MODG - Earnings call transcript Q1 2024 | Topgolf Callaway Brands Corp.

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

Operator

Good day, and welcome to Topgolf Callaway Brands First Quarter of 2024 Earnings Conference Call. Please note that today's event is being recorded, [Operator Instructions] And with that, I would like to now turn the call over to Katina Metzidakis, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Katina Metzidakis

Thank you, operator, and good afternoon, everyone. Welcome to Topgolf Callaway Brands First Quarter Earnings Conference Call. company's of the Corporate Relations Metzidakis, Communications. Katina Vice Investor President and I'm

speakers are quarter our today's President me release updated today, on Joining as presentation. a issued call We've and Legal Executive press also and the an company Officer its and Officer; Chip results. Brian Financial Lynch, first Chief announcing Chief Officer. Earlier financial Chief our Brewer, published

in note current will U.S. accepted the are risks presentation Financial in the results statements as on non-GAAP well based tab. Most the call reconcile on accordance this Relations management's as with release description. And press In are a identify from safe and with encourage that both now report the for in release harbor available to presentation forward-looking generally press measures Chip Investor and discussed on earnings financial the the we Our instances GAAP involve website and complete the the earnings to could I where measures Mr. under Results of Brewer. uncertainties that Regulation cause actual you to to presentation to turn we expectations. and numbers more the statements principles. company's the over would the materially measures, like that reported review G. Please non-GAAP measures the call today's accounting that, the contained call We differ include corresponding

Oliver Brewer

forecast efficiencies EPS estimates QX driving higher call. both our continued and confidence across you, that pleased Thank brand afternoon, good strong operating year for cash our We full high and joining Katina, and results, are improving flow. EBITDA in portfolio I'm everyone and everyone. to report appreciate our strength

performance. of revenue line billion same our sales venue with guidance QX, in as was Topgolf on was Focusing $X.XX

expenses timing market operating clubs $X.XX combined in some of in the in million favorable of EBITDA on-track we Golf delivering gains, product balls. expected, gained currency also and efficiencies, performance hedge quarter. with and on better-than-expected based both stronger-than-anticipated of compelling $XXX As Equipment EPS This share launches and revenue

cash also better-than-anticipated delivered We flow.

since we margins venues due an year As under European on expectations expected reduction approximate revenues forecast our to its year, $XX of full headwinds in we look to EBITDA as by approximately this due and as towards million. Even Jack our brands change, well year additional lowering overall hedging conditions. a confidence call our last Wolfskin Golf at the $XX million our full an million, market both revenue expected little $XX with Equipment market as our in based and challenging revenue our remain we conditions our business full revenues X% year operating improving business are currency currency programs, core as of confident full in in well

We beginning operating delivering we our growth revenue as debt. ahead $X.XX are estimates by full remain million term cash well overall flow raising and efficiencies, our cash share growth schedule free as flow our and EBITDA targets, and in per also of by in of year million, the our we $XX respectively. In paying increasing cash $XX short, and organic track targets brands, flow for on embedded key free EPS and process approximately are down now EPS

As of see to engine I the strengthen. it, continues business our fundamental

on development. our drivers: venue new and sales returns same segment X business growth, margin key continues performance venue venue our to to performance. Moving Topgolf strides make and

side to business. foundation to are through highly lay growth, a of the As all we for initiatives returns I expansion our the moment, which our multiple will product in the walk footprint, you and attractive place venue complementary in durable of have of

venue our QX expectations. with line First, in same X% was down sales of

as XXXX in reminder, our by of our in impacted well as call. during this earnings was year, weather QX surge during we post-COVID a which February events cold highlighted a extreme As early corporate January business

January sales after same venue stabilized QX the weather Our normalized.

experience pleased our penetration towards digital most XX%, come areas XX% at developing to drive QX Digital of in positive digital, key increased we the is from and year-over-year. value. executing Topgolf, sales same that to up revenue is same percentage visitors As us points and rapidly venue against opportunity year. And growth, that now basis versus for period we last XXX the digital through drive XX% opportunity: the of channels are sales I'm X

to on new more teams ability importantly, now Topgolf by of and smarter our expect data the that insights, tailor and in slated a the improve commercial Topgolf and brand every unlocking be and serve compelling and loyalty at I'm backbone is trial to gather schedule, our evolving of necessary program pleased offerings, player Callaway products report year. mode to for this cross-brand are getting consumer ahead we Our this this, results. Building digital day, platform insights driving will and key live, as greatly end

Our same second opportunity of sales area drive is venue experience. to

are new the to improve ways We to experience curated offer and continuing products. more uncover player

we end, XXXX. which first back since new Party, launched our game introduced during in this QX, Towards Topgolf Block Birds, Angry

intend months. hitting the we this enter skill in the new invest media response all Player the has ball positive so aspects is for game of greater extremely to great that player we fun summer and levels in as of awareness score to points support outfield. literally far, our peak you One it's been by anywhere as

synergy events held in the Callaway venues club On Masters. during fitting of the the across week we country the front,

implemented experience And our seasonal decorated promote venues. to also players Callaway all now We well as latest their Callaway's Callaway offerings. as club ball in clubs venues golf sell ball upgrade gaming Tour Chrome and upgrading all program, allows new which our golf the to upgrade by Topgolf

the beginner we every to Topgolf growth approximately golfers brand top number visit on-course new the ensure a Our is opportunity. goal of for golfers creating. Value is third is golfers that U.S. our Callaway as that annually well that sales is as Topgolf all of day, believe mind XX% the is

we We've the with are game half-off was an a towards Mondays results. As our players. our first more and But to on play broader launched perhaps Wednesdays pleased offering aware, and for QX only offerings build in portfolio compelling been a in-app Half-off importantly, step a of you this also promoted value promo strategy Tuesdays.

hours and XX ahead, will additional Looking XX summer's our value commercial reservation And what gain will fee consistent as a booking take test our new easier data digital requires continue know visits. this small end, they as when platform believe effectively play during more on other to game minutes trial it offering a The this of increase book for bay weekdays. make well to on drive products. our results Topgolf's offering this consumer valuable will We consumers. expected primary based action. To more with date, free be offers players campaign, we team reservation and insights is new and to best, are digital which them what Free to learn will specified works online be this

top of initial you both data in count they manner communication can With our our will to line. passes programs that be drive thoughtful platform, well will experimenting new And us an these as personalized the a to to bottom mentioning we this and increasingly increase digital, on line within as communicate effective. days so worth with be also and of repeat that XX XX visit. It's consumer help our visits bundled offers

associated to venue sales improvement struggled forecasting digits, account takes companies, first a Looking many forward as from with be other spring and of April This X low sales Easter down a slow for with QX. we break QX, into are slower-than-expected single same like weeks nice we, year-over-year timing.

over period, trends the sales we have normalized past levels. than past As moved expected X to this more returned have weeks,

be ] However, and our market to internal able again margin. that convinced we have compares slightly digits. Most single digits starting venue [ grow be sales positive our confident low expansion. our half seen venue see, importantly, our margin a to long we have for same range in over The venue XXX programs live full we are QX, could to same sales for And as now increase we basis EBITDAR to continue the And low margin from point us, been are this. clear, to and spend that full will back results. given approximately is venue confidence and sales year, deliver they become year in believe targets. the second the and they we single consumer teams of now positive new working down the to to half slightly improving same start Day choppy one, go behind of to better the year direction Memorial easier. venue term. Shifting a are in this goal second am or have including year. year-over-year year biggest improved last behind performance, flat marketing saw guidance versus conditions of hard our the for us And widening same transition remain to laps unusual I strong their In sales in level to in we'll

rolled continue delivering inventory new labor results. and model, PIE and clear management which from system now system-wide both We benefit out to our have been are

to timing In a our spend margin and products. shift focus marketing QX more post-Memorial addition to from in on the efficiency programs of Day also our benefited gains,

today. XX% remain of EBITDAR We margins this, profitability all drive proving as transitions market ability footprint venue space. they even to are on and over year. Furthermore, confident kinds operating continue returns and are as already white consistently growth, to feel long margin target will us significant continue to extremely With term for we stronger hit full backdrop This to back the to of venue track the to well in our we of sales our continue and our in the conditions. grow a our positions become our venues venue against same increase, than attractive

that X Speaking X we most BigShots adjacent new municipally-owned second, green of ] in in a Durham, Texas. opened a opportunity, last grass course; our California. Montebello, in represents in we is the unique white The a Bryan, our lighting. traditional venue night X-hole venue course growth And it just with courses, public to area our densely-populated new quite opened January, partnership. It's In [ second is purchased North a and X-hole April, in private venues one, par new Montebello golf trade and venue in week, Carolina. we space in

excitement. with driving While and we we don't believe venue they our synergistic operate in interest or will own courses, be these

communicated, now expectations strength and a globally strong X XX and new U.S., into XXXX. QX venue we open late expect a our push venues Texas of change in for we that franchisees, also a XXX and venue our immaterial world-class add in testament to are which permitting, due XXXX to to to be owned the Brownfield previously when team. Today, XXXX you in opening should operated We and [ the internationally-owned ], include updating venues our X execution both for outlook. venues by largely estate that long-term in will XXXX the plan delay versus now We over X a real business are expected to the financial

Looking year new venues remain XX ahead, our future. to where back accelerate excluding year, intentionally we pulled the ability confident cash in flow, average we to this per over foreseeable

We XXX available a in also in number our States remain of internationally. venues United with similar TAM confident the

or continues Turning Callaway Ai-ONE also market club XX% an where also held share more shown brand we've received shine. growth, a position its gives woods activation ] providing work points be to U.S. our latest Tour a record clubs. In Callaway Chrome achieved launch, advertising to and new forward chain, this going woods via year-over-year. we and hopefully, position well premium QX, further finally, to to set our report color of fuel of to sales, strength nice the on in pleased years launch. Golf product we driver, achieved momentum share position on across new share grow, the the with which earnings enjoyed in leads in the We're we challenges. I'm to driver, spin the R&D, share with U.S. new XX% to positive package Smoke Equipment. time golf both in entrants record Golf putter the in U.S. strong market hybrid. believe from we with Tour #X the woods have continues. And that conviction seen record golf incredible QX, gained performance as golf overall have to the also driving focusing basis very irons. In U.S. the share share QX, sell-through delivered also for [ has And of like a fairway corporate, as speed testament year-over-year Chrome I'm Callaway our over continue room performance and our we'll our in model and market share see as we some fairway sales, that on XX.X%, saw market putter, other teams dollar performance QX, have strength. into leveraging we Ai call. In and more distribution market the strong pleased feedback and marketing game new we glove, shares to In thanks gained That and report future. supply in I'd of the #X that the a highlight us on and especially brand up categories, to not the to us said, of our several look ball brand that the category, our next last ball in #X tour to strong launches and and position XXX

little Looking in Equipment demand, our with and expectations. The geography. conditions sales basis, The was line remained overall due up in to at far business new we double been is market than in digits retailers lower consumer to terms well and [ well as versus XXXX, slightly continue our Korean trends business positioned in ] U.K. with well being currency a down poor do the inventories European has thus year the by and us strong gained share year currency Golf more but the Japan appear weather expected QX to but market U.S. so. The the with last both ] this slower constant volumes year as down both sell-in on as a in conservative. And market to the business as due field to as headwinds. are lastly, market started currency [ tough real

consistent similar to the larger remain And the that towards As ] and Equipment plan Golf the second we and we year globally. with have year, launches was [ both in XXXX. in segment of that half product mentioning This we than planned good our and feel growth on had cadences our for balance more years. We launches the of be will the of year worth of done track product it's more for continue second fall grow golf part we've overall about full look the this previous we health weighted. half thus, to always and

our to Turning Active Lifestyle segment.

that on call, communicated QX. Lifestyle the As the down It expected Active to was now and segment year-over-year is full in was year. our for one expected last also be down

TravisMathew, but We at are which QX pleased with year. last our in down was with expected, line as QX performance expectations, versus

As sell-in corporate February QX call, last of significant relative in occurred our a this lapped brand. during we mentioned was channel the primarily to and as that a reminder, size year

and impact, remain healthy this sales Excluding underlying trends growing.

our also business the to celebrated grow with our confident that open in also relaunch We with to TravisMathew also brand. business. stores remain women's to ability XX year launch remain track and We're TravisMathew of on signed. this pleased leases the shoe under approximately anniversary the of our already X-year we X continue

under Finally, Jack including QX, an environment, pressure soft over market a and Europe. inventory conditions tough largely due in channel Wolfskin remained to in overall macro

we As full a revenue for are lowering year this result, expectations our brand.

think expect EBITDA this and market that I performance still positive growth despite XXXX. it's However, pressure, worth noting in we

China. be to performance pleased continue with brand's in also the We

the more next has progress European we this business, status action growth. been come in made leadership accepting future it already not few year, certainly we're taking this months. forward, has to drive to to proactively a to been the transitioned stabilize and new Looking with considerable profitability quo. which There return Earlier team,

hard taking closing, the even execution. and like on revenues will Topgolf their our core to and feel Overall, you and annual an to we small this Brands call. In is relatively I'd thank our good is update Callaway and of our our portion QX for strength starting We Although as brands portion during well we the actions feel we solid call our of EBITDA our Brian. engine about of teams remain profit, cash confident and the debt. Perhaps year and work targets, we company start process opportunity. With for the further as importantly, direction the XXXX this of these flow our a and strengthen, our over smaller to to long-term most EPS fundamental continuing believe annual business markets. progress our up and targets of about down in paying that, I'll and great turn our are

Brian Lynch

Thank you, everyone. Chip, afternoon, and good

rates start currency unfavorable year some EPS revenue. overall. We despite in-line and EBITDA mentioned, some Jack strong had business, revenue a Chip softness As the on had Wolfskin better-than-expected in we to foreign and adjusted our

$XX Our year. by cash QX million improved used last in compared to operations

Golf XXXX irons launches, received woods golf and the well Ai and market all including grew product balls share. Equipment Smoke levels Tour were and Our at Chrome

were reduction basis Loan inventory our We basis our initiatives current since $X year. decreasing and based rate $XXX million on QX with Term inventory Our saving XX on million our successful consolidated interest B, approximately levels. debt last annualized points by an successfully reducing repriced

repurchased an earnings a loan to at term common still our our choppy end also today, announced we May. All shares all, million quarter good pay million in We consumer And appears last stock what the of be a additional the since in down debt plans very environment. $XX call. of of to X

now to our that Management successfully As what a provide that an development will new and merger, This XXXX would in XX,XXX year, launched and transitioned announce and consumer preferences The enhance I consumer our trends improve we data platform. to processes. Separately, little management will in our it that extremely of to we and CDP we us across I has April, recruitment also understand will our year-to-date. want our human mentioned become most enable have access of career accomplished which during pleased Enterprise early globally. call better on our to have system across color business capital and last we March, behavior, employees, post training, be I to investment am important Workday over data, brands.

our I for to leverage personalized insights drive want thank will and this with more consumers. to hard life. recognize bringing these engagements teams impactful We work their strategy to and our

Active revenues is in year-over-year quarter our to line decrease This year-over-year to $X.XXX first decreased Consolidated was billion, Now with turning in results. our XX% which business. a range. QX to guidance our attributable Lifestyle X% decrease

year decreased Topgolf, grew end last at $XX currency approximately to incremental exceeded due we new was gains. that venue's the These first constant increased of timing quarter, X% Golf last year, our and venue a Equipment. Currencies XXXX repeat partially million in XXXX. impacted negatively last half the $XXX expense our inventory quarter in Equipment did million by margins X% X% year-over-year approximate impact occurred QX. to mentioned strong growth year which impacted compared shifted which not offset were on sell-in business in most consolidated first to of by of largely As in approximately high some lap compared channel had income corporate increased to an X% and D&A range the this of and balance into at the $XX and Most Topgolf EBITDA TravisMathew of guidance million Golf growth net due the results revenue OpEx, basis. Non-GAAP the interest to of which of million, in FX segment, $X year-over-year that to development. Adjusted Topgolf related

post-COVID well X%, to XXXX, same revenue new the mentioned the in in Topgolf, was primarily summer from expectations driven shift support to with primarily labor rolled to operating QX by million while a well slightly continued weighted $XX the been $XX continued revenue. Venues was to from surge driven our in in Chip adjusted million. model the At now summer in up X% venue toward has spend improvement events the given grew venues marketing increased decline The adjusted sales, more margins Moving QX a in also which EBITDA first by PIE income EBITDA offset line quarter, to in increased which by system-wide. the and as prior venue of year, partially improvement million new the segment as timing margin benefited exciting out to earlier. Topgolf as was as programs. in $X corporate be compared business performance. the benefit execution Topgolf QX as

us. same programs the given We year have same sales most mentioned, the challenging and are comps in venue second improving and consumer of upcoming sales venue in as behind confidence the the marketing Chip XXXX in the half now

Our internal the venue to back second positive during sales goal to the of year. half transition same is

], and offset changes Golf from Revenue X% million to due $XXX Moving strong recent rates in by to year-over-year momentum to in partially primarily ball increased currency Asia. our Equipment. results club unfavorable foreign QX and for launches, [ softness

digits. decreased due year-over-year, business Lifestyle income Golf Importantly, the our Equipment our high TravisMathew that the revenue. In primarily segment, year-over-year corporate sell-in operating Equipment X% million at core U.S. XX% Golf increased QX grew revenue I of to increased single revenue Active lapping channel mentioned $XX earlier. to due

sales, is high In and addition, our XX% business, inventory conditions. including total soft our levels of less which conditions in market Europe, market represents challenging Jack retail facing than overall Wolfskin

As expect that to for the a full result, be year. down business we

new year. million actively This lower in million decrease income As compared business. Operating $XX $XX to management by the a mentioned, we the Chip optimize team, prior decreased sales. was working to and to we have are driven that

points term B to in sheet. and of levels. lowered highlight the to March, interest million Term completed I'd savings on like successfully debt resulted by rate principal repricing Turning on XX in we annualized the basis balance interest Loan based which the $X our current

our market total addition, shares X for transactions in In we've earnings last cost repurchased since a million. open call, of $XX million

capacity borrowing facilities. our ample We cash hand continue also credit comprised have is which on of under and to liquidity,

to XX, manage company to flow better million prior manage our efficiently generation more to inventory. of with million continues March capital the to liquidity to due and increased $XX compared working the as $XXX cash regards available costs XXXX, especially As year

net debt to term position, of the total is of $X.X $XX compared principal had we to million end, of XXXX. to quarter increase billion amount end to flow [ we pay debt financing million billion, QX Given cash increased now down $XXX plan approximately related at of the convertible $X.X our loan month. At new and our outlook which strengthened strong debt venues. attributable This of excludes debt the venue liquidity ] in

it leverage our no As excluding also position required. the is helpful principal capitalize net is which evaluate by rent to venue REIT or think a repayment additional reminder, financing to debt we with bullet akin

Excluding debt, to net our debt is the REIT as REIT $X.X billion compared QX of billion $X.X adjusted XXXX.

Our net debt leverage, flow, X.Xx which venue debt. excludes was the convertible XX, debt, was prior compared and This offset improved change XXXX, year. X.Xx by the than EBITDA which at driven to increased increased March financing cash in more

debt prior in adjusted X.Xx X.Xx leverage was comfortable ratio REIT Our We feel at compared leverage very to these year. levels. net the

to decreased XX% million $XXX have after at inventory of and for months more $XX million post-COVID is QX to surge. teams million level which Topgolf. XXXX, $XX of the million from overall a expenditures Our our for were we good million, QX to of $XX $XX million, arrangements REIT inventory $XXX of our of manage We reimbursements related current capital expenditures received inventory. Capital our from reasonable who or about diligently and levels $XXX net end achievement of balance of to X million worked by quality XXXX as XXXX first feel significant our the

Now of outlook. year balance turning to our

is to the million Wolfskin range $XX business, are revenue billion full in guidance core Jack approximately hedging EBITDA range $X.XXX XXXX guidance million by program. in mentioned change $XX the FX this to $X.XXX adjusted to million lowering guidance, Europe the strength the to remain we attributable given billion, given As FX a FX of and we softness and earlier, the confident year our in the Jack and drop $XX our of other decrease our rates, in of unfavorable business Wolfskin. Despite revenue

EBITDA, a from result, $XXX in approximately million $XXX adjusted billion continue to approximately we unchanged reiterating million our million. By and in is $XXX to adjusted guide prior segment, full guidance guidance. year EBITDA $X.XX to at Topgolf, we are revenue which As of

we our in launches. As the to to this slightly overall, FX our down in growth easier. In our digits, an also half year, be we that a the to Golf half the launches line half in single second Topgolf even launches which It this as initiatives same Chip year-over-year mentioned, become towards when of comparisons as venue are trends take adjusting back and slightly into product hold of expectations last year, Equipment, the of sales improvement segment incremental includes more range headwinds, to product new up and XXXX is taking second important anticipated increased low after our summer highlight account new more weighted given were QX-weighted. versus year, strength expect revenue grow will of the

to business, this year. In profits FX up and We in the given also in year-over-year Jack be segment. to Lifestyle, income continue this the expect revenue for to expect Wolfskin segment operating Active we down be unfavorable rates in softness the in

repricing $X.XX, debt $X.XX. Loan As EPS by Term a range higher we are the cash to paydown to raising our anticipated result guidance of full our and outlook, year B, $X.XX flow of

related in in provide approximately benefit year Our the balance $X.XX should income XXXX. this also debt repricing will cash flow. Shifting expected gears. higher investing provide million is on the $XX benefit The and to paydown in debt approximately increased $X.XXX expected

shift As to next and million compared timing year. guidance, in interest to prior free due lower CapEx approximately $XX growth is flow improvements, of expected to ] working [ a capital improve by cash cash to

capital in guidance We embedded prior working Active Golf due are versus me, and Lifestyle also cash segments. flow cash to improvement excuse better-than-expected free our Equipment flow free forecasting -- EBITDA

improvement million respectively. and million, respectively, $XX and versus As result, a flow and approximately cash which represents expected a million embedded be free free cash $XXX flow to $XX million prior $XXX guidance, are

We $XXX million growth our than lower million guidance total $XX CapEx above. timing net mentioned be due expect to CapEx of Topgolf previous to of

$XXX impact income QX, timing year-over-year expect in Topgolf, In due $XXX billion $X.XX range year, launches by $X.XX is [indiscernible] to to in million this in versus venues an shift words, In million Now the to QX or estimate the we woods our at approximate in since fairway revenue revenue to adjusted QX XXXX, in half billion to of of Golf we XXXX. QX and QX operating consolidated Equipment, we up EBITDA to QX of slightly. be billion to $X.XX we $XXX from million be QX second the $XX QX, other are turning new year being year. In irons specifically. last up prior the launched million year. In which to and last expect to year. impacted last QX to compared of compared the We in flat

year-over-year, As a to mentioned, we up QX portion of expected we separately, income QX. as be in revenue quarter in Wolfskin Lifestyle, for result, operating full and channel year. In lapping down previously Jack conditions Europe down business segment as to be are the the in the expect second market corporate for our sell-in to will the in be in Active revenue TravisMathew in expect but remain remaining this and year-over-year soft

of the As with confident well to in in to pleased core our a expect in and result, this we we business. start would our be the year income operating segment. Overall, strength down as are

million down As a result, of we feel the comfortable debt. committing to term $XX loan paying

the for balance optimistic of We the are year.

over the for will We you. to open Operator, now questions. call

Operator

question, our [Operator take from with Instructions] Matthew which JPMorgan. Boss first We will come will

Matthew Boss

Great.

could cited, and Tour So you maybe feedback launches. market maybe from your share ball to response off, Chip, you wholesale kick Chrome that Ai on Smoke just elaborate and gains customer

this outside year growth assumptions of foreign exchange? change Golf Just for any in equipment the

Oliver Brewer

for market strong. Matt, strength the share Smoke the remains brand of the quite and gains Ai

goods points clubs is at we the a accurately XXX So up U.S. up premium the you points were We ball. hard in were in in ball clubs look up basis market which were our with and category. we share, points most and basis and clearly if identified which XXX segment, combines XXX in reported, and basis market share the record

and Smoke. all positions -- model #X that for [ So then I mentioned #X have positions ] and the the we brand Ai

the very half scripts we with all that a well. our market of brand So robust in strength and as plan quite and pleased we the reception, the have product mentioned pipeline second and then strong of and

Matthew Boss

how you're that you the the comps progresses the maybe just or the then on on return as positive to back or then between a just to follow-up price? drivers seeing traffic maybe elaborate the to And in just could initiatives place of And Great. conditions in April best as rank half? year softness choppy Topgolf,

Oliver Brewer

Sure.

results, weather, this ] same normal, in more January, in it market with January a And saw we've venue period but but where weeks then. Easter similar extremely year we in had we X was the a of periods sales it was We weather. strictly performance [ than Matt. always X it's in cold So the had yes, that our cold severe volatility and And break. first then the April, of and timed marked drop spring saw drop extremely

spring time those and so less an impact condensed prior sales. available shifted in to on timing, our basically, had that period there a same was And break this periods in Easter year venue

So that we of down period. Outside saw periods pretty that the really. have in those significantly volatility, of in traffic good, period trends been weakness and

and stable X- up And the to to periods flat mostly. stabilizing. X-plus is Bay X-Bay Our is slightly

that a have it's a time seen some story story for now. right So positive and we

have of in lot terms We coming initiatives. a

We moved of marketing spend. ad some a have new our campaign. We

a have game. new We

have new we're We other energy the summer. throughout bringing

deliver a but track the the going overall of not to And we're nice the the believe going you've be the offering sales, a that you most, that on that passes Free and same brand is long-run value and have cash XX, lot on way bundles have now had when we flows. We our reasons in what to around offerings. We're where prudent called coming. really past event focus we're the cetera. the have of those of matter venues, and outlook. capability I long-term venue et record And to business. We're building profitability a of new periods But we bit to implementing, profitability going we're confident things a this look some seen a continue we we're volatility. doing We've like so testing of it damage some trends quite the that in feel

Operator

And our next America. from Alex come with Perry Bank will question of

Alexander Perry

think comps how of and about given the for the easier events I first, events the versus in second the just get in quarter? business year, we guess walk- much the should corporate XQ especially rest

Oliver Brewer

We get in is been see post you've had I improvement, business going up story After it's and The clearly of continue we that, a many to you're the events calling venue to Alex, now, that number and quarters to out. of a to consistent and now. it about it. have But gliding had we drive we're grow the we're right reversion feeling on improve. out than that over go Other direction essentially to really seen volatility to good to that stabilizing it now, sales. X business working towards a and of same going we're of we flat with was some and periods those surge initiatives confident There it called in saw continue that flat, believe will that trend. The see massive to slightly stabilizing COVID. we're that. flat. clearly X-Bay, We X-

Alexander Perry

venue implied think of revenue guide but helpful. And follow-up, on the guidance, versus guidance venue one sales lowered the albeit it anything then have than the come venue prior there of the ramp? it kept same really just sort more was my you ] the better less Or Topgolf supposed Is revenue of [ there? That's of I guide, sort and same year. midpoint the year rounding? Is at sort full is the the end the this of to

Oliver Brewer

And in move enough guide same have the my More the the we in -- the rounding, results materially, we didn't to -- The had overall results sales in room opinion. Alex. venue guide room. enough

Operator

next will Megan Our question with come from Stanley. Morgan Alexander

Megan Christine Alexander

that were to down finer quarter-to-date, last put those assume but Topgolf a guide. on same few fair it, want sales it the point around just don't weeks to harp on but running the digits single you're low that questions I maybe Is venue to than better end high bit little [indiscernible]. things positive is of you the also maybe down range seems at maybe were it that. just bit in widening were for and bringing a And then but the it reason including that April, a choppy like the

So perhaps driving little in half? confident a initiatives is that an just the a the improvement reflection more back you're in bit of

Oliver Brewer

worse we weeks that first X of in Megan, the were than April.

still dry initiatives really start come, to down, without -- end all that these last of consistent been early with of the period were weeks, expectations. of that ramp with and X markedly we're our something high the it a performing that, talking consumer may of down somewhat has been the right, for is in since some going put to There's powder behind have to the May, And us lot conservative. with but digits how or that So think, planning is about stabilized those June. But value -- we us are was lot got April range. that there I And the opportunity over business. year. all change as that And we've single of recognize of not a other to an And and and us the for the goes rest guide we full getting little is the we've is outperform offerings, being this, on. volatility had year we've to a strengthen may and out that or just that

Megan Christine Alexander

Is maintain then and FX guide Jack there for And did helpful, question just Understood. Chip. Wolfskin any You maybe for That's the to to a impact EBITDA? EBITDA. the way quantify Brian.

unchanged. was Topgolf think I

expectation offset FX to there is is EBITDA Golf the -- bit perspective? from Equipment, little headwinds a an Jack and So better that business in Wolfskin is the from

Brian Lynch

question, the foreign million $XX to is Jack million related in the Yes. related Wolfskin guide as business. That's you a correctly currency noted, Megan. Again, revenue good in and to the $XX change changes

actions the currency Chip -- They'll it business manage Wolfskin but the business. of go also Jack the the have to of portions a through then related a drop management on revenue going team in hedging whole program not completely of but we to -- they is this on extent. light offset that new to were foreign will as they do change going line, And large of in revenue. it, the mentioned, FX business. And in piece, minimize through, the completely, doesn't the as bottom we Now impact in costs then part is underperforming as manage cost through the drop taking

we that or also those, Equipment exit we're great drive But the businesses. across QX operating the So business. to continue Wolfskin managing absorb profitability. And more costs as importantly, Europe increasing improve a should to our softness impact were they FX fix while efficiencies in Golf [ all of we as Jack and ] Topgolf able our is example, EBITDA. in then

our in fairly to ability EBITDA are we hit the So guidance. confident

Megan Christine Alexander

that of you're bit things are flow-through EBITDA are up like just the just Is there something a It's if slack. there's perspective, Maybe an clarify. kind fair? that helpful. Super assuming I could doesn't It seem is from picks -- muted. the that

Brian Lynch

if Well, offset up pick of able not business the will the to amount. other slack is portion help Jack the to any be Wolfskin able entire

improving are businesses pick and their other up. The I efficiencies, think they'll it

Operator

question Kate next with our Goldman come And McShane from Sachs. will

Katharine McShane

question we given debt. QX? your impact some We how your wanted the to then rest throughout our should Is the to contribution second of way it new of ask the about labor allocation, about was today model capital And first of your think margins. quantify its impacted to the year? just how And much thoughts about about there comments a around

Oliver Brewer

then on take I'll Brian, capital the that second I'll you. lateral part Sure. first to and one allocation

that fully system PIE implemented margins basis And of and XXX implementing of the just Topgolf, up that improve PIE. So a reservation We and have us overall realize year-over-year. continuing operating about year, heard see of all got Kate, at you've in efficiencies us improved operating drives it to us about during steady and seen last were to QX, labor, you driving We will you're trend us right? digital allows points continue. fruits talking

fully year, of end had at same to improved that. last an see and of the benefit revised that continuing model, The the labor thing. model and you're labor implemented We've

of most had be to to going are be Now a initiatives we of impactful. our where some can timing new it shift also therefore, and spend, in bit little marketing introduced, moving

a there's a timing bit little so And of move.

is So XXX but we improved every of quarter, and full points proven you're basis trend consistently our feel confident not to being X% in sales margin think, down over necessarily for year. And drive tough on obvious really [ in capital and here is able deliver basis I'll performance, right, you. pretty think candidly, some with point the XXX to to the is environments, venue proof I venue going XX% ] see the what I margin margins EBITDAR point. Brian, same a good returns to one improvement send even

Brian Lynch

Kate. Thanks, Sure.

which technology I to think they're strategy. the reinvest business. investing returns, of we're Equipment the continued down great build returns X leading million first space we the XX% to $XX and foremost, great Golf our our either consistent benefit through -- that's which allocation capital and our is, call We've repurchased our there, returning We've paying venues, with and the Topgolf stock. And policy, and venues, in today very [indiscernible]. highlights capital of allocation debt, million golf and in or XX% to to have seen [ ] shares position

we'll and So that foremost. do continue first to

to on leverage want at do we have them. very a maintain readjusted reasonable ratios. currently we basis, we're comfortable X.Xx that, At We Beyond that believe level.

look then both really to we'll So investments other which to after today. thing the we given as up. us good is of we don't I have that, do returning between you'll debt, this any. and capital come see And balance and down before, paying mentioned shareholders they at that, announced acquisitions

where have out in embedded and enough our drive or growth be have we but don't do revenue any we'll opportunistic. growth to to profits, We go

And so as we'll those up. take they come

Operator

James. Raymond our question with next Altobello And Joe will from come

Joseph Altobello

first guess I on the question quarter.

high EBITDA margins, You you It and of upside in as drivers above the timing end venue $XX like marketing were about the million the looks guidance. of quarter. gains hedge the mentioned

the could timing what was trying us and of Just maybe So here. OpEx where X, get a -- the sense underlying from latter to you impact quantify beat hedging the for the gains? the

Brian Lynch

some hedged at that, had that those of gains, programs the identifiable. which to new [ easily there was Chip with that planned that marketing ] launch of $X of million incremental for the align early not little year, here was I'm quantify a not -- was balance it's all in example. probably these are hedge going But it because mentioned. but the push there Yes. some the going consumer expenses was to marketing bit a in we more They're for There push It's Joe. Topgolf, to for QX. out QX

quarter perspective. from some it's that, overperformance. a I there's and mean that it So all really was good

Joseph Altobello

back earlier Okay. the going of terms Maybe to in guidance, question. an

revenue the the million you basically, guidance offsets million outlook, driven kept FX EBITDA that unchanged. to What So reduction? $XX the Jack lowered revenue $XX are

Brian Lynch

businesses. just somewhat the I it's business. said, in of It things other it's improvement in It's the Well, other efficiencies the managing is costs. the the operational overperformance the

Joseph Altobello

Okay.

it's all QX So driven?

Oliver Brewer

because Yes, only flows. that portion million the on hedged So a -- of Joe, $XX we're FX, right? that is

that that able So hit will revenue in outperformance but the EBITDA you're really drop looking something $XX to million we're with and at business. the $XX offset a of $XX of over million, million, rest

Joseph Altobello

sense to I'm get trying million, and in million cushion bit the there. of a $XXX just Okay. that what to like it is still cushion $XXX of little sounds there's a

So...

Operator

Compass Casey question come Point will Alexander And our Trading. & Research with from next

Casey Alexander

premium little XX% Can a more that? [ Chrome Or ] around understand Tour extent give the to does cannibalizing market better Soft about that share. valve to what Chrome combined? Tour Chrome granularity Soft. us Tour an a that Is Chrome and trying launch. little I'm Chrome you Is bit

Oliver Brewer

It is Sure. of Yes. combined, Casey. both those

everything We the includes previously price and which $XX to is it's $XX dozen to were So and intents X. under And purposes, products, is Chrome urethane Tour Soft all Chrome our points, all those mat premium the higher, market and is, Chrome XX% a share it for ball [ ] of price. Soft. Chrome Tour had

their significant but for you products of of the cetera. targets, Chrome consumer about excited know, we're Chrome us, it. So ranges, I et direction launch absolutely, Soft, in guess, now a terms it's they're and compression And cannibalizes different Tour as

Casey Alexander

that share, was Soft, Chrome just mean, what year last But against that comp excuse it when me. XX% Chrome Tour? would I

Oliver Brewer

XX% that probably X% It's basis. in seasonal a to on

points, So up I premium we're year-to-date. then the feedback. getting category good category we're up and the ball in in basis nicely And XXX overall think,

Casey Alexander

is category, Soft driving the Chrome a Tour margin? And so might be additional that higher-priced Chrome some versus the

Oliver Brewer

price our a to this from $XX raised $XX. We dozen year

price strategy There -- this ago. launched in end, product. taking where high with year the Chrome us, are just at years increase for product Tour We priced change traditionally X have so the we previously not Chrome price there. a We launched is the a

Operator

from question will [Operator Zatzkin next Capital with KeyBanc Noah Instructions] Our come Markets.

Noah Zatzkin

of last you out kind back looked half second called think when quarter XXXX, on of the I headwinds. midweek you and as traffic events

You midweek some an or on provide that the if events, could wondering comp just tailwind half, be with the how update of touched to in might progress particularly. and on initiative back but kind of traffic offering kind you upside potentially the

Oliver Brewer

of have for events. the -- the areas and us venue same quarters challenge last primary Noah, midweek several Yes. over identified, sales the as been you

peak do offering during weekends, we to also long-standing had we very well continue times well very is ] And Tuesday. peak very have times. accepted do Tuesday basically value [ We And but on that understood. our are a and on well

as just a expect identified The not really have last it to trend the the So events is quarter. struggle from improve midweek and be we where that but it help would the over business Free same hope continues to It's we that we has us sales venue that. XX performing stabilizing. will would. And changed initiative perspective, an

Operator

to session. Chip our this back concludes And for remarks. Brewer the like any closing over question-and-answer conference I'd to turn

Oliver Brewer

we of a specific some around discussed of Well, call, got and recent details we granular kind volatility. quarters on should as lot today's and

moment a take to like of view. recap I'd and what close, I just As is believe I kind larger a

to continues and grow strengthen. our and First company foremost,

It's itself our major positive That's is daily to have here an ramp or not-too-distant a cash direction of and one record strong That ourselves has growth extremely to confident one embedded in through volatile we sales transforming profitability the strong transitioned of increasing, defensive few hope expected over returns now same and an future. somewhat in working a important flow goal and and doesn't we're venue years. to venue and I that COVID, And ours. The been we're lost cash year, our clear is moat. reprove growth the also golf. and post that. noise. Topgolf ahead, is run it has path flow. We track its over increasing expect but expect the EBITDA we next rate have a cash transition was continue. Last to That and flow get

robust clear. the reach audience In our business the of synergies existing products new new continues delivering of in clubs to look a driver, to putter the and brand the to create on you over market Callaway on were #X strategic with value growth Smoke update believe will hybrid. to Odyssey flow also U.S. We golf And and the your you share to value in deliver and drivers, for fairway growth cash strong and revenue time and brand was shareholders woods Thank Ai irons. golfers, for U.S. our and growth as potential share we #X Given our we We're golf expectations and uniquely and position and early ball record QX, woods continuing fairway in shareholders And forward for and a of model #X time. we is on also profit ability to year we have of Topgolf's Ai-ONE. the plans progress. and innings here. in today, strengthen. half remain delivered we growing the of Topgolf's a and the in in confident second premium was this and future our healthy in industry, for year. Overall, strength the ball. We're

Operator

concluded. now has for conference today's The you Thank attending presentation.

disconnect now your You may lines.

Topgolf Callaway Brands (MODG) 8 May 242024 Q1 Earnings call transcript