CALY

The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this report, and the condensed consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on February 27, 2026. Interim operating results are not indicative of operating results that may be expected for the year ending December 31, 2026, or any other future periods. See “Important Notice to Investors Regarding Forward-Looking Statements” on page 2 of this report. References to the “Company,” “Callaway Golf Company,” “we,” “our,” or “us” in this report refer to Callaway Golf Company, together with our wholly-owned subsidiaries. Divestitures of Topgolf and Jack Wolfskin In 2025, we executed a strategic realignment to focus on our core Golf Equipment and complementary soft goods businesses, which included the sale of Jack Wolfskin on May 31, 2025, for approximately $290.0 million and the sale of a 60% stake in our Topgolf and Toptracer business (“Topgolf”) based upon an equity value of approximately $1,100.0 million. The Topgolf transaction closed effective January 1, 2026, resulting in net proceeds to us of $820.1 million from the sale and related financing transactions, net of preliminary working capital adjustments and cash retained. Our remaining 39.3% interest in Topgolf (following the sale by Topgolf of additional dilutive units in April 2026, which decreased our non-controlling interest) is accounted for under the equity method. As a result of these divestitures, the operating results of Jack Wolfskin and Topgolf are classified as discontinued operations for all periods presented, while our proportionate share of earnings and losses related to our remaining equity method investment in Topgolf is included in continuing operations. For more information, please refer to Note 3 of this Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2025. Discussion of Non-GAAP Measures In addition to the financial results contained in this report, which have been prepared and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), we have also included supplemental information concerning our financial results on a non-GAAP basis. This non-GAAP information includes the following: •A constant currency measure on net sales in order to demonstrate the impact of foreign currency fluctuations on these results. This information represents an estimate for comparative purposes and is calculated by taking current period local currency results and translating them into U.S. dollars based on the foreign currency exchange rates for the applicable comparable prior period. •Net income and diluted earnings per share from continuing operations excluding the non-cash amortization associated with acquired intangible assets, including acquired customer and distributor relationships and acquired developed technology related to our acquisitions of TravisMathew and OGIO (collectively, the “Acquisitions”). While the amortization of these assets is excluded from our calculation of non-GAAP net income, the revenue, operating costs and associated acquired assets that contribute to the revenue generation associated with these acquired companies is reflected in our calculation of non-GAAP net income from continuing operations. •Net income and diluted earnings per share from continuing operations excluding certain non-cash and non-recurring items, as further detailed below, as well as the income (loss) from our equity method investment in Topgolf. In addition, for periods presented for fiscal year 2025, net income and diluted earnings per share from continuing operations were adjusted to include interest expense associated with term loan debt that was recognized as part of discontinued operations in order to show the full effect of consolidated interest expense from our corporate debt. 33 We have included information in this report to reconcile non-GAAP information for the periods presented to the most directly comparable GAAP information. Non-GAAP information in this report should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP and may also be inconsistent with the manner in which similar measures are derived or used by other companies. We use such non-GAAP information for financial and operational decision-making purposes and as a means to evaluate the underlying performance of our business and/or in forecasting our business. We believe that the presentation of such non-GAAP information, when considered in conjunction with the most directly comparable GAAP information, provides additional useful information for investors in their assessment of the underlying performance of our business. Segment and Related Information Our products and brands are reported under two operating segments: Golf Equipment, which includes the operations of our golf clubs and golf balls business; and Apparel, Gear and Other, which includes the operations of our soft goods business marketed under the Callaway, TravisMathew and OGIO brand names. Golf Equipment Our Golf Equipment operating segment is comprised of Callaway Golf-branded woods, hybrids, irons, wedges, Odyssey putters, packaged sets, and Callaway Golf branded golf balls, as well as sales of pre-owned golf clubs. Our golf equipment products are designed to be technologically advanced and are for golfers of all skill levels, from beginner to professional. Operating results for our Golf Equipment segment fluctuate due to seasonal factors, as the game of golf is primarily played on a seasonal basis in most of the regions where we conduct business. Weather conditions in most parts of the world, including our primary geographic markets, generally restrict golf from being played throughout the entire year, with many of our on-course customers closing during the cold weather months. Operating results are also impacted by the timing of our product launches. In general, we launch new products for the new golf season during the first quarter of the year. This initial sell-in period typically continues into the second quarter, while third-quarter sales are generally dependent on reorders and may also include smaller new product launches. Fourth-quarter sales are generally less than the other quarters due to the end of the golf season in many of our key regions. In addition to this seasonality, our Golf Equipment sales may also be impacted by other factors, including the timing of new product introductions. As a result of these factors, a majority of our Golf Equipment sales, and most, if not all, of the profitability from our Golf Equipment operating segment generally occurs during the first half of the year. Apparel, Gear, and Other Our Apparel, Gear and Other segment is comprised of high quality soft good products which we design, develop and sell under the Callaway, TravisMathew and OGIO brands. These brands deliver a range of premium performance and lifestyle products in the United States and select international markets. We are focused on maintaining strong brand momentum by category and market share growth with key trade partners by enhancing our digital marketing, e-commerce and retail store presence, which we believe will increase direct-to-consumer sales and drive increased profitability over time. Sales of Callaway‑branded golf apparel and accessories generally follow the same seasonal patterns as golf equipment and are therefore typically higher during the first half of the year. Sales of TravisMathew and OGIO branded products, which include golf and lifestyle apparel, accessories, and performance products, are more diversified and therefore are more evenly distributed throughout the year due to broader product offerings and a greater mix of direct‑to‑consumer sales. For further information about our segments, see Note 17 “Segment Information” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. 34 Current Economic Conditions Macroeconomic Factors Our products are discretionary purchases, and demand may be adversely affected by changes in macroeconomic conditions that impact consumer discretionary spending. These conditions include, among other factors, inflationary pressures, interest rate environments, changes in trade policies or tariffs, and geopolitical tensions that may create an uncertain environment for global trade and contribute to volatility in commodity, energy, and other input costs. While we seek to mitigate the effects of such factors through monitoring consumer spending behavior and implementing strategic initiatives, prolonged or severe adverse economic conditions could negatively impact our operating results. Tariffs In 2025, the U.S. government implemented reciprocal tariffs affecting many countries in which we do business, increasing costs for our products, components, and raw materials, a significant portion of which are sourced from outside the United States, including Asia and other regions, which may adversely affect product availability, pricing, and demand. On February 20, 2026, the United States Supreme Court struck down certain tariffs previously imposed under the International Emergency Economic Powers Act of 1977 (“IEEPA”). As a result, we filed approximately $49.5 million of refund claims related to previously paid IEEPA tariffs, subject to applicable eligibility, filing, and recovery requirements. We account for tariff refund claims as gain contingencies and recognize refunds when they are deemed realized or realizable. During the quarter ended June 30, 2026, we recognized $10.8 million of tariff refunds related to previously paid IEEPA tariffs, with the associated benefit recorded within cost of sales in our results of operations. Despite the recognition of these refunds, significant uncertainty remains regarding future U.S. trade policy, including the potential for additional tariffs under alternative statutory authorities, the outcome of ongoing legal proceedings, and the possibility of further changes to tariff rates, scope, duration and enforcement. The ultimate amount, if any, and timing of additional tariff refunds remain subject to ongoing legal, regulatory and administrative proceedings. Foreign Currency A significant portion of our operations is conducted outside the United States in currencies other than the U.S. dollar. We use foreign currency forward contracts to partially mitigate the short‑term effects of exchange rate fluctuations on our financial results; however, these instruments do not eliminate currency impacts or address long‑term exposure. Foreign currency fluctuations affect our results primarily through the translation of foreign‑currency‑denominated results into U.S. dollars and mark‑to‑market adjustments on certain intercompany balances and foreign currency forward contracts. For the three and six months ended June 30, 2026, foreign currency fluctuations had an unfavorable impact of $5.1 million and a favorable impact of $2.5 million, respectively, on international net revenues. 35 Results of Operations We have reclassified certain prior-year amounts related to our discontinued operations to conform to the current year’s presentation. Unless otherwise specified, our discussion below reflects continuing operations only and prior period financial information related to discontinued operations has been reclassified and is separately presented in the condensed consolidated financial statements and accompanying notes. Net sales and operating segment results (in millions, except percentages) Net sales for the three months ended June 30, 2026 increased $11.8 million or 2.0% (2.8% on a constant currency basis) as compared to the three months ended June 30, 2025. Segment operating income increased $28.2 million or 26.7% driven by increases in both our Golf Equipment and Apparel, Gear and Other operating segments. Net sales for the six months ended June 30, 2026 increased $69.7 million or 5.7% (5.5% on a constant currency basis) as compared to the six months ended June 30, 2025. Segment operating income increased $60.6 million or 25.0% driven by increases in both our Golf Equipment and Apparel, Gear and Other operating segments. Three Months Ended June 30, Increase/(Decrease) Non-GAAP Constant Currency Growth vs. 2025(1) Six Months Ended June 30, Increase/(Decrease) Non-GAAP Constant Currency Growth vs. 2025(1) ($ in millions) 2026 2025 Dollars Percent Percent 2026 2025 Dollars Percent Percent Net sales: Golf clubs $ 316.5 $ 312.7 $ 3.8 1.2 % 2.2% $ 697.1 $ 652.7 $ 44.4 6.8 % 6.5% Golf balls 113.8 99.1 14.7 14.8 % 15.0% 219.4 203.0 16.4 8.1 % 7.5% Golf Equipment 430.3 411.8 18.5 4.5 % 5.3% 916.5 855.7 60.8 7.1 % 6.7% Apparel 105.2 104.3 0.9 0.9 % 2.1% 207.9 202.3 5.6 2.8 % 3.6% Gear, accessories, & other 76.7 84.3 (7.6) (9.0) % (8.3)% 175.3 172.0 3.3 1.9 % 1.6% Apparel, Gear and Other 181.9 188.6 (6.7) (3.6) % (2.5)% 383.2 374.3 8.9 2.4 % 2.6% Total net sales $ 612.2 $ 600.4 $ 11.8 2.0 % 2.8% $ 1,299.7 $ 1,230.0 $ 69.7 5.7 % 5.5% Segment operating income (loss): Golf Equipment $ 100.3 $ 76.2 $ 24.1 31.6 % $ 217.9 $ 178.0 $ 39.9 22.4 % Apparel, Gear and Other 33.4 29.3 4.1 14.0 % 85.4 64.7 20.7 32.0 % Total segment operating income (loss) 133.7 105.5 28.2 26.7 % 303.3 242.7 60.6 25.0 % Non-recurring items (2) 7.5 (0.9) 8.4 n/m 3.5 (2.2) 5.7 n/m Corporate costs and expenses (3) (26.4) (30.3) 3.9 (12.9) % (53.8) (63.1) 9.3 (14.7) % Income (loss) from operations 114.8 74.3 40.5 54.5 % 253.0 177.4 75.6 42.6 % Interest income (expense), net (4.6) (15.3) 10.7 (69.9) % (10.4) (30.2) 19.8 (65.6) % Other income (expense), net 1.4 (0.4) 1.8 n/m 4.3 2.0 2.3 115.0 % Income (loss) from equity method investments (1.0) — (1.0) n/m (28.7) — (28.7) n/m Income (loss) from continuing operations, before income taxes $ 110.6 $ 58.6 $ 52.0 88.7 % $ 218.2 $ 149.2 $ 69.0 46.2 % (1) Calculated by applying 2025 exchange rates to 2026 reported sales in regions outside the United States. (2) Includes non-cash amortization of acquired intangible assets and non-recurring items primarily consisting of tariff refunds, costs related to the relocation to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025, restructuring and reorganization charges related to the Transformation Plan, and the write-off of software assets stemming from our separation from Topgolf. (3) Corporate costs and expenses include corporate general and administrative expenses not utilized by management in determining segment profitability as well as adjustments from discontinued operations related to indirect costs that were previously allocated to a segment. 36 Golf Equipment Net sales The $18.5 million (4.5%) increase in Golf Equipment net sales for the three months ended June 30, 2026 was primarily due to a 14.8% increase in golf ball sales driven by the continued success of the new Chrome family of golf balls and overall gains in market share, and a 1.2% increase in golf club sales primarily driven by continued sales momentum in fairway woods. These increases were partially offset by decreases in sales of lower-margin golf ball products related to SKU rationalization initiatives. The $60.8 million (7.1%) increase in Golf Equipment net sales for the six months ended June 30, 2026 was due to a 6.8% increase in golf club sales driven by strong reception of new product launches, combined with an 8.1% increase in golf ball sales driven by the successful launch of the new Chrome family of golf balls and overall gains in market share, partially offset by lower sales of lower margin golf ball products related to SKU rationalization initiatives. Operating income The $24.1 million increase in Golf Equipment segment operating income for the three months ended June 30, 2026 was primarily driven by the increase in net sales noted above, combined with improved gross margins resulting from favorable pricing, product mix, cost savings from gross margin initiatives and lower tariffs. These increases were partially offset by an increase in operating expenses of $4.2 million primarily due to the timing of advertising spend and cost-of-living adjustments. The $39.9 million increase in Golf Equipment segment operating income for the six months ended June 30, 2026 was primarily driven by the increase in net sales noted above, combined with improved gross margins resulting from favorable pricing, product mix, and cost savings from gross margin initiatives, which more than offset the unfavorable impact of incremental tariffs. These increases were partially offset by an increase in operating expenses of $12.4 million primarily due to the recognition of an $8.2 million lease termination incentive gain in the first quarter of 2025 that did not recur combined with an increase in employee costs due to cost-of-living adjustments. Apparel, Gear and Other Net sales The $6.7 million (3.6%) decrease in Apparel, Gear and Other net sales for the three months ended June 30, 2026 was primarily due to decreases in sales of Callaway soft goods due to timing of shipments and decreases in Asia from unfavorable foreign currency impacts, partially offset by an increase in sales of TravisMathew apparel products primarily related to higher direct-to-consumer sales. The $8.9 million (2.4%) increase in Apparel, Gear and Other net sales for the six months ended June 30, 2026 was primarily due to increases in sales of TravisMathew apparel products related to strong overall market demand and higher direct-to-consumer sales, combined with increased sales of Callaway soft goods. Operating income The $4.1 million (14.0%) increase in segment operating income for the three months ended June 30, 2026 was primarily driven by higher gross margins from favorable pricing and cost savings from gross margin initiatives, which more than offset the decrease in net sales and the unfavorable impact of incremental tariffs. These increases were partially offset by an increase in operating expenses of $0.8 million due to slight increases related to timing in advertising spend. The $20.7 million (32.0%) increase in segment operating income for the six months ended June 30, 2026 was primarily driven by the increase in net sales and higher gross margins from favorable pricing and cost savings from gross margin initiatives, which more than offset the unfavorable impact of incremental tariffs. These increases were partially offset by an increase in operating expenses of $3.6 million due to the recognition of a $3.8 million lease termination incentive gain in the first quarter of 2025 that did not recur. 37 Net sales by major geographic region for the periods presented below were as follows (in millions, except percentages): Three Months Ended June 30, Increase/(Decrease) Non-GAAP Constant Currency Growth vs. 2025 Six Months Ended June 30, Increase/(Decrease) Non-GAAP Constant Currency Growth vs. 2025 2026 2025 Dollars Percent Percent 2026 2025 Dollars Percent Percent Net sales: United States $ 414.7 $ 401.1 $ 13.6 3.4 % 3.4 % $ 863.5 $ 817.2 $ 46.3 5.7 % 5.7 % Europe 64.8 64.6 0.2 0.3 % (1.2) % 148.0 128.9 19.1 14.8 % 8.5 % Asia 90.3 91.9 (1.6) (1.7) % 6.3 % 193.9 198.7 (4.8) (2.4) % 2.5 % Rest of World 42.4 42.8 (0.4) (0.9) % (4.0) % 94.3 85.2 9.1 10.7 % 5.9 % Total net sales $ 612.2 $ 600.4 $ 11.8 2.0 % 2.8 % $ 1,299.7 $ 1,230.0 $ 69.7 5.7 % 5.5 % We sell our Golf Equipment and Apparel, Gear and Other products in the United States and internationally, with our principal international regions being Europe and Asia. Apparel, Gear and Other product sales for our TravisMathew business are primarily concentrated in the United States. United States The $13.6 million (3.4%) increase in net sales for the three months ended June 30, 2026 was primarily due to higher sales volumes of golf equipment combined with higher TravisMathew sales, partially offset by a decrease in sales of OGIO products. The $46.3 million (5.7%) increase in net sales for the six months ended June 30, 2026 was primarily due to higher golf equipment and TravisMathew sales. Europe The $0.2 million (0.3%) increase in net sales for the three months ended June 30, 2026 was primarily due to increases in golf equipment product sales. The $19.1 million (14.8%) increase in net sales for the six months ended June 30, 2026 was primarily due to increases in golf equipment product sales from strong demand combined with the favorable impact of changes in foreign currency. Asia The $1.6 million (1.7%) decrease in net sales for three months ended June 30, 2026 was primarily due to unfavorable foreign currency impacts. On a constant currency basis, net sales increased $5.8 million (6.3%) during the three months ended June 30, 2026 primarily due to the success of new product launches. The $4.8 million (2.4%) decrease in net sales for six months ended June 30, 2026 was also primarily due to unfavorable foreign currency impacts. On a constant currency basis, net sales increased $5.0 million (2.5%) during the six months ended June 30, 2026 due to the success of new product launches. Rest of World The $0.4 million (0.9%) decrease for the three months ended June 30, 2026 was primarily due to lower golf equipment sales in Canada, partially offset by increases in other rest-of-world regions. The $9.1 million (10.7%) increase for the six months ended June 30, 2026 was primarily due to higher golf equipment sales in Canada and Australia. Gross Profit (in millions, except percentages) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Amount Percent 2026 2025 Amount Percent Net sales $ 612.2 $ 600.4 $ 11.8 2.0 % $ 1,299.7 $ 1,230.0 $ 69.7 5.7 % Cost of sales 305.5 337.0 (31.5) (9.3) % 666.3 683.0 (16.7) (2.4) % Gross profit $ 306.7 $ 263.4 $ 43.3 16.4 % $ 633.4 $ 547.0 $ 86.4 15.8 % Gross margin 50.1 % 43.9 % 6.2 % 48.7 % 44.5 % 4.2 % 38 Cost of sales Our cost of sales is variable in nature and fluctuates relative to sales volumes. Cost of sales includes raw materials and component costs, direct labor and manufacturing overhead, inbound freight, duties, tariffs and shipping charges, and depreciation and amortization directly related to manufacturing and distribution. Gross profit and gross margin During the three months ended June 30, 2026, gross profit increased by $43.3 million (16.4%) as compared to the prior year period. Gross profit as a percent of net sales (“gross margin”) increased to 50.1% for the three months ended June 30, 2026 compared to 43.9% for the three months ended June 30, 2025. The improvement in gross margin was due to favorable pricing and product mix, cost savings from gross margin initiatives, and the receipt of $10.8 million of tariff refunds in the current period. During the six months ended June 30, 2026, gross profit increased by $86.4 million (15.8%) as compared to the prior year period. Gross margin increased to 48.7% for the six months ended June 30, 2026 compared to 44.5% for the six months ended June 30, 2025. The improvement in gross margin was due to favorable pricing and product mix, cost savings from gross margin initiatives and the receipt of $10.8 million of tariff refunds in the current period, partially offset by higher overall impacts of incremental tariffs compared to the prior year. Operating Expenses (in millions, except percentages) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Operating expenses: Selling, general and administrative expense $ 176.1 $ 173.7 $ 2.4 1.4 % $ 349.4 $ 338.3 $ 11.1 3.3 % Research and development expense 15.8 15.4 0.4 2.6 % 31.0 31.3 (0.3) (1.0) % Total operating expenses $ 191.9 $ 189.1 $ 2.8 1.5 % $ 380.4 $ 369.6 $ 10.8 2.9 % Selling, general and administrative expense Selling, general and administrative (“SG&A”) expenses primarily consist of employee costs, advertising and promotional expense, legal and professional fees, tour expenses, travel expenses, building and rent expenses, depreciation and amortization charges and other miscellaneous expenses. The $2.4 million (1.4%) increase in SG&A expenses for the three months ended June 30, 2026 was primarily due to a $2.9 million increase in advertising and promotional expenses driven largely by the timing of advertising spend and $1.5 million of impairment charges related to the planned closure of certain underperforming TravisMathew retail locations, partially offset by reduced employee costs from cost savings initiatives and lower tour expenses. The $11.1 million (3.3%) increase in SG&A expenses for the six months ended June 30, 2026 was primarily due to a $12.0 million gain recognized from a lease termination incentive in the first quarter of 2025, which did not recur in 2026, combined with impairment charges on retail assets at TravisMathew, losses on asset disposals, and higher legal costs, partially offset by lower advertising spend due to the timing of planned advertising activities, decreased tour expenses, and a decrease in depreciation and amortization. Research and development expense Research and development expenses are comprised of costs to design, develop, test or improve our products and technology, and primarily include employee costs of personnel engaged in research and development activities, research costs and depreciation expense. The $0.4 million (2.6%) increase in research and development expenses for the three months ended June 30, 2026 was primarily due to an increase in computer software costs and professional fees. The $0.3 million (1.0%) decrease in research and development expenses for the six months ended June 30, 2026 was primarily due to cost savings initiatives. 39 Other Income and Expense (in millions, except percentages) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Other income and expenses: Interest income (expense), net $ (4.6) $ (15.3) $ 10.7 (69.9) % $ (10.4) $ (30.2) $ 19.8 (65.6) % Other income (expense), net 1.4 (0.4) 1.8 n/m 4.3 2.0 2.3 115.0 % Total other income (expense), net $ (3.2) $ (15.7) $ 12.5 (79.6) % $ (6.1) $ (28.2) $ 22.1 (78.4) % Interest income/expense The decreases in interest expense, net for the three and six months ended June 30, 2026 were primarily due to lower interest expense on our term loan as a result of the partial repayment on January 2, 2026 in connection with completion of the sale of Topgolf and its full repayment on May 29, 2026. Other income/expense The $1.8 million increase in other income (expense), net for the three months ended June 30, 2026 was primarily due to a $4.5 million favorable change in foreign currency transactions and hedging activity and $1.1 million of income from transition services provided to Topgolf, partially offset by a $2.3 million write-off of unamortized debt issuance costs in connection with the full repayment of the term loan and a $0.7 million decrease in dividend income on our money market accounts due to lower average balances resulting from funds being used for debt repayments and stock repurchases. The $2.3 million (115.0%) increase in other income (expense), net for the six months ended June 30, 2026 was primarily due to a $5.0 million favorable change in foreign currency transactions and hedging activity, a $4.3 million remeasurement gain on our investment in Five Iron Golf, $2.3 million of income from transition services provided to Topgolf, and $1.3 million of higher dividend income on our money market accounts due to higher average balances for the year-to-date period, partially offset by a $9.8 million write-off of unamortized debt issuance costs in connection with the repayment of the term loan mentioned above. Income (Loss) from Equity Method Investments (in millions, except percentages) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Income (loss) from equity method investments $ (1.0) $ — $ (1.0) n/m $ (28.7) $ — $ (28.7) n/m Income (loss) from equity method investments The $1.0 million and $28.7 million loss during the three and six months ended June 30, 2026, respectively, represents our proportionate share of Topgolf’s net losses following the completion of the sale of a majority interest in the business effective January 1, 2026. Income Taxes (in millions, except percentages) Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Income tax provision (benefit) $ 34.8 $ 13.1 $ 21.7 165.6 % $ 67.5 $ 40.3 $ 27.2 67.5 % Income tax expense The $21.7 million and $27.2 million increases in income tax expense for the three and six months ended June 30, 2026, respectively, were primarily due to higher pre‑tax earnings, as well as the tax impacts from our investment in Topgolf. As a percentage of pre-tax income, our effective tax rate for the three months ended June 30, 2026 increased to 31.5% compared to 22.4% in the comparable period of 2025. As a percentage of pre-tax income, our effective tax rate for the six months ended June 30, 2026 increased to 30.9% compared to 27.0% in the comparable period of 2025. The increases in our effective tax rate for the three and six months ended June 30, 2026, respectively, were primarily due to impacts of valuation allowances related to our investment in Topgolf combined with our global mix of earnings. 40 Net Income, Diluted Earnings Per Share and Reconciliation of Non-GAAP Measures The following table presents a reconciliation of our GAAP results for the three months ended June 30, 2026 and 2025 to our non-GAAP results for the same periods (in millions, except per share information): Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 Net Income Diluted Earnings per share(5)(6) Net Income Diluted Earnings per share(5)(6) GAAP net income (loss) from continuing operations $ 75.8 $ 0.40 $ 45.5 $ 0.24 Non-cash amortization of acquired intangibles(1) — — (0.1) — Interest income (expense) and non-recurring items(2)(3) 4.9 0.03 6.7 0.03 Income (loss) from equity method investments(4) (2.9) (0.02) — — Non-GAAP net income (loss) from continuing operations $ 73.8 $ 0.39 $ 38.9 $ 0.20 GAAP diluted weighted-average shares outstanding 190.1 199.8 Non-GAAP diluted weighted-average shares outstanding 190.1 199.8 (1) Includes the amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to our Acquisitions. See “Discussion of Non-GAAP Measures” for more information. (2) In 2026, amounts primarily include $10.8 million of tariff refunds, partially offset by the $2.3 million write-off of debt issuance costs associated with the full repayment of the term loan in May 2026, $0.6 million of costs related to the relocation to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025, and $0.4 million of restructuring charges related to the Transformation Plan. In addition, for 2026, non-recurring items include $1.1 million of costs incurred under the Transition Services Agreement with Topgolf, which are offset by $1.1 million of cost recovery fees received from Topgolf related to these transition services. (3) In 2025, amounts primarily include $0.5 million of restructuring charges related to the Transformation Plan. In addition, $9.6 million of term loan interest expense incurred at the corporate level and included in discontinued operations on a GAAP basis is reflected as part of continuing operations on a non-GAAP basis in order to show the full effect of consolidated interest expense. (4) In 2026, amounts include our $1.0 million proportionate share of Topgolf’s net losses combined with $1.9 million of unfavorable tax impacts. (5) The effect of the Convertible Notes on diluted earnings per share is calculated using the if-converted method, which excludes interest expense related to the Convertible Notes from the calculation of net income through the cash settlement date of May 1, 2026. (6) When aggregated, diluted earnings per share amounts may not be additive due to rounding. GAAP net income from continuing operations Net income from continuing operations and diluted earnings per share for the three months ended June 30, 2026 were $75.8 million and $0.40 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $45.5 million and $0.24 per share, respectively, for the three months ended June 30, 2025. These increases were primarily driven by a $28.2 million increase in segment operating income combined with the recognition of $10.8 million related to the tariff refunds in the current quarter and a reduction in interest expense resulting from the full repayment of our term loan debt. These increases were partially offset by an increase in the income tax provision and the loss recognized from our equity method investment in Topgolf. Non-GAAP net income from continuing operations On a non-GAAP basis, excluding the items described in the table above, our net income from continuing operations and diluted earnings per share for the three months ended June 30, 2026 would have been $73.8 million and $0.39 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $38.9 million and $0.20 per share, respectively, for the three months ended June 30, 2025. The increase in non-GAAP net income from continuing operations was primarily due to a $28.2 million increase in segment operating income combined with lower interest expense, partially offset by an increase in the income tax provision. 41 The following table presents a reconciliation of our GAAP results for the six months ended June 30, 2026 and 2025 to our non-GAAP results for the same periods (in millions, except per share information): Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 Net Income Diluted Earnings per share(6)(7) Net Income Diluted Earnings per share(6)(7) GAAP net income (loss) from continuing operations $ 150.7 $ 0.78 $ 108.9 $ 0.56 Non-cash amortization of acquired intangibles(1) (0.2) — (0.1) — Interest income (expense) and non-recurring items(2)(3) 0.5 — 13.0 0.07 Tax valuation allowance(4) 0.1 — — — Income (loss) from equity method investments(5) (35.3) (0.18) — — Non-GAAP net income (loss) from continuing operations $ 185.6 $ 0.96 $ 96.0 $ 0.50 GAAP diluted weighted-average shares outstanding 196.3 199.0 Non-GAAP diluted weighted-average shares outstanding 196.3 199.0 (1) Includes the amortization of acquired intangible assets, including customer and distributor relationships, reacquired distribution rights and acquired developed technology related to our Acquisitions. See “Discussion of Non-GAAP Measures” for more information. (2) In 2026, amounts primarily include $10.8 million of tariff refunds and a $4.3 million gain on our investment in Five Iron Golf, partially offset by $9.8 million of other expense related to write-offs of debt issuance costs associated with the January and May 2026 repayments of the term loan, $1.7 million of charges incurred to relocate to a new UK warehouse as a result of the sale of the Jack Wolfskin business in 2025, $1.5 million of restructuring charges related to the Transformation Plan, and a $0.7 million write-off of software assets stemming from our separation from Topgolf. In addition, non-recurring items for 2026 include $2.3 million of costs incurred under the Transition Services Agreement with Topgolf, which were fully offset by $2.3 million of cost recovery fees received from Topgolf related to those transition services. (3) In 2025, amounts primarily include $1.5 million of costs associated with the Transformation Plan and $0.4 million of costs incurred to centralize warehousing and distribution operations to achieve synergies in connection with our acquisitions. In addition, $19.1 million of term loan interest expense incurred at the corporate level and included in discontinued operations on a GAAP basis is reflected as part of continuing operations on a non-GAAP basis in order to show the full effect of consolidated interest expense. (4) Related to the release of valuation allowances on certain U.S. deferred tax assets related to the disposal of the Topgolf and Jack Wolfskin businesses. (5) In 2026, amounts include our $28.7 million proportionate share of Topgolf’s net losses combined with $6.6 million of unfavorable tax impacts. (6) The effect of the Convertible Notes on diluted earnings per share is calculated using the if-converted method, which excludes interest expense related to the Convertible Notes from the calculation of net income through the cash settlement date of May 1, 2026. (7) When aggregated, diluted earnings per share amounts may not be additive due to rounding. GAAP net income from continuing operations Net income from continuing operations and diluted earnings per share for the six months ended June 30, 2026 were $150.7 million and $0.78 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $108.9 million and $0.56 per share, respectively, for the six months ended June 30, 2025. These increases were primarily driven by a $60.6 million increase in segment operating income combined with the recognition of $10.8 million related to the tariff refunds in the current quarter and a reduction in interest expense resulting from the full repayment of our term loan debt. These increases were partially offset by the loss recognized from our equity method investment in Topgolf and an increase in the income tax provision. Non-GAAP net income from continuing operations On a non-GAAP basis, excluding the items described in the table above, our net income from continuing operations and diluted earnings per share for the six months ended June 30, 2026 would have been $185.6 million and $0.96 per share, respectively, as compared to net income from continuing operations and diluted earnings per share of $96.0 million and $0.50 per share, respectively, for the six months ended June 30, 2025. The increase in non-GAAP net income from continuing operations was primarily due to a $60.6 million increase in segment operating income combined with lower interest expense, partially offset by an increase in the income tax provision. 42 Discontinued Operations (in millions, except percentages) Three Months Ended June 30, Growth/(Decline) Six Months Ended June 30, Increase/(Decrease) 2026 2025 Dollars Percent 2026 2025 Dollars Percent Income (loss) from discontinued operations, net of tax $ (0.6) $ (25.2) $ 24.6 (97.6) % $ 17.6 $ (86.5) $ 104.1 (120.3) % Loss of $0.6 million from discontinued operations, net of tax, for the three months ended June 30, 2026 was related to the settlement of certain indemnification obligations and other costs directly related to our divestitures of Topgolf and Jack Wolfskin. Income of $17.6 million, net of tax from discontinued operations for the six months ended June 30, 2026, was primarily related to the recognition of an income tax benefit in connection with the sale of Topgolf effective on January 1, 2026, partially offset by transaction costs directly related to the completion of the sale as well as the settlement of certain indemnification obligations. The $25.2 million and $86.5 million loss from discontinued operations, net of tax for the three and six months ended June 30, 2025, respectively, was due to net operating losses of both Topgolf and Jack Wolfskin during the period. Financial Condition Cash and cash equivalents Our cash and cash equivalents decreased $625.1 million to $278.1 million at June 30, 2026 as compared to December 31, 2025 and decreased $405.4 million compared to June 30, 2025. These decreases were primarily driven by cash used in financing activities from continuing operations, largely reflecting the full repayment of our term loan during the period, which was funded by cash proceeds from the sale of Topgolf and cash on hand. We also used cash in financing activities to repurchase shares of our common stock pursuant to our stock repurchase program. In addition, cash provided by operating activities from continuing operations increased due to the strong performance of the business. For further information related to our financing arrangements, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Liquidity and Capital Resources” in Part I, Item 2 of this Form 10-Q. Accounts receivable Our accounts receivable balance fluctuates throughout the year as a result of the general seasonality of our business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, accounts receivable are generally the highest during the first and second quarters during the seasonal peak in the golf industry, and generally decline significantly during the third and fourth quarters as a result of an increase in cash collections combined with lower seasonal sales. With respect to our Apparel, Gear and Other business, accounts receivable balances for our TravisMathew and OGIO businesses are more evenly distributed throughout the year while accounts receivable balances for our Callaway soft good brand are subject to the same general seasonality as our Golf Equipment business. As of June 30, 2026, our consolidated net accounts receivable increased to $315.7 million from $123.2 million at December 31, 2025. The increase primarily reflects the seasonality of Golf Equipment net sales in the first and second quarters. Net accounts receivable as of June 30, 2026 decreased $15.9 million compared to June 30, 2025, primarily due to lower net sales in the latter half of the second quarter of 2026 combined with improved cash collections. Inventory Our inventory balance fluctuates throughout the year as a result of the general seasonality of our Golf Equipment business, and is also affected by the timing of new product launches. With respect to our Golf Equipment business, the buildup of inventory generally begins during the fourth quarter and continues into the first quarter and beginning of the second quarter in order to meet increased demand during the golf season. Inventory levels are also impacted by the timing of new product launches as well as the success of new products. With respect to our Apparel, Gear and Other business, inventory levels are generally less affected by seasonality due to the diversification of product offerings for these brands. As of June 30, 2026, our inventory decreased $107.1 million to $518.2 million, compared to December 31, 2025, which reflects our seasonality. Our inventory decreased $49.7 million as of June 30, 2026, compared to June 30, 2025, primarily due to higher net sales in the current period. 43 Liquidity and Capital Resources Liquidity Our principal sources of liquidity consist of our existing cash and cash equivalents, funds expected to be generated from operations and funds from our credit facilities. Based upon our current cash balances, our estimates of funds expected to be generated from operations, as well as from current and projected availability under our current credit facilities, we believe that we will be able to finance current and planned operating requirements, capital expenditures, required debt repayments and contractual obligations and commercial commitments for at least the next 12 months from the issuance date of this Form 10-Q. Our ability to generate sufficient positive cash flows from operations is subject to many risks and uncertainties, including future economic trends and conditions, demand for our products, supply chain challenges, price inflation, foreign currency exchange rates, and other risks and uncertainties applicable to us and our business (see “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025). Capital resources As of June 30, 2026, we had $774.7 million in combined cash and availability under our credit facilities, which is a decrease of $386.6 million compared to June 30, 2025 following the full repayment of our Term Loan B in May 2026 and repurchases of shares of our common stock pursuant to our stock repurchase program. Information about our credit facilities and long-term debt is presented in Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q, which is incorporated herein by this reference. As of June 30, 2026, approximately 26% of our cash was held in regions outside of the United States. We continue to maintain our indefinite reinvestment assertion with respect to most jurisdictions in which we operate because of local cash requirements to operate our business. If we were to repatriate cash to the United States outside of settling intercompany balances, we may need to pay incremental foreign withholding taxes which, subject to certain limitations, generate foreign tax credits for use against our U.S. tax liability, if any. Additionally, we may need to pay certain state income taxes. 44 Significant cash obligations We plan to utilize our liquidity (as described above) and our cash flows from business operations to fund our material cash requirements. The table below summarizes certain significant cash obligations as of June 30, 2026 that will affect our future liquidity (in millions). Payments Due By Period Total Remainder of 2026 2027 - 2028 2029 - 2030 Thereafter Debt (1) 50.8 2.4 45.6 0.8 2.0 Interest payments (2) 2.9 0.6 1.5 0.4 0.4 Finance leases, including imputed interest (3) 31.8 1.7 6.6 6.6 16.9 Operating leases, including imputed interest (4) 274.6 17.8 67.9 60.0 128.9 Minimum lease payments for leases signed but not yet commenced (5) 2.9 — 0.2 0.6 2.1 Unconditional purchase obligations (6) 85.4 40.5 42.7 2.2 — Uncertain tax contingencies (7) 1.0 — 0.3 — 0.7 Total $ 449.4 $ 63.0 $ 164.8 $ 70.6 $ 151.0 (1) Excludes unamortized debt discounts, unamortized debt issuance costs, and fair value adjustments. Includes $43.1 million of outstanding ABL borrowings. For further details related to long-term debt, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (2) Long-term debt may have fixed or variable interest rates. For further details, see Note 6 “Financing Arrangements” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (3) Represents commitments for future minimum lease payments under financing leases. For further details, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (4) Represents commitments for future minimum lease payments under operating leases. For further details, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (5) Represents future minimum lease payments under lease agreements that have not yet commenced as of June 30, 2026, in relation to future TravisMathew retail stores. For further discussion, see Note 5 “Leases” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (6) During the normal course of business, we enter into agreements to purchase goods and services, including commitments for endorsement agreements with professional athletes and other endorsers, consulting and service agreements, and intellectual property licensing agreements pursuant to which we are required to pay royalty fees. The amounts listed above approximate the minimum purchase obligations we are obligated to pay under these agreements over the next five years and thereafter as of June 30, 2026. The actual amounts paid under some of the agreements may be higher or lower than these amounts. In addition, we also enter into unconditional purchase obligations with various vendors and suppliers of goods and services during the normal course of business through purchase orders or other documentation or that are undocumented except for an invoice. For further details, see Note 12 “Commitments & Contingencies” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. (7) Amounts represent current and non-current portions of uncertain income tax positions as recorded on our condensed consolidated balance sheets as of June 30, 2026. Amounts exclude uncertain income tax positions that we would be able to offset against deferred taxes. For further discussion, see Note 11 “Income Taxes” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q. During the normal course of business, we have made certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include (i) intellectual property indemnities to our customers and licensees in connection with the use, sale and/or license of our products or trademarks, (ii) indemnities to various lessors in connection with facility leases for certain claims arising from such facilities or leases, (iii) indemnities to vendors and service providers pertaining to the goods or services provided to us or based on the negligence or willful misconduct, and (iv) indemnities involving the accuracy of representations and warranties in certain contracts. In addition, we have made contractual commitments to each of our officers and certain other employees providing for severance payments upon the termination of employment. We have also issued guarantees in the form of a standby letter of credit in the amount of $0.4 million primarily as security for contingent liabilities under certain workers’ compensation insurance policies. We have also made certain indemnities under which we may be required to make payments in relation to divestitures of the Topgolf and Jack Wolfskin businesses. These include indemnities against (i) damages arising from certain ongoing litigation matters, (ii) certain exempted claims and (iii) certain pre-closing tax and other liabilities. 45 The duration of these indemnities, commitments and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments and guarantees do not provide for any limitation on the maximum amount of future payments we could be obligated to make. Historically, costs incurred to settle claims related to indemnities have not been material to our financial position, results of operations or cash flows. In addition, we believe the likelihood is remote that payments under the commitments and guarantees described above will have a material effect on our financial condition. The fair value of indemnities, commitments and guarantees that we issued during the six months ended June 30, 2026 was not material to our financial position, results of operations or cash flows. In addition to the contractual obligations listed above, our liquidity could also be adversely affected by an unfavorable outcome with respect to claims and litigation that we are subject to from time to time (see Note 12 “Commitments & Contingencies” in the Notes to Condensed Consolidated Financial Statements in Part I, Item 1 and “Legal Proceedings” in Part II, Item 1 of this Form 10-Q). We have no material off-balance sheet arrangements. Capital expenditures Total estimated capital expenditures for the year ending December 31, 2026, are expected to be approximately $40.0 million. Critical Accounting Estimates For the six months ended June 30, 2026, there have been no material changes to our critical accounting estimates from the information reported in our Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 27, 2026.