When it comes to golf, what are the first two brands that come to mind?  I would have to assume its Callaway and Titleist.  At least in terms of brand recognition.  But in terms of performance, there are a plethora of companies boasting about their products performing better than major brands like Callaway, Titleist and Taylormade.  So, we set out to see who does better in the market, Callaway or Titleist.

 

Callaway Golf – A Brief History

Callaway began in 1982 when Ely Callaway Jr. sold his vineyard for $9 million and purchased half of a company named Hickory Sticks USA.  After this purchase, the company was renamed to Callaway Hickory Sticks USA.  In 1983, they moved their operations to Carlsbad, California and began selling golf clubs out of the trunk of their cars.  Due to tremendous success, Ely Callaway Jr. purchased the remaining half of Callaway Hickory Sticks USA for $400,000 in 1984.  Four years later, the company officially changed their name to Callaway Golf.  Eight years later, Callaway Golf became a publicly traded company under the stock symbol ELY.  Today, Callaway Golf has a market value of approximately $5.51 billion dollars!

So where does all your money go when you purchase those new clubs, Odyssey putter or Chrome Soft golf balls?  Well…to shareholders equity.  We pulled their financials from Q3 2021 to see just how much of your money goes to Callaway.  In case you weren’t already aware, let’s start with their acquisitions over the last 13 years.

  • 1997: Odyssey Sports  ($130 million)
  • 2017: Ogio Bags   ($75.5 million)
  • 2017: Travis Matthew   ($125.5 million)
  • 2019: Jack Wolfskin  ($484 million)
  • 2020: Top Golf Entertainment  ($2 billion)

So where does all your hard-earned money go when you buy those new Big Bertha clubs or a few dozen Chrome Soft?  Well…let’s have a look at their most recent 8-K filing.  You can view this data at Callaway’s Investor Relations page.

In the 3rd quarter of their fiscal year 2021 (April – June), Callaway had a net income of $91.7 billion and their balance sheet shows assets totaling over $7 billion dollars.  For comparison, Callaway’s net income was 11.2% higher than industry rival Titleist. We could dive in deeper and give you tons of financial ratios that show how profitable they are, but you’ll just need to take our word for it. Callaway Golf does very well from a profit standpoint but with almost $3 billion in long-term debt, they need to charge high prices so they can continue making those loan, mortgage and rent payments.  So…where does your money go?  To research and development or to large acquisitions?

 

Titleist – Title Holder?

Like with Callaway, we’ll first give you a brief history.

In 1910, Phillip E. Young founded Acushnet Process Company in Acushnet, Massachusetts.  Like many present golf ball manufacturers, Acushnet began as a rubber company (i.e., Bridgestone, Saintnine).  But in 1932, they added a golf division and began making the first Titleist (which means “title holder”) golf ball.

Forty years after the first Titleist golf ball premiered, the Acushnet Company was purchased by the company now known as Fortune Brands.  In 2010, Fortune Brands sold Acushnet Company to Fila (and other investors), the sportswear manufacturer, for $1.23 billion dollars.  Six years later, in 2016, Fila acquired a 53% majority stake in Acushnet Company.

Over the last decade, direct to consumer golf ball brands have rapidly arrived on the scene.  To stay competitive, Titleist created a low-end brand they named Union Green.  Oh…and they also make Pinnacle!  But Union Green doesn’t have your typical Titleist “flair”.  This ball is geared toward the moderate disposable income, brand-conscious, weekend golfer, Millennial.

So how did Titleist get so big?  Through being acquired!  Having changed hands several times over the last eight decades, stakeholders invested money into growing the brands of Titleist, FootJoy and Scotty Cameron.  These three names, alone, symbolize golf.

We wanted to compare the profitability of Titleist to Callaway, and we were not surprised.  Titleist is a well-oiled machine!  But where does all of your money go when you buy those new Vokey wedges, Scotty Cameron putter or box of Pro V1s?  Research and development or acquisitions?  You can view Acushnet Company’s investor relations page to verify the financials below.

In the end, we will let you decide where you think your money is going at the end of the day.  Do you feel like big golf brands are “growing for growth’s sake” or are they listening to their customers who want better performing equipment?  Leave your comments in the comment section and we will reply.

Callaway and Titleist Income Statements