CALY

Callaway has just completed a material strategic reset. The MD&A confirms management sold Jack Wolfskin to ANTA for ~$290M (May 2025) and a 60% stake in Topgolf/Toptracer to Leonard Green at a $1.1B equity value (closed Jan 1, 2026), netting ~$800M in proceeds with a retained 40% equity-method interest in Topgolf. With both businesses now in discontinued operations across all periods presented, the FY2025 income statement reflects the go-forward 'Golf Equipment + soft goods' core: $2.06B revenue (-0.8% YoY), 42.1% gross margin, $128M operating income (6.2% op margin) and $334M operating cash flow. That is a slower-growth, lower-margin business than the consolidated Callaway of 2022 ($4.0B revenue), but it is recognizably profitable on an operating basis and self-funding from cash flow ($334M OCF vs. only $31.8M capex).

The big asterisks sit on the balance sheet and the bottom line. Net income was -$409M in FY2025 (after -$1.45B in FY2024), driving retained earnings to -$910M and equity down 14% to $2.07B — the loss appears to be carrying significant discontinued-operations and impairment drag from the Topgolf/Jack Wolfskin exits. Liquidity looks superficially huge (current assets ballooned 270.8% to $5.94B, cash doubled to $903M) but that is largely because divested assets are reclassified to held-for-sale; the mirror image is current liabilities up 428.8% to $4.37B and 'current portion of debt' jumping from ~$15M to $765M. Long-term debt fell 54% to $651M, consistent with debt being reclassified current ahead of the Topgolf closing and partial repayment from the ~$800M of January 2026 proceeds. Net of cash, gross debt of ~$1.42B against $903M cash is workable but not trivial for a ~$3.3B-cap discretionary-goods name.