ELY - Earnings call transcript Q4 2021 | Topgolf Callaway Brands Corp.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Callaway Golf Company Fourth Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. And during the Q&A session, we ask that you please limit your questions to one and a follow-up to allow as many participants as possible to ask a question. And I would now like to hand the conference over to your speaker for today, Lauren Scott, Director of Investor Relations. you. Thank ahead. go Please

Lauren Scott

and everyone. Operator, good you, afternoon, Thank

by First, patience, difficulty we to make thank up the on that of be for your you all call extending are be lost end for we I’d minutes we and to sure like our will XX the having time. any a technical

thank very much Director the, am I said, the you for company’s as So, Lauren Investor of Relations. Operator, your patience. Scott, And

our on fourth Officer. Officer Joining Jennifer Chief results. call issued SVP today’s President me today press Brewer, Lynch, Financial and Chief are announcing Officer; Chip Chief XXXX of financial and speakers room company the Patrick a release for Brian and Accounting quarter as year in Thomas, our and Executive full Earlier are Q&A. the Callaway’s its also Global our Finance; Burke, today,

coordination, a turn In presentation this as website both to accordance at And the may for management’s that presentation excuse for and more Brewer. press the uncertainties that Relations it in under easier and addition, accompanies I’d to earnings the current company’s at available the the there materially as call remarks description. follow This actual Safe expectations. is today’s Accounting risks review Financial statements release prepared Investor in In in forward-looking note are we make earnings tab. call. we presentation the corresponding the GAAP press call reconciled you cause over We Chip results Harbor financial today’s back -- Accepted call that, include to involve instances of like presentation, numbers me, complete the are -- the statements to a Results now release could based presentation the measures you report the contained with Generally encourage the on Regulation accordance from U.S. that the the will non-GAAP discussed to G. the and where of with in on reported Please Most measures, differ that non-GAAP on have and to Principles. measures well

Chip Brewer

and Lauren, way. the by you, happy this Thank birthday week,

Lauren Scott

Thank you.

Chip Brewer

a us afternoon call. take thank of But forward apologize Good detail pleased space. start. quarter marked your to to Apparel the Topgolf incredible of moment I unrivaled also golf for look all for you transforming was I for by outlook joining a the year for year on to We on closed just growth leader our lifestyle company modern and strong ahead. QX, and in report XXXX the segments. patience. more exceptional Callaway, the acknowledge Thank results, and and our acquisition today the for want concluded. pivotal you strong to late significant everyone the the across providing year we to around We in business into momentum our am results first, another

Amid world’s Golf company team The five operations and operating COVID-related be hardened Over an has global with proven continued combined entertainment global a delivering to the high model. differentiated truly lifestyle business Equipment impressive lifestyle impressive teams for despite significant of our and asset tirelessly, products, quarter-after-quarter challenges. sales Callaway. and itself results work we past years, tech-enabled Apparel a for Equipment golf deliver traditional the brands and to Golf business demand a have leading select battle

to all personally our and investments to and people thank In business, a year. we I continued employees throughout for want financial growth have larger up set us increasingly in their made of in success. infrastructure support addition, the global key hard to for work

to Total for led net up $XXX $XX Gear. both for Apparel QX, than and million, EBITDA demand business. $XX XX% came by quarter high from exceptional year-over-year up continued without and revenue Shifting dedication possible passion this Equipment adjusted million, your Our of expected, Topgolf, another in results was positive million. results would and results not lifestyle our be and Golf was better and

our Turning an walk-in of for expectations, over same impressive driving surpassed to and the traffic XXXX increase venue Topgolf, event sales to sales X% quarter, levels. both

sales time events For XX% of same at meaningfully the surprise full of in drove events sales encouraging short-term their operating year, January, softness rise staffing smaller projected very the into group same events expect, were sales trend. continued has some result walk-in increase in levels, challenges. in an resurgence than we one in and in the given corporate some would Having the seen same QX, and positive sales said venue venue had Omicron this, a decline venue resulted have business higher December week been for the and continuing of strong approximately XXXX social last and and A strong as most environment. of in in

a impact results, are was our again While This some Omicron approximately very of QX see through indicator starting this will it remainder U.S. back U.K. QX to month venues, of bounce our on this signs of quickly experienced quite anticipated ahead an have U.S. impacts good is once a the the in promising venues, which we we and resiliency performing the and business now to see expect improvement. well. already of that are

single-digit the expecting down and anticipate for XXXX same For slightly we sales we over the levels. the be venue year, of compared full first low growth to XXXX quarter XXXX, to are

XXXX very continued location we to my everyone venues challenging and a had New on is in watching with seat consistently environment. I openings are the of ringside exceed XX Florida, I Fort on operating on group for Topgolf success uniquely and in have despite to remind opening good the performance want pace mid-November, here. rate track years XX are are Myers, open expectations, had venue openings We while strongly opinion, nine our now, successful this venues, we here. we our on delivering nearly the financial in bay

proven our of expertise, strength, and the financial real model, competency believe appreciate increasing our may community repeatable yet. estate I As a fact a brand team is a operating not fully teams’ now and result of this

venues, XXXX, an to our QX. the For XX of confident XXth least with late potential new in at very are adding we ability deliver

Topgolf We Ontario, Southern QX, are with two California for lineup Angeles location The the QX El in Stadium. which and is in other Los about technology our create experience. Segundo, to to one will nighttime the unique excited is of elements just will perfect in first rounds, particularly intriguing, course. locations opening and include this this for year also be element in of near lighted in fashion, the extremely El venue truly be as and your course not Segundo guest SoFi area true the typical is incorporating first east L.A. a It golf on-course XX-hole an a Toptracer entertainment and the

both more encouraged strong under new due five which disruption year activities will continued impact Toptracer expected the Baltimore, X,XXX will install as with during venue in latest for new the remain note be to the to and installations. just to the and expect Shifting well half X,XXX year’s over open year XXXX. Seattle year, weighted the in installed from in include note of to demand total will enhancements, back feature as QX. This the development Callaway heavily to venues. in bringing by base fitting new our the We of premium this base, important locations that of our of openings X,XXX contribution timing base base. Additional this toward XXXX, It’s venue we or timing to year’s

more a to am Lastly, World launch Topgolf development whereas game I announce existing this Golf that on leveraging Tour traditional from within gamer, we the are business, that Media younger, year caters game later new the more traditional the expertise pleased focuses to mobile to golfer. our game

we it community financial provide digital upside will the have we to that as of contribution While XXXX, in continues believe to customers game grow. expect a our to future minimal results

both game In addition, will from thus this our synergies new integrate digital in our venues game Toptracer driving time our capabilities. into ranges, at and due development offerings

our Report, the year grow, segment, approximately trade also the Off-course, to XXXX venues across Five the people visiting on-course and non-traditional of for million clubs that participation marking report traditional are remains involved to off-course. to in golfers playing our industry. increased those of to to Golf million Topgolf inventory remains half fourth by According Moving approximately National and high Golf participation Equipment number the of we Iron, XXX,XXX low Foundation’s and straight XX.X Annual golf. as increased XX.X very with demand continue such players, in pleased exclusively

new Looking to players venues expand, out to more the introduced beyond, and over be as and months expect off-course. the next sport, on- we even both continue Topgolf XX to

in our expectations. were QX, with Golf line results For our Equipment

XXXX as new As QX we we some we anticipated last explained to shift made in production softness product. launch build revenues, the decision to quarter,

XXXX, of several thus comparison. an launched products new we comparable addition, the uneven in quarter fourth year-over-year creating In

ST are As gold manufacturer on very seeing so year to Chrome with new receiving feedback Champions and medals product outstanding, other the be in starting any irons of on the of has the QX new and far. reception The full we promising the with significantly new Golf momentum we are Balls. Rogue Pre-books been woods family and positive launch and up Soft ahead look launch Rogue in been of number has week more the The tour at will available week. than its XXXX, on next Callaway ST retailers Digest hotlist. being and tour recent Golf driver one first at product Tournament our

based grow on that continued retail. opportunity year, are on a demand increases we price at restocking new from full business for will strong product Equipment our the For the launch consumers, and the reiterating Golf

our XX% roaring versus up in revenue multi-day signed a healthy increase ambassador, Turning TravisMathew QX, retail million worthy over The benefiting to our with Apparel and this flash The contributing a the during grow Olympics. also Gear, Chris helped team donations also store for in segment and Pratt, very a event year-over-year Special who up in increase and was profile to cause. visibility continue versus successful a sales awareness raise to Gear further XX% a over their comp sale $X own Apparel led E-commerce in by XX% XXXX. and were high XXXX. QX, at Apparel charity was with XX% very increase TravisMathew up actor sales a XX% new pace, gear. in brand

collection. in accounting relaunch we direct-to-consumer up sales are to image pants Jack and [ph] excited pre-books and public XXXX and received positively compared Feedback Wolfskin for sales. the new a of has On jackets of of as outerwear with her cloud very and the Both the product collection and within product part the, first Apparel the their in side, weather include editions cold well, his in predominantly selling range his women’s expanded gear XX for performed more brand’s fresh were ahead. consumers. out as the on the women’s quarter was to as well as by outstanding, XX% as launched XXXX TravisMathew hours, product been December, both year

sustainability and the Jack sales Campaign, every decided Nature discounts, stay forestry, On to new Counts continue Forest conservation environmentalism. Monday the made efforts. love be to In called donate the the its in Cyber a which launched Academy. QX Peter Black front, and from dedicated Wolfskin brand purchase place ambassador is to week to €X initiative during re-wilding true roots an Friday and Wohlleben’s to see the brand We to for of

Golf sales and Lastly, Callaway retail in in in direct-to-consumer region as wholesale off, The the paid Callaway during in the business one our the with traffic share number have stores Apparel in strong own foot quarter increased. channel Japan Asia a to thrive. our continue brand efforts

would and remains we underpinned continue match grow, company, belief Golf Equipment XX% XXXX consumer believe $XXX increase by between scales demand. expect high our the $XXX continue up strong exceptional our supply to to be to we participation million outlook to as This consolidated and is ahead revenue Looking EBITDA and that and will approximately adjusted million. business will

brands, same trends in the year-over-year we strong and in business. for venue Longer and and a pre-books Gear business growth and through venue the of -- Our term, sales. new direction Topgolf and remain Apparel excited openings embedded demand the appear about confident growth

growth all increases positive growth These work, in the increased of macro over been courses, entrants. long-term creating growing such shift We more look golf, growth desire sustainable brands, experiences and structural hybrid waiting two portfolio of believe new market rapidly way out and we consumers have I behind call support increased Callaway’s Off-course a provided with and what come. golf sport of remote that to the include to both also lifestyle golfers and are same time, nature, call believe these this in to structural positioned items. are While trends into the new the believe we are lists want with to interest and differentiated as introduced into golf the momentum the uniquely at impact [ph], in off-course golf own their conclusion, more there for businesses. Topgolf of has years get in -- past get to In additional favorable changing for the golf. tailwinds casual the two shifts apparel engage Callaway through handling to unlocking to years Brian, off right, handing the people brands the before the business within embedded forward to a of is will out

First, pleased to Sustainability month. Comprehensive are we publish first I next am that to planning announce Report our

view As good core this a business those that continue found company, eat is that good to are and Callaway’s operate ethics we were today. we with

review planet, to content. product report the four important will and and component team procurement. through an our pillars long-term of engage through when with our the encourage comes people, sustainability it report I of discuss You the see It’s out you to strategy. the strategy, and out, business theme strategic this the carried

Second, More excited in financial And and hear Day discuss I businesses, participate. for more senior like across medium- for an IR event Brian to this and more our vision turn plan by that, be can team to in from our long-term detail. our am with executives the to details to will announce over Lynch I’d hope more very coming hold where in we to provided learn and of weeks company. call results the the you the opportunity the our to will Investor have each about you QX,

Brian Lynch

XXXX. an results. our and Thank so was financial products for transformational and apparel you, COVID year, outstanding from significantly continued we strong XXXX highlighted year remained expected, more Golf which clearly in The is Topgolf in and for business and our it’s recovers and Equipment throughout Callaway, far than demand Chip. the quickly

casual hiking been our and that structural such in momentum As entertainment Chip brands, each golf, shift benefit mentioned, and increased has will market for we there a desire including behind the Topgolf, believe participation leisure apparel in and increased an and camping. businesses, of interest as lifestyle

and and component steady Equipment with at in XX%. total at were XXXX you Golf year EBITDA earlier. for XXXX As larger believe of [Technical of Gear a financial year slide demand each as EBITDA new resurgence guidance businesses Apparel, to look a XXXX businesses result, continues, growth Goods venues Shifting as Soft full grow full But revenue rate $X.X million, and XX line our we billion. will our on Other and Jack billion, an The a We strong pace plus into quarter, more growth compared TravisMathew, year and and and important year to and of was Golf high of of XX was the outperformance full revenue, strategy as of represented an Equipment guidance. momentum Golf continued XX, TopGolf Full openings adjusted shown million. XX% results, to expand revenue, portion our of our $XXX to was breakdown at Wolfskin Equipment continue these $X.X of across XX% of XXXX Difficulty] was consolidated beyond. per a XX% the toward segments. be related TopGolf versus $XXX revenue expect the over high in year during XXXX see our TopGolf represented we increase, our Chip to continue increase forward. and XXX% The a the XXXX of adjusted mentioned a corporate When events net moving

compared fourth the largest increase million. $XXX TopGolf million, was to generating quarter, XXXX. by the $XXX consolidated was XX% QX segment, revenue an contributor For net of

fourth continued XX% collectively highlighted and to segment sales X% corporate during chain earlier, from well translated Other from our performed quarter and COVID delivered shift events growth up due Apparel, robust and venue brand as sales new recovery a over third quarter guest guidance, same demand supply prioritizing Equipment XXXX strengthening a strong the was in with walking XXXX Chip to quarter, Our strong inventory down growth disruptions launch products Gear well-positioned social and XXXX. events, also year-over-year, to momentum, and the sales. with quarter. very over Consistent year-over-year the Golf strong revenue

spending in launched Changes XXXX compared quarter foreign currency revenues. rates XXXX, the in fourth several million quarter in fourth non-GAAP total QX year-over-year moving XXXX. costs XXXX, the million creating on larger organization, of expenses a to normal remaining corporate increase on the Apparel $X $XXX a back The million growth to increased a products an investments comparison. also of Of $XXX $XX new thus impact freight including and Korea costs and to of fourth expansion We million and uneven $XXX quarter expenses. added incremental initiatives, includes, support an Total in costs business, had levels, $XXX levels Topgolf inflation. were the negative increase, basis increased an TravisMathew and and million million costs

of As move balance we a sales million, loss quarter loss increases loss of non-GAAP XXXX. on the loss XXX in XX $XX previously per $X.XX will was $XX quarter million, a pressures. fourth in in due million Golf was compared of increase loss out to increase increased select well to Non-GAAP shares to volumes as expense XXXX. Other million products, was price XXXX into fourth fourth Equipment expense the believe quarter, in million addition to planned million we Non-GAAP as a $XX inflationary income the down shares is to higher and on $XX compared XXXX QX compared expense a $XX the in that continue XXXX, million XXXX, primarily of mentioned. of The approximately Fourth of per Topgolf. fourth -- approximately related XXXX, the compared quarter to supply the $X.XX related the of quarter shift interest Other of of launch $XX share to cost previously XXXX million in to in mentioned a share operating to

was XXXX a business. XXXX. Lastly, EBITDA of million, The fourth was contribution $XX quarter increase driven the $XX compared by in quarter to $XX fourth $XX adjusted from the Topgolf million negative million million

a Turning pleased position we ample are slide that items balance to am XX. I financial report in liquidity. with sheet to certain on strong

XXXX, million XX, to is hand December under availability which facilities million, of XXXX, cash December at increase available XX, of and on XX%. $XXX $XXX liquidity, comprised our credit As was of compared an

In expectations. When compared have ago, requirements the announced year addition, initial $XXX we improved over needs to funding funding Topgolf estimated from Topgolf our the at Callaway million. the merger a were for

As of for XXXX used their less strong forward, faster need need that million, million our of Topgolf expected of Equipment XXXX, XX total to we XXXX. $XXX originally times quarter of XXXX, lower times of days less we million, Apparel year-end, anticipated, of our was positive leverage will million for Callaway its to funding venue of funding compared its a performance. leverage already point, and that growth. the going estimate Topgolf flow we Topgolf as due for as significantly, be we cash businesses XX, debt had need be to compared Since to than which from days Golf million we funding XXXX. XXXX. expect of significantly At Consolidated almost this $X.X the improved XX, XX, at than and and and $XXX free our billion, in quarter-end, is compared December obligations recovery ratios net December Topgolf XX%, venues. positive the to ratio March than at and incremental net -- have estimate will sales improved $XXX of venue the cash is future growth outstanding fund a $XX decrease debt related was merger, XX X.X Topgolf to At receivable operating December accounts Day would X fourth able flow cash financing own to only XXXX. be $XXX end development including to XX, net

built end at million the to XXXX, of within the of $XXX and quarter fourth for to our the quarter at the fourth products of supply XXXX, million increased Equipment balance end new inventory Golf $XXX the Apparel Our we as businesses. compared

million for This of $XXX In reimbursements. in January XX million not addition, prior REIT does net full Topgolf and to Equipment systems of of year reimbursements This the including Topgolf, This full net Apparel and million related $XX the months within since year Capital of XXXX added $XXX the and businesses. Topgolf inventory. the for due integration merger. Topgolf. for for include million primarily to expenditures increase Golf in XXXX includes forecast reimbursements, the new buildings million REIT REIT capital to for investment and in XXXX $XX February $XXX CapEx The is million $XXX for timing were approximately merger. Callaway expenditures is of and growth the approximately

that total on December under have of repurchase price shares now XXX,XXX the our a program. announced million of we Board approximately remaining stock of $XX that a authorization program. quarter and approved Lastly, approximately during We $XX average Directors XXth, $XX.XX million repurchased an at

full our $X.XX and XX, XXXX. on we to first XX to compares billion. full and outlook quarter year, revenue the be expect for That the $X.X approximately turning slide in billion Now XXXX year

year. billion $XXX year adjusted $X.X due for million net chain to Topgolf. EBITDA and to or any is be $XXX segments, our Equipment in no supply Full XXXX significant the retail -- to It which full assumes for also demand revenue Topgolf positive million and million, Soft shutdowns COVID from approximately year, estimate projected continued to $XXX assumes net Goods Our revenue resurgence. from approximately assumes Golf

expected infrastructure an to growth. we larger the perspective, will to adjusted limited are quarter. overall profitability business the will be and for in From future a a at with in the full plan we this EBITDA means personnel venues least half making to openings those venue XXXX, investments XX reopening be although limited venues will have will incur as more support new five open venues perspective, From there to add cost Topgolf toward we year, fourth and heavily weighted in impact of XXXX, the As revenue. costs a with in back XXXX stated, Chip

from We also inflation, increased anticipate cost cost commodity including and freight prices. continued pressure labor and

from changes are to strengthening foreign million pre-tax dollar in a $X anticipate U.S. hedge we currency in on $XX a repeat. sales believe headwinds, across to and these price year. strong continue expected we grow out these expect demand, negative our on revenue businesses volumes and $XX income will to all million Despite not of balance select and and rates that due Lastly, increases segments pressures approximately to this million we business gains impact

shares. Lastly, count looking our count for us per effect calculating year XXXX, bond. taking require account an change earnings year relates rule a at will bond, the has full assuming share change converted accounting this share. XXX to the to This that new the approximately know for accounting it for for share to will we want This million been convertible to cause increase to

We the calculation, are and shares million interest bond bond calculating we EPS, we the converted. to if add had will paid EPS will eliminate as to the XX.X the been related

not calculation, number transaction which had XX this conversion at by we benefit would of into of the we prices. at by us the reduce issuance, include upon bond million of new shares the the purposes maturity For time of issued shares call approximately do entered current capped the

$XX expected hedge there EBITDA on million in million repeat. that a This several emphasize factors billion. QX QX not XXXX the and to shift the in are million were $XXX to cause between $XX negative a $X pre-tax revenue to gains includes just QX. is I including want positive financial could our million million. is that guidance first which and Adjusted income, or a over of again $X our to negative results Moving approximately $XXX outlook, quarter in guidance foreign currency XXXX impact revenue

factors the these of Equipment, our the shifted April, in into timing of QX supply or to beginning QX. Golf be accelerate we deferred received Good March products of end to scheduled include or segments, and are of at Some the when where Soft

corporate first business, that to the and we and our will affect assumption prepared and Feel closing, The questions. quarter to happens Operator, remarks you. the levels. our including will share now throughout QX which XXXX. over progress proud the in guidance excited performance QX of As we lessen business COVID about are pace reflects are In Topgolf results. our close That full to open that events, our to guidance. XXXX at year during returns our today good of our call that our concludes XXXX for continued continues

Operator

[Operator have our question Thank Konik. you, first from presenters. Instructions] We Randy

line Your is open.

Randy Konik

Thanks, guys. Yeah.

So, first, that’s probably disproportionate I want venue not unit but coming and revenues you. have have what at keep the than recall, peak Vegas or the to The for revenue focus better - numbers peak of I in a Topgolf that’s if from kind probably business. And expected perspective. you on a amount accounting revenue prior of EBITDA,

potentially thought? a Just kind of perspective, originally mature things; than are of you about, have you just I you about about two, venue are can market two strength guess, how U.S. kind the So, you change curious have and in unit that one, anticipate; what look maybe could being thinking. at I higher am Thanks. curious if the thought like i.e., think levels on revenues on do you that the you would you seeing are than the and/or that from density units more you talking

Chip Brewer

Sure. Randy, those good are questions.

So pleased terrific want Topgolf just we the results. performance team have congratulate that and of with been wildly on to

now. a -- venues is have Vegas Vegas it venues, a one does But lot the our so is of the So biggest venue significant have we a impact. and of

in we we and because Delta that corporate will but of were mid results events really picked they belief the recover, and and gas was much in tank on venue. result the year to do the do with had this we out that bit saw then And walk-in want to end in and card will wild I you some these Delta, systems at in that the anticipated. of started that. that tank. a of slow call. middle the seems venues quarter as events a being social sales have sign which talk concerning away, venue we over any only like where we that But momentum recovered got not, year, focus what increasing the Delta year, corporate number all build. the the through seeing actually can yet, QX gas hasn’t higher build that’s last QX one in most for the tell will have throughout as I originally we be long the we business. every with potential to and earnings events to Day So Topgolf surge and you talks At great that even corporate that, in on we evidence Analyst December. completely and were positive, but Nobody of The left, call go, of if that But time systems and I we It strong believe on way, they can up a confidence, in little sat QX, have that continued than you about a want clearly last we saw don’t all is we we surge mean, time. think but also view spoke events. on we that the were of on corporate delivered venues, we business we great about

Randy Konik

Super within the the of guess kind idea opportunity is, revenue opportunity with my helpful. to synergy pitching think across just ecosystem of kind portfolio. I investors businesses it’s when I last different question about

as different so in app, to customers from ecosystem Topgolf user be you select the different I to TravisMathew kind kind past I you this forth. Toptracer customers have the appears products together, across I if these app, may where have question you regularly opportunity bought on will, of and and parts so to of a and may It of think asked have with or engage databases there’s these businesses of utilize on come more get have information that or more the it. the

Thanks, are side of more that you kind of curious more of how for even connect software of currently aspects that customers if together these trying So insights backend more that what kind more ecosystem just that further are of I to to just data the engaged do, on anything come within on of ecosystem? kind things kind different businesses using give get to side on the of guys. your them to you kind could

Chip Brewer

in and types something early will all data something to fit stages some that. that low within other we offerings interesting not types. And synergies and that well overnight. hanging starting and advantage That been to significant but topic over time, will putting the have technology a and of would consumer But our long-term opportunity. another are also studying question, that’s technologies over materialize. seeing expect now, investments on of platforms, will take already are It’s very to have Randy, it’s to Yeah. you we is the we on of unlock that fruits of potential golfers realize a earlier ecosystems overall it reach the competitive

the of more then said we that on things taking are the as those strategic You are they us will types and but hear to going opportunities continue down in and to talk and that of the point a increasingly care things we field further about are mentioning, be bigger conversation move more those you forward. are more first little

Randy Konik

Helpful. Thanks, guys.

Chip Brewer

you. Thank

Brian Lynch

Thank you.

Operator

from our question have We next Alex Perry.

line Your open. is

Alex Perry

that your maybe I think for on the maybe then very outlook quarters and about past wanted one these were, I for Thanks the said, guidance just within quarter. question XXXX. profitability seems for elevated about since question the little on for strong Topgolf XXXX labor few taking just and mid-single bit the and within availability to venue assumptions the embedded costs Hi. congrats presentation Topgolf? guidance clarifying a ask my versus Topgolf they And up talk then within

I you mentioned call. the on up think singles maybe low

clarify Thanks. that everyone? for to wanted Just

Chip Brewer

venue have so profitability, the the Sure. with we yeah, the delighted -- successfully. been with which profitability venues the did that have these not driven, on open The consistency we

and think been we from et going in has model. most we and know, flow pleasant that results As than a Day, I -- haven’t are availability proven season, last immune cost the repeatable over you challenge cetera, of and Most better by certainly had labor labor been the it’s profitability the color expected, a if then that Analyst to been through At you we we at points that market, little positive give is also story. from But on venues, has margin, that originally a EBITDA mentioned, more and but and there I would, have cost. that. varies you businesses, a has by the year been a labor time increasing different the -- and constraint, like it

most and, with single-digit the out and, to pay admired grow businesses of very we shown has so And TopGolf the we wages. been are despite excited and full sales venue sales, and competitive fortunate venue absorb to to and we I the we what We of for for employers by able large year, able are shoe. were our just I Forbes have obviously deliver starting But we costs there very then that low employers one of named ability got believe attract same in was effectively know, absorb basis are the here retain XXXX business, increasing that, expectation and our are outlook. labor margins. We any able you said fortunate to expectation slow these the profitability about are

Alex Perry

what of XXXX you. maybe starting beginning within That’s Golf what the the on on events outlook the you. how a that the approach is you And the help XQ, events visibility the just within then from returning really were be, corporate the through XQ Omicron business, the seems guidance? headwind follow-up parse of it maybe more, be side, guess, the just would bit guess like would could is that levels Thank helpful. I guide business corporate Topgolf my Equipment I on us much mostly Thank then and embedded the to is

Chip Brewer

Sure.

area at is the corporate that was most So Topgolf. impacted the

walk-in QX. recovered positive We When data corporate positive social have really October very events. wasn’t events had recovered quickly. with results in but had phone The that late it candidly, last consistently on we really you, the on and were we

corporate. increased activity seeing in in and are We interest leads

on Topgolf We at basis be you slightly sales same guidance did business start to a we But confident. on gave and we expected down QX. venue QX the are after the in obviously, down QX. But,

So feel trends about there. the good

of numbers. there’s very some QX this play And We mentioned and as breaking next Brian we the and work well. in U.K. and QX we Equipment to question that quarter. on in that will are that have seen was volatility Golf then confident on already in segment But kind through relative out the know year feel full the out by I don’t

don’t Other. are we Part golf there, we quarter. coming, forecast very QX the some will we into but on through breaking believe the issue et we of bit to just out are arrive and expecting DCs, a material the that but a is and a of but equipment. the just or issue QX feel is Equipment But into Golf have big Alex, and I lot QX cetera, on, So, good of ability exactly move very that a like it could a basis, in of there’s quarterly looks in about make don’t it our year We move and not to a when grow, good shift, noise. you full and it’s Equipment Apparel, shift Golf have see segment demand every Gear think we volatility our bookings supply

Alex Perry

Best forward. That’s really of going helpful. luck

Chip Brewer

Thanks.

Operator

Mike have next Swartz. We question our from

Your line open. is

Mike Swartz

guys. Hey. Good afternoon,

two apologize retail us just to I view a you it, high of there’s that for big this, around I you I do years level sense repeat sales if expect are thoughts in XXXX, what you could coming Golf and but off two maybe us and -- give just I missed can the obviously give retail? you if maybe Just maybe industry some but think I -- -- can’t Equipment

Chip Brewer

been keeps can’t saying but it have hold they coming. Mike, or we it, Sure. repeat it

results at off demand look be et XXXX, as to did are second expecting of half beautiful market this but strategy, strong other the the activities, point, So remained how strong level at we were the very golf year. and some in for available, you need cetera, the the going and golf to into

that and be momentum is remote been inventory But a several this not strength We are of of the confident our Off-course business up, golf the will even at new hybrid golf lot shifts the There’s last enthusiasm. retail. work are that and year our away. going have over around more impact, golf, structural Mammut significant. years line are pretty given for

markets are We the business. about golf overall confident our in and optimistic

Mike Swartz

and fourth on some or a Topgolf made what Thanks time in needs just on for comments shares buy being you capital I allocation, this than the less second Chip. first question quarter, you at think that, previously back the time buy you And that shares second anticipated. is back in capital long

towards capital does of, than maybe So previously? buybacks, maybe that debt reduction more sense give allocated up be thought a free us to M&A, you

Chip Brewer

expected to did structure liquidity we we a than have, if more $XXX we financial we Well, million us lot matches into clearly, to that results have wouldn’t a deliver you the that. to put wildest less have mean, have Topgolf. talk capital in we year ago, and would our our dreams I

we are million available Topgolf have a $XXX Only forecast. $XX needed current our million go to of on Yes, liquidity. more much We based to stronger position.

comment on for As question. essentially or on capital We allocation plans plans policy, It’s new M&A. stock intentions don’t on existing a don’t we buybacks. comment a

with back years done unchanged. capital business reinvest straight We our for allocation and pretty we unabashedly that So first our is effect. strategy in have and XX foremost good

to a got have ROI opportunities lot nice of high We projects.

blessed shareholders that are After capital acquisitions. way. We we selective and are debt that, balanced repayment, returning

Our make hit first executed And are repurchases selectively we leverage ahead announced share or against. December like we is to the that. one on and our evaluate we opportunistically, in focus then sure we expectations and

not act at point. liberty specifics so And continue we this and more we to as are will at discuss any we to have

Mike Swartz

Thanks, Chip. Understood.

Chip Brewer

Thank you.

Operator

have We next Joe from our Altobello. question

open. is Your line

Joe Altobello

TopGolf. Couple guys. of on Hey, afternoon. Good questions Thanks.

XX did nine the pace gating venue year. potentially example? the factor looking or do year, obviously XX, for XX First, this at pace? last you XX What’s can’t on of openings Why that

Chip Brewer

Well, these are items, very long Joe. lead time

of well. Like businesses labor up and as and the to our clearly that we ramping prior fruits our from continue harvesting reinvest. in we So, everything to merger are it grow is

of risk not at We are present, balancing it balancing it moving with faster think are I the right. And pretty we getting well.

to investing continually increase our capabilities. also are We

do to the when potential we to are XX. do with going XX heard correctly you are So, us saying we

but So XX are proven manner. venues, in right a you we strong It’s see see us development do repeatable past open are our have on and predictable the will impact now right? investments that to and venues So you things and a model. these We I pipeline, a working XX and continuing what our will prudent our cycle. wasn’t be ability think in in we recent to XX

Joe Altobello

it. Got

Okay. the actually on but supply I beyond I guess XXXX, it question chain. understood. totally get I I second think it.

about getting at You were on QX? still progressed earnings constructive Are and point? the things How in pretty at call talked better here better. getting actually chain that supply things about this QX last the has

Chip Brewer

The ops supply continually through a definitely shortage, short, in But of dealing If needed this everybody logistics Joe, it’s issue of whether side down, in chain somewhere a challenges the for some containers that. your are and are it’s work supply is the year, getting supply shut terminal the they with labor through point the should chain or person chemical not buy lunch your at or teams a continually semiconductors urethane or it’s Whack-A-Mole improving. getting they covers after businesses, and ops one are. playing as they next. Yes. because

there. been capacity ramping up have We

see from being through focusing some The coming returning the of Chinese because always an well. back challenges of and interesting gulf return New China from is it’s You that, time-to-time. don’t employees But these Vietnam equipment is offset just side, it’s operating on Year. well question always now. by right is

woods to the to it are on very on we We completely manage chain present are able going going we out be the and at have well we the but of be not supply chain confident to very side. supply are shown

Joe Altobello

you. Thank Great. Okay.

Operator

We have Imbro. next from Daniel question our

open. is line Your

Daniel Imbro

Good business. guess, on the I you sales afternoon, taking apparel at first look the XXXX, Yeah. one for side if maybe the Hey. Thanks questions. Chip, guys. on

time is ordering up fall the was about Wolfskin XXXX Jack now maybe talk Grass that momentum. year? year-over-year, I you Travis this is Can for probably Green has mentioned You collections. pre-books guess

rest but early of given the are So the kind the back your and backdrop, for any the only planning are the just customers inflationary of consumer, of the seeing any you spring signs apparel weakening for year curious pre-orders of on indications the how not maybe half year?

Chip Brewer

I know opposite. Daniel just the

pre-books excellent and are our across… So

Brian Lynch

next two… And

Chip Brewer

businesses. our of all Across

specifically think business business We they that demand I momentum are for fall. global, to are strong. Wolfskin, a bit later this finalized they TravisMathew, are is and we have through, were pre-books. be don’t so -- Wolfskin’s been is exceptionally, a them than a issue. finalized little TravisMatthew for does -- just They fall amazing Jack very brand appear the not there can is and performing The has the the Jack not go

Daniel Imbro

are tough have as part of Chip, portfolio are synergies about same on Jack that but still the you Apparel Got it. of kind I the you business. are turnaround. characterization a in focus And how today, towards out and follow-up business, the it’s know learn it as that makes laid where from or time built? Wolfskin, that we terms COVID, still of know and I guess a overall million of asset you in health have about a we with of that more on I profitability middle, the your sense I fair think, Is less thinking plus you but it’s the of plus the a brands you path guys confidence $XX

Chip Brewer

It’s portfolio to in any and feel The I year. on in start they They were are momentum now. challenging end shutdown down. plus and even Central them. business as. confident just fits that year Europe business, for Central still there but it starts profitable. as they growth kind has that was for operating of we team been year-over-year as synergies million more the the retail still and mean, Daniel, of deliver probably, them, It $XX based to a the new Europe difficult environment and our

we play am the results fits sense a how will it are pleased very -- can overall significant perspective the have that the this pre And you it The just all across the very, more driven books, so Day into that tell, you can sell itself. within segment, momentum QX. in that they Other in the something together. an I from brand And think, really in with there. excellent of there, in are Apparel, get our just of at their It’s But Gear exceptional. portfolio and becoming through, it those and business. and delivers business is that bit the very it’s their and synergies I Analyst are later as again, operating environment The they a team little our

Daniel Imbro

at $XX the Wolfskin… clarifier Chip that EBITDA and million Brian, out a Jack you great have and path you there. Topgolf’s laid That’s just quantified to

Chip Brewer

$XX I confident in I was million the I more said was highly plus. --

Daniel Imbro

XXXX? said, to you that guys in million to plus? quantify up Where growing Wolfskin they that number, so Jack was $XX what get Have

Chip Brewer

so… We don’t give XXXX, you

Daniel Imbro

Okay.

Chip Brewer

within out will our we Analyst but We stage. that at for Day, are et businesses cetera, and evaluate this not breaking segments individual

Daniel Imbro

so Okay. Best much. Thanks of luck.

Chip Brewer

you. Thank

Operator

We have our from question Anderson. next Susan

Your line is open.

Susan Anderson

taking and could my how question. average maybe you was the you talk for wondering about for Good year Hi. are the on raising if Thanks much I prices balls, Golf this Equipment also restocking then evening. am of to be still if And and you also still, to I think there’s just lot curious, had grow do you expect at there year-over-year? units this is business wholesale? a then

Chip Brewer

Susan, it’s Chip.

going are I that guessing break price gloves, as look we taking et across for the price well at up, are because now generally not as I to it, we units as balls, look It are am we partly segments, at the not But guessing how versus across needed. it. golf out you it’s combining but as price all -- we But -- cetera. So are of units are across. you

if to solid, expecting margins are improved We not next year. be

part be part might question. I And other your so that the missing? might answer that was What think I of

Susan Anderson

you just giving guess, oh! Just are -- the on you I guys -- you… are are pricing,

Chip Brewer

Restocking out.

Susan Anderson

whole increase … a restock then price and value.

Chip Brewer

Yeah. It varies. really

don’t $X Golf we Chrome average it. increase, But Soft have on up So, Balls. I so a dozen like, Susan, price are

up Fairway sometimes a on are Wood. We

on $XX a up are Fairway We Wood.

a $XX are on Driver. We

varies. in not pushback new and most any when the of have the we products on really in pricing it some taken So product, of launch already getting And the field are middle we it.

three on we for have of still industry in versus year and the XXXX it clubs tech the confident. showed highly X.X So the was XXXX I then at end a I is months that mean, hand unfortunately. X.X you, for high months percentage don’t on are And is not on hand inventory number. a restocking,

Susan Anderson

Okay. to and level of those coming realization is are there back curious or Core higher? there on Apparel terms like changed EBITDA to that’s of this pricing in range, then Great. the you helpful. expecting business, year, drive just down That’s be kind Golf that I just XXXX it looks would guess, And that promotions margins nothing

Brian Lynch

Susan, this is Brian.

pressures in just will we at the it’s the the point expecting look Soft business and Equipment you pricing, business it op this If across pricing we business, next margins better inflationary margins that pricing about will just and gross will a better the the through. -- will of to see see some the volume you And and cover cover any for flow gross we Goods but -- op and all the really increases will Topgolf segments, will three talk margins just now, in yes, year the business. be margins

Susan Anderson

XXXX you XXXX? versus or Great. that’s And mean

Brian Lynch

it’s XXXX -- For versus XXXX.

Susan Anderson

over increase The XXXX, yeah.

Brian Lynch

Yeah.

Susan Anderson

Versus XXXX? Yeah.

so you Great. Good this Okay. Thanks much year. guys. luck

Chip Brewer

Susan. Thank you,

Operator

We have from Kernan. next John our question

John open. line is open. is your line Your Kernan,

You may ask your question.

John Kernan

you me Can hear Hey. now?

Chip Brewer

We can hear you now.

John Kernan

for inflation XXXX? food and I Golf business. my How Well, answered about and year, inflationary Good. in impact XXXX, what’s and product costs finishing for question. that I for lot you the the mean, chain at model the guess, Topgolf, a growth a strong looking supply Apparel thanks curious of a much an level. Brian, congrats the out of been on impact of labor, cost at the just taking are and in and Okay.

Chip Brewer

there. we the XXXX, during the ability with year have been also haven’t next year We just quantified we as it, and in outrun year in it been to to outrun it we able -- able that the for did we volume It’s but this it’s increases have definitely have as well.

but margins Topgolf, I think and a gross little so gross it bit mostly impact are an of will covering a see strong. their they more you on are margins maybe

of people definitely as they But the some have So offsetting they pricing. approach as of flat. far it’s something at number The same that. time felt the is labor

so year. at time been We same So it get think we little will they more will said, cover. sustain all lower. to can at businesses don’t levels, those a the bit But able have be this three profitable it

John Kernan

Understood.

what increased upside topline in just Just you venue the announced my above Topgolf driver on level really you EBITDA question just just the the see it the third of been for expectations has just get is XXXX. profile what a to recovery, think the do curious higher leverage and the expectations it? is you into level more deal. we and traffic in was -- is Is from since sales Is I more to that recovery move it or XXXX? margin at venue the in as to Topgolf there XXXX model

Chip Brewer

that’s we John ability on So drive and gaining wildly great a XX%, back. right? question, we are our there certainly, year sales some delivered above are recovering, to same Corporate and events really last we expectations. was confidence increasing haven’t real positive come numbers venue which still

the long-term to margins operating the deliver tank. thought they you the on initially we what better Analyst be give there in this little big are then all at more than a we gas overall can convinced are We color back Day. over area for and going that’s a We will and

So, walk little will that make specifics and to bit try a hopefully, more we then. you through

John Kernan

to taking good. come We would Thanks everybody. to love California and for my questions. Sounds out see

Chip Brewer

you. Thank

Operator

Kelly. next George from We have our question

Your is open. line

George Kelly

Hi, everybody. questions. my Thanks for taking

two you. just quick So ones for

question. Topgolf another First,

I any opening e-venues scale consideration lot there like that a venues, whole how it’s of any of wondering still is those to internationally, something yourself? to you and not venues internationally, So, quickly think, expect

Chip Brewer

Good George. question,

that well that three was be we Glasgow, believe will opened were highly are in owned one in really So I that Scotland, announced, one it an venue. we and confident, Germany. venues January one’s year, it of And in and which because new doing this we expect to open then and doing is yesterday,

later actually we be in the the the that then So legacy consistent be are it is year the for the one from then it going which to venues there. we that in the of and be operated there’s other will and international planned venues have portfolio, opened with balance will U.K., ramping And in but owned more are year.

scale well. to increasing developing even see color it little than will we hope long-term what than operations but there we a internationally thought. a will will more openings. of this it mid- bit year. been But has you and domestic that in a more Day familiar, good been so it on we have these and has you -- originally where sound terms activity are as up for the But on seeing we of we perhaps probably give tune some this activity in will Investor for little do outlook we and that have I factor ramped there later nice with franchisees activity are So

George Kelly

I Great. really had that it’s So you then remarkable. just there growth to too TravisMatthew? been is And have Okay. ask the wanted second but

that you curious talk how how you could going? -- outside and expectations how So expectations if for and about that keep that for going new Just your maybe brand growing stores of golf? that’s wondering

Chip Brewer

are has golf, golf Coast. East It’s at but fast they wear its the Apparel apparel outside brand same-store to brand. lifestyle some And good. what of getting It’s West don’t already. George, through It office that’s a what view interesting, after it’s you the the of in you that metrics, I wear that’s outerwear, their time. stores one a roots When because for things Well, golf we potential you is sales, really really you that and of I is is way pretty the golf go and it, it’s collections, of business fleece in about This above but we the big you very cloud selling and into out brand hoodies golf. and because the buying big. go on essentially the gave get brands the and socialize, studied loved Coast, when and I through is those is on lot got selling that scale runway. some and And it’s of XX% space business looked candidly,

think last I added we XX year. stores

Brian Lynch

Yeah.

Chip Brewer

a but add see partners. it’s will XX had also well on good payback its It’s We continue direct-to-consumer got to is wholesale nice with doing stores you and stores. extremely open. really model, then us those The

be story, not should a success it about you great thinking So, but brand. as golf

routes it You about with beyond just But Topgolf, golfers. can of think as the as audience golf. just to way OGO

George Kelly

Understood. Thank you.

Chip Brewer

you. Thank

Operator

Casey question next from our Alexander. have We

line Your open. is

Casey Alexander

this know I afternoon. call is Good Yeah. getting tooth. long the in

it So, question. I to will keep one just

numbers your at of XXXX, billion growth in Topgolf Looking that’s of compared shouldn’t really we just of $X.X year Topgolf? solid five with for why as for to of on XXXX, be opening the guidance XXXX for growth yet the a accelerating thinking XXXX fourth and stores to quarter six

Chip Brewer

Casey, point. I you good think up a bring

Casey Alexander

questions. That’s all my Thank you.

Chip Brewer

started we Casey, late. Thanks, and sorry,

Casey Alexander

That’s okay.

Operator

Yang. We our question have next Rudy from

Your is line open.

Rudy Yang

of you historically how anyway think how all at kind just business affect to Hey, your rising my if for higher fared a could guys. I questions. can your guess environment? and has industry in taking firstly, just you rates comment in Thanks interest

Chip Brewer

Good obviously, -- even Rudy. but… debt of turn guess, don’t much I not exactly versus I I it Brian. six don’t question, to really is know you I versus what

Brian Lynch

a us all would think would it and our affected, but wouldn’t but on I incremental but I terminal big exact the would be cash, don’t affect rates, Bs effect the interest with be know have driving it some business. percentage,

Chip Brewer

don’t part it. Golf although and -- for When But rates, I to they Equipment of XX or even plus find sensitive sensitivity have does the We a they I in think business highly rates have economic reason sensitive some weak a it’s rates around And in years. there. better and course through not because -- interest haven’t have good sensitive this Topgolf will well are business not we don’t a are these economy. seen, raising lower it economy we any highly business cycles, been been than are the years. in to more XX will businesses does for you Rudy, know, to that are hearing, versus we it of we does

Rudy Yang

it leave will that. at I Awesome. Thanks, guys.

Chip Brewer

Thank you.

Operator

back questions Chip this to Executive more I it no and President Chief are and There turn Officer. at will time our over Brewer,

Chip Brewer

for right. being everybody thank on today. Well, the to I call want All

more very hanging pleased the and seeing are start. you the forward the talk As for can we to us apologize difficulties soon. we which with details we and Investor be Appreciate in you again, late tell, and technical at Day, to you will our with look you forthcoming, business

Operator

concludes Ladies participating. this and you today’s gentlemen, presentation. Thank for

now may disconnect. You

Lauren Scott	Director, Investor Relations
Chip Brewer	President and CEO
Brian Lynch	Chief Financial Officer
Patrick Burke	Senior Vice President, Global Finance
Jennifer Thomas	Chief Accounting Officer
Randy Konik	Jefferies
Alex Perry	Bank of America
Mike Swartz	Truist Securities
Joe Altobello	Raymond James
Daniel Imbro	Stephens, Inc.
Susan Anderson	B. Riley
John Kernan	Cowen and Company
George Kelly	ROTH Capital Partners
Casey Alexander	Compass Point
Rudy Yang	Berenberg Capital Markets LLC

Topgolf Callaway Brands (MODG) 11 Feb 222021 Q4 Earnings call transcript