations we are obligated to pay under these agreements over the next five years and thereafter as of September 30, 2026. The actual amounts paid under some of the agreements may be higher or lower than these amounts. In addition, we also enter into unconditional purchase obligations with various vendors and suppliers of goods and services during the normal course of business through purchase orders or other documentation or that are undocumented except for an invoice. For further details, see Note 12 “Commitments & Contingencies” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
(7) Amounts represent current and non-current portions of uncertain income tax positions as recorded on our condensed consolidated balance sheets as of September 30, 2026. Amounts exclude uncertain income tax positions that we would be able to offset against deferred taxes. For further discussion, see Note 11 “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. | |||||||||||||||||||||||||||||
During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products or trademarks, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining to the goods or services provided to us or based on the negligence or willful misconduct, and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In addition, we have made contractual commitments to each of our officers and certain other employees providing for severance payments upon the termination of employment. We have also made certain indemnities under which we may be required to make payments in relation to divestitures of the Topgolf and Jack Wolfskin businesses. These include indemnities against (i) damages arising from certain ongoing litigation matters, (ii) certain exempted claims and (iii) certain pre-closing tax and other liabilities.
The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the nine months ended September 30, 2026 was not material to our financial position, results of operations or cash flows.
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In addition to the contractual obligations listed above, our liquidity could also be adversely affected by an unfavorable outcome with respect to claims and litigation that we are subject to from time to time (see Note 12 “Commitments & Contingencies” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Legal Proceedings” in Part II, Item 1 of this Form 10-Q).
We have no material off-balance sheet arrangements.
Capital expenditures
Total estimated capital expenditures for the year ending December 31, 2026, are expected to be approximately $40.0 million.
Critical Accounting Estimates
For the nine months ended September 30, 2026, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We use derivative financial instruments to mitigate our exposure to changes in foreign currency exchange rates and interest rates. Transactions involving these financial instruments are with creditworthy banks, primarily banks that are party to our credit facilities (see Note 6 “Financing Arrangements” and Note 15 “Derivatives and Hedging” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q). The use of these instruments exposes us to market and credit risk which may at times be concentrated with certain counterparties, although counterparty nonperformance is not anticipated.
Foreign Currency Fluctuations
Information about our foreign currency hedging activities is set forth in Note 15 “Derivatives and Hedging” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q, which is incorporated herein by this reference.
As part of our risk management procedure, a sensitivity analysis model is used to measure the potential loss in future earnings of market-sensitive instruments resulting from one or more selected hypothetical changes in interest rates or foreign currency values. The sensitivity analysis model quantifies the estimated potential effect of unfavorable movements of 10% in foreign currencies to which we were exposed at September 30, 2026 through our foreign currency forward contracts.
At September 30, 2026, the estimated loss from our foreign currency forward contracts, calculated using the sensitivity analysis model described above, was $12.6 million. We believe that such a hypothetical loss from our foreign currency forward contracts would be partially offset by increases in the value of the underlying transactions being hedged.
The sensitivity analysis model is a risk analysis tool and does not purport to represent actual losses in earnings that we will incur, nor does it consider the potential effect of favorable changes in market rates. It also does not represent the maximum possible loss that may occur. Actual future gains and losses will differ from those estimated because of changes or differences in market rates and interrelationships, hedging instruments and hedge percentages, timing and other factors.
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Interest Rate Fluctuations
We are exposed to interest rate risk from our credit facilities and long-term borrowing commitments. Outstanding borrowings under these credit facilities and long-term borrowing commitments accrue interest as described in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1, and in “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q. Our long-term borrowing commitments are subject to interest rate fluctuations, which could be material to our cash flows and results of operations. In order to mitigate this risk, we may enter into interest rate swap contracts as part of our interest rate risk management strategy. Information about our interest rate hedges is provided in Note 15 “Derivatives and Hedging” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. In order to determine the impact of unfavorable changes in interest rates on our cash flows and results of operations, we performed a sensitivity analysis as part of our risk management procedures. The sensitivity analysis quantified that the incremental expense incurred by a 10% increase in interest rates would result in an approximate annual increase of $0.1 million in interest expense on our existing principal balance as of September 30, 2026.
Inflation
The continued increase in inflation partially contributed to the increase in the cost of our products as well as our operating costs. If the cost of our products, employee costs, or other costs continue to be subject to significant inflationary pressures, such inflationary pressures may have an adverse effect on our ability to maintain current levels of gross margin and selling, general and administrative expenses. Further, we may not be able to offset these increased costs through price increases. As a result, our inability to quickly respond to inflation could harm our cash flows and results of operations in the future.
Item 4. Controls and Procedures
Disclosure Controls and Procedures.
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness, as of September 30, 2026, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting.
There were no changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the three months ended September 30, 2026.
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in Note 12 “Commitments & Contingencies” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1, of this Form 10-Q, is incorporated herein by this reference.
Item 1A. Risk Factors
Certain Factors Affecting Callaway Golf Company
We have included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025, a description of certain risks and uncertainties that could affect our business, future performance or financial condition (the “Risk Factors”). Investors should consider the Risk Factors prior to making an investment decision with respect to our stock. There are no material changes from the disclosure provided in the Form 10-K for the year ended December 31, 2025 with respect to the Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Stock Purchases
In January 2026, we announced that our Board of Directors authorized a $200.0 million share repurchase program (the “Repurchase Program”) under which we are authorized to repurchase shares of our common stock in the open market or in private transactions, subject to our assessment of market conditions and repurchase opportunities. We will assess market conditions, buying opportunities and other factors from time to time and will make strategic repurchases as appropriate. The repurchases will be made in compliance with Rule 10b-18 under the Exchange Act, subject to market conditions, applicable legal requirements and other factors, and the repurchases will be made consistent with the terms of our credit facilities, which define the amount of stock that can be repurchased. The Repurchase Program does not require us to acquire a specific number of shares and it will remain in effect until completed or until terminated by the Board of Directors. During the third quarter of 2026, we repurchased 3.0 million shares of our common stock under the Repurchase Program at a weighted average price per share of $16.62, for a total cost of $50.1 million.
The following table summarizes our purchases during the third quarter of 2026 and includes amounts repurchased under the Repurchase Program and shares withheld to satisfy payroll tax withholding obligations in connection with the vesting and settlement of employee restricted stock unit awards and performance share unit awards. Our repurchases of shares of common stock are recorded at cost and result in a reduction of shareholders’ equity.
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||
Total Number of Shares Purchased | Weighted Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Maximum Dollar Value that May Yet Be Purchased Under the Program | |||||||||||||||||||||||
| July 1, 2026 - July 31, 2026 | 673,840 | $ | 18.55 | 673,840 | $ | 107,425,564 | ||||||||||||||||||||
| August 1, 2026 - August 31, 2026 | 1,300,324 | 16.57 | 1,259,744 | 86,520,612 | ||||||||||||||||||||||
| September 1, 2026 - September 30, 2026 | 1,102,319 | 15.11 | 1,102,319 | 69,862,591 | ||||||||||||||||||||||
| Total | 3,076,483 | $ | 16.61 | 3,035,903 | $ | 69,862,591 | ||||||||||||||||||||
During the third quarter of 2026, we also repurchased less than 0.1 million shares of our common stock at an average cost per share of $15.77, for a total cost of approximately $0.6 million, which were related to shares withheld to satisfy payroll tax withholding obligations as described above and not pursuant to the Repurchase Program.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
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Item 5. Other Information
10b5-1 Trading Arrangements
The adoption or termination of contracts, instructions or written plans for the purchase or sale of our securities by our officers and directors for the three months ended September 30, 2026, each of which is intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (each, a “10b5-1 Plan”), were as follows:
| Name | Title | Action | Date of Adoption or Termination | Expiration Date | Aggregate Number of Securities to be Sold | |||||||||||||||||||||||||||
| n/a | ||||||||||||||||||||||||||||||||
(1) On July 30, 2026, Mr. Brewer terminated three 10b5-1 Plans, each of which was adopted on February 23, 2023 and provided for sales of our shares held by trusts established for the benefit of Mr. Brewer’s children. The 10b5-1 Plans provided for the sale of up to 88,848, 88,848 and 88,849 shares, respectively. None of the 10b5-1 Plans had a defined expiration date. | ||||||||||||||||||||||||||||||||
Other than as described above, during the three months ended September 30, 2026, none of our officers or directors adopted or terminated a 10b5-1 Plan or any “non Rule 10b5-1 trading arrangement.”
Item 6. Exhibits
| 3.1 | ||||||||||||||
| 3.2 | ||||||||||||||
| 31.1 | ||||||||||||||
| 31.2 | ||||||||||||||
| 32.1 | ||||||||||||||
| 101.1 | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||
| 101.2 | XBRL Taxonomy Extension Schema Document † | |||||||||||||
| 101.3 | XBRL Taxonomy Extension Calculation Linkbase Document † | |||||||||||||
| 101.4 | XBRL Taxonomy Extension Definition Linkbase Document † | |||||||||||||
| 101.5 | XBRL Taxonomy Extension Label Linkbase Document † | |||||||||||||
| 101.6 | XBRL Taxonomy Extension Presentation Linkbase Document † | |||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) † | |||||||||||||
(†) Included with this Report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CALLAWAY GOLF COMPANY | |||||
| By: | /s/ Jennifer Thomas | ||||
| Jennifer Thomas | |||||
| Senior Vice President and Chief Accounting Officer | |||||
Date: November 5, 2026
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Exhibit 31.1
CERTIFICATION
I, Oliver G. Brewer III, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Callaway Golf Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ OLIVER G. BREWER III | ||
| Oliver G. Brewer III President and Chief Executive Officer | ||
Dated: November 5, 2026
Exhibit 31.2
CERTIFICATION
I, Brian P. Lynch, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Callaway Golf Company;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ BRIAN P. LYNCH | ||
| Brian P. Lynch Executive Vice President and Chief Financial Officer | ||
Dated: November 5, 2026
Exhibit 32.1
CERTIFICATION PURSUANT
TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Callaway Golf Company, a Delaware corporation (the “Company”), does hereby certify with respect to the Quarterly Report of the Company on Form 10-Q for the quarter ended September 30, 2026, as filed with the Securities and Exchange Commission (the “10-Q Report”), that:
(1) the 10-Q Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
The undersigned have executed this Certification effective as of November 5, 2026.
/s/ OLIVER G. BREWER III | ||
| Oliver G. Brewer III President and Chief Executive Officer | ||
/s/ BRIAN P. LYNCH | ||
| Brian P. Lynch Executive Vice President and Chief Financial Officer | ||