MODG - Earnings call transcript Q2 2024 | Topgolf Callaway Brands Corp.

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Operator

Good day, and welcome to the Topgolf Callaway Brands Second Quarter 2024 Conference Call.

[Operator Instructions]

Please note that this event is being recorded. I would now like to turn the conference over to Katina Metzidakis, Vice President of Investor Relations and Corporate Communications. Please go ahead.

Katina Metzidakis

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

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

available press on earnings our company's We have release, as as under are the updated both tab. website published Relations presentation earnings Results the well Investor presentation, Financial an the

and Aside We from revenue, Regulation discussed in the the on non-GAAP GAAP these the call financial the measures. with numbers measures non-GAAP to and accordance reconcile reported measures G. are measures presentation today's identify corresponding in

this to statements management's Please harbor the uncertainties description. to call risks and actual forward-looking more a you could from statements differ press in materially presentation will complete encourage involve review include that We and that cause the results the release safe for contained expectations. note current that

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

Oliver Brewer

the transforming growth is of more as our sales believe have At golf, some announcement strategic you, made release performance in game business. time afternoon, everyone, and the call. it we the returns I significant and that high-quality our thank same in Thank venue We review formal same financial as Topgolf stock want of to convinced substantial Katina. opportunity, the about with by over remain will disappointed reiterating for our joining press begin future performance. been a and time, business deliver recent you Good our we Topgolf is the we it well for time.

venue process of As assessment same includes a of Topgolf result, growth This inorganic alternatives, potential organic Topgolf. are strategic spin as Topgolf. review a review including to as of strategies the profitable the sales return well of conducting to full in a we

Topgolf We're is is to of help expeditiously. review value. outside at strategic advisers with on review our in complete the Topgolf present expect active of of work being Our shareholder conducted focused this long-term strategic and maximizing and

We the when this complete. back will work report on is

can you questions try details any comments growth address on strategies initiatives the portion. at on I inorganic potential provide to time. or unable further this this imagine, happy to and be comments during As answer to I'm will organic we'll my

greater few to and sales including lower-than-expected our company segments a below on strong to and quarter. million minutes. was revenue of due expectations, which $X.XXX Moving review at performance roughly the second cost operating billion the and same-venue golf lifestyle the Both QX at golf ahead share active driven a Total Total detail primarily in discuss in expectations, equipment both Topgolf, by performed of I'll was consistent EBITDA of TravisMathew Callaway across efficiencies business. market expectations, management with continued $XXX strong of the equipment.

venue a sales to same single and digits. be low trends, revenue billion and results year high estimates by are full very our to of approximately lowering these Given to $X.X full our billion $XXX to million $X.XX we current range expectations down year double

we're As an but Topgolf a implies EBITDA as EBITDA in well approximately as estimates. which venue flat operating our EBITDA continued mitigated sales venue same our updated This savings are negatively initiatives. $XXX half by the be flow-through our improvement million By will $XXX margin. outlook will on impact based our to outlook revenue cost efficiencies result, we to revising segment, year-over-year our million, lowering second

by potential approximately million. X% second this of activity the our of in This or revenues product slowing In side revising the further $XX the our reflects of year. second half business, consumer legacy half we for are or down

bottom line this any can manage we our modest business. believe adjustment in revenue we However, impact to products majority of of expenses the offset

Finally, position remains our cash minutes, strong. a and financial as few Brian flow discuss will in

with segment TopGolf. to to performance, with start move perspective. now I'd I'll from what like starting a we're macro seeing

feedback the inflation discretionary consumer spending. belt where survey our it concern We portions tightening in has price to few been large years last it and it from well external restaurant from has clients. across firsthand corporate as business, the leisure industries. an in wide data it peers, customers over documented, led as As our is data those the We card observe well in and see persistent and both in credit of venue hear see our of internal including biggest our

we income the stronger what appear Bay in similarly directionally we're data. our But quarter, you venue with during were to of the saw, and XXXX other plus at X the that by than the now X our turn venues What shows X our positively be top-performing it X-year and of in X X% business. to similar entertainment to the The it Bay what sales correlated the our trends. both support including X with and moving thoughts look shows In results, business remains we're the data quarter. stack the in I'll events portion sales data, same saw that experiences our forward. consumer household this, of driven overall about The going Topgolf restaurants. when Bay year-over-year seeing, moving trends down and quarter, to soft traffic we venue declined do overall same the

to Events easiest but of to is slowest Bay. X+ our perhaps part Turning and the the business, understand. This

reflect believe normalization stabilizing, Events previously slowing belt May deteriorated same down surge XX% venue business of X% demand thought For events well a We a a post-COVID conditions Bay as typical and was results the on late as year-over-year, X X% then softness June. XXXX. and in and business X-year it stack corporate quarter, from sales economic plus the in the but further tightening. was versus We

of the year. now by sales on with we to to expect this through end Based the QX data, lead level slowness potential the off continue

partially in was XX a our campaign, there Looking by in same well had sales more of recent step at tested the we deteriorate macro the in both advertising as which May. rollout This mitigated change late quite the rollout data, starting our in promotion of free likely saw most venue and demand June despite May. or combined was U.S.

full balance June's this expected double single slightly when continue July in the the digits. it as down to U.S. been venue we've our year to June sales X% the down of to same the implies and With venue year. high few than decline now seeing low July we calendar we're weeks. XX% the digits with trends be the same sales better very retail basis backdrop, was positive. X forecasting first was a weeks of for approximately month the trending on last This

this easier relatively slowing fact the through Given should that some additional be forecast a for period overall allows also mid-December of demand. August of comps,

Now turning to what it. about going we're to do

refining we're efforts First promotional as well as furthering our offerings. select our digital of all,

the on is several believe noted I've for opportunity As last the us TopGolf's digital biggest we calls, business. building out

sales reservation averages. have penetration a are by why both organizational our our consumer digital portion points important technology talent and our data system, on our capabilities, as focused implementing basis consistently This and this is again investments XX year-over-year a PIE, as sales is higher perspective. of strengthening perspective, our that XX%. from platform from well significant fact, fleet another such as our a outperformed quarter And as digital this penetration to increased venues know In with we digital

To going investing additional and this insight loyalty end, in expertise. further team performance the digital program is be consumer marketing, to

been and this Turning to traffic With be in out interest it our effective found mind, new customers. brand to value, we analyzed free visit offer effective selective promotion in it they and and be for driving Many an driving have to and profitability targeted. by believe promotions. first in, overall need existing protect customers, results, and [ our new customers To smoothing attracting from long-term book may and to it that but reluctant the be demand any in reservation. time improved ] we walking to less promotions XX has we generally

will promotion customers these redeemable continuing for walk-in to we model only X-hour that our our be our days we who utilizing not reservations existing is new the of a anytime platform efforts to targeting X value drive free consumer have a Given requiring not data reservations version reservation XX built. customers with via and insights, week and X while

now this forward to trialing and are look the We seeing results.

Partnerships are another and traffic. way to incremental drive increase awareness

we've able find scale, been national bigger, to gained have we more partners. As

partnership to and drive Visa special this Our cardholders recently With of Topgolf announced repeat to with via intended Visa cash is good new promoted this. a example offers both being is visits. at partnership,

game but to be quality visit. to and importantly, stepping on our delivering continually we're Lastly, up reasons experience the going improving of our newness,

more provide offerings. to are we we fun design, We than we by value are unique this be are premium made a but and can and experience not in cheap, other thus,

visit more we point new newness, By reasons to be again. year. a Xx or to give back national customers fun reasons refocusing believe Topgolf on a per and least and From delivering forward, visit try us to will basis, on X we we at exciting this give can come

of new ball new unique which includes love geared team that golfers. this launching a Sure forward QX, video and you'll if easier in-venue in designed and features next it. the the and think makes QX, we Topgolf airborne Thing game For Callaway towards with in to It Then by engineers [ fan is our recently a be we'll design launched it and was get innovative Club Golf the consultation ]. games, you're the

nights. addition be will live as local DJ and drive more excitement initiatives concerts programs, big to also these In such to visits there national and incremental

a constantly to same are over right drive time, things Turning sales I our and teams improving we believe already lot moving doing growth Overall, including my thoughts initiatives. venue of forward. in firmly to the

that I since perception seen we and the our point of recommendation purchase and to evidence initiatives, scores intent, As have brand improve. summer fact price spring this, launching

both do and in And recommend the been plans we're indicator and the we also which and a our consumers' scores identified to believe and importantly, forward. address to growth going correlated fund Topgolf. where At areas historically can better, a we these time, is are we've highly fewer future to likelihood quickly resources up, return has for putting perhaps most same our leading

it initiatives some and choppy. of remains macro will clear is implement time these some that environment the Although take to

ability margin in venue continue growth same believe our performance to to key second gears driver expansion. time. drive I Shifting to sales Topgolf's over

to in shown both operating its and consistently margins, ability has team positive conditions. drive difficult Our market venue

quarter, we soft adjusted the total year-over-year. revenue points EBITDA outlook were XXX expect we grow now to full XX%, half a to the XXXX is trends, given full of lowered revenue and top our margins by quite said, improves. EBITDA year, basis XXX That back healthy considering top margin despite venue with year to able expand year segment the For line points plenty of expectations margin flat which room of lower is still approximately last basis as versus our roughly at be ahead line our for

Montebello continue financial to new Texas venue high We track We conclusion year. Bryan, report open venues venues successfully and targets. on out, [indiscernible] is and QX XXXX and our construction add openings. Topgolf in performance schedule. to and performing the and including QX, well X remain to its the achieving under segment key X are on In X are opened TopGolf Moving in remaining new margins X Venues venue this of development. well drivers, on venue in added

been to same front, have we the our On are below committed sales and expectations, results here. improving venue

events that portion of the an is normalization seeing economic what of and/or a post-COVID believe business. cycle I vast the we majority our in are However,

strengthen to in experience. to the capabilities positive really enjoy continuing the intact. believe Topgolf consumers a that same-venue are This we and strength remains Importantly, environment. sales of I enduring normalized being our drive expertise

and measured sport a revenue Topgolf the a model, Topgolf economic level strong increasing the of time. over on of trend on retains remains golf normalized core addition, venues as as profitability model In where is our a does

can outstanding new uniquely growth we identify high and execution build strong This combines venues defensive with business from unmatched with an benefits confidence well as and and a the moat. outlook

Turning with remains market share golf strong growing positions. equipment. to brand The Callaway now

hybrids. held driver, the as #X its in Callaway market quarter, ferry brand woods This U.S. and position share

and performance woods our a share the fact its as channel. maintained grass showcases of maintained Odyssey [indiscernible] Ai June position One we XX%. and market that green that the line model smoke #X in our environment. terrific proud particularly scale also and irons I'm stat this green U.S. the woods AI #X putter strengthened fitting Our in is market outstanding XX% this driver share of at brand. the grass showcases deliver number. is can smoke a in And distribution also our it of important position

in years continue tour in with segment major grow our made was this ball. year over the last tour Turning Callaway we've pay ball new dividends investments The A for and the to to strategic to brand. golf golf significant several product line. our ball Callaway focus for Chrome

that doing that. results Our we're show just

announced Chrome As hosting you will and I be speed we may recall, challenges. last quarter, Tour, spin ball

have the results We done of these impressive. hundreds have now and been

and Our pitch shows we are test test faster of deliver in shot back that that spend in the test. we data XX% an of advantage XX% in the

increased overall record share premium XX.X% market ball Our basis XX%, by U.S. a XXX and June market ball our new share year-over-year points share up XXX basis year-over-year. to achieved of points

has Championship. PGA brand second his championships, major Xander and tour second U.S. on and the year open [indiscernible] had her also his Our winning an outstanding women's first the both then winning Open with championship and

healthy the Korean soft, we year and market field positive. outperforming we market. remain core double global markets. by overall The In other have revenues the each underperformed of markets conditions these market, The this slightly markets, not share. demand all we measured at steady, believe of the digits overall are Looking down Japan as Europe consumer in hand, on inventories, this market and U.S. and also market if slightly golf remains with and unfortunately,

seeing changes a at and here, have our are improving performance relative aimed recently result, signs. As made we we positive

technology well my Callaway. slightly new on launched For product upcoming we're at the tune announcing is opinion, we communication to of Monday, only into line the I'm tour. be popular forward, learn this. about and exciting more. is best are the this Congrats excited here Apex premium of launches. new will Fusion our I new recent as and about choice This invite the of In of launched excited OPUS and drove We the this teams and our looking the done we that introduced our be launch beautiful new And just balance most our irons. wedge, the will launch already and wedge of to product they tie is line irons particularly next year, lineup, on my both our in have that part time a innovative. you to

expectations. for solid year, full currency-neutral for on approximately XX% active full retail but develop initiative this new significant revenues segment. the revenues to to year a Switching QX had were on our at flat X year nicely and of gears They way business. opening slightly track revenues. see at XX for wholesale to be segment, a line now TravisMathew delivering full this total approaching being lifestyle basis. now share Looking forecast portion up stores stores. The a for are our the a open quarter, we also It appears on XX. with women's being to of to in gains also of is its and continues

In them done has outerwear addition, helping job brand. great their the TravisMathew is team turn growing which be a less seasonally focused in a business,

hard work The our team Central like rightsize since business Wolfskin. in earnings their successfully to on brand strategic we for the back its to last as shifted focus QX significant the steps to core and Moving Europe we call. its markets China. spoke I'd commend Jack has to took

We are recent for performance a our achieving XXXX. and encouraged including sales still we QX positive results, by EBITDA targets in expect

same resume positive overall last at year-over-year are Consistent we improving we significantly a results active in our environment. menu and of organization's same segments. in growth. this the equipment base ability sales, performance communication, as to to short-term with in view lifestyle volatility we working form through decline normalized drive Topgolf, pleased which At are while in a we a segment cycle what our quarter's to both time, we new as revenues with golf conclusion, expect the In of

Topgolf highly demonstrate to We of in options to strong acumen opened our drive build which to within the continue deliver one overall continues and experience, attractive and efficiency venues to improved the as most ability with entertainment consumer resonate available. digital to financial our the newly grow operating of our penetration with and returns performance reliably fun to on experience. venues strength players

the that and Brian. turn strategy call have that, confident look in growth both With to proper place drive the forward, I'll we to long-term revenue we profitability. we in As remain over

Brian Lynch

revenue. afternoon, Chip review Topgolf, so I results. of you, I Chip, our the our will right everyone. expectations highlights non-GAAP jump good adjusted strategic for announcement and QX in of despite year-over-year start million decrease financial million, EBITDA were and covered the quarter. net with Thank ahead of X% regarding income of financial into of will some $XX all $XXX EPS $X.XX a

compared provided million by $XXX half last improved cash First year. to half first operations

inventory were outstanding decreasing $XX discretionary at made debt successful QX our reduction payment million May. year. loan last with million initiatives term $XXX principal We the consolidated our a Our against the of inventory since end of

increased available compared liquidity and QX last $XXX million remains Our year. to strong

end to the decrease consolidated X% below year-over-year EBITDA decrease the our X% X% of specifics. decreased the primarily equipment by million. due compared currency Topgolf efficiencies income as at QX rates guidance expenses attributable approximately expense our $X.XXX at in decrease revenues the loan On operational trailing This lower year-over-year. QX partially venues. These Topgolf last by for high a benefited an EBITDA investment business. increase tax across trends flat were of to impacted turning with year-over-year. were Now income line midpoint basis, softer in benefit growth XXXX expectations. approximately from strong business. term and a adjusted QX in year-over-year golf XX-month and guidance, Changes Topgolf This XX% which both X% quarter. and by $XX decrease over an our our is to year million, of income interest was due new of Net of exceeded results billion in million $XXX also net $XX revenue QX non-GAAP a to is XX% net in cost adjusted the offset consolidated in result negatively primarily to and foreign in lifestyle, our reduced refinancing. by and the increased was driven increase approximately driven revenue to up active income largely range, was and

prior year, QX new communicated. management million, was adjusted driven consistent adjusted increased we performance. by the The the last team and to and second previously new grew to driven top operating and $XXX targets million operating well their XX% revenue the The opened continued QX efficiencies, by $XX EBITDA to income X% financial since while new segment year. XX% cost performing in primarily strong to up ability initiatives. commend We increased profit Topgolf environment. the venues line EBITDA $XXX to quarter, compared a At Moving volatile labor venues with Topgolf are Topgolf, year-over-year and drive the model returns revenue growth at the million. from including our benefits in primarily for was

constant last year's which expect between just irons, This of timing and woods our year approximate golf Moving ball golf be on earlier. Overall, lapping million impact year-over-year market to with discussed momentum golf continued to an to consistent we strong $XX from currency to this due launches full and the QX birth shares, still as $XXX equipment million underlying for quarters, primarily equipment and Chip a X% QX to decreased basis. with compared year. up to the big results equipment. year's strong this launch for of club Revenue business see expectations, had our is

segment impacted the to headwinds equipment by foreign also negatively was approximately million during $X golf Our quarter. exchange related

Jack lower year-over-year sales. Lifestyle were currency was along air offset Golf to expectations our from the decreased exchange Wolfskin due inventories, management headwinds, in in which XX% million operating field operating to In lower due decreased rates. million to QX primarily primarily to decreased segment, year-over-year which due of foreign higher freight our revenue Operating X% foreign income and in unfavorable with changes income of with to compared line costs prior the softness and is high million year, $XX expenses. Active $XX partially by the $XX revenue, equipment in

sheet balance liquidity highlights. and to Moving

liquidity. ample have to continue We

manage on flow costs as hand facilities, our under XX, $XXX due credit to company and our million liquidity, incremental June with better cash continues million of to capacity the to regard to comprised XXXX, to capital, generation more is and the manage available compared borrowing working which of efficiently especially As inventory. $XXX prior cash increased year

net approximately our is to of million debt venue the to of excludes $X.X related At debt year. compared recent debt This by quarter $X.X end, debt increased we same in for convertible which term loan time increase debt partially billion, new had $XXX offset billion last to reduction a paydown. to financing due venues, total attributable

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

our the billion sheet, REIT to Excluding is net of REIT adjusted from million $XXX debt as debt compared $X.X XXXX. balance our QX

increased debt. with REIT ratio, the EBITDA remain leverage payments X.Xx exclude X.Xx which X.Xx was improvement This EBITDA leverage prior offset which was debt these convertible expense venue at net We which to the adjusted REIT driven X.Xx debt, than flow, year. was A improved more burdens to Our June year. prior leverage compared cash the with comfortable compared the and in debt XXXX, in by levels. XX, increased interest net financing

based REITs, market. quick update of a what to I in Speaking the provide on are want seeing we

attractive viewed interest increased continue as venues. we our First, and for venues fact, REIT to very new demand these strong from in are be and seeing investments partners

steady at to our the several line balance decreased million in remain quarters. $XXX have the inventory the venues rates last or cap million XX% and the of on we seen Second, new QX gears, rates end XXXX. over with $XXX Switching

for inventory and reimbursements with our X business for essentially expenditures pursue. to and we we of XXXX each Capital net our of $XX $XX million with $XXX million. normalized REIT continue were million, quality level We continue believe partners received feel approximately for capital first region our months the will that of to from opportunities small expenditures at current and or we in comfortable levels the are of brand

year outlook. our to turning balance of Now

with million expectations year we mentioned Chip coupled our our revised lowering same are of XXXX our our across by softer potentially $XXX decrease sales consumer guidance our given billion the and outlook to venue full is to a revenue of businesses, approximately a of X% approximately attributable $XXX $XX million earlier, other for business. range XX% environment for $X.XX the to products billion. midpoint business range million to or Approximately or As the this $X.X Topgolf

strong As a the $XXX of also million are result, and were full we respectively. Topgolf, which reductions million, EBITDA, By our in in cost a the and to prior of $XX change revenue lowering $XXX billion guidance of and $X.XX we efficiencies. adjusted to by at through our mitigate segment, EBITDA of EBITDA approximately our range adjusted billion to able million compares approximately operational $XXX impact midpoint $X.XX million outlook are year guidance lowering and revenue to to $XXX in million. We the approximately

to down same Our sales single digits double guidance outlook of year very the the half updated year. digits now of high softer with assumes a venue low for back

allows year. and are Despite of very in foreign about forecast the rates, both consumer in expect and launches updated golf and our range we wedges. second of of half our some currency growth trends potential Apex a second current softness this of half the for of equipment, softening a golf excited OPUS the In or QX irons includes now continuation that outcomes equipment unfavorable

on China. the due Chip focus up year, as its last income Active be with in X the down And to million Central business channel For operating noted, sales line continues for we lower core perform year and approximately on and expect Wolfskin markets Europe Jack this anticipate Jack $XX filling Lifestyle, the at continue Overall, year-over-year a we to year-over-year basis. to we to corporate expectations. In full golf currency-adjusted in full have and in to equipment year and TravisMathew successfully slightly be rightsized segment to Wolfskin. revenue TravisMathew flat lapping

income approximately since have of full guidance, we an rates million of last expecting negative exchange revenue and gave $XX $XX approximately impact million. we operating on improved year a now are Foreign

Shifting gears.

is for flow. compared continue Topgolf. to we While million XXXX, business also the free million flow expected We from our our million positive expect the cash cash $XXX be coming a $XXX estimate flow are cash year for to approximately approximately From for for guidance. million we we non-Topgolf $XX positive $XXX to cash $XXX prior million CapEx outlook be perspective, free with to flow net expect lowering year. and now from be in full free coming TopGolf the to

to be in due Now more $XXX to Topgolf, marketing continued turning we revenue $XX to EBITDA million $XXX compared operating is $XXX the efficiencies. revenue, change losses expect down $XXX compared revenue to expect consolidated year-over-year, $X.XXX increased of year. year. QX digits specifically. spend in and to QX This offset revenue prior adjusted and timing in XXXX. in expenses partially revenue In versus QX, than due million of In income more to QX prior decrease hedge single range deleverage at the to we the expect be the and the by low marketing estimate down we in deleverage, be million billion million We to of million the to to

also to is QX. the and revenue timing same expected to to We be to income approximately expected expected in grow be down equipment slightly is due is currency. Golf up same unfavorable to venue QX, QX in income spend to QX and to launch foreign due sales down ball. are to new expect golf product the the in Operating revenue QX expected launches. in marketing increased due growth. Operating decrease be the to growth changes related expected primarily sales in and due revenue to year-over-year be in QX

lifestyle. active to Moving

estimates the for to We sales due expect last revenue decline QX lower Europe to Wolfskin wholesale compared year to channel. and Jack

in QX due to be due expected to TravisMathew is the both at leverage. QX expected the income to be is Wolfskin. and down in QX We expect Jack in Operating up and revenue decrease revenue to growth

and As are the want in Wolfskin to The high remains we I and interest the fundamentals markets conclude, emphasize their strong. Participation fund business and very TravisMathew strong. in leaders that remain core in of improving. Jack golf brands are scores our

our However, point. business, economic macroeconomic expected some seeing the current at golf clearly part the less we outside in all This softness cycle some we conditions. are of of the is consumer equipment fun

it and impact operational While of through on bottom have much the able some having line cost is to revenue, been we efficiencies impact management. offset

cash strong We liquidity. and positive are flow have free

are take strengthens to of We the as maximize to cycle during this again. great a in be opportunities consumer to conditions able and better position advantage

said, the like now to open that questions. for With would I call

Oliver Brewer

to close. the comment opening actually on trading before stock want I shortly market questions, call Before for our in the halt

provider we to Relations to market prior use our presentation Our prematurely Investor to close. manage posted website, website long-term our our investor

was had it earnings been today. immediately quickly publication already the in down, it halted We NYSE announcements pending a our notified in of media. up the trading Although picked taken

will discussing apologize the our call matter and disruption. with please said, with for be Operator, this provider for this that We further open questions.

Operator

Instructions] And [Operator Alex our from Bank America. of today Perry come will first with question

Alexander Perry

I does for you're And I Topgolf about any sort sort year? thinking future in make First, this Topgolf the of the a on then pausing to versus how it. think sales growth current quarter guess, you and maybe traffic beyond bit. little wanted of unit little ask about about a same trajectory ticket color

Oliver Brewer

regard expansion. With Sure. to the this Chip. Alex, is venue

that we've a given continue creating is shareholder something obviously build answer to for correct the And we thought amount to the to. the fair is short of believe that's So value venues. answer

little on average add that, again less some per an years starting in a of little add years XX to though. year a color a some more, expect little We XXXX.

on cash these attractive As investment, have and XX% communicated, cash with financial and cash XX% for return payback. than confirmed formas the very XX% and looked period we the X-year venues, at recently, sales XX% venue the less returns on recent We've to consistent gross previously new recent We It's performance of just the pro same volatility. that. metrics believe our even is are in in they volatility. delivering venue volatility to

and looking first the in was same down single and stack last color X%, time, up market, it little in of years this We're to the this to To in X-year case position. X, still a even it's to and venue but we're or we you of through and basis deliver strengthening We're going and through we XXXX In good the a the normalized cost and far XXXX volatility, respond our period side better ability capital. give exceed to same the half, over it's sales consumer in growth. sensitivities drive exit we'll be circumstances. X new it, ran And believe venue XXXX team Over this in information 'XX, assess wrong, and it sales continue able year. our Bay, downside returns stronger just on versus a our sales X%. on few in up venue X%, to a up of are was we'll a at digit low that, 'XX still same

or venue and slow needed, goals can cash company's and of if we question we investments, the flow protect down will the wisdom at that present, proven confident. remain We've the growth neither if to we those of apply

issue now. right traffic versus visit the On a really traffic mostly is spend per it ticket, and

the as consumer slowness other in of consumer detail. a of well And at much experiencing our bit the business traffic. business, look outside the business event little difference between like there stronger is data there's with when you the being we've and in So it seen

Alexander Perry

Got about XQ given you. to I a ask implies you equipped the timing of guide, sort I golf of helpful. that in And wanted down from sort the then the it Apex guess quarter, Bertha really is benefit. versus golf with what's expected equipment the last sort just quarter. core that occurred about XQ the of the benefit maybe down that guide more That's launch talked XQ with

So lower of sort Or partners? and the there? your what are takes wholesale puts orders you from seeing

Oliver Brewer

But I'll Apex Yes, now. launch we in. it have Brian, jump you basically, and take

in the other in to from more perspective coming favorable launches equipment versus second half timing have golf the launch the anticipating for up a half slightly We're year. QX in of QX. be the year. We're We QX second of

market are good. Our shares

good. in Our -- We it. about markets our category are feel the good our and position

Brian Lynch

QX. and it's No, between some it's just noise QX really timing

to we half currency be year. the mentioned, for the even second up neutral Chip on for As expect and full

Operator

Matthew will Boss with And question next from our come JPMorgan.

Matthew Boss

architecture you today further that guess time? concerns for initiatives proposition comfort current at today. the pricing venues of the you're what's and over So pricing considering X as with drive traffic in just cited Chip, Topgolf or largest your value to consumers improvement I

Oliver Brewer

a absolutely right of is topic all Pricing for consumers conversation now.

that You portions it. varies Topgolf pressures consumer stress. and can't are the we that the you inflationary media and level the hearing definitely that And And open there of about can of some of data in up know feeling segment without are but there. business the businesses, some across see clearly it

I selective long at efforts in for answer targeted think in is Topgolf, fairly and the the promotional term. been our that why and right have We

increased it select look to it's relatively that driving in offering free demand the you If time be and profitability. both promotion timing, the effective we of the modest It's driving that running and the smoothing in are demand incremental in period at and it's XX, gives. proven

we it continue reservation for and offering and for refine an that long more don't talked that make intelligent model -- protect this also builds in we've most brand how them. call, this value that kind us this use We satiate we're think manner about interesting allows the satisfying new and the that run, different and to on the expanding to can in of do to and for consumers to visitors available way

sales exciting we're drive to lot got a side going on of that same one continue And is them. initiatives that. of to venue The working we've in the front. just we're promotional So

Matthew Boss

strategic you've could just table? Great. what the And then on maybe could and Topgolf the as considered just a alternatives that possibly elaborate follow-up, on or initiated, you be review

Oliver Brewer

When but considering because I we're it's now much on not the There's potential done, we that. And that of process work can a that at all that work shareholder the say how present. back is alternatives, looking it. do report We're maximize best spin. in middle at we're Sure. we're mentioned a specifically right right we'll that on middle We're value. of in long-term

Operator

will Riley next from our Eric Securities. Wold come with B. And question

Eric Wold

Lifestyle short how now think spend. golf the the segment you of consumer are what couple making golf I their business. consumer thoughts think on the to there, equipment your being equipment do on term? long right the -- term pricing to you're a Topgolf ability you non-Topgolf and difference and and questions as versus guess about Topgolf And headwind or the a about A pricing within

Oliver Brewer

downturns with very and not we now. economic the continue of to condition. see that. passionate robust right business wealthier, our The globe especially And markets They're there solid, remaining sensitive golf economic most the the at markets And or Korea. more Eric. be out exception equipment better different, than is across or And is to to the modest Sure. in changes has consumer proven are

we pressure household average that The feel demographic about might very Topgolf there good is of So feel about $XXX,XXX, more portions consumer the than that. consumer. equipment an that income of means average are which golf them

Eric Wold

it. Got

And take so of that ticket degradation visiting Topgolf, just being than their are a or about those for the demographic lower door in and Topgolf seeing to you're of Safe more in kind more first issue. the pressure issue more that an that's comment say that person before any income the their traffic per getting spend consumer not maybe place.

Oliver Brewer

primarily traffic Alex. It's issue, a

and data we've business share performing traffic this segments some addition going between slowness a and post-COVID that. noise the side The of directional on but event is see issue, actually that shows that restaurants. to concepts the has bit it. right more underway lot with bit had that business the economy now. of all little you're initiatives of on in little in volatility also in we got -- a what of consumer -- similar in we better it, significantly primary And reversion of general seeing in is other the economic there's the and There's a So of a

Operator

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

Megan Christine Alexander

differently. another I the little Topgolf wanted question, shot a ask just bit take to review it strategic at maybe

a get to the to just macro, understand trying for to mostly can back I understand organic that say to the that bit as back goes, So the same and low inorganic what volatility strategies that single talk growth, organic today. the in release, venue advisers you you want But don't profitable You review assessing as hired? of about you Topgolf more strategy part external digits. just far little just is sales mandate I'm get it's alternatives you've to you talked the think mostly about did about guess exactly

So venue confirm that they to growth. to something far And strategy kind are the is there positive goes? of that a that as -- at that's back there's it sales or so timeline else terms them a of organic as is in same you is Or it just get want case? to timeline looking more

decision to far the alternative understand, the as Just goes. more strategic bit a about guess, trying tree I little as

Oliver Brewer

Yes, sure.

also there's that going lot business want volatility. venue outside of advisers operate do are it clear So seeing with have recognize we better. exists. and I as we to continually do -- side, on a look what macroeconomic that to the the although sales. be approaching that to environment our can in at same and we're There's we We ability to us organic we're do our is I to believe how and have drive working improving

strengthen Club, venue newness to has team, We venues, the the significant talked sure sales energy the the will games, to more organization, We about fun, launched and and continue same in new that to cetera, reason the better et are about visitors better that thing reasons the give to returning talked on performance new continue visitors which at a both We to efforts and making the visit. come to side. concerts, Golf its our capabilities script, drive back.

run. our pay efforts will about dividends through We're new here. digital a will additive resources we're hired our come teams in going she from marketing upping and be Operating as that. our long We're to Chief efforts, and Officer, the We're this working the digital the casino and came out commercial our performance believe And of excited of stronger undoubtedly significant I on We the articulated significantly direction. efforts game And and investing adding I'm our to business, promotional volatility in who to I side. already. and further period

drive your resources sitting it's using organization, this to that sure better Megan, It's just that here strengthen not build far So venue normalize. we're a even that opportunity realize from out, as question? not, the same Did you the cycle that. when waiting macro really we're and I'm it it. answer and this sales an do to We're and conditions taking

Megan Christine Alexander

Yes, the relative look that, tell of the continue just year. context you're second you yes, implies seeing weeks? Could said with you of balance to trends maybe the much Topgolf. better X of the maybe how that's second first maybe the helpful. sticking July And X the the weeks us in half And for

basis. point. to 'XX big say there sufficiently get of in guide is step derisked talk I'm think any compares Would of at compares kind to like this XQ. the second half about see easier. look versus be did what trying you down whether You assuming just understand did given way that's on pretty X-year a I'm kind a they

Oliver Brewer

we what July. as Well, saw, and mentioned, in June

business So in trends X%, those XX% assumes our the that continue. U.S. June, guide July. down in And

And so in be do just number if to down have we you half. the for a would math, second the double-digit

question year. last and In last comping that but small words, there easier. versus one? X-year that the not would negative it's at be numbers, other to negative, that answer at point on So on to are only we would where least continue a the numbers you're the you were, but Does are be negative small guide basis, going weakness year say comps the

Megan Christine Alexander

weeks, Yes. Any guess, first of I X I because if... all wondering much better how just the at asking contextualize the can second July you -- guess weeks X versus

Oliver Brewer

to be There to into week and I much of think too it to that get one I within of bad start that ask enough read detail. is level into Megan, not reason could getting other, would and going to question we're level specificity. that the and the think practice or noise granular understand I you the a that way week

Operator

Instructions] [Operator

from will James. Raymond come with question Altobello next Our Joseph

Joseph Altobello

Topgolf back surprisingly, to I go second. to for want here not So a

today call throughout long-term the and the Chip, mentioned you changed. business that hasn't on your really view the So opportunity

then cyclical of point you post-COVID believe temporary So the Topgolf what's the or are normalization, review? if at the that issues

Oliver Brewer

inorganic that value. Well, would there's long-term interest it's shareholder that in I think evaluate an practice to good the better of if option be

Joseph Altobello

Okay.

anything... with stock, it's the a frustration really not that So

Oliver Brewer

Yes. Oh, absolutely.

the alternatives underperformed to, our is to There of and long-term shares strategic have one Joe. due and strictly that's inorganic shareholder to review, that that's right. our maximize view structural that point factors So are There's our they've And time X relative a underperformed or of and value. sales. side drive venue for growth that's recent obviously, we're venue single-digit organic same period over of committed of same sales be low And the time. to venue those is that best-in-class The better it sales now. or same

Joseph Altobello

it. Got

follow-up on And Could the potentially stand-alone say, quantify dissynergies it that. you just business? a if Okay. for a were, let's Topgolf,

Oliver Brewer

process, this be looking we'll as we're of time. comment but something That's at that going part at not on to this

Operator

back this to Brewer at over I the call would turn like remarks. to time, for And Mr. any closing

Oliver Brewer

your We you, everybody, in forward in you thank to for time, today. tuning we continue appreciate to and Well, the communicate look with future.

Operator

The lines now conference at this for has may your time. disconnect concluded. you now Thank you and today's presentation, attending

Topgolf Callaway Brands (MODG) 7 Aug 242024 Q2 Earnings call transcript