Callaway Golf Company EBITDA dropped on 111% and EBITDA Margin dropped on 13.6 pp from 12.1% to -1.5%
02/10/2021 • About Callaway Golf Company (
$ELY) • By InTwits
Callaway Golf Company reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: -1.5% in 2020, 12.1% in 2019, 11.9% in 2018, 9.2% in 2017, 7.0% in 2016
- Callaway Golf Company has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 3.2%
- CAPEX is quite volatile: $39m in 2020, $55m in 2019, $37m in 2018, $26m in 2017, $16m in 2016
- The company has unprofitable business model: ROIC is -6.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.5x while industry average is
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 6.6%. Annual revenue decline showed slowdown in 20Q4 - revenue surged on 20.1%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.3 pp from 2.3% to 3.6% in 2020. During the last 5 years EBITDA Margin topped in 2019 at 12.1%.
Gross Margin decreased on 3.7 pp from 45.1% to 41.4% in 2020. During the last 5 years Gross Margin topped in 2018 at 46.5% and was declining since that time. SG&A as a % of Revenue showed almost no change in 2020.
Net Income margin dropped on 12.7 pp from 4.7% to -8.0% in 2020. Net Income margin stuck to a declining trend at -5.9 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 2.5%. The company showed almost no change in CAPEX/Revenue from 2017 to 2020. It's average CAPEX/Revenue for the last three years was 2.9%. During the last 5 years CAPEX as a % of Revenue topped in 2019 at 3.2%.
Return on investment
The company operates at negative ROIC (-6.1%) and ROE (-17.6%). ROIC dropped on 18.7 pp from 12.6% to -6.1% in 2020. ROE dropped on 28.2 pp from 10.6% to -17.6% in 2020. During the last 5 years ROIC topped in 2018 at 18.7% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.5x and Debt / EBITDA is . Net Debt / EBITDA dropped on 3.2x from 3.2x to in 2020. Debt jumped on 17.9% while cash jumped on 243%.
Callaway Golf Company has no short term refinancing risk: cash is higher than short term debt (552.1%).
Management team
The company's CEO is Oliver G Brewer III "Chip". Oliver G Brewer III "Chip" has 9 years tenure with the company. The company's CFO Brian P Lynch has spent 3 years with the company.
Financial and operational results
FY ended 12/31/2020
Callaway Golf Company ($ELY) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 871 | 1,049 | 1,243 | 1,701 | 1,589 | -6.6% |
| Gross Profit | 385 | 480 | 578 | 767 | 658 | -14.2% |
| SG&A | 308 | 365 | 409 | 584 | 543 | -7.0% |
| EBITDA | 61 | 96 | 148 | 206 | -23 | -111.4% |
| Net Income | 190 | 41 | 105 | 79 | -127 | -259.9% |
Balance Sheet
|
|---|
| Cash | 126 | 86 | 64 | 107 | 366 | 243.2% |
| Short Term Debt | 12 | 88 | 40 | 178 | 66 | -62.8% |
| Long Term Debt | 0 | 0 | 0 | 581 | 829 | 42.6% |
Cash flow
|
|---|
| Capex | 16 | 26 | 37 | 55 | 39 | -28.2% |
Ratios
|
|---|
| Revenue growth | 3.2% | 20.4% | 18.5% | 36.9% | -6.6% | |
| EBITDA growth | 37.1% | 58.7% | 53.9% | 38.9% | -111.4% | |
|
|---|
| Gross Margin | 44.2% | 45.8% | 46.5% | 45.1% | 41.4% | -3.7% |
| EBITDA Margin | 7.0% | 9.2% | 11.9% | 12.1% | -1.5% | -13.6% |
| SG&A, % of revenue | 35.3% | 34.8% | 32.9% | 34.3% | 34.1% | -0.2% |
| Net Income Margin | 21.8% | 3.9% | 8.4% | 4.7% | -8.0% | -12.7% |
| CAPEX, % of revenue | 1.9% | 2.5% | 3.0% | 3.2% | 2.5% | -0.7% |
|
|---|
| ROIC | 9.0% | 13.4% | 18.7% | 12.6% | -6.1% | -18.7% |
| ROE | 37.5% | 6.5% | 15.2% | 10.6% | -17.6% | -28.2% |
| Net Debt/EBITDA | -1.9x | 0.0x | -0.2x | 3.2x | |
Callaway Golf Company ($ELY) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 442 | 297 | 476 | 375 | | -14.3% | -33.5% | 11.6% | 20.1% |
| EBITDA | 61 | -158 | 84 | -11 | | -29.8% | -343.1% | 46.0% | - |
| Net Income | 29 | -168 | 52 | -41 | | -40.6% | -679.6% | 68.9% | - |
Balance Sheet
|
|---|
| Cash | 167 | 164 | 287 | 366 | | 111.1% | 101.8% | 224.9% | 243.2% |
| Short Term Debt | 373 | 93 | 73 | 66 | | 49.6% | -52.9% | -49.1% | -62.8% |
| Long Term Debt | 630 | 801 | 822 | 829 | | 10.8% | 31.4% | 42.1% | 42.6% |
Ratios
|
|---|
| Gross Margin | 44.2% | 41.1% | 42.2% | 37.1% | | -1.9% | -5.2% | -2.7% | -4.6% |
| EBITDA Margin | 13.7% | -53.1% | 17.7% | -2.8% | | -3.0% | -67.7% | 4.2% | -1.9% |
| Net Income Margin | 6.5% | -56.5% | 11.0% | -10.8% | | -2.9% | -62.9% | 3.7% | -1.5% |
Peers in Leisure Products
Below we provide Callaway Golf Company benchmarking against other companies in Leisure Products industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | - | 3.2% | 45.5% | 40.2% | -22.2% |
| |
|---|
| Median (1 company) | - | 3.2% | 45.5% | 40.2% | -22.2% |
|---|
| Callaway Golf Company ($ELY) | - | 20.4% | 18.5% | 36.9% | -6.6% |
Top companies by Gross margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | 27.6% | 27.8% | 27.2% | 24.3% | 20.8% |
| |
|---|
| Median (1 company) | 27.6% | 27.8% | 27.2% | 24.3% | 20.8% |
|---|
| Callaway Golf Company ($ELY) | 44.2% | 45.8% | 46.5% | 45.1% | 41.4% |
Top companies by EBITDA margin, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | 11.5% | 16.1% | 18.4% | 8.8% | -4.4% |
| |
|---|
| Median (1 company) | 11.5% | 16.1% | 18.4% | 8.8% | -4.4% |
|---|
| Callaway Golf Company ($ELY) | 7.0% | 9.2% | 11.9% | 12.1% | -1.5% |
Top companies by CAPEX/Revenue, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | 1.7% | 1.8% | 1.6% | 3.0% | 3.9% |
| |
|---|
| Median (1 company) | 1.7% | 1.8% | 1.6% | 3.0% | 3.9% |
|---|
| Callaway Golf Company ($ELY) | 1.9% | 2.5% | 3.0% | 3.2% | 2.5% |
Top companies by ROIC, %
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | 51.5% | 74.8% | 62.9% | 21.4% | -16.5% |
| |
|---|
| Median (1 company) | 51.5% | 74.8% | 62.9% | 21.4% | -16.5% |
|---|
| Callaway Golf Company ($ELY) | 9.0% | 13.4% | 18.7% | 12.6% | -6.1% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MCBC Holdings, Inc. ($MCFT) | 2.0x | 0.8x | 1.1x | 2.6x | - |
| |
|---|
| Median (1 company) | 2.0x | 0.8x | 1.1x | 2.6x | - |
|---|
| Callaway Golf Company ($ELY) | -1.9x | 0.0x | -0.2x | 3.2x | - |
