Callaway Golf (ELY) Raises Q3 and FY Guidance

Callaway Golf Company (the "Company" or "Callaway") (NYSE: ELY) today provided a business update and increased its financial outlook for the third quarter and full year 2021.

"I am very pleased with how our teams are navigating the rapidly changing business environment resulting from COVID-19 and its many variants," commented Chip Brewer, President and Chief Executive Officer of Callaway. "The updated guidance we are providing today reflects not only the continued overperformance and strength of our diversified portfolio but also our operational flexibility, which is allowing us to adapt and react as business conditions change. While our visibility into the remainder of the year remains murky, our revised guidance reflects the best information we have about the short-term disruption to our supply chain and the continued momentum of our businesses. Looking ahead to 2022 and beyond, we are excited about the strong growth embedded within our unique platform of businesses and are committed to unlocking additional long-term value for our shareholders."

The Company's increased financial outlook is primarily attributable to the following:

• Mitigation of Supply Chain Disruption. The Company has been able to mitigate a significant portion of the third quarter Vietnam supply chain disruption by shifting some production capacity to non-Vietnam suppliers. Based upon further information from its suppliers, the Company now estimates that the remaining risk related to the Vietnam supply chain has shifted from the third quarter to the fourth quarter. The amount by which the fourth quarter will be impacted will depend upon when, and at what pace, the supply chain in Vietnam reopens. The Company has included in its guidance today its current estimates of the supply chain disruption.
• Overperformance. The Company's Topgolf business, particularly its walk-in and social events business, performed ahead of expectations in July and August and the Company's TravisMathew and Jack Wolfskin apparel businesses exhibited continued brand momentum with both brands exceeding expectations in the first two months of the third quarter. Demand in the golf equipment business has also remained strong. With more supply than originally expected, the Golf Equipment business is expected to outperform prior guidance for the balance of the year.
• Deferred Operating Expenditures. With the increase in the Delta variant, the Company plans to defer a portion of its planned operating expenditures in the second half of 2021 to 2022, including delayed hiring of planned positions, travel and some event-based marketing expenses.

Updated Business Outlook The Company emphasized that it has limited visibility into the balance of the year due to the continued impact of COVID-19 and its variants on the Company's businesses and supply chain. The third quarter and full year 2021 projections set forth below are based on the Company's best estimates at this time. These estimates assume no further significant disruption to the Company's operations or supply chain due to the pandemic or otherwise.

Full Year 2021 Estimates*

*Due to the timing of the Topgolf acquisition on March 8, 2021, Callaway's reported full year financial results will only include 10 months of Topgolf results in 2021 and therefore will not include January and February results which were in the aggregate $142.9 million in revenue and $2.3 million in Adjusted EBITDA.

Third Quarter 2021 Estimates

(Consensus sees Q3 EPS of $0.01 on revenue of $753 million and FY EPS of $0.40 on revenue of $3.04 billion)

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