Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Topgolf Callaway Brands Fourth Quarter and Full-Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Lauren Scott, Director of Investor Relations. Please go ahead.

Lauren Scott

good and operator, you, afternoon, everyone. Thank Topgolf earnings conference to Callaway Brands XXXX full-year and quarter call. fourth Welcome I’m Lauren Scott, the company’s Director of Investor Relations.

speakers Chief are the Q&A. Brian our Senior Joining our also Chief Accounting Officer. in as on President Patrick are our call me Burke, and Chip Jennifer President Thomas, and for our of Executive room Lynch, and Vice today Officer; Officer; Chief Financial today’s Brewer, Global Finance,

full year today, its and Earlier company fourth press issued financial announcing release XXXX the a results. quarter

In presentation remarks addition, to accompanies and the on earnings the that may call. available company’s you both as presentation, the the under is Financial for earnings Investor there Results a are website today’s press as well tab. make prepared it follow release, This easier Relations

financial the this call presentation reconciled reported are measures at from expectations. corresponding that measures In risks the forward-looking GAAP differ on today’s the that statements cause results Please include U.S. accepted non-GAAP and to of report the in have we Regulation discussed numbers measures, involve G. current actual accounting back call generally and we non-GAAP materially accordance that instances principles. will note on based the Most to could with management’s the uncertainties of where

review description. We contained in Harbor more complete release to Safe encourage the you press statements the a presentation and for the

ask that your we sure make limit can accommodate analysts, questions you to we of to Lastly, each two. from questions our

And with call turn the over to that, would Chip Brewer. to I now like

Chip Brewer

record sport and golf which XXXX was Modern for strong thank comprised everyone more our Golf another of off-course and today. year. golf broadly. for afternoon of both Topgolf for you The joining year to Good had us on- very Lauren. the on you, Callaway Brands is ecosystem, Thank and a call,

an XXX,XXX larger million grew up the increased National in just same in time, on-course million now the golf. last performances X.X At over On-course than golf for participation of is off and XX.X golf XXXX. Foundation result golf by people, coming off-course million excellent from to strong participants exceeded U.S. participants, first the Golf the years. time XX people by two According

our was venue growth Topgolf. by we off-course driven this is same-venue the continue. we high sales growth, will With believe trend growth largely increased degree golf and that a And of certainty have count a

Callaway foresee at X As new Golf X approximately growth unique Modern our the this, growth squarely visitors of the Topgolf structural With add million of annually. clearly positioned venue million it. center should a alone for off-course Brands we can to pattern with ecosystem now

financial $XXX billion Now, XX-month or results. up revenue was looking adjusted at our full just basis. Full million, EBITDA year full was year-over-year XX% on $X and year year XX% XXXX a calendar and under

the helping results, We Callaway for entire team deliver thank like pleased Brands very them. with to us I’d are and these Topgolf

major short-term Turning aggressive quarter, We This miss a with rare or health of our and combined relative the no our to some to forecasting more the both internal in weather guidance. earnings quarter. We fourth see quarterly trends, due but to had was volatility timing. a change expense our in consumers. strong potential,

We trajectory to the of about our when a very feel assessing good continue our performance long-term and take business. view

financial on targets. track ahead our remain of or long-term We

We also the in have unique Golf competitive increased us Modern conviction advantage brands a that collection of our provides ecosystem.

an XX-month overview. I’d year $X.X revenue We delivered possible. and basis. team, playmakers results. or especially and for calendar respectively, this in XX%, XXXX and first is $XXX XX% year like I’ll entire with over making the for billion segment EBITDA, growth venues outstanding a adjusted million Shifting in of start on full at all to Topgolf the thank Topgolf, to the our Topgolf’s

opening a in confidence did year and learned is than the year have strong what bigger Most ago. was more growth for improved XXXX, on by believe in a operating sales venue growth, same-venue we This continued business to for excellence up venues, we this and X% there we new importantly, driven XXXX, margins. compared based opportunity

As to be continues we brand the we have momentum ongoing Topgolf XXXX, and enter strong. engaged consumer and

fourth venue to the by good a quarter in X%. internal corporate quarterly forecast rates, to our business up During impacted weather strong, event The with XX% the during XXXX, in traffic sales compared peak events. extreme trends These holiday our as cold venue below little closures growth same were due remained was in December. by the business late grew while season including

a additional owned the on of and we increases format model serve six believe size XXXX. This to market markets in year and venues, venues of and expansion Wichita cost-effective in way to and note the Two XXX XXX examples Boise our and markets operated venues focused a new in venues excellent new We opened new new our more midsize unlock finished both venues venues. total to total the are venues. U.S. of one we markets. five ultimately small venues for Also, new is a XX-bay quarter, from addressable XX can during XX-day to XX the for the with franchise

medium, year, with we Looking the remain to skewing proprietary operational at loaded first planned this Artie ahead, Pi. in impactful planned half to be about platform, being to that we QX. eight owned to internally the venues spoke it of expect track, improvement the Day bay two The call in Investor open initiatives again in open most year like and digital our only to this on a will year. large growth in system and back-end similar mix new year, size last The open will and venues operated XX be last management

of the help more advanced experience business digital merger, time profitability. the allows believe venue also platform relationship XX% It an Topgolf increase digital. this will between a of management consumer. the guest that the system reservation the team improve the and and our At builds more inventory Topgolf also was We also is stronger essentially new system will system. This and bays for a operations utilize efficiently

in there. Now, be it the system than it The Pi of and XX%, is us half, to of platform but more was XX end is digital venues XXXX. this as getting should key

to all XXXX. expect in have We end the of venues it by

to China’s be Chengdu. on franchisee spring’s the front, also national Topgolf will We be venue located will massive This first of facility of make by opening continue the this city operated milestone significant strides XXX-bay and international a there. in our a built, owned, interior

opportunity you’d get franchisee our As And running. long-term for both as up excited venue our we a to represents are and China Topgolf. and expect, massive first

bays delivering year. a quarter, X,XXX opened little for just the than more for the Toptracer over X,XXX

innovate number recently unveiled continues product new to profession data-driven On golf a gaining through coaching is in to immersive elevate specifically Toptracer designed product recognition strengthen technology this the America. pipeline Toptracer and entered one the driving further a experience. technology as partnership also us will the front, partnership We naming of for U.S. business. range and green tracking PGA into an of tracking grass believe the this official recently range the our technology

Golf Equipment core engaged the strong segment, to golf and remains consumer throughout Moving the the year.

year, revenue currency-neutral. full our Golf XX% up year-over-year XX% or was the For Equipment segment global

year industry U.S., the even Golf. a the were shipments, which according thus Equipment the goods U.S. National our up to revenues year-over-year, and strong on were year X% an stronger for up hard XX% Foundation. for Focusing Golf Golf outperforming Clearly, Callaway

partly Japan here strong success in headwinds. by though convenience, and Korea global U.S. we quote metrics And for particularly had years although XXXX. currency masked I had

ball U.S. a year Our record. golf history. ball time the for eclipsed share our sales first XX.X%, at the And new million ended our $XXX in

at also share Our finishing U.S. market XX.X%. year up, was the club

shift from XXXX, to and on a a been complete forward Looking innovation extremely of marketing driver a family well the has of standpoint, and new performance as tour. both of well proprietary the received, XXX-degree irons. product, and woods, in paradigm, and an clubs new our The Paradigm AI in is Jailbreak represents full and a features as carbon ferry a phase. line design Technology version hybrids, driver, chassis, marketplace

On is driver we calendar And line first example Paradigm year. events pleasingly Callaway, start has an this. great amazing PGA and of superior product Tour entire that’s of five the tour, At about four talk the a the winning the different. Paradigm out demonstrably of had

as with and golf Good engaging partnerships and the conjunction famous songwriter, singer, In new also an with announced and platform; engaging ecosystem a partnership our with underscore extended in Golf, partnerships Curry. Modern inclusive golfer; we launch Horan, of all new the Niall golfers the multiyear avid interest content as These of products, Golf Stephen within with levels. a broadening well Good our reach

Turning Active the segment. to Lifestyle

pro for and continued all momentum, partnerships, to $X revenue channels, the green and year. increased results TravisMathew’s segment surpassed that stores. shops, delivered including excellent billion part scale, increased retail in was goal by profitability. our own This grass milestone large TravisMathew driven across e-commerce, wholesale pleased We’re report key the our

existing sales stores a to XXXX, during moment, delivered a for we new In stores. stores doors plan XXXX, same-store for of opened own our year-end. for and nine another double-digit retail on by Focusing TravisMathew XX XX growth total open

we provide detail remains Day. happy and prospects revenue our to regular million plan a EBITDA announce The basis, While we targets and momentum on shared brand don’t $XXX TravisMathew are by million to exceeded that at brand $XX also the for strong. the financial growth adjusted Investor

and consumer years the weather of shutdowns Europe. Apparel in with softness Performance branded Wolfskin as unfavorable year well globally. had business and also outstanding had as Gear end a Callaway China, challenging The COVID-related in Jack

and as Brands product, both optimistic trade a story, total we recent a positioning, shows. market as Europe trends supported and is we what this business believe well long-term the that With awards business feel belief of the recognition good we Although business. by this, potential is smaller are Callaway industry this in remain U.S. both about the part brand and improving as about at of Topgolf

our outlook for now to XXXX. Turning

expanding disclosed updating upon previously guidance. We’re our and

be increase $XXX up to we full EBITDA $XXX billion, million XX% an to now million. adjusted the approximately revenues will to For and XXXX, $X.XX will XX% estimate year approximately to XX% approximately XX%

$XXX billion assumes forecast basis, for at Topgolf $XXX our approximately to million of approximately to this our forecast, revenue account segment worth now company-adjusted that EBITDA. approximately a segment With On and with adjusted Topgolf million full-year total it’s is $X.X continued EBITDA. outlook of noting in half success

and Topgolf the momentum mentioned, remains consumer strong. As brand

from a result, with to same-venue growth a high and about single-digit price. the two-thirds growth compared a for from we’re or ticket third coming XXXX, sales As projecting traffic XXXX of

Omicron in sales the year higher venue expected the to QX that year. of impact to than QX, of same the is of last full For due be growth

Equipment relative position our segment Our and to this be good very expected in to segment. revenues competitiveness Golf feel flat XXXX. approximately We about relative are

account our low-teens TravisMathew in rate continue into at taking versus inventory compared to continue should potential competitor year economic segment this grow pressures, a at Lifestyle to the last. more we’re than launches forecasting, grow in Active with catch-up rate faster However, at And XXXX, that lastly, occurred also the some to and XXXX, a large.

XXXX is to for significant year Topgolf that emphasize as itself. being parent flow business to cash the expected to we want transition and Callaway the our be company, we Topgolf Additionally, a for positive division Brands, both

big Our on here. should business we strong, bet continue that’s plus paying and overall remains than made expected legacy off a ramp from faster to Topgolf

to this, of $XXX potential million or our plan growth ahead headwinds, the foreign in of strengthen macroeconomic adjusted EBITDA remain Investor business unique we With face earnings our target during we’ve and and laid XXXX on of expand continued exchange even the and Day. out this the

like a to go, I’d I’d discuss to And Eagles. in as also Philly, add, to like son turn Brian of native more the the Now call detail. financials to

Brian Lynch

Chip, you, good and afternoon, Thank everyone.

exciting place guidance, with our our both and fourth-quarter today as tap and into performance pleased reach remarks Topgolf. our merger the My start with our work be see ecosystem. very taking the forward-looking with Modern but culturally, results XXXX, the to first the few the for year. within will structural key we focused transformation I are from been highlights of to growth full expand to business, want the more year and full on Golf It financially collectively has We following a

changes This During record each on of or operating revenue our XXXX, a broad-based exchange is XX% foreign across we in increase of $X.XXX year-over-year segments. $XXX growth sales million a from by generated XX% rates. impact currency our strength net negative despite constant-currency of billion, driven basis,

increased part to Full-year XXXX. basis increased impacted and year. $XXX operating of income basis, million, increase an XX% margins last changes increased from $XX constant-currency year-over-year. non-GAAP foreign million metric operating operating latter to was currency a in XX% This the points compared On rates income heavily XX of during

is EBITDA on adjusted an of compared ahead by increase $XXX of $XXX full-year million This to currency XX% or in XXXX. constant XX% or EBITDA Lastly, of goal XXXX. was million, track our

overview, more With I the that will brief results review now quarterly detail. in

XX% constant of operating increase and net region. to QX XXXX million, revenue an This performance For the each product fourth increased currency. quarter, was across XX% $XXX revenue or compared category, segment, reflects

was operating compared XXXX quarter a XXXX $XX million, to to due fourth strong non-GAAP QX XX% revenue the seasonal growth. improvement loss Our

historically As a to the have loss we of due a reminder, in seasonality QX recognized our business.

non-GAAP basis, percent income XX% basis income compared points would of have constant-currency have fourth would a and sales operations increased to operating as On XXX XXXX. quarter from improved a

convertible share fourth note basic for EBITDA QX up QX. notes, fully on per share XXX% and XXX only $X.XX $XX XXXX, applies Please which QX quarter shares income, XXX or per to to with the our share was was up loss associated Non-GAAP count, with $X.XX a our million on net adjusted count a used periods XXX% was basis. million, shares in that therefore, constant-currency over includes million diluted shares XXXX. compared share of on

reflecting in the Adjusted EBITDA a $XX million to same-venue and million, expenses. growth sales was QX $X for down XX% XXXX, and Topgolf Topgolf XXXX segment additional higher revenue to over the quarter, At contributed increase new in million primarily venues. due strong preopening $XXX compared level, marketing

or volume off XX% Equipment headwinds. XXXX, very to income and Golf basis. income increase benefits million, XXX% QX constant-currency capped on XXX,XXX and strong QX increase than a costs to currency Segment XXXX, revenue offset loss a pricing higher more million of increased of to with $XX an operating seasonal input $XXX compared as QX foreign year XX% in over a a

increased continued China, Callaway basis approximately on Lastly, to Wolfskin’s were year-over-year and Segment segment Jack the million, to increase by XXXX. offset of Europe markets. led income This $XXX largest and in was facing had TravisMathew a Lifestyle that million our operating momentum Active constant-currency macroeconomic breakeven. XX% $X up or issues QX revenue approximately XX% partially compared Brands by

increases Turning million under hand million XX, XX, with compared decrease to a remain We on December to and The XXXX. is certain credit ample liquidity. availability comprised position cash strong from December At available balance financial $XXX facilities liquidity, which sheet in of year our $XXX XXXX, capital Equipment last was items. at a investment to was which we last was in to capital the note the and continued to our due in year. pandemic. this year’s support growth working due chain will disruptions abnormally On the businesses, related year-over-year working that and Topgolf Active comparison, in Lifestyle supply Golf low

the the relates last $X.XX to total had approximately convertible of primarily to of debt new million end billion, working $XXX net and of At increase venue year. incremental $X.XX quarter-end, debt excluding compared we billion higher This at financing capital.

December excludes times Our convertible times net the XXXX, XX, X.X increase new note, debt and XX, at was leverage, increases the working which to development due December venue to X.X was in capital. The at compared approximately XXXX.

Active revenues XXXX. the million was was compared XXXX. of receivable XXXX, million XX, to and $XXX to fourth quarter accounts net the $XXX Consolidated of Equipment as end of at QX our The Golf compared December increase to Lifestyle higher due businesses in

the fourth than Overall, to receiving are $XXX at of inventory end increased about quarter that feel normal. slightly Also, normalize $XXX levels end due hand pre-pandemic at XXXX, by Our please of inventory earlier remember levels to than XX, only XXXX. XXXX million and Days we low. the launch December expect good the on of higher the balance was our inventory year. levels million the inventory inventory abnormally compared to

net forecasted This the Topgolf the million venue of for to was $XXX reimbursements. of year related includes to CapEx originally million Topgolf $XXX Capital for timing venue the than year. full due expenditures were financing financing higher reimbursements. full

$XXX approximately expected of Topgolf to million, full be $XX non-Topgolf XXXX reason, company lower CapEx million CapEx business. financing expected net the Total which XXXX for to same CapEx venue at million, reimbursements. approximately is for $XXX the year includes of be is For

turning Now, XXXX outlook. our to

which foreign Our estimates implemented currency for December are rates when based end program the XXXX upon of XXXX, XXXX. and exchange as of we our January early hedging is

and of $X.X should within $X.XXX the is to estimate billion. Lifestyle development For teens increase approximately at the expected revenue will venue flat $X.XXX expected to and XXXX. Golf Active we year-over-year, full segment to a range be be sales increase year, to XX% billion, growth. be XX% is approximately to driven revenues net billion Topgolf new percent to approximately same-venue by Equipment compared low

company a estimate foreign million total currency The revenue includes impact. negative $XX

adjusted increase of a full be negative range with We total $XX a within FX adjusted XXXX XX% impact. approximately includes $XXX to that expect year half to EBITDA estimate to will company million, $XXX approximately generating EBITDA million the XX% million Topgolf of EBITDA,

of the quarter $X.XXX expect billion we revenue net X% within to to be first will the of to For $X.XXX XX% increase range XXXX, billion. approximately

driven of segment venues just the and million, opened Topgolf same-venue from by Topgolf expect recently revenue benefit in growth $XXX QX. under revenue We sales

revenue total currency a include estimates negative The foreign company impact. $XX million

adjusted is which is EBITDA expect to EBITDA within the the million. We of negative $XXX QX million, to driven million impact first million expect currency, which impact range by we $XXX on for quarter. to below have of QX $XXX be XXXX a foreign of the EBITDA $XX decrease The primarily

quarter be million driven The the Topgolf in in venues. full year, marketing expenditures staffing we segment adjusted will higher below the last and a EBITDA the return $XX generated by slightly to

corporate the also for we XXXX investments impacted larger to business. made will impact The of support first quarter the our by company during be full-year

expect want in that that an at a are XXXX, ahead in positive to flow merger. our the business, we be in inflection the cash the business will note year the of both company time and plan also where We point of total we Topgolf

of the for around XXXX helped who the are proud and of our deliver We world them. to results employees grateful very team

our segment each deliver and on on outlook excited meaningful our the will value. business the positioning are long-term our embedded and prospects create to growth our remain of shareholder us to about within and growth keep across competitive business We track that confident

what over That said fly, would emphasize Chip prepared open now for today, you. remarks call like finally, to Eagles, earlier, concludes And Operator, I the we our and to fly. questions. will

Operator

Thank right. you. All

session. now At the question-and-answer Instructions] pause we for will [Operator a will our begin We roster. this moment to time, assemble

today Konik Please question from Randal ahead. of go first will Jefferies. Our come

Randal Konik

I’m Hey, fan, so guys. little Good have I’m on Jets but questions. luck two a a afternoon. I jealous, Sunday. good

The you the industry in Golf your or couple want industry talk in Golf get – levels inventory the on just I a the then pricing just sell-through? first. you sell-in to on to industry Equipment or how channel first want perspective, to discuss think years the ahead Thanks. about Chip, how thoughts to of And get want ahead? versus your there power about think year Equipment Just of one

Chip Brewer

Randy. Sure,

engaged, So, of the periods although healthy, that, the Golf We’ve remained had Golf show business has which the remains Equipment in And things time of has The clearly potential business, there is our excellent consumer year. of conversation demonstrated itself remains business outperformed the market growth. participation but or various reversions stats an been Equipment strong. like results. has

we’re So, with very pleased that.

Inventory largely year. up last caught

of at you normal in would XXXX, levels been in So, have field, if XXXX. look months the consistent at it with supply where they’re

So, did that during XXXX. normalization occur

then has question, Randy, Equipment new really our that different, more Nobody Golf And in consumer that’s price. – to we to They power. compete have product pricing around a superior. business And is driver. last really around demonstrably the your was pleasingly sensitive candidly not

spring, makes the new is a The et deliver games able of part for in joy passage passionate, cetera. the they’re fun game enjoyable more the equipment them, hopefully, are because delivers buying consumers product rite of for advantages, that of itself and engaged. really We’re is to

and time. feel long able good over that pricing demonstrate we been our power to a period So of about have

Randal Konik

in Paradigm of my I weeks. am for waiting a driver couple

spent. well money So,

here, look broke more my in over The digit, and you you single then sales traffic down When high last same-store believe, XXXX, you’re it’s of to Topgolf. at or guiding XX% between the I it and second just topic one price. numbers on

for or they single low growth will. you of ago you to years single-digit of think out stronger they – minimal the be of the what comp kind these if than honeymoon When seem a about few model phase, very those up was was thought get businesses much low numbers, kind as of economic a

mature upside think I at last gave obsolete, Analyst year the given store would – Day my be what volume kind small, guess just you for of you have to do large, those are question you but basis – medium, numbers you’ve should venue, kind So, to where seen? you on now of have not a a they is, the have more

you thing about think like could costing I feels other last Analyst units, can with United you to about, the you ask have than build. units these the then year wanted us is the almost given or again think, i.e., in better maybe remarks It about And where States talked density get have venues more may in these smaller seen I your more you’ve to at Day.

think opportunity of Topgolf. your unit venue about I So, get kind how and long-term Thanks. density end the that, top or just to for want then or on thoughts maturity it the you unit of curve

Chip Brewer

Sure, Randy. Yes. There’s a lot there.

Let me take it here. in some course of

we So, yes, experiences. – on that of when doing had was we’re the results merger great we of. at are delivering to an team solve amazing I them just we’re our the first commend Topgolf, very of at something proud of to job same-venue delivering time the the want on and consumer – all, sales, That expectations

building momentum. is brand The clearly

venue originally as it’s drive an long-term opportunity we attractive same-venue clearly to The consistently, successfully. and price, venue and than open our growth, had ability are is You’re ramp business business. unlock sales what more traffic, the a demonstrating for we sales up profitable seeing much expected same

relative initial I looking do – numbers call. And last sales presented volume think Day preparation back growth our what we store The in our Investor was year. expectation low the at for have as single-digit upside was to same-venue the for I earnings

drive improvement. to continue So, obviously, we

we there TAM that. U.S. a new think now is we They mid- XXX. prime to unlock small in – about And of There talked more us, a specifically. yes, great markets about models count. Boise markets these doing, being when believe more initially, Wichita consumer we significance venue will And XXX they’re of we for experiences. that And talked that is types and real we’re for to then, some lot examples

Randal Konik

Super helpful. Thanks, guys.

Chip Brewer

Randy. you, Thank

Operator

our go And ahead. will question Bank next America. Perry of come from Please today Alex of

Alex Perry

taking Hi. for Thanks my question.

come Just sort EBITDA drivers key the of in Was high-margin getting first, bit pushed weather-related into there? despite corporate number. strong pretty What have same-venue Topgolf the XQ January? a it expectations your impacting this may maybe sales that under seems were in events like

And then guide XXXX Pi, margins the also, what’s labor margins. the in implies some nice in for Is in of the the dynamic Topgolf initiatives, for increase the be drivers the the key project would What ‘XX? increase EBITDA a pricing, Topgolf productivity that there? EBITDA segment sort of Thanks. driving segment

Brian Lynch

is Hey, and Brian. the jump Alex. one. in second then answer on question This first I’ll let Chip the

normally For in QX, would only Topgolf what the this flow-through new preopening not in in is the expenses. for opened of one compared one, lot They QX prior venues six of the XXXX normal quarter. incremental we we But in a year. the – a had in expect to

of marketing year also down national campaign you so had last caught then related top up this on marketing incremental some the launched that, throughout the investment we year, a then just catch-up by done QX. there’s And there, expense lot overhead we of that And that have of that. to

Chip Brewer

XX%, the December or very it they And And to was Relative mean, Chip. the XX of extreme remember another the in venues down then of Topgolf had was weather, miss majority were XX had is strictly impacted. shut third weather. at in it. there country. a was back, the and December, you then, this guide, I XX% Alex, swaths cold – and of literally broad if to life-threatening We week weather roughly

revenue guide. and relative so, the the flow-through affected And missed that to the our to relative

that the and when a at scale. by way. – and look continuing margin consistently leverage Topgolf, improvement at That’s you’re EBITDA seeing strong the And in been to then you happen

seeing Pi the successfully. it venue to are in by You the the being same we’re the and with driven putting open place venue ability growth initiatives by sales so

program marketing well. operating to contributing the increasing mentioned, their are as that. these on margin optimistic And We’re as venues overall

business from at good cycle really So, Topgolf. venue results a of virtuous the

Operator

question Imbro next Inc. will Daniel from today Please Our Stephens go come of ahead.

Daniel Imbro

answer a Yes. when, evening, on that wanted had be go curious on for any dynamic good Topgolf, are a there to everybody. Alex’s Pi actually guys some found I’m more have then Topgolf window timing-wise, you little effect And to plan you into Hey, year? last timing. to follow-up labor under you when Chip, I on question pricing just gave of your you other can you’ve productivity specific? on now starts implementing opportunities that that belt

Chip Brewer

Sure, Daniel.

So, Pi we’re going in team working been XXXX. mentioned, the for venues XXXX. now has But end as And an has have in the year-and-a-half. initiative of the a only that end at was of on venues it XX of been it all to the by

will a capability, reservation increased capability, it’s that So, improve unlock margins. think operating the management great We opportunity. increase and

specific reservations we fact, And they also in know beta. enjoy these make to the think, a to we have that know time that and to consumer likes the ability

and very a significant operating improved But is driver driving improved we’ve we the that So, been of results expect. margins.

at acquired mentioned, business. we XX% historically when the we margins thought operating you We could XX%. the As EBITDAR were the venue, at we we previously a Day, Investor exceed told

you telling now can drive We to we improvement. we’re further have and that, continue exceeded

Daniel Imbro

That’s just guidance. wanted Thanks. kind then to on touch And helpful. I of the company overall

midpoint. it roughly, raised you think better. at call $XX it, I has Obviously, million the FX gotten

$XX I a FX better think the to months footnotes ago. from point million about of few

the are puts to well. on what solid business we’ve as just core of takes So, Topgolf had kind doing and obviously sale paradigm, a maybe preorder curious the what

changed that few a that core kind are ex ago? in the what and months takes have FX So, guidance puts from of

Brian Lynch

is we from FX this increase million Lynch. the Hey, adjustments. previously Brian really The $XXX guided all to reflects now

change number. that’s everything the you FX our rates, in rates, FX all-in program, the the bake in bake you If hedging in

Daniel Imbro

I think, Brian, in the FX…

Brian Lynch

guidance. you So, get the to

Daniel Imbro

what quarters of $XX looked drop So, I the better what the accounting Isn’t FX kind of to a XX% just XX%, like ago? core was was wondering that? few maybe for million it than

Chip Brewer

XXX, time said snapped we pre-guidance. were Well, little XXX we when the last a it but approximately giving under line, bit was when we chalk

so, all it of Daniel. and FX of the all of into rounding it being And number, within going we’re

Daniel Imbro

lot. a Thanks it. Appreciate Got it. That’s helpful color.

Chip Brewer

Yes. Thank you.

Operator

ahead. question will Altobello Raymond James. next go of Our from come Please Joe

Joseph Altobello

Thanks. Hey, guys. afternoon. Good

First question Golf Equipment. on

You this channel sales segment have did year last mentioned benefit guess, first, be I how from much figure expect to out have trying you to flat to fill, how much year. you you anniversary.

maybe of do it as spend Golf And Is see well? last in with secondly, how year industry flattish overall Equipment ‘XX? sort the you

Chip Brewer

million good couple last to that overall one-time benefit down year furthering we’re market We $XX million, questions. points. fill Joe, of we approximately won’t that And of this a $XXX Yes. a provided maybe expecting year. channel Equipment, estimate there, then be the Golf and about flat to be

generally this our forecasting to market do be better this standard for point, not, at We bit solid growth we the at year, hold But year. to and the industry a we’re the a large. is significant have expect think market we ourselves again that will although little than

Joseph Altobello

That’s the in helpful. How year you new XX XX? should Or a seeing of those you’re and rather using we a that than think you’re end mentioned about on venues? additional at Topgolf, – Is plan? XX maybe format Maybe Boise that Wichita. is the

Chip Brewer

of year, and believe to into still they’ll scatter holding our XX at we’re we’ll but have just out there growth years we the per plan. No, point, more this

no larger for into or – in the number business. down we’ll a break opportunity of version expect but to of the when the not see real But and We’re large, change this going venues, mediums, new out more TAM growth mix.

Operator

Swartz Securities. Our today Truist will next Michael ahead. come go Please of question from

Michael Swartz

Toptracer range. just wanted Good touch Hey, to guys. afternoon. on I

calling bit. you had in I the kind not think another a a of plus structural ‘XX, installs additions of just at you just had I something something But X,XXX and X,XXX chain why ‘XX. supply that’s expected a bay is for run to acquired as X,XXX challenges? about think time it you’re to that think why Or I you like the business, going back that grow the year pulled there Is – more little still fast was been rate. Maybe sense planning you’re forward? in

Chip Brewer

Good Sure, Michael. question.

did you’re just So, over in We X,XXX correct. XXXX.

that to expect grow We from that X,XXX.

been range where not conversions success, material great rounding of X,XXX bay outstanding. within that our we’ve XXXX. for on And us have covered change had fact, puts that forecast So, in our exceeded year, this for a sales expectations on

has what initially ramp expected. grass on green little we the The been a slower market than

there. to we certainly Golf channel just finding investments the a it’s grass and little bit to sort channel, a infrastructure do is valuable into, longer get what that. making but we’re takes And a a little it’s Green have really like Equipment. We’re of that

The PGA professionals good able think that partner and business. will America to that. We to lend that. particularly very we’ll introduced PGA And on of Toptracer where partnership still us us golf will coaches, be certainly we we help feel endorsement the at the show, the coaching PGA about with platform

Michael Swartz

a follow-up just Topgolf. Thank you. on question maybe And

from about eight quarter. to from add annualized think profitability just in you be think million? to additive your going another to would Is to that But development benefit much get year any heavily there I’m would XXXX won’t the or locations quarter? million, way a way you be of – a said sense in ‘XX. it’s trying the Any $XXX that how the those fourth that revenue going in, sense be $XXX extremely weighted fourth I is presumably, of to can standpoint.

Chip Brewer

I the when – bottom you you six obviously most we don’t correct for here, an help preopening preopening the QX but negative the think But will additive jump on the year, us opened costs, year line them that of and would, But of expense or probably for pretty that, this they’re you eight that that add so but because have be on additive if we QX for me. opening year. it’s QX, year. the the Patrick, last in particularly basis start-up the other are if in this not should neutral can EBITDA cover can

Patrick Burke

best venue That’s right? way, a don’t told years. ‘XX, have right. and also you a perfect told is we’ve we following but representative, opened generally, year it that in from margin. and first four-wall their that next and – larger year, a what a revenue full tell one Michael, than you little the does We first is the we we add of maybe, year And representative in does ‘XX, ones a The what you the a

that of impact some of end be. to would use probably you at what next understand venues could of the you that those So, help year the year’s new

Operator

Please Point and of will next from come Casey go Our question Research Trading. ahead. today Compass Alexander

Casey Alexander

from City would guidance check your Kansas based afternoon. for cancellations Good Hi. upon Country for the order looking first I quarter you… Club what

Chip Brewer

risk I knew took little there. we a

for as Midwest all So, record. the well, we Casey, love the

Casey Alexander

margins as good year-over-year is more. it of lot and Ball side? now of such couple you How ask business that Golf asked. XX? get long go goes XX flattish in the volume $XXX you’ve business, a you do to questions Golf And for dramatically. profitability do and XX A going we your time Ball. been to volume-driven go further covered share up, the the a push do million of How took Golf from already light a to got what I’m but on that Equipment guidance, – have sort could And to now growth In Golf Equipment great XX? market expand to

Chip Brewer

Yes.

So, share of there got market You run just have steadily that are $XXX years, how now market share in a prolonged really proud, eight of the growth we’ve because been this over over grown We in great Casey, right? points six, million. continual Golf we Ball. has been

record is which a XX%, threshold. over cool We’re

you And will growth we’re that dust that we’ve stick level done several that in last of the the continuing years deliver we’ve to tends the yards on and doing that steady that. same you at a things growth. that path hopeful of space with over in do three cloud And momentum had when also

green at grass. relationships great building We’re

Ball we Golf invested have what to and golf. in building the think facility into bit the We’re Chicopee a is quite build best

the Rahms, Xanders Jon are The using that tour. on it

We’re obviously new capabilities. investing working in and

the continue that several us think to excited results, – will the committed used So, serve forward. we we’ve be going that formula well to business, over on the years the and last we’re will very

Casey Alexander

not committee, single follow-up I’m grass the obviously, about is professional. effort my a informed Toptracer that Toptracer. fact an difficulty expenditure, often capital your the PGA the made Because things decision-maker, like convince at about very decision decision-maker. great the harder the comment is a But I at lot the often with on – right? maker a And mean, he’s is to that you green PGA to connect and committees than curious show, be can

Chip Brewer

and what could No, the gone you advocate the the There’s an we not sense. Golf learned because of where have year be as tell that’s stronger, over around a last range the ranges, nice And may things and PGA energy and than covered And is makes relationships may connecting little we’ve of strong both our business professional we’re one there. the Director the a PGA right. Casey, although at to show, be decision maker our momentum that or anticipated. going business. as you’re It PGA around only But conversions driving has It bit to future that be get certainly professional. the slower uncovered. that of the builds product with it’s

Operator

Eric Please Our Wold Riley next B. question Securities. will come of go ahead. from

Eric Wold

next Thank you. benefit up Two it reservation during when baked of guess. versus the the throughout venues that Maybe how by those think following depending the of into rollout and on terms you guidance questions, system of year variable pricing happens I kind cadence in year coming online? of about that what much this One, timing? we more of should and maybe benefit how on the network the rollout in year the end that of the year,

Chip Brewer

the my of the think, knowledge, throughout year. it Eric, I best to scales

we only had equal-by-quarter an in on the in basis – throughout almost venues it go So, will XX it year. will

Eric Wold

promotion the been there putting Topgolf. of kind of then your brands, Maybe you where And this focus ones the this spending were one TravisMathew focus at little different offering awareness Or mean, about revenue bit your attention? question, of an year? for talk you between bonus second of groups the Got a between kind more of various it. kind synergies a email in today Is saw drive initial recent and boosting a year different of kind I customer to kind of the segments? where

Chip Brewer

I’d for recommend promotion loved you might thanks at – in what where think for Yeah, up for time ones a I That’s card love wouldn’t that life. and buy Eric, Valentine bay noticing that take it’s want a highly you that. that, $XX your the if gift and a Topgolf to

his or gift for TravisMathew, $XX a card hers. get You

great So of opportunity – cross-brand it’s that. we – that a the such but example out assets for but a digital wonderful of building promotion we’re have

on of where exposure The drivers. marketing together. Rahm’s an sleeve, for just Jon power going opportunity Topgolf programs. We had more bags, use you lean see you’ll opportunities continue these see on that. together. would paradigm our launch to different tour It’s loyalty Topgolf coming some teams cross-promote exciting able our And to brands days, to in we’re event putting Early we’re are the to and at logo more a

Operator

from George Our MKM. ROTH come Kelly next will question Please today ahead. go of

George Kelly

everybody. taking Hey, for Thanks questions. my

is normalized think there? of So, just curious, I’m to the just And you first billion you do one quarter a ended with get close you when what inventory. level? $X And can is

Brian Lynch

all than year. of arrived of George, a of is that you’re challenges the that product. year-over-year It’s current shipped earlier chain sudden, to end a – it. earlier. up with we caught year people make all right. Inventory is product earlier sure you great and to expected ordering pandemic, at the – normalize get the earlier of it Almost just current with channel of is see the supply the But will start percentage product, it’s started half supply and back all pushing the then year. currently chain the And in up

we are in pre-pandemic than days And hand about inventory good slightly Our on it. higher just levels. feel

has to it as So, product. we way work launch through just its

George Kelly

Okay, understood. to sort question, And second the rollout of I’m better. then understand the trying just reservation of

you seen implemented pricing topics detail. would be assuming But system, and what helpful. more mainly this impact could of you’ve quantification you’ve I was I’m far, the quantify little in few it’s can at hoping cover all? maybe you a kind a but so team already a any that So,

a it? is like there that secondarily, be kind to to do or a when that of years needs of out lot lot then penetration longer. system needs place, sort to this of consumers do And well is roll educate so, education base it? not to in needs that And to education you of about there of there know will put you folks – your still it’s an about several And everywhere. process of take kind have really it It as customer as just you

Chip Brewer

unfortunately, of on in, you we in venues this George, we have give metrics, in the in those, specifics improvements terms put not metrics. to, where terms going in sales both So, the of education, but we’re seen the

if same-venue So, utilization, better more cetera., would, bay satisfaction. you sales, and consumer better et times, it’s improved bay turn

very and we see So, metrics from it. tangible attractive

on education a is point And sound I the and your very one. think good

It’s getting requires because lot also different bay they way specific business. it’s have some from to have So, a a don’t stay that if period of understand it doing for would. training the it consumer. methodology of have a whole we a you right, two-hour time have requires But the different education you bay a of where the reserving playmakers, but education and a you consumer the block, They – time. reserve to indefinitely, of

I had so We’ll and make this sounds were because biggest at long. that have it’s can these the they want to have the aware too consumers was that be we weights that do silly, They to reservations. – know Topgolf, the complaint but

hours I And time, in – go four the quite it, think frankly. more and if an many reserve even opportunity to a like myself, I’m bit want anywhere, a person to I they to that little charge so, are. don’t there’s me all And if for for wait

much great Pi, more to a wonderful proud going to fully in approaches the with and system of the to continuing that release we’re delight they’re embracing They’re this, tell in have transitioning They’re it’s and team it. got reservation playmakers are to Topgolf anyway. for management them. and how the us. think consumer we difference. some their to this be just a job. consistent and doing We of now making the is unlock I couldn’t attractiveness the big a of to understand the They terms you – the teach of both But team

George Kelly

Thanks.

Operator

we to our this conference conclude time, Brewer will closing to like at back over question-and-answer session. And any turn remarks. Chip the I’d for

Chip Brewer

Eagles want everybody I are Obviously, time. and Brian fan. I their thank diehard Well, for just to

call. weekend, attending everybody on one. and So, routing much look Thank Sunday, you we this start Super the Bowl has forward of this we’re next hope side the we our great you year one but equation of our for updating on so a on to

Operator

And you has attending concluded. the now presentation. We thank today’s for do conference

You lines. disconnect your may now

Topgolf Callaway Brands (MODG) 9 Feb 232022 Q4 Earnings call transcript