This article first appeared on GuruFocus.
Q3 Revenue: $437 million, down 6% year-over-year, but ahead of expectations.
Q3 Gross Margin: 45.0%, up approximately 520 basis points year-over-year (410 bps excluding a 110 bps tariff benefit).
Q3 Adjusted EBITDA: $36 million, up 17% year-over-year.
Q3 Operating Expenses: $181 million, up slightly year-over-year.
Year-to-Date Revenue: Up 3%.
Year-to-Date Adjusted EBITDA: Up 31%.
Year-to-Date EPS: Up 144%.
Year-to-Date Gross Margin: Expanded approximately 410 basis points.
Corporate Overhead: Down 4% year-over-year in Q3 and 11% year-to-date.
U.S. Ball & Club Retail Sell-Through: Down approximately 3% in Q3; up approximately 6% on a two-year stack; up 1% year-to-date (nearly 8% on a two-year stack).
U.S. Golf Ball Market Share: Just over 22% year-to-date, up 163 basis points.
Japan Putter Market Share: Jumped to 40% post-launch of the turtle putter.
Share Repurchases: Approximately $50 million in Q3; $135 million year-to-date; approximately $70 million of authority remaining.
Debt Paydown: Approximately $1.4 billion repaid in the first half of 2026.
Balance Sheet: Net cash position; $76 million outstanding debt (including $26 million finance leases); $434 million unrestricted cash; $815 million total available liquidity.
Tariff Expense: Full-year 2026 gross tariff expense expected at approximately $43 million (vs. $34 million in 2025); approximately $44 million in refunds and interest received through September 2026.
Full-Year 2026 Revenue Guidance: $2.065 billion to $2.078 billion (raised approximately $14 million at midpoint).
Full-Year 2026 Adjusted EBITDA Guidance: $272 million to $280 million (raised $23 million at midpoint).
Q4 2026 Revenue Guidance: $328 million to $341 million.
Q4 2026 Adjusted EBITDA Guidance: Minus $53 million to minus $45 million.
Capital Expenditures: Approximately $40 million expected for 2026; approximately $40 million annual run rate going forward.
3D Printing Investment: $15 million facility in Fort Worth, Texas, expected online mid-next year.
Release Date: November 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Callaway Golf Co (NYSE:CALY) raised full-year revenue and adjusted EBITDA guidance, reflecting Q3 outperformance and improved margin outlook.
Gross margin expanded approximately 520 basis points year-over-year in Q3, driven by margin initiatives and lower tariff rates.
The company returned $135 million to shareholders year-to-date through share repurchases and expects to buy back another $50 million in Q4.
Callaway Golf Co (NYSE:CALY) ended the quarter in a net cash position with $434 million in cash and total liquidity of $815 million.
The $15 million investment in a 3D printing facility positions Callaway Golf Co (NYSE:CALY) as a leader in titanium club technology and supports U.S. production.
Negative Points
Q3 revenue declined 6% year-over-year due to strategic launch timing changes and rationalization of lower-margin products.
U.S. rounds played fell 5% in the quarter, and retail sell-through for balls and clubs was down approximately 3%.
Q4 revenue is expected to decrease year-over-year due to fewer new product launches and tougher comparisons.
Cost pressures from tariffs, commodities, and geopolitical conflicts are expected to persist, with full-year gross tariff expense rising to $43 million.
Q4 adjusted EBITDA guidance is negative, reflecting seasonal lower volumes, marketing spend shifts, and reduced dividend income.
Q & A Highlights
Q: Simeon Gutman (Morgan Stanley) asked whether 2027 could be a breakout year for faster growth and another step-up in margin, given better pricing, innovation, and launch cadence changes. A: CEO Oliver Brewer said the company feels good about its direction and intends to grow market share, but must prove it. He noted margins are up about 500 basis points in Q3 and 400 basis points year-to-date, with further opportunity ahead, though not at the same pace or magnitude. He added the industry is healthy and the company is making significant improvements.
Q: Jon Keypour (Goldman Sachs) asked about demand for titanium clubs, the planned titanium mix next year, and margin implications from 3D printing. A: CEO Oliver Brewer said almost all premium drivers are titanium and made via overseas centrifugal casting. 3D printing allows structures and design fidelity that casting cannot, enabling better, more differentiated products that could drive market share gains and a step change in performance. He said a portion of next year’s product line will feature the technology, with more details in early 2027.
Q: Jon Keypour (Goldman Sachs) asked whether 3D printing offers R&D benefits such as rapid prototyping or cost reductions. A: CEO Oliver Brewer said yes. Callaway has had an in-house titanium printer since 2022 for prototyping and has used unannounced 3D-printed parts on tour. The new facility will support further learning and U.S. production of titanium parts with U.S. country of origin. The facility comes online mid-next year and will support production for early 2028 parts, while the technology will be introduced to the world in 2027.
Q: Gregory Miller (Truist Securities) asked how LIV Golf’s bankruptcy announcement might impact Callaway and its sponsored pros. A: CEO Oliver Brewer said Callaway has been watching closely and has had conversations with LIV, tours, and affected players. He believes it is good for the game to have the best players playing together, calling the split suboptimal. He noted Jon Rahm was a key Callaway player on LIV, and while his next tour is undetermined, greater visibility wherever he lands could benefit Callaway.
Q: Gregory Miller (Truist Securities) asked for an update on any impact from the GoodGood video incident on Q3 results, Q4 guidance, or the brand more broadly. A: CEO Oliver Brewer said it was a serious incident and a tough two weeks for the team and brand, but there was no material financial impact and no discernible change in sales trends. Brand rating and consumer sentiment declined during the event but quickly recovered. He said Callaway took responsibility, apologized, addressed internal deficiencies, and updated processes, and he is confident the brand will emerge stronger.
Q: Joseph Altobello (Raymond James) asked what a realistic long-term gross margin goal is, given Q3’s 45% margin versus pre-COVID peaks of 46%-47%. A: CFO Brian Lynch said there is no specific target, but the company is pleased with progress and sees room to improve long-term. Drivers include more efficient freight management (air versus ocean), renegotiated freight forwarder terms, full-year plant and warehouse overhead reductions, supplier product cost reductions, lower-margin product rationalization, production placement to minimize tariffs, select price increases, and company-wide initiatives.
Q: Joseph Altobello (Raymond James) asked whether the iron launch timing change creates a 2027 revenue tailwind, and whether most of it falls in Q2. A: CEO Oliver Brewer said the company moved a launch out of this year into next year but is also moving a launch out of next year, effectively lengthening the iron lifecycle. It is not a revenue tailwind but rather a long-term profitability improvement. Callaway will still have energy and excitement in irons next year while extending product life cycles, which should be more profitable.
Q: Noah Zatzkin (KeyBanc) asked whether Q4 bottom-line guidance implies additional margin headwinds despite tracking ahead on structural margin improvement. A: CFO Brian Lynch cited about $2 million of marketing spend shifting from Q3 to Q4, $5 million less dividend income year-over-year, and $3 million of incremental fitting investment, plus revenue flow-through. CEO Oliver Brewer added that Q4 EBITDA guidance was still raised by a couple of million dollars.
Q: Noah Zatzkin (KeyBanc) asked about input cost headlines, particularly for the first half of 2027, and potential offsets. A: CFO Brian Lynch said cost pressures impacted 2026 as well and were managed through. He called them annoying but expects the company to continue managing through them next year, with no material overall impact.
Q: Arpine Kocharyan (UBS) asked about Q4 top-line drivers and the revenue outlook beyond Q4, given weather noise and decelerating rounds. A: CFO Brian Lynch said Q4 implies a $33 million year-over-year decrease due to the iron launch cadence shift, lower-margin business rationalization, and a tough comparison against Q4 2025 when U.S. sell-through was up about 7%. He declined to guide 2027 until February. CEO Oliver Brewer said golf remains healthy, with two-year stacks up 8% and the industry outperforming playable-hours declines, though the company is monitoring geopolitical and consumer confidence risks.
Q: Arpine Kocharyan (UBS) asked whether tariff and raw material spot cost increases will be offset next year by annualized tariff tailwinds and cost efficiencies. A: CEO Oliver Brewer said it is a little early. If current tariff rates are final, tariffs would be a very modest headwind next year. Oil and metals costs have risen through the year, and while they will be a slight headwind next year if current rates persist, the company views them as manageable.
Q: Simeon Gutman (Morgan Stanley) asked whether titanium is an incremental product technology step or a step change, and what 3D printing does for quality. A: CEO Oliver Brewer called 3D printing transformative. Callaway has invested for a long time and believes it knows more about the technology than industry peers, positioning it to lead in designing and manufacturing titanium golf products that traditional casting cannot achieve. He highlighted bringing the investment to the U.S
For the complete transcript of the earnings call, please refer to the full earnings call transcript.