Q4 2021 Callaway Golf Co Earnings Call

February 10, 2022

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Ladies and gentlemen, this is the operator. Today's conference will begin in a couple of minutes. Thank you for standing by and thank you for listening.

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Ladies and gentlemen, this is the operator today's conference will begin in a couple of minutes. Thank you for standing by and thank you for your patience.

["Pomp and Circumstance"] ["Pomp and Circumstance"]

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Good day and thank you for standing by. Welcome to the Callaway Golf Company 4th Quarter 2021 Good day and thank you for standing by. Welcome to the Callaway Golf Company 4th Quarter 2021

Good day and thank you for standing by welcome to the Callaway Golf Company fourth quarter 2021 earnings call. At this time, all participants are in a listen only mode and during the Q&A session. We ask that you. Please limit your questions to one and a follow up to all of US as many participants as possible to ask a question and all of that.

And during the Q&A session, we ask that you please limit your questions to one and a follow-up to allow as many participants as possible to ask a question. And I would like to hand the conference over to your speaker for today, Lauren Scott, Director of Investor Relations. Thank you. Please go ahead and unmute yourself.

And the conference over to your Speaker for today, Laurence Scott <unk> director of Investor Relations. Thank you. Please go ahead.

Thank you operator, and good afternoon, everyone first I'd like to thank you all for your patience, we're having a technical difficulty on your end.

Thank you, operator, and good afternoon, everyone. First, I'd like to thank you all for your patience. We're having a technical difficulty on our end, and we'll be extending the call by 15 minutes to be sure that we make up for any of the losses.

We will be extending the call by 15 minutes to be sure that we make up for any of the lost time. So thank you very much for your patience.

As the operator said, I'm Lauren Scott, the company's Director of Investor Relations. Joining me as speakers on today's call are Chip Brewer, our President and Chief Executive Officer, and Brian Lynch, our Chief Financial Officer.

As the operator said I'm Lauren Scott the company's director of Investor Relations joining me as speakers on today's call are chip Brewer, our president and Chief Executive Officer, and Brian Lynch, Our Chief Financial Officer, Patrick Burke, Calloway's SVP of Global Finance and Jennifer Thomas Our Chief Accounting Officer are also in the room today for Q&A.

Patrick Burke, Callaway's SVP of Global Finance, and Jennifer Thomas, our Chief Accounting Officer, are also in the room today.

Earlier today, the company issued a press release announcing its fourth quarter and full year 2021.

Earlier today, the company issued a press release announcing its fourth quarter and full year 2021 financial results. In addition, there is a presentation that accompanies todays prepared remarks and may make it easier for you to follow the call. This earnings presentation as well as the earnings press release, both available on the company's Investor Relations website.

In addition, there's a presentation that accompanies today's prepared remarks that may make it easier for you to follow the call. This earnings presentation, as well as the earnings press release, are both available

And to the financial results tab.

Most of the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting principles. In the instances where we report non-GAT measures, we have reconciled the non-GAT measures to the corresponding GAT measures at the back of the screen.

Most of the financial numbers reported and discussed on today's call are based on U S. Generally accepted accounting principles in the instances, where we report non-GAAP measures. We have reconciled the non-GAAP measures to the corresponding GAAP measures at the back of the presentation and accordion and coordination excuse me in accordance with regulation G.

Please note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe Harbor.

that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe harbor requirements contained in the presentation and press release for a more complete...

<unk> in the presentation and press release for a more complete description.

And with that I'd now like to turn the call over to chip.

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

Yes.

Good or not good afternoon to everyone on the call. Thank you for joining us today and also thank you for your patience, we apologize for the late start.

I'm pleased to report another quarter of strong results and look forward to providing more detail around our outlook for the year ahead. But first, I want to take a moment to acknowledge the incredible year we just concluded.

I am pleased to report another quarter of strong results and look forward to providing more detail around our outlook for the year ahead.

First I wanted to take a moment to acknowledge the incredible year, we just concluded.

2021 was a pivotal year for Callaway marked by exceptional results significant growth and strong momentum across all our business segments.

We closed on the acquisition of top golf in Q1 <unk>.

transforming our company into the unrivaled leader in the modern golf and lifestyle apparel space.

Transforming our company into the unrivaled leader in the modern golf and lifestyle apparel space.

Over the past five years, we've combined a traditional golf equipment business with select lifestyle apparel brands and the world's leading tech-enabled golf entertainment company to deliver a truly differentiated business.

Over the past five years, we've combined a traditional golf equipment business with select lifestyle apparel brands and the world's leading tech enabled golf Entertainment company to deliver a truly differentiated business model.

Amid continued high demand for our golf equipment and lifestyle products, our global sales and operations teams work tirelessly to make our products more affordable.

Amid continued high demand for our golf equipment and lifestyle products, our global sales and operations teams worked tirelessly delivering quarter after quarter of impressive results. Despite significant global COVID-19 related operating challenges.

delivering quarter after quarter of impressive results despite significant global COVID-related operating challenges.

The team has proven itself to be an impressive and battle-hardened asset for all of us.

The team has proven itself to be an impressive and battle hardened asset.

Yeah.

In addition, we've increasingly made key investments in infrastructure and people to support a larger business.

In addition, we have increasingly made key investments in infrastructure and people to support a larger business and to set us up for continued growth and financial success.

and to set us up for continued growth and financial success.

I want to personally thank all of our global employees for their hard work throughout the year.

To personally thank all of our global employees for their hard work throughout the year our positive.

Our positive results would not be possible without your dedication and passion for this business.

<unk> results would not be possible without your dedication and passion for this business.

Shifting to Q4, our results came in better than expected led by another quarter of exceptional results from Topgolf and continued high demand for both golf equipment and lifestyle apparel and gear.

Shifting to Q4, our results came in better than expected led by another quarter of exceptional results from top golf and continued high demand for both golf equipment and lifestyle apparel and gear.

Total net revenue was $712 million, up 90% year over year, and adjusted IBDI was $14 million, up $27 million.

Total net revenue was $712 million up 90% year over year, and adjusted EBITDA was $14 million up $27 million.

Turning to Topgolf, for the quarter, both walk-in traffic and event sales surpassed our expectations.

Turning to top golf for the quarter, both walk in traffic and event sales surpassed our expectations.

driving same venue sales to an impressive increase of 6% over 2019 levels.

Driving same venue sales to an impressive increase of 6% over 2019 levels.

For the full year, same venue sales were approximately 95% of 2019 levels.

For the full year same venue sales were approximately 95% of 2019 levels.

meaningfully higher than projected and an encouraging and very strong result given the operating environment.

<unk> meaningfully higher than projected and an encouraging and very strong result, given the operating environment.

A resurgence in corporate events business drove most of the same venue sales positive surprise in Q4. Walk-in sales and smaller social events had been strong for some time and continued their trend.

A resurgence in corporate events business drove most of the same venue sales positive surprise in Q4 walk in sales and smaller social events had been strong for some time and continued their trends.

Having said this, as one would expect, in the last week of December and continuing into January , we have seen some softness in same venue sales as the rise in Omicron has resulted in a decline in group events and increased short-term staffing challenges. While this will have an impact on the economy,

Having said this as one would expect in the last week of December and continuing into January we have seen some softness in same venue sales of the ryzen Omicron has resulted in a decline in group events and increased short term staffing challenges.

This will have an impact on Q1 results.

It was promising to see that our UK venues, which experienced Omicron impacts approximately a month ahead of our US venue.

He was promising to see that our UK venues, which experienced omicron impacts approximately a month ahead of our U S venues bounce back very quickly and are now once again performing quite well.

bounce back very quickly and are now once again performing quite well.

This is a good indicator of the resiliency we expect in the US business through the remainder of Q1 and we're already starting to see some signs of this anticipated improvement.

This is a good indicator of the resiliency, we expect in the U S business through the remainder of Q1, and we're already starting to see some signs of this anticipated improvement.

For the first quarter of 2022, we're expecting same venue sales to be down slightly compared to 2019.

For the first quarter of 2022.

We're expecting the same venue sales to be down slightly compared to 2019.

And for the full year, we anticipate low single digit growth over 2019 levels.

New venue openings continued on pace with our 72 Bay Fort Myers, Florida location opening strongly in mid-November.

New venue openings continued on pace with our 72 Bay Fort Myers, Florida location opening strongly in mid November .

While we're on venues, I want to remind everyone on the success rate we're consistently delivering.

While we're on venues I want to remind everyone on the success rate we're consistently delivering here.

We had nine very successful openings in 2021, and the financial performance of this group is on track to exceed our expectations despite the challenging operating environment.

We had nine very successful openings in 2021 and the financial performance of this group is on track to exceed our expectations. Despite the challenging operating environment.

I've had a ringside seat watching Topgolf open venues for nearly 10 years now, and in my opinion, we are uniquely good here.

I've had a ringside seat watching top golf open venues for nearly 10 years now and in my opinion, we are uniquely good here.

As a result of increasing brand strength.

competency of our real estate team and our operating team's expertise, this is now a proven and repeatable model.

Competency of our real estate team and our operating teams expertise. This is now a proven and repeatable model.

a fact I believe the financial community may not fully appreciate yet.

I believe the financial community may not fully appreciate yet.

For 2022, we are confident in our ability to deliver at least 10 new venues, with the potential of adding an 11th in very late Q4.

For 2022, we are confident in our ability to deliver at least 10, new venues with a potential of adding an 11th in very late Q4.

We're also extremely excited about the lineup for this year, with the first two Southern California locations opening in the Los Angeles area in Q1 and Q2. One in Ontario, which is just east of LA, and the other in El Segundo, near SoFi Stadium.

We're also extremely excited about the lineup for this year with our first two southern California locations opening in the Los Angeles area in Q1 and Q2.

One in Ontario, which is just east of La.

And the other announcer condo near <unk> Stadium.

The El Segundo location is particularly intriguing as it's the first venue to include an on-course element.

El Segundo locations, particularly intriguing as is the first venues include and on course element.

And in true Topgolf fashion, this will not be your typical golf course. It'll be a 10-hole lighted course, perfect for nighttime rounds, incorporating elements of entertainment and our cop tracer technology to create a truly unique guest experience.

And in truth top golf fashion. This will not be your typical golf course, it'll be a 10 whole lighted course, perfect for nighttime rounds, incorporating elements of entertainment in our top tracer technology to create a truly unique guest experience.

Additional locations of note include Seattle and Baltimore, both of which will feature our latest premium venue enhancements.

Additional locations of note include Seattle, and Baltimore, both of which will feature our latest premium venue enhancements as well as Callaway fitting base.

as well as Callaway Fitting Base. It's important to note that due to the disruption in the development activities in 2020, the timing of this year's venue openings will be heavily weighted toward the back half of the year, with five expected to open in Q4. This timing will impact this year's contribution for a new venue.

It is important to note that due to the disruption of the development activities in 2020, the timing of this year's venue openings will be heavily weighted towards the back half of the year with five expected to open in Q4. This timing will impact this year's contribution for new venues.

Shifting to Top Tracer, we installed over 1,700 new bays, bringing our total for the year to just under 7,000 new bay installations.

Shifting to top tracer joined we installed over 70 to 100 1700, new base, bringing our total for the year to just under 7000, New Bay installations. We remain encouraged by continued strong demand and expect to install 8000 base or more in 2022.

We remain encouraged by continued strong demand and expect to install 8,000 bays or more in 2022. Lastly, with...

Lastly, within the top golf media business.

I'm pleased to announce that we are leveraging our mobile game development expertise from World Golf Tour to launch a new game later this year that caters to the younger, more traditional gamer, whereas existing game focuses more on the traditional golf.

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

While we expect the game to have minimal contribution to our financial results in 2022, we believe that it will provide future upside as our community of digital customers continues to grow.

While we expect the game that minimal contribution to our financial results. In 2022, we believe that will provide future upside as a community of digital customers continues to grow.

In addition, in due time, we'll integrate this new game into our digital offerings at both our venues and Top Tracer range.

In addition in due time, we will integrate this new game into our digital offerings at both our venues and top trace of ranges.

thus driving synergies from our game development capability.

Thus driving synergies from our game development capabilities.

Moving to our golf equipment segment, we're pleased to report that demand remains very high for our clubs and balls and trade inventory remains low across the industry.

Moving to our golf equipment segment. We're pleased to report that demand remains very high for our clubs and balls and trade inventory remains low across the industry.

According to the National Golf Foundation's annual report the number of on course golfers increased by approximately 300000 2021 to $25 1 million players, marking the fourth straight year of increased participation in traditional golf.

Off-course participation also continued to grow with 24.8 million people visiting non-traditional venues such as Topgolf and 5 Iron.

Off course participation also continued to grow with $24 8 million people visiting non traditional venues such as top golf in five iron and.

and approximately half of those playing exclusively off course.

And approximately half of those playing exclusively off course.

Looking out over the next 12 months and beyond.

As Topgolf venues continue to expand, we expect even more new players to be introduced to the sport both on and off course.

As top golf venues continue to expand we expect even more new players to be introduced to the sport both on and off course.

For Q4, our golf equipment results were in line with our expectation.

For Q4, our golf equipment results were in line with our expectations as we explained last quarter, we anticipated some softness in Q4 revenues as we made the decision to shift production to build 2022, new launch product.

As we explained last quarter, we anticipated some softness in Q4 revenues as we made the decision to shift production to build 2022 new launch products.

In addition, we launched several new products in the comparable fourth quarter of 2020, thus creating an uneven year-over-year comparison.

In addition, we launched several new products in the comparable fourth quarter 2020, thus, creating an uneven year over year comparison.

As we look ahead to Q1 in the full year 2022, we are seeing promising momentum with the launch of our new Rogue ST family of woods and irons and new chrome soft golf balls.

As we look ahead to Q1 and the full year of 2022.

We are seeing promising momentum with the launch of our new Rogue STI family of Woods, and irons, and new chrome soft golf balls.

The reception has been very positive so far. Pre-books are up significantly and feedback on the product has been outstanding, with Rogue ST being the number one driver on tour in its first week on tour at the Tournament of Champions, and Callaway receiving more gold medals than any other manufacturer in Golf Digest's recent hot list.

Reception has been very positive so far pre books are up significantly and feedback on the product has been outstanding with Rogue STB and the number one driver on tour in its first weekend tour at the tournament of champions and Callaway, receiving more gold metals than any other manufacturer and golf Digest recent hot list.

The new launch product will be available to retailers starting next week.

The new launch product will be available at retailers starting next week.

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

For the full year.

Iterating.

Golf equipment business will grow based on continued strong demand from consumers.

Price increases on our new launch product and the opportunity for a restocking at retail.

Turning to our apparel and gear.

In our apparel and gear segment, revenue is up 33% year over year in Q4, led by a 40% increase in apparel and a 19% increase in gear.

In our apparel and gear segment revenue was up 33% year over year in Q4 led by a 40% increase in apparel and a 19% increase in gear.

Travis Matthew continued to grow at a roaring pace with her own retail comp store sales up over 67% versus 2020.

Travis Matthew continue to grow at a roaring pace with our own retail comp store sales up over 67% versus 2020.

E-commerce sales were also up a healthy 30% versus 2020.

E Commerce sales were also up a healthy 30% versus 2020.

The team also signed a high-profile new ambassador, actor Chris Pratt, during Q4, who helped further increase brand visibility and raise awareness for a multi-day charity flash sale benefiting the Special Olympics.

The team also signed a high profile, new ambassador accurate, Chris Pratt during Q4, who help further increase brand visibility and raise awareness for a multi day charity flash sale benefiting the special Olympics.

The event was very successful with Travis Matthews contributing over $1 million in donations to this very worthy cause.

The event was very successful with Travis Matthew contributing over $1 million in donations to this very worthy cause.

On the product side, Travis Matthews expanded his product range to include women's apparel as part of the His and Her Cloud Collection launched in December , as well as more cold weather gear within their outerwear collection.

On the product side Travis Matthew expanded its product range to include women's apparel as part of his and her cloud collection launched in December as well as more cold weather gear within their outerwear collection.

Both editions performed very well with the women's products selling out predominantly in the first 48 hours.

Both additions performed very well with the women's product selling out predominantly in the first 48 hours.

and jackets and pants accounting for 37% of direct to consumer sales.

And jackets and pants accounting for 37% of direct to consumer sales.

Jack Wolfson sales were up in the quarters compared to both 2020 and 2019 as the public relaunch of the brand's fresh new image was positively received by consumers.

Jack will skin sales were up in the quarter as compared to both 2002 2019 as the public relaunch of the brand's fresh new image was positively received by consumers.

Feedback on pre-books has been outstanding and we're excited for the year ahead.

Feedback on pre books has been outstanding and we're excited for the year ahead.

On the sustainability front, Jack Wolsken launched a new initiative in Q4 called the Nature Counts Campaign.

On the sustainability front, Jack will skin launched a new initiative in Q4 called the nature counts campaign.

which is dedicated to forestry, rewilding, and conservation efforts.

Which is dedicated to forestry rewilding and conservation efforts.

In place of Black Friday and Cyber Monday sales discounts, the brand decided to donate two euros from every purchase made during the week to Peter Wolden's Forest Academy.

In place of Black Friday, and cyber Monday sales discounts the brand decided to donate to euros from every purchase made during the week to Peter Robins Forest Academy.

We love to see the brand stay true to its roots and continue to be an ambassador for environmentalists.

Love to see the brand stay true to its roots and continue to be an ambassador for environmentalism.

Lastly, our Callaway apparel business in Asia continued to thrive.

The Callaway Golf brand in Japan held the number one share in the wholesale channel during the quarter and direct-to-consumer efforts paid off with strong sales in our own retail stores as foot traffic in the region increased.

<unk> golf brand in Japan have the number one share in the wholesale channel during the quarter and direct to consumer efforts paid off with strong sales in our owned retail stores as foot traffic in the region increased.

Looking ahead to 2022 and the consolidate company.

Looking ahead to 2022 and the consolidated company.

We believe revenue will increase approximately 21 percent, and we expect adjusted IBDAL will be between $490 and $515 million.

We believe revenue will increase approximately 21% and we expect adjusted EBITDA will be between $490 $515 million.

This strong outlook is underpinned by our belief that our golf equipment business will continue to grow as participation remains high and supply continues to scale up to match exceptional consumer demand.

This strong outlook is underpinned by our belief that our golf equipment business will continue to grow as participation remains high and supply continue to scale up to match exceptional consumer demand.

our strong pre-books and demand trends for style apparel and gear brands, and embedded growth in the Topgolf business through new venue openings and year-over-year growth in same venue sales.

Our strong pre books and demand trends for solar peer apparel and gear brands.

And embedded growth in the top golf business through new venue openings and year over year growth in same venue sales.

Longer term.

we remain excited and confident about the direction of the business.

We remain excited and confident about the direction of the business.

while macro trends of the past two years have provided favorable tailwinds for golf.

While macro trends over the past two years have provided favorable tailwind for golf. We believe there is also been a more sustainable structural shift in the market that will support all of Calloway's businesses.

We believe there has also been a more sustainable structural shift in the market that will support all of Callaway's business.

These structural shifts include what we believe are long-term increases in remote and hybrid work. They increase desire to get out into nature.

These structural shifts include what we believe are long term increases in remote and hybrid work.

The increased desire to get out into nature, the momentum behind casual lifestyle apparel brands the growth of new golfers with waiting list to get into golf courses and the growth in positive impact at off course golf.

the momentum behind casual lifestyle apparel brands, the growth of new golfers with waiting lists to get into golf courses, and the growth and positive impact of Off Course Golf.

Off-course golf experiences such as Topgolf are both growing rapidly in their own right and at the same time changing the way people are introduced to the sport of golf, creating increased interest in the sport of golf. On- Molle La Ville

Off course golf experiences such as top golf are both growing rapidly in their own right and.

And at the same time changing the way people are introduced to the sport of golf, creating increased interest in more new entrance.

We believe Callaway is uniquely positioned to engage with these consumers through a differentiated portfolio of brands and look forward to unlocking the embedded growth within this business for years to come.

In conclusion, before handing the call off to Brian , I want to call out two additional items.

In conclusion before handling handing the call off to Brian I want to call out two additional items.

First, I'm pleased to announce that we're planning to publish our first comprehensive sustainability report next month.

First I am pleased to announce that we are planning to publish our first comprehensive sustainability report next month.

As a company, we were founded on Keely Calloway's view that good ethics is good business. And we continue to operate with this ethos at our core today.

As a company we were founded Neely Calloway's view Theyre. Good ethics is good business and we continue to operate with this ethos at our core today.

You will see this theme carried out through the report and through the four strategic pillars of our sustainability strategy.

You will see this theme carried out through the report and through the four strategic pillars of our sustainability strategy people planet product and procurement.

people, planet, product, and procurement.

I encourage you to review the report and when it comes out, engage with the team to discuss the content. It's an important component of our long-term business strategy.

I encourage you to review the report and when it comes out and engage with the team to discuss the content.

It's an important component of our long term business strategy.

Second, I'm very excited to announce our plan to hold an investor day in Q2, where you will have the opportunity to hear more from senior executives across each of our businesses.

Second.

I'm very excited to announce our plan to hold an investor day in Q2.

You will have the opportunity to hear more from senior executives across each of our businesses.

and learn more about our medium and long-term vision for the company.

And learn more about our medium and long term vision for the company.

More details for this event will be provided by the IR team in the coming weeks, and we hope you can participate.

More details for this event will be provided by the IR team in the coming weeks and we hope you can participate.

And with that, I'd like to turn the call over to Brian Lynch to discuss our financial results in more detail.

And with that I'd like to turn the call over to Brian Lynch to discuss our financial results in more detail.

Thank you chip.

2021 was an outstanding and transformation year for Callaway, which is clearly highlighted in our financial results.

2021 was an outstanding and transformational year for Callaway, which has clearly highlighted in our financial results.

The Topgolf business recovered from COVID more quickly and significantly than we expected, and demand for our golf equipment and our power products remain strong throughout the year and has continued so far in 2022.

Top golf business recovered from Covid more quickly and significantly than we expected and demand for our golf equipment and apparel products remained strong throughout the year.

And has continued so far in 2022.

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

As chip mentioned, we believe there has been a structural shift in the market that will benefit each of our businesses, including increased interest in participation in golf.

Behind casual lifestyle apparel brands, and an increased desire for leisure and entertainment such as top golf hiking and camping.

As a result, we expect continued high demand and growth across each of our businesses into 2022 and beyond.

Shifting to our financial results as shown on slides 10, and 11 consolidated net revenue for the full year 2021 was $3 1 billion.

Shifting to our financial results, as shown on slides 10 and 11, consolidated net revenue for the full year 2021 was $3.1 billion.

A 97% increase compared to full year 2020 revenue of $1 6 billion.

Full year 2021 adjusted EBITDA was $445 million, an increase of 170% over full year 2020 adjusted EBITDA of 165.

Full year 2021, adjusted EBITDA was $445 million, an increase of 170% over full year 2020, adjusted EBITDA of $165 million.

The outperformance versus our guidance was related to Topgolf and the resurgence in corporate events during the quarter, as Chip mentioned earlier. The golf equipment and soft goods business...

The outperformance versus our guidance was related to top golf and a resurgence in corporate events during the quarter as chip mentioned earlier.

The golf equipment and soft goods businesses were in line with our guidance.

When you look at a breakdown of our 2021 revenue, golf equipment represented 39% of total revenue.

When you look at a breakdown of our 2021 revenue golf equipment represented 39% of total revenue.

Top cough was 35% and apparel gear and other represented 26%.

<unk> was 35% and apparel gear and other represented 26%.

We believe golf equipment will continue to grow at a steady pace and be an important component of our strategy moving forward.

But as Top Cop venues continue to expand at the rate of 10 plus new openings per year, and the strong momentum of Travis Mathew and Jack Wolski continue,

But as top golf venues continue to expand at the rate of 10, plus new openings per year, and the strong momentum with Travis Matthew and Jack Woolskin continues.

we see a larger portion of our revenue shifting more toward these high-growth segments.

We see a larger portion of our revenue.

King.

More towards these high growth segments.

For the fourth quarter consolidated net revenue was $712 million, an increase of 90% compared to Q4 2020.

For the fourth quarter, consolidated net revenue was $712 million, an increase of 90% compared to Q4 2020.

Topcoff was the largest contributor by segment, generating $336 million.

Top golf was the largest contributor by segment generating $336 million.

Our strong social events, strengthening corporate events, and continued robust demand from walking guests collectively delivered 6% same venue sales growth over 2009.

Our strong social events strengthening corporate events and continued robust demand from walk in guests collectively delivered 6% same venue sales growth over 2019.

Apparel, Gear and other also performed very well during the quarter with revenue up 33% year over year, a strong brand momentum, recovery from COVID and well positioned products translated to strong sales growth in the quarter.

Apparel gear and other also performed very well during the quarter with revenue up 33% year over year as strong brand momentum recovery from Covid and well positioned products translated to strong sales growth in the quarter.

Consistent with our guidance, and as Chip highlighted earlier, the golf equipment segment was down year over year due to third quarter supply chain disruptions and a shift to prioritizing 2022 new launch inventory over fourth quarter 2021 sales.

Consistent with our guidance and as Jeff highlighted earlier, the golf equipment segment was down year over year due to third quarter supply chain disruptions and a shift to prioritizing 2022, new launch inventory over fourth quarter 2021 sales.

We also launched several new products in Q4 2020, thus creating an uneven year-over-year comparison.

We also launched several new products in Q4, 2020, thus, creating an uneven year over year comparison.

Changes in foreign currency rates had a $6 million negative impact on fourth quarter 2021 revenue.

Changes in foreign currency rates had a $6 million negative impact on fourth quarter 2021 revenues.

Total cost and expenses were $755 million on a non-GAAP basis in the fourth quarter of 2021 compared to $397 million in the fourth quarter of 2020. Of the 350 adviser, this is all a Only One

Total costs and expenses were $755 million on a non-GAAP basis in the fourth quarter of 2021 compared to $397 million in the fourth quarter of 2020.

Of the $358 million increase <unk>.

Topcoff added an incremental $330 million of total cost and expense.

<unk> added an incremental $330 million of total costs and expenses.

The remaining $28 million increase includes moving spending levels back toward normal levels, increased corporate costs to support a large...

The remaining $28 million increase includes moving spending levels back toward normal levels increase.

Increased corporate cost to support a larger organization.

Investments and growth initiatives, including Travis Matthew expansion and the Korea apparel business.

Investments in growth initiatives, including Travis Matthew expansion in the Korea apparel business.

And increased freight costs and inflation.

As we move into 2022, we continue to believe that higher sales volumes and select price increases will balance out inflationary pressures.

Fourth quarter 2021 non-GAAP operating income was a loss of $43 million, down $21 million compared to a loss of $22 million in the fourth quarter of 2020. Due to the previously mentioned plan shift in golf equipment supply to 2022 launch products, as well as the increased cost previously mentioned.

Fourth quarter 2021, non-GAAP operating income was a loss of $43 million.

$21 million compared to a loss of 2020.

Compared to a loss of $22 million in the fourth quarter of 2020 due to the previously mentioned planned shift in golf equipment supply through 2022 launch products as well as the increased cost previously mentioned.

Yeah.

non-GAAP other expense was $37 million in the fourth quarter, compared to other expense of $13 million in Q4 2020.

non-GAAP other expense was $37 million in the fourth quarter.

Compared to other expense of $13 million in Q4 2020.

The increase was primarily related to a $28 million increase in interest expense related to the addition of top

The increase was primarily related to a $28 million increase in interest expense related to the addition of top golf.

non-GAAP loss per share was $0.19 on approximately 186 million shares in the fourth quarter of 2021, compared to a loss of $0.33 per share on approximately 94 million shares in the fourth quarter of 2020.

non-GAAP loss per share was <unk> 19 on approximately 186 million shares in the fourth quarter of 2021 compared to a loss of 33 per share on approximately 94 million shares in the fourth quarter of 2020.

Lastly, fourth quarter 2021 adjusted EBITDA was $14 million compared to negative $13 million in the fourth quarter of 2020.

Lastly, fourth quarter 2021, adjusted EBITDA was $14 million compared to negative $13 million in the fourth quarter of 2020.

The $27 million increase was driven by a $46 million contribution from the Topgolf business.

The $27 million increase was driven by a $46 million contribution from the top golf business.

Turning to certain balance sheet items on slide 13.

I am pleased to report that we are a strong financial position with ample liquidity.

I am pleased to report that we are in a strong financial position with ample liquidity.

As of December 31, 2021, available liquidity, which is comprised of cash on hand and availability under our credit facilities, was $753 million compared to $632 million at December 31, 2021, an increase of 19%.

As of December 31, 2021 available liquidity, which is comprised of cash on hand, and availability under our credit facilities was $753 million compared to $632 million at December 31, 2021.

An increase of 19%.

In addition, the Topgolf funding requirements from Cowley have improved compared to our initial expectations.

In addition, the top golf funding requires from Kyle we have improved compared to our initial expectations.

When we announced the merger over a year ago, the funding needs for Topgolf were estimated at $325 million.

When we announced the merger over a year ago, the funding needs for top golf were estimated at $325 million.

As of year end, their need for funding was significantly lower due to its faster than expected recovery and strong 2021 performance.

As of year end their need for funding was significantly lower due to its faster than expected recovery and strong 2021 performance.

At this point we estimate.

that Topcoff will need almost $200 million less funding than we originally anticipated.

Top golf will need almost $200 million less funding than we originally anticipated.

and going forward we have to make top couple only need incremental funding from cali of less than seventy million dollars which would be used

And going forward, we estimate top golf will only need incremental funding from calloway of less than $70 million.

Which would be used for future venue growth.

Topgolf is already operating cash flow positive and we expect Topgolf to be able to fund its own growth and be free cash flow positive in 2024.

<unk> is already operating cash flow.

And we expect top golf to be able to fund its own growth and be cash free cash flow positive in 2024.

At quarter end, we had a total net debt of $1.4 billion, including venue financing obligations of $593 million related to the development of Top Cop Venues.

At quarter end, we had a total net debt of $1 4 billion, including venue financing obligations of $593 million related to the development of top golf venues.

Since the merger our leverage ratios have improved significantly our net debt leverage ratio was three one times at December 31 2021.

Since the merger, our leverage ratios have improved significantly. Our net debt leverage ratio was 3.1 times at December 31st, 2021, compared to five times at March 31st, 2021.

Compared to five times at March 31, 2021.

Consolidated net accounts receivable is $105 million, a decrease of 24% compared to $138 million at the end of the fourth quarter of 2020.

Consolidated net accounts receivable was $105 million, a decrease of 24% compared to $138 million at the end of the fourth quarter of 2020.

Day sales outstanding for our golf equipment and apparel businesses improved to 35 days as of December 31st, 2021, compared to 45 days as December 31st, 2020.

Days sales outstanding for our golf equipment and apparel businesses improved to 35 days as of December 31, 2021, compared to 45 days as of December 31 2020.

Our inventory balance increased to $523 million at the end of the fourth quarter of 2021, compared to $353 million at the end of the fourth quarter of 2020, as we built supply for our new products within the golf equipment and apparel business.

Our inventory balance increased to $523 million at the end of the fourth quarter of 2021 compared to $353 million at the end of the fourth quarter 2020, as we built supply for our new products within the golf equipment and apparel businesses.

In addition, Topgolf added $22 million in image.

In addition, top golf added 2020 $22 million in inventory.

Capital expenditures for the full year 2021 were $234 million, net every reimbursement.

Capital expenditures for the full year 2021 were $234 million net.

Net of reimbursements this.

This includes $173 million related to Topgolf, primarily for new openings.

This includes a $173 million related to top golf, primarily for new wings for the 10 months since the merger. This does not include $12 million of Capex for January and February of 2021 prior to the merger.

This does not include $12 million of capex for January and February of 2021 prior to the emergency.

full year 2022 forecast for Callaway and Topgolf is approximately $310 million net of reimbursements, including approximately $230 million for Topgolf.

The full year 2022 forecast for Callaway in top golf, so approximately $310 million net of reimbursements, including approximately $230 million for top golf.

This increase in capital expenditures is due to the timing of reimbursement and investment in systems integration and growth within the golf equipment and apparel business.

This increase in capital expenditures is due to the timing of <unk> reimbursements and investment in systems integration and growth within the golf equipment and apparel businesses.

Lastly, on December 13th, we announced that our Board of Directors approved a $50 million stock repurchase program.

Lastly on December 13th we announced that our board of directors approved a $50 million stock repurchase program.

We repurchased a total of approximately 947,000 shares at an average price of $2641 during the quarter and now have approximately $25 million in authorization remaining under that)--

We repurchased a total of approximately 947000 shares at an average price of $26 41 during the quarter and now have approximately 25 million.

Authorization remaining under that program.

Now turning to our full year in first quarter 2022 outlook on slide 14 and 15.

Now turning to our full year and first quarter 2022 outlook on slides 14 and 15.

For the full year, we expect revenue to be approximately $3.8 billion.

For the full year, we expect revenue to be approximately $3 8 billion.

That compares to $3.13 billion in 2021.

That compares to $3 3 billion in 2020.

Our full year 2022 net revenue estimate assumes continued positive demand for our golf equipment and soft goods segments and no significant supply chain or retail shutdowns due to any COVID research.

Our full year 2022, net revenue estimate assumes continued positive demand for our golf equipment and soft goods segment.

No significant supply chain of retail shutdowns due to any COVID-19 resurgence.

It also assumes approximately $1.5 billion in net revenue from Topcoff for the year.

It also assumes approximately $1 5 billion in net revenue from <unk> for the year.

Full year adjusted EBITDA is projected to be $490 to $515 million, which assumes approximately $210 to $220 million from Top Gun.

Full year adjusted EBITDA is projected to be $490 million to $515 million, which assumes approximately to 220 million from top golf.

As Chip stated, we plan to add at least 10 new Top Cop venues in 2022, although the venue openings will be heavily weighted toward the back half of the year, with five expected to open in the fourth quarter.

As Jeff stated, we plan to add at least 10, new top golf venues in 2022, although the venue openings will be heavily weighted toward the back half of the year with five expected to open in the fourth quarter.

From a profitability perspective, this means our 2022 venues will have a more limited impact to adjusted EBITDA in 2022 as we will incur full pre-opening costs for those venues with limited revenue.

From a profitability perspective. This means our 2022 venues will have a more limited impact to adjusted EBITDA in 2022, as we will incur full preopening cost for those venues with limited revenue.

From a cost perspective, we will be making investments in personnel and infrastructure to support an overall larger business and future growth.

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

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

Lastly, we anticipate a negative impact from changes in foreign currency rates of approximately $54 million on revenue and $38 million on pre-tax income due to a strengthening U.S. dollar and $8 million in hedge gains that are not expected to repeat.

Lastly, we anticipate a negative impact from changes in foreign currency rates of approximately $54 million on revenue and $38 million on pre tax income due to a strengthening U S dollar and $8 million in hedge gains that are not expected to repeat.

Despite these headwinds, we continue to believe strong demand, sales volumes, and select price increases across our business segments will balance out these pressures, and we expect all businesses to grow this year.

Despite these headwinds we continue to believe strong demand sales volumes and select price increases across our business segments will balance out these pressures and we expect all businesses to grow this year.

Lastly, looking at the share count for full year 2022, we want to know an accounting change taking effect this year that will cause our share count to increase to approximately 204 million shares.galOf cricketC

Lastly, looking at the share count for full year 2022, we want to know an accounting change taking effect. This year that would cause our share count to increase to approximately 204 million shares.

This change relates to the accounting for our convertible bond.

This new rule will require us to account for the bond, assuming it has been converted for calculating earnings per share.

This new rule will require us to account for the bond assuming it has been converted.

Calculating earnings per share.

calculating EPS, we will eliminate the interest paid related to the bond and we will add 14.7 million shares to the EPS calculation as if the bond had been converted.

When calculating EPS, we will eliminate the interest paid related to the bonds and we will add $14 7 million shares to the EPS calculation as if the buyer had been converted.

For purposes of this calculation, we do not include the benefit of a capped call transaction we entered into at the time of the bond issuance.

For purposes of this we do not include the benefit of the capped call transaction, we entered into at the time of the bond issuance.

which at maturity would reduce the number of new shares issued by us upon conversion by approximately 4 to 5 million shares at current prices.

Which at maturity would reduce the number of new shares issued by us upon conversion by approximately 45 million shares at current prices.

Moving to the first quarter 2022 outlook, our revenue guidance is just over a billion.

Moving to the first quarter 2022 outlook, our revenue guidance is just over $1 billion.

Adjusted EBITDA guidance is $130 to $145 million. This includes a negative foreign currency impact of approximately $21 million on revenue and $21 million in pre-tax income.

Adjusted EBITDA guidance is $130 million to $145 million. This includes a negative foreign currency impact of approximately $21 million on revenue and $21 million in pre tax income.

Again, including the $8 million hedge gains in Q1 2021, they're not expected to repeat.

Again, including the $8 million hedge gains in Q1, 2021 that are not expected to repeat.

I want to emphasize that there are several factors which could cause a positive or negative shift in our financial results between Q1 and Q2.

I want to emphasize that there are several factors, which could cause a positive or negative shift in our financial results between Q1 and Q2.

Some of these factors include the timing of when we receive supply in the golf equipment or soft goods segments, and whether products scheduled to be shipped at the end of March or beginning of April are deferred to Q2 or accelerated into Q1.

Some of these factors include the timing of when we receive supply in the golf equipment, our soft goods segment and whether projects scheduled to be shipped at the end of March or beginning of April our deferred to Q2 or accelerated into Q1.

As our Q1 guidance reflects our assumption that COVID continues to lessen during Q1 and that the top-golf business, including corporate events, returns close to 2019 levels. The pace at which that happens will affect our first quarter results.

As our Q1 guidance reflects our assumption that Covid continues to lessen during Q1, and the top golf business, including corporate events returns close to 2019 levels.

The pace at which that happens will affect our first quarter results.

Feel good about our full year guidance.

In closing, we are proud of the performance of our business in 2021 and are excited to share our continued progress throughout 2022.

In closing we are proud of the performance of our business in 2021 and are excited to share our continued progress throughout 2022.

That concludes our prepared remarks today, and we will now open the call for questions.

That concludes our prepared remarks today, we will now open the call for questions.

Operator over to you.

Thank you presenters. At this time for the participants to ask a question, please press star 1 on your telephone keypad. Again, that's star 1 on your telephone keypad and we will pause for just a moment to compile the Q&A run.

Thank you presenters at this time for participants to ask a question. Please press star one on your telephone keypad.

Again, Thats star one on your telephone keypad, and we'll pause for just a moment to compile the Q&A roster.

We have our first question from Randy Connick. Your line is open.

We have our first question from Randy <unk>. Your line is open.

Thanks guys. First I want to focus on the Topgolf venue business. The numbers keep coming in better than expected from a revenue perspective. If I recall, you have the Vegas unit that's probably accounting for a disproportionate amount of revenue in EBITDA, but that's probably not at peak.

Yes, thanks, guys.

First I wanted to focus on the top golf venue.

Nick.

The numbers keep coming in better than expected from a revenue perspective.

If I recall you have.

They get unit, it's probably accounting for a disproportionate amount of revenue and EBITDA, but that's probably not at peak.

kind of prior peak revenues or what have you. So I guess I'm just curious, on the strength that you're seeing and that you're talking about, have you thought about kind of two things. One, what mature revenues would look like at the venue maybe being higher than you anticipate? And or two, do you think about the density levels that can change from a unit perspective, i.e. you could potentially have more units?

End of <unk>.

Prior peak revenues or what have you. So I guess I'm just curious on the strength that you're seeing and what you are talking about have you thought about kind of.

<unk> one.

What mature revenues would look like at the venue, maybe being higher than you anticipate.

<unk> do you think about.

Yes.

The density levels that can be seen from a from a unit perspective, I E could potentially have more unit.

in the US market than you originally kind of thought. I'm just curious on how you think.

In the U S market than you originally kind of thought just curious on how youre thinking.

Thanks. Sure, Randy. Those are good questions. So we have been wildly pleased with the performance of Topgolf and

Thanks sure Randy those are good questions. So we have been.

Lee.

Pleased with the performance of top golf and.

I want to congratulate that team on just terrific results.

Want to congratulate that team on just terrific results. So.

And, you know, the Vegas is a, the Vegas venue is one of our biggest venues, so it does have a significant impact. But we have a lot of venues now, so I don't want to over focus on any one venue.

And.

The Vegas.

Ah is a vegas venue is one of our biggest venue. So it does have a significant impact, but we have a lot of venues now so I don't want to over.

Focus on any one.

I do want to call out that even with this great result that we delivered last year, we do think we have gas in the tank. We saw throughout last year that business recover and build momentum and walk in sales and social events were strong for most of the year, continued that way with the only wild card being the corporate event.

<unk>.

I do want to call out that even with this great result that we delivered last year. We do think we have gas in the tank campaign, we saw throughout last year that business recover.

And build momentum and walk in sales and social events were strong.

For most of the year continued that way with the only wildcard being the corporate events. The corporate events started the quarter slow in Q4, and Thats, where we sat as we spoke to you on that Q3 earnings call.

The corporate events, you know, started the quarter slow in Q4 and that's where we sat as we spoke to you on that Q3 earnings call. It seems like a long time away, but that we were actually in the middle of a surge in Delta at that time. Nobody talks about Delta, but Delta was a...

It seems like a long time away, but that we were actually in the middle of a surge in delta at that time, nobody talks about delta that Delta was.

had surged and we were seeing some concerning results on corporate and then they

Had surge that we were seeing some concerning.

Results on corporate and then they.

really picked up in mid or through end of December . But we have gas in the tank left because corporate events hasn't, you know, completely recovered yet, but we got every belief and sign that they will and we saw great evidence of that.

Really picked up in mid for through end of December but.

But we have gas in the tank left because corporate events hasnt completely recovered yet, but we've got every belief and sign that it will and we saw great evidence of that.

At the analyst day that will be in Q2, we'll talk to you a little bit about the potential of these venues, which is clearly much higher than what we originally anticipated, and also confidence, if not increasing view on number of venues that we believe we can build. But all systems go, all systems positive, as you can tell on the Topgolf venue business. Super helpful.

At the analyst day that will be in Q2, we will talk to you a little bit about the potential of these venues, which is clearly much higher than what we originally anticipated and also confidence if not increasing.

View on number of venues that we believe we can build but all systems go all systems positive as you can tell on the top golf venue business.

Super helpful and I guess my last question is.

When I think about pitching the idea to investors, it's this ecosystem opportunity with revenue synergy opportunity across different businesses within the portfolio. I think I've asked this question in the past where as a user of the top golf app, the top Tracer app, I've bought products from Travis Matthews and so on and so forth, it appears to be there's opportunity to kind of...

When I think about kind of pitching the idea to investors.

Ecosystem opportunity with revenue synergy opportunity across different kind of.

Businesses within the portfolio.

I think I've asked this question in the past where.

As a user of the top golf as the top tracer App I bought products from Travis Matthew.

So on and so forth.

See there is opportunity to kind of.

get databases that you may, or information you may have on select customers across these different businesses to kind of come together, if you will, and have these customers utilize different parts of the ecosystem more regularly or engage more with it. So I'm just curious on what you're trying to do, if anything, on the kind of software side, backend kind of side of things to kind of connect the businesses more for these customers that are currently using different aspects of your ecosystem that could kind of just they're not necessarily connected and the way that they use a platform again on theirmusic All right. If we kind of switch gears up a little bit, I think my internal point is that, you know, caused more reversibility is the kind of delivery to sort of containers, so you're really talking about Sounds like a life, you're not you're the business thatANTX so you're interconnecting

Yet databases that you may or information you may have on select customers across the different businesses to kind of come together. If you will and have these customers utilize different parts of the ecosystem more regularly or engage more with it. So I was just curious on what youre trying to do if anything on the software side backend.

And a side of things kind of net the business is more for the customers that are currently using different aspects of your ecosystem that could kind of just putting together more to give you more data insights on how to get them more engaged even further within that ecosystem. Thanks guys.

come together more to give you more data insights on how to kind of get them more engaged even further within that ecosystem. Thanks, guys. Yeah, Randy, that's another.

Randy.

Another.

interesting and on topic question, but it's also a long term potential opportunity. That is not something that we would expect to realize overnight, but.

Interesting and.

On topic question, but it's also a long term potential.

The opportunity that is not something that we would expect to realize overnight but.

Over time, we will have a significant competitive advantage over the overall reach to golfers of all types, and it will take technology.

Over time, we will have a significant competitive advantage over the overall reach to golfers of all types and it will take technology.

consumer data platforms, other types of technologies and offerings that will fit very well within our ecosystems to unlock that.

Consumer data platforms other types of.

Technologies and offerings that will fit very well within our ecosystems to unlock that it's something that we have been studying and putting in the early stages of investments on now.

It's something that we have been studying and putting in the early stages of investments on now. And you're seeing some of the earlier low hanging fruits on synergies already starting to materialize.

And youre seeing some of the <unk>.

Earlier low hanging fruit so on synergies already starting to materialize.

You will continue to hear us increasingly talk about those types of opportunities that you're mentioning, but they are a little further down the field.

You will continue to hear us increasingly talk about those.

Types of opportunities that you are mentioning.

But they are a little further downfield.

and we're taking care of the bigger things first, and then those more strategic things are going to be more on point and more in the conversation set as we move forward.

And we're taking care of the bigger things first and then those more strategic things that are going to be.

More on <unk>.

On point and more in the conversations that as we move forward.

Helpful. Thanks, guys.

Thank you.

We have our next question from Alex Perry. Your line is open.

We have our next question from Alex Perry Your line is open.

Hi, thanks for taking my question and congrats on a strong quarter.

Hi, Thanks for taking my question and congrats on the strong quarter.

I just wanted to ask a little bit about the Topgolf venue profitability assumptions embedded within the guidance since they were...

Wanted to ask a little bit about the top golf venue profitability assumptions embedded within the guidance since they were.

You know, it seems very elevated these past two quarters and then maybe within that talk about your outlook for labor costs and availability, you know, within top golf. And then just one clarifying question on the guidance for top golf for 2022. I think the presentation maybe said, you know, up mid singles versus 2019. I think maybe you mentioned up low singles on the call. Just wanted to clarify that for everyone. Thanks.

He is very elevated these past two quarters and then maybe within that talk about your outlook for for labor costs and availability.

Within top golf and then just one clarifying question on the guidance for top costs for 2022, I think the presentation, maybe said up mid singles versus 2019, I think maybe you've mentioned up low singles on the call just wanted to clarify that for everyone.

Sure.

So on the.

Venue profitability, yeah, we have been delighted with the profitability that the venues have driven. You know, the consistency with which we've been able to open these successfully.

Then you profitability.

Yes, we have been delighted with the profitability that the venues have driven.

The consistency with which we would admit on open these successfully.

You know, as I mentioned, I think it's a proven and repeatable model. But then also that the profitability that flow through from the venues, the EBITDAR margin if you would, has been better than we originally expected. And we're going to give you a little more on that at that analyst day, but certainly pleasant results there.

As I.

And I think it is a proven and repeatable model, but then also that the.

Profitability that flow through from the venues the EBITDAR margin if you would.

Has been better than we originally expected and were going to give you a little more on that at that analyst day, but.

Certainly.

<unk> results there and.

positive story. Like most businesses, the labor cost and availability has been a challenge over the last year and you know we've had we haven't been immune from that. At different points of time labor has been a constraint you know it varies by market, by season, etc.

Positive story, most like most businesses the labor cost and availability has been a challenge over the last year.

And.

We've had we haven't been immune from that.

At different points in time labor has been a constraint.

Varies by market.

By season et cetera.

and labor is increasing in cost. We are fortunate with

And labor is increasing in cost.

We are fortunate with our business.

you know, that we're able to absorb that, you know, pay competitive wages.

We're able to absorb that pay competitive.

Wages.

We were fortunate Topgolf just got named one of the most admired employers by Forbes of large employers. So we're able to track and retain labor effectively and we're able to absorb any costs there and deliver what has been obviously increasing profitability and margins.

We were fortunate top golf just got named one of the most admired employers by Forbes of large employers.

And so we're able to attract and retain labor effectively and.

We're able to absorb any costs, there and deliver what has been obviously increasing profitability and margins and then.

And then the expectation for same venue sales, I believe I said low single digit was the

The expectation for same venue sales I believe I said.

Low single digit was the.

expectation for 2022 full year, despite starting very slow here out of the chute. But we've shown our ability to grow these businesses, you know, in venue sales basis, and we're very excited about that.

Expectations for 2022 full year, despite starting very slow here out of the chute.

But we've shown our ability to grow these businesses.

And venue sales basis, and we're very excited about the outlook.

Thank you, that's really helpful. And then I guess just my follow up would be, could you maybe help us parse through the one cue guide a bit more? You know, how much of a headwind is, you know, Omer Khan on the top golf business, I guess, you know, is that mostly just on the corporate event side, it seems like maybe the corporate events were

Thank you that's really helpful. And then I guess just my follow up would be could you maybe help us parse through the <unk> guide a bit more.

How much of a headwind.

Omar on the top Golfs business I guess is that mostly just on the corporate events side. It seems like maybe the corporate events, we're starting to approach 2019 levels from the beginning of <unk>.

starting to approach 2019 levels in the beginning of 4Q, what is the visibility on that returning? And then what would be the outlook within the golf equipment business and better within the guidance? Thank you. Sure.

What is the visibility on that returning and then what would be the outlook with within the golf equipment business embedded within the guidance. Thank you.

Sure so the.

Corporate was the area that is most impacted at Topgolf. We've had consistently positive results on walk-in and social events.

Corporate was the area that is most impacted.

Top golf, we've had consistently positive results walk in and social events.

The corporate events really recovered late in Q4. When we were last on the phone with you,

The corporate events really recovered late in Q4.

When we were last on the phone with you.

We had October data that wasn't very positive candidly, but it really recovered quickly. We are seeing increased interest in leads and activity in corporate. We're confident, but the business that topped off did start down on a same venue sales basis in Q1. Obviously.

We had October data it wasn't very positive candidly, but really recovered quickly. We are seeing increased interest in leads and activity incorporate we're confident but the business that top golf.

Did start down on a same venue sales basis.

In Q1, but obviously.

we gave you Q1 guidance and we expect it to be down slightly for Q1.

We gave you Q1 guidance and we expect it to be down slightly for.

For Q1 so.

Feel good about the trends there. We've seen this already kind of play out in the UK and, you know, there.

Feel good about the trends there we've seen this already kind of play out in the UK.

And.

There.

There's some volatility that we'll work through in Q1, and Brian mentioned that as well, but feel very confident on the full year.

There is some volatility that will work through in Q1, and Brian mentioned that as well.

But feel very confident on the full year numbers.

And then the next question was on golf equipment in Q1. And I don't know that we're breaking out by segment relative to quarter. So.

And then the next question was on golf equipment in Q1, and I don't know that we're breaking out by segment.

Relative to quarter. So we.

We are expecting every segment to grow, but I don't think we're breaking out golf equipment in quarter. Part of the issue there, Alex, is there's just a lot of volatility on. We have very good bookings in our golf equipment and our apparel, beer, and other. We don't believe we have a demand issue.

We are expecting every segment to grow.

But I don't think we're breaking out golf equipment in quarter part of the issue there Alex is theres, just a lot of volatility on.

Have very good bookings in our golf equipment and apparel beer and other.

We don't believe we have a demand issue.

and the supply is coming, but ability to forecast exactly when that will arrive and make it through DCs, et cetera, you could see some of that move into Q2 or Q2 move into Q1, and it looks like a big shift, but it's not a material shift on a full-year basis, just a quarterly bit of noise. But we feel very good about the golf equipment business.

And the supply is coming.

But ability to forecast exactly when that will arrive and make it through Dcs et cetera, you could see some of that move into.

Q2, or Q2 move into Q1, and it looks like a big shift, but it's not a material shift on a on a full year basis, just a quarterly.

A noise, but we feel very good about the golf equipment business.

That's really helpful best of luck going forward.

Thanks.

We have our next question from Mike Schwartz. Your line is open.

We have our next question from Mike Swartz.

Line is open.

Hey, good afternoon, guys. Just apologize if I missed this, but maybe could you give us a view of you know what what you expect retail sales for the golf equipment industry to do in 2022? You're coming off to obviously two big years and I just I think there's some sense that you know, maybe you can't repeat it. But maybe just if you can give us high level thoughts around around retail.

Hey, good afternoon guys.

And I apologize if I missed this but maybe chip could you give us a view of what you expect retail sales to the golf equipment industry to do in 2022, Youre coming off obviously.

Obviously, two big years and.

I think there is some sense that maybe can't repeat it but maybe just if you can give us high level thoughts around retail.

Sure. Mike, they've been saying we can't hold it or repeat it, but it keeps coming. So at some point,

Sure, Mike <unk> been saying, we can't hold it or repeat it but it keeps common so at some point.

know how beautiful the strategy, you need to look at the results. And the market did

No.

How beautiful the strategy you need to look at the results.

And.

The market did.

level off in the second half of 2021 as other activities, etc., were available, but the demand remained very strong for golf.

Level off in the second half of 2021.

As.

Other activities et cetera were available, but the demand remained very strong for golf.

and we're expecting golf to be strong going into this year. You know, where we're even more confident is that our golf business will be up, you know, given the strength of our line for this year, inventory at retail, but the structural shifts around golf that have been over the last several years.

And we're expecting golf to be.

Strong going into this year, where we're even more confident is that our golf business will be up.

Given the strength of our line for this year inventory at retail.

But the structural shifts around golf that had been over the last several years.

uh... are pretty significant there's a lot of momentum and enthusiasm

Our pretty significant there's a lot of momentum and enthusiasm.

Off course golf, dynamic new impact.

Off course golf NAMIC, new impact hi.

hybrid and remote work are not going away.

Hybrid and remote work are not going away.

Where we are.

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

Optimistic about the golf markets overall and confident in our business.

Thanks, Thanks for that Chip just second question on capital allocation you bought back some shares in the fourth quarter.

Thanks for that, Chip. And just second question on capital allocation. You bought back some shares in the fourth quarter. I think this is the first or second time you bought back shares in a long time and made some comments on the capital needs at Topgolf being less than what you previously anticipated. So maybe give us a sense of, you know, does that free up more capital to be allocated towards buybacks, M&A, debt reduction than maybe you thought previously?

Second time, you bought back shares.

In a long time and made some comments on the capital needs at top golf being less than what you previously anticipated. So maybe give us a sense of does that free up more capital to be allocated towards buybacks M&A debt reduction than maybe you thought previously.

Well, clearly we have a lot more liquidity than what we would have if you'd talked to us a year ago. We wouldn't have in our wildest dreams expected to deliver the financial results that we did and our...

Well clearly we have a lot more liquidity than we would have if you talk to us a year ago, we wouldn't have in our wildest dreams expected too.

Deliver.

Financial results that we did and our.

capital structure matches that. I mean we have 200 million less to put into Top Golf. We have 700 million of available liquidity. You know only 70 million more needed to go to Top Golf based on a current forecast.

Capital structure matches that.

We have 200 million less to put into top golf, we have $700 million of available liquidity only.

Only $70 million more needed to go to top golf based on our current forecasts.

Yes, we're in a much stronger position.

<unk>.

Yes, we are a much stronger position.

You know, as a policy, we don't comment on intentions for existing plans or new plans on stock buybacks. We don't comment on M&A. You know, it's essentially a capital question. So our capital allocation strategy is unchanged. We first and foremost reinvest back in our business. And we've done that unabashedly for 10 straight years.

Policy, we don't comment on intentions for existing plans, our new plans on stock buybacks, we don't comment on M&A.

It's essentially a capital issue question. So our capital allocation strategy is unchanged, we first and foremost reinvest back in our business and we've done that unabashedly for 10 straight years with pretty good effect, we've got a lot of nice opportunities too.

with pretty good effect. We've got a lot of nice opportunities to hire ROI projects. We're blessed that way.

<unk> projects, we're blessed that way.

After that, we balance debt repayment, returning capital shareholders, and selective acquisitions. Our first focus is to make sure we hit our leverage expectations, and we are ahead on that.

After that we're balanced debt repayment, returning capital to shareholders and selective acquisitions. Our first focus is to make sure we hit our leverage expectations and we are ahead on that.

And then selectively or opportunistically, we evaluate share repurchases like the one we announced in December and executed against. And so we'll continue to act as we have. And, you know, we're not at liberty to discuss any more specifics at this point.

And then selectively or Opportunistically, we are evaluate share repurchases like the one we announced in December and executed.

Against.

And so we will continue to act as we have.

We're not at Liberty to discuss any more specifics at this point.

Understood. Thanks chip.

Thank you.

We have our next question from Joe Altobello. Your line is open.

We have our next question from Joe also below your line is open.

Hey guys, good afternoon. A couple questions on Topgolf. First, the pace of venue openings. Obviously you did nine last year, looking at 10, potentially 11 this year. What's the difference in the dating factor on that pace? You know, why can't you do 15 or 20?

Hey, guys good afternoon.

Couple of questions on top golf first.

Paces that you're opening.

Obviously, you did nine last year Youre looking at 10 11 this year.

What's the.

The gating factor on that piece.

15, or 20 for example.

Well, these are very long lead time items, Joe. So, you know, we're harvesting the fruits of labor from prior to our merger. And, you know, the name is clearly ramping that up as well. Like everything in our business, as we continue to grow and reinvest, we're balancing the risk of moving faster with not getting it right.

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

We're harvesting the fruits of it.

Labour from prior to our.

Merger.

And.

<unk> is clearly ramping that up as well.

Like everything in our business as we continue to grow and reinvest we're balancing the risk of moving faster with not getting it right.

And at present, I think we're balancing it pretty well. We're also continually investing to increase our capability.

And at present, I think we're balancing it pretty well, we're also continually investing to increase our capabilities.

You know, so you, you know, you correctly heard us when we're saying we're going to do 10 with the potential to do 11. So you will see us open these things in a proven and predictable manner. It's a repeatable model. We do have a strong. Pipeline, but we're working right now on 24 and 25.

So you you.

You correctly heard us when we're saying we're going to do 10 with the potential to do 11.

So you will see US open these things in a proven and predictable manner.

It's a repeatable model, we do have a strong.

Pipeline, but we're working right now on 24 and 25 venues.

Right? So our ability to impact 22 venues.

Right, so our ability to impact 'twenty two venues.

wasn't in the recent past. And you'll see that we are continuing to be what I think is prudent in our investments and our development.

Wasn't in the recent past.

And you'll see that we are.

Continuing to.

B, what I think is prudent in our investments and our development cycle.

got it okay uh... uh... delivered out of the ticket beyond

Got it okay, that's totally understood.

Beyond 'twenty, two but what I get it.

but I get it. I guess, you know, second question on supply chain.

I guess the second question is on supply chain.

You were actually pretty constructive on the last earnings call about supply chain and talked about things getting better. How has that progressed in Q4 and here into Q1? Are things still getting better at this point?

We're actually pretty constructive on the last earnings call about supply chain and talked about things getting better.

How has that progressed in Q4 and here into Q1.

So we're getting better at this point.

Yes, Joe is in short they are.

you know, the supply chain and option side of businesses.

The supply chain.

Syed of businesses.

You know, everybody should buy your ops person lunch at some point this year because they are definitely playing whack-a-mole. They're dealing with one issue after the next. If it's not a labor shutdown, it's a supply shortage. Whether it's semiconductors or a chemical needed for your urethane covers or...

Everybody should buy your ops person lunch at some point.

This year, because they are definitely playing whack a mole as they're dealing with one issue. After the next if it's not a labor shut down its a supply shortage, it's whether semiconductors are chemical needed for your urethane covers or.

the logistics challenges of getting containers or getting through a

The logistics challenges of getting containers are getting through.

terminal somewhere and you know the teams continually work through that but the supply chain is is continually improving. We've been ramping up capacity there you don't always see that because it's being offset by some of these challenges from time to time.

Terminal somewhere.

And the teams continually work through that but the supply chain is continually improving we've been ramping up capacity. There you don't always see that because it's being offset by some of these challenges from time to time.

But, you know, through, you know, focusing on the golf equipment side, Vietnam is operating well right now. China is just coming back from Chinese New Year. The return of employees is always an interesting question and it's returning well.

But.

Through focusing on the golf equipment side.

<unk> is operating well right now.

China is just coming back from Chinese new year. The return of employees is always an interesting.

Question and Thats returning well.

You know, we're not going to be completely out of the woods on the supply chain, but we've shown we're going to be able to manage it very well, and at present we're very confident on the supply chain.

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

Okay, great. Thank you.

We have our next question from Daniel Imbrough. Your line is open.

We have our next question from Daniel <unk>.

Your line is open.

Yeah, Hey, good afternoon, guys. Thanks for taking the question.

Maybe one on the sales side, as you look at 22, I guess first on the apparel business.

Maybe one on the sales side as you look at 'twenty, two I guess first on the apparel business.

You know, you mentioned I think Jack Wolsken was up year over year. Travis has momentum. Can you maybe talk about pre-books for this year? How I guess now is probably the time Greengrass is ordering fall 22 collection. So kind of curious, any early indications on not only the spring apparel, but maybe the back half of the year and and how your customers are planning for the consumer, just given the inflationary backdrop. Are you seeing any signs of weakening preorders for the rest of the year?

You mentioned and I think Jack up year over year drivers has momentum could you maybe talk about pre books for this year I guess now is private upon green grass is ordering fall 'twenty two collection. So kind of curious any early indications on not only the spring apparel, but maybe the back half of the year and how your customers are planning for the consumer.

Given the inflationary backdrop are you seeing any signs of weakening preorders for the rest of the year.

No, Daniel, just the opposite. So our pre-books are actually...

No Daniel just the opposite so our pre books are excellent.

and across all of our businesses. We're global, so this is a, we can go through, specifically Travis Matthews, that business is pre-booked. I don't think they have them finalized for the fall. They're a little bit later than Jack Wolfskins. Jack Wolfskins are finalized for fall, and they're very strong. The Travis Matthews business has been just performing exceptionally. The brand momentum there is amazing.

And across all of our.

And across all of our businesses.

We are global so this is a.

We can go through specifically Travis Matthew that business is pre booked so I don't think they haven't finalized for the fall they were a little bit later than Jack will skin check oilskins are finalized for fall and they're very strong.

The Travis Matthew business has been.

Just performing exceptionally than brand momentum there is.

Amazing and.

not, does not appear to be.

Not.

Not and does not appear to be a demand issue.

Got it. And I guess a follow up on the apparel business. I know it's less of a focus today, but in terms of Jack Wolfson, we're still kind of in the middle, I think, of the profitability turnaround. Is that a fair characterization or where are we on the path you guys laid out towards 50 plus million from that asset plus energies? And I know it's been a tough time with COVID. But as you learn more about that business chip, you still have the same confidence that it makes sense as part of your portfolio. How are you thinking about the overall house of brands you've built?

Got it I guess as a follow up on the apparel business I know, it's less of a focus today, but in terms of Jack will again, we're still kind of in the middle I think of the profitability turnaround is that a fair characterization or where are we on the path you guys laid out towards 50 plus million from that asset plus synergies and I know, it's a tough time with COVID-19 , but as.

You learn more about that business chip you still have the same confidence that it makes sense as part of your portfolio. How are you thinking about the overall health of the brand new built.

You know, Daniel, we feel even more confident on that 50 million plus synergies now. The new team there and the momentum of that business, it has been challenging for them. I mean, you know, probably as difficult a business operating environment as any in our portfolio as, you know, they're based in Central Europe and Central Europe retail was shut down.

Daniel we feel even more confident on that $50 million plus synergies now the new team there and the momentum of that business. It has been challenging for them I mean.

Probably as difficult a business operating environment as any in our portfolio as they are based in central Europe , and Central Europe retail was shut down.

To start the year, to end the year, it's still kind of down. You know, it just fits and starts for them, but still they deliver growth year over year. And they were prof.

To start the year to end the year, it's still kind of down.

It just fits and starts for them, but still they deliver growth year over year.

And.

They were profitable and so you can really sense the brand momentum there their sell through their pre books.

And so you can really sense the brand momentum there. Their sell through, their pre-books. It's just

It's just an excellent business.

And it fits within our portfolio, you know, from the perspective of the synergies that it delivers overall across our apparel, gear and other segment and how those all play together.

The and it fits within our portfolio.

From the perspective of the synergies that it delivers overall across our apparel gear and other segment and how those all play together.

it's becoming a very significant business in and of itself.

It's becoming a very significant.

Business in and of itself.

And again, I think this is something that we'll get a little bit more into at the analyst day later in Q2. But we're very, as you can tell, I'm very pleased with the team there.

And again I think this is something that will get it a little bit more into.

At the Analyst day later in Q2, but we are very as you can tell I am very pleased with the team there.

results that they've driven in the environment that they're operating in are

The results.

The results that they've driven in the environment that they're operating in are just exceptional.

That's great. And just a clarifier there, Brian , you've quantified Topgolf, keep it up. And Chip, you just laid out the past at 55 million at Jack Wolski Energy. I said I was highly confident in the 50 million plus. Where was Jack Wolski in 21? Have you guys quantified that number as to what base you're throwing off to get to that 50 plus?

That's great.

Clarifier, there, Brian you've quantified how costs EBITDA and chip you just laid out the path to $55 million at Jack.

<unk> energy I said I was more it was highly confident in the $50 million plus.

Doug well, it's getting into 'twenty, one have you ever quantified that number that's sort of what base, we're growing off of to get to that 50 plus.

We don't give you 21. So

We don't give you a 'twenty one so.

Okay.

We'll evaluate that for analyst day, but we're not breaking out individual businesses within segments and et cetera at this stage.

We'll.

Well evaluate that for analyst day, but we are not breaking out individual businesses within segments et cetera at this stage.

Okay. Thanks, so much best of luck.

Okay.

Yes.

We have our next question from Susan Anderson. Your line is open.

We have our next question from Susan Anderson Your line is open.

Hi, good evening. Thanks for taking my question. I was wondering if maybe you could talk about how much you're raising prices on average for the golf equipment business this year and the balls, and then also if you expect units to grow this year, year over year. And then I'm just curious, do you think there's still a lot of restocking to be had at wholesale?

Hi, good evening, Thanks for taking my question.

Was wondering if maybe you could talk about how much you're raising prices on average for the call frequently businesses here in the fall and then also if you also expect units to grow this year year over year and then I'm. Just curious is there still do you think theres still a lot of restocking to be had at wholesale.

Susan's chipped, so we're not going to break out units versus price for you across, partly because I'm guessing as I look at across all of the segments, but I'm guessing that units are up as well as price across, but it's, you know, now you're combining golf balls, clubs.

Susan's chip, so we're not going to break out units versus price for you.

Across it partly because I'd be guessing as I look at across all of the segments, but I'm guessing that units are up as well as.

Price.

Across but it's now you are combining golf balls clubs.

you know, et cetera, it's not how we generally look at it. But the, we are taking prices as needed. We're expecting margins to be solid, if not improved next year.

Et cetera.

Not how we generally look at it but we are taking price as needed we're expecting margins to be.

Solid if not improved next year.

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

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

Just are you guys, are you giving, oh, I guess just on the pricing, are you giving like an average price increase and then restock at whole value?

Just are you guys are you, giving up I guess, just on the pricing or restocking March price increase and then we talk alitalia.

Yeah, it really varies. So like Susan, so average price increase, I don't have it. But you know, we're up $2 on a dozen chrome soft golf balls. You know, we're up sometimes on a fairway wood.

Yes, it really varies so like Susan So average price increase I don't have it.

But we're up $2 on a dozen chrome soft golf balls.

We're up sometimes on a fairway wood.

We're up $50 on the fairway wood. We're up $50 on the fairway wood.

We're up $50 on the fairway wood.

<unk>.

Hi.

$20 on a driver, you know, so it really varies and we've taken some pricing in the middle of launch when product's already in the field and, you know, most of the new product, we're not getting any pushback on it.

$20 on a driver.

So it really varies and we've taken some pricing in the middle of launch when products already in the field.

Most of the new product, we're not getting any any pushback on it.

So I don't have a percentage for you, unfortunately. And then.

So I don't have a percentage for you Unfortunately and then.

On the inventory risk stocking, we're highly confident. I mean, if months on hand is still, tech showed it is three months on hand for industry club.

On the inventory restocking, we're highly confident I mean months on hand is still.

<unk> showed it as three months on hand for industry clubs.

at the end of the year, you know, versus 5.2 in 2019.

At the end of the year versus $5 two in 2019.

And 2019, that 5.2 was not a high number.

And 2019 that $5 two was not a high number.

Great, that's helpful. And then just curious on the core golf and apparel business, it looks like even on margins this year, you're expecting to kind of be back to that 2019 level range. I guess, is there nothing that's changed there in terms of just promotions coming down or pricing realization that would drive those higher?

Okay, Great that's helpful.

Then just curious on the core golf and apparel business. It looks like EBITDA margins. This year youre expecting that kind of be back to that 2019 level range. I guess is there nothing thats changed there in terms of just promotions coming down or pricing realization that would drive those higher.

Susan This is Brian .

If you look at the, we'll talk about the op margins just for now, but yes, next year we'll be expecting increases in op margins in the soft goods business, really across all three business segments, the equipment business and the top cop business. And it's just.........

If you look at the when you're talking about op margin just for now, but yes next year, we'd be expecting.

Increases in op margins in the soft goods business.

It really across all three business segments, the equipment business and the top golf business.

It's just.

Better gross margins to just point some of the pricing.

just point some of the pricing. The pricing will cover, the pricing and volume will cover the any inflationary pressures that we see and you'll see the better gross margins and it will flow through. Great and that's versus 2020.

The pricing will cover the pricing and volume will cover the any inflationary pressures that we see.

And you'll see the better gross margins and it will flow through.

Great and that's versus 2020, you mean 2019.

For us versus 2021.

versus 2021. The increase, or 2021, yeah, versus 2008. Yes. Okay, great. Thanks so much.

Please.

2021, yes.

Yes.

Okay, great. Thanks, So much you guys. Good luck this year.

Thank you.

We have our next question from John Cernan. Your line is open.

We have our next question from John Sir Your line is open.

John Sir Your line is open you may ask your question.

Hey can you hear me now.

We can hear you now. OK, good. Well, congrats on a strong year, finishing that out. And thanks for taking my question. I guess a lot of

We can hear you now.

Okay. Good.

Well congrats on a strong year, finishing that out and.

Thanks for taking my question.

I think a lot of what's been answered about the model and the growth in <unk> just curious in 2022, Brian the impact of inflation.

Curious in 2022, Brian , the impact of inflation at a product cost level, and then food at top golf, labor, supply chain.

Product cost level, my food at top golf labor.

Supply chain costs.

The golf and apparel business.

How much of an inflationary impact are you looking at in 2000?

How much of an inflationary impact are you looking at in 2022.

We haven't quantified it, but it's definitely there. It's just that we've been able, as we did in 2021, we've been able to outrun it.

We haven't quantified it but it's definitely there. It's just that we've been able as we did in 2021, we've been able to outrun it.

during the year with the volume increases and in this year we also have the ability to outrun it for next year as well. I think you'll see a little bit more of an impact on gross margins, maybe a top cop, but

And the year with the volume increases and then this year. We also have the ability to outrun. It for next year as well I think youll see a little bit more of an impact on gross margins, maybe a tough comp.

they're mostly covering it and their gross margins are so strong. So it's approach flat. The labor is

They're mostly covering it and their gross margins are so strong.

Yes.

Approach flat the labor is definitely something they felt as far as pricing, but at the same time.

definitely something they felt as far as pricing. But at the same time, the number of people they've...

The number of people.

offsetting some of that. So they've been more profitable this year. We said we don't think it can sustain at those levels, so it'll get a little bit lower, but at the same time all three businesses will be able to cover.

Offsetting some of that so they've been more profitable. This year, we said that we don't think we can sustain.

At those levels, so it will get a little bit lower but at the same time.

All three businesses will be able to cover.

Understood just my final question is just on the the venue level even dots for Topgolf has been above expectations

Understood.

My final question is just on the the venue level EBITDA for top golf has been above expectations. Since you announced the deal I was just curious what you think the upside driver to expectations as in 2022 is it really just the top line recovery in traffic recovery.

announced the deal. Just curious, what you think the upside driver to expectations is in 2022? Is it really just the top line recovery and traffic recovery? What more do you see in the margin profile of Topgolf at a venue level to move that higher as we get into 2022 and 2023? Is it just leveraging the model from increased sales?

What more do you see in the margin profile top golf would've venue level to move that higher as we get into 2022 and 23 is it just leverage in the model from increased sales.

Or is there more to it.

John , that's a great question and certainly, you know, we're gaining increasing confidence on same venue sales, ability to drive some real positive numbers there and we're still recovering, right? So last year we delivered 95%, which is wildly above our expectation.

John That's a great question and certainly.

We're gaining increasing confidence on same venue sales.

Ability to drive some real positive numbers, there and we're still recovering right. So.

Last year, we delivered 95%, which was wildly above our expectations corporate events really haven't come back we're convinced they're going to be back and Thats a big gap.

Corporate events really haven't come back. We're convinced they're going to be back. And that's a big area for gas in the tank.

Area for gas in the tank.

We can deliver better operating margins overall there over the long term than what we initially thought.

We can deliver better operating margins overall, there over the long term than what we initially thought.

And then we'll give you a little more color on all this at the analyst day. So, hopefully we'll make that and we'll try to walk you through a little bit more specifics then.

And then we will give you a little more color on all of this at the analyst day. So.

Make that and we'll try to walk you through a little bit more specifics.

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

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

Thank you.

We have our next question from George Kelly. Your line is open.

We have our next question from George Kelly Your line is open.

Hi everybody, thanks for taking my questions. So just two quick ones for you. First, another Topgolf question. So internationally, still not a whole lot of venues. I think it's something like 8 venues internationally.

Hi, everybody. Thanks for taking for taking my questions. So just two quick ones for you first another another top golf question. So internationally.

Still not a whole lot of venues I think it's something like eight venues internationally.

wondering how quickly you expect that to scale? And is there any consideration to opening any of those venues yourself?

I'm wondering how quickly do you expect that to scale.

Is there any consideration to opening any of those venues yourselves.

Good question, George. So we expect to open three new venues this year, one of which we're highly confident because it opened in January . And it's doing really well. And that one's in Germany. And then we announced, I believe it was yesterday, that we're doing one in Glasgow, Scotland.

Good question George So.

We expect to open three new venues this year, one of which we're highly confident because it opened in January and is doing really well and that one's in Germany.

And then we announced I believe it was yesterday.

We're doing one in Glasgow, Scotland and that will be an owned venue. So it will be in the international portfolio, but is consistent with the other venues that we've opened in the UK, which are actually legacy.

and that will be an owned venue. So it'll be in the international portfolio but is consistent with the other venues that we've opened in the UK, which are actually legacy venues, that will be owned and operated. And then there's one more plan for the balance of the year later in the year.

Hi.

And then use that will be owned and operated and then Theres one more planned for the.

Balance of the year later in the year.

And then we're going to be ramping it from there. So you'll see increasing activity on that and this will probably sound familiar, but tune for the investor day where we'll give you a little bit more color on perhaps mid to long term outlook in terms of open.

And then we're going to be ramping it from there so you'll see increasing activity on that and this will probably sound familiar but.

Tuned for the Investor day, where.

We will give you a little bit more color on perhaps mid to long term outlook in terms of openings.

COVID has been more of a factor even internationally than it has been in domestic operations as we ramped up with these franchisees.

Covid has been more of a factor even internationally than it has been in domestic operations as we ramped up with these franchisees.

And, you know, so we're seeing good activity there and developing that well. But it'll scale a little later there than what we originally thought. But we do have some nice activity for this year.

And.

So we're seeing good activity, there and developing that well.

But.

It will scale a little later there than what we.

Generally thought, but we do have some nice activity for this year.

Okay, Great and then second.

area I wanted to ask about too is Travis Matthew. So the growth that you've had there has just been remarkable. So curious, how do you keep that going? And maybe if you could talk about your expectations for new stores, and expectations for growing that brand outside of golf, just wondering how that how that's going.

Barry I wanted to ask a question.

As Travis Matthew So growth you've had there has just been remarkable.

So curious how do you keep that going and maybe.

Maybe if you could talk about your expectations for new stores and expectations for growing that brand outside of goals I'm, just wondering how that how that's going.

Well, it's interesting, George, because I view that brand as outside of golf already. It's really a lifestyle apparel brand. It has its roots in golf, but it's what we wear to the office. It's what you wear after golf when you go out and socialize. You go into their stores and you're buying hoodies and cloud collections, essentially fleece and outerwear.

Well, it's interesting George because I view that brand is outside of golf already.

It's really a lifestyle apparel brand it has its roots in golf, but it's what we wear to the office is what you were after golf when you go out and socialize.

You go into their stores and you are buying hoodies and cloud collection is essentially fleece and.

Outerwear.

You know, that's one of the things that I really loved about the brand when I looked at it because the scale and potential of that business is way above golf. I'd studied the golf brands in the apparel space for some time and candidly they don't get very big. This business is getting big fast.

Hi.

One of the things that I really loved about the brand when I looked at it because the scale and potential of that business is way above golf and.

Studied the golf brands in the apparel space for some time.

Candidly they don't get very big.

This business is getting big fast.

And, you know, we give you some of those metrics, but, you know, 65% same store sales. That's pretty good. And, you know, it's got a lot of runway. It's selling through on the East Coast. It's selling through on the West Coast.

We gave you some of those metrics, but 65% same.

Store sales that's pretty good.

And.

It's got a lot of runway, it's selling through on the east coast is selling through on the West Coast I think we added 10 stores last year.

I think we added 10 stores last year. We had 29 open. The payback on those stores is really good. And you'll see us continue to add stores. It's got a nice direct-to-consumer model, but then it's also doing extremely well with its wholesale partners.

We had 29 open.

The payback on those stores is really good.

And Youll see us continue to add stores, it's got a nice direct to consumer model, but then it's also doing extremely well.

With its.

Wholesale partner so great.

Great, great success story, but you should not be thinking about it as a golf brand. You can think about it as roots in golf, but just as with Topgolf, OGO, way beyond the audience of just golfers.

Great Great success story, but you should not be thinking about it as a golf brand you can think about it as roots in golf, but just as with top golf Oh Geo.

Way beyond the audience of just golfers.

Understood. Thank you.

Thank you.

We have our next question from Casey Alexander. Your line is open.

We have our next question from Casey Alexander Your line is open.

Yeah, good afternoon. I know this call is getting long in the tooth. So I'll just keep it to one question. You know, looking at your guidance for Topgolf of 1.5 billion for 2022. That's just on the numbers compared to 2021 really solid growth.

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

I'll just keep it to one question.

Looking at your guidance for top golf of $1 5 billion for 2022.

Just on the numbers compared to 2021 really solid growth.

And yet, with five to six stores opening in the fourth quarter of 2022, why shouldn't we be thinking of 2023 as a year of accelerating growth for Topgolf?

And yet with five to six stores opening in the fourth quarter of 2022, why Shouldnt, we be thinking of 2023 as a year of accelerating growth for top golf.

Casey I think you bring up a good point.

That's all my questions. Thank you. Thanks Casey and sorry we started late. That's okay.

That's all my questions. Thank you. Thanks.

Thanks, Stacy and sorry, we started late.

That's okay.

We have our next question from Rudy Yang Your line is open.

Hey guys, thanks for taking my questions. I guess just firstly, can you just kind of comment to how you think rising interest rates could affect your business in any way, if at all, and how your industry has historically fared in a higher rate environment? Good question Rudy, I don't really...

Hey, guys. Thanks for taking my question.

I guess, just firstly can you just kind of comment to how you think rising interest rates could affect your business in any way if at all and how your industry has historically fared in a higher rate environment.

Good question Rudy I don't really.

Obviously.

I guess I got to turn it to you Brian , I don't even know how much of our debt is.

I guess I'm going to turn it to you Brian I don't even know how much of our debt is exactly what percent fix versus not but I don't know the exact percentage, but it would affect us is with rising interest rates all of the.

what percent is fixed versus not. I don't know the exact percentage, but it would affect us with rising interest rates. All the terminal fees and everything would be affected. It would be some incremental cash, but it wouldn't have a big effect on our business. We haven't seen, Rudy, part of the reason you're hearing, we don't know because we don't think we're that sensitive to it. You know, when we, this business does well throughout raising rates and lower rates.

Terminal dues and everything would be.

Affected.

It would be some incremental cash, but it wouldn't have a big effect on our business. We haven't seen really part of the reason you're hearing we don't know because we don't think we're that sensitive to it.

This business does well throughout raising rates and lower rates.

you know, it does better in any business will in a good economy versus a weak economy. But it does fine in a, I've been in the golf equipment business for 20 plus years, you know, been around Topgolf for more than 10 years and it's, these businesses are not highly sensitive to interest rates or

It does better than any business will in a good economy versus a weak economy.

But it does fine in a.

I've been in the golf equipment business for 20 plus years.

Been around top golf.

For more than 10 years and it's.

These businesses are not highly sensitive to interest rates or.

They're not even highly sensitive to economic cycles, although they of course will have some sensitivity there.

Awesome I'll leave it.

Thanks, guys. Thank.

Thank you.

There are no more questions at this time and I will turn it back over to Chief Thank you.

There are no more questions at this time and ill turn it back over to chip Brewer, President and Chief Executive Officer.

All right, well, I want to thank everybody for being on the call today. As you can tell, we're very pleased with our business and we look forward to seeing you at the investor day, which more details will be forthcoming. And again, we apologize for the technical difficulties in the late start. Appreciate you hanging with us and talk to you soon.

Alright, well I want to thank everybody for being on the call today as you can tell we are.

Very pleased.

Pleased with our business and we look forward to seeing you at the.

Investor Day, which more details will be forthcoming and again, we apologize for the technical difficulties in the late start appreciate you hanging with us and.

Talk to you soon.

Yeah.

Ladies and gentlemen, this concludes today's presentation. Thank you for participating. You may now just-

Ladies and gentlemen. This concludes today's presentation. Thank you for participating you may now disconnect.

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Good day and thank you for standing by. Welcome to the Callaway Golf Company 4th Quarter 2021 Earnings Call. At this time all participants are in a listen-only mode.

Good day and thank you for standing by welcome to the Callaway Golf Company fourth quarter 2021 earnings call.

At this time all participants are in a listen only mode and during the Q&A session. We ask that you. Please limit your questions to one and then a follow up so I'll allow us many participants as possible to ask a question and all of that I'd like to hand, the conference over to your speaker for today.

During the Q&A session, we ask that you please limit your questions to one and a follow-up. To all of our many participants, it's possible to ask a question. And I would like to hand the conference over to your speaker for today, Lauren Scott, Director of Investor Relations. Thank you. Please go ahead and unmute yourself.

Scott <unk> director of Investor Relations. Thank you. Please go ahead.

Thank you operator, and good afternoon, everyone first I'd like to thank you all for your patience, we're having a technical difficulty on our end and we will.

Extending the call by 15 minutes to be sure that we make up for any lost time. So thank you very much for your patience.

And as the operator said I'm Lauren Scott the company's director of Investor Relations. Joining me of speakers on today's call are chip Brewer, our president and Chief Executive Officer, and Brian Lynch, Our Chief Financial Officer, Patrick Burke, Calloway's SVP of Global Finance and Jennifer Thomas Our Chief Accounting Officer are also in the room today for Q&A.

Patrick Burke, Callaway's SVP of Global Finance, and Jennifer Thomas, our Chief Accounting Officer, are also in the room today.

Earlier today, the company issued a press release announcing its fourth quarter and full year 2021.

Earlier today, the company issued a press release announcing its fourth quarter and full year 2021 financial results. In addition, there's a presentation that accompanies todays prepared remarks and may make it easier for you to follow the call.

Earnings presentation as well as the earnings press release, both available on the company's Investor Relations website under the financial results had.

Most of the financial numbers reported and discussed on today's call are based on U.S. Generally Accepted Accounting principles. In the instances where we report non-GAAT measures, we have reconciled the non-GAAT measures to the corresponding GAAT measures at the back of the screen.

Please note that this call will include forward looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations.

that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe harbor guidance contained in the presentation and press release for a more complete discussion.

Encourage you to review the Safe Harbor contained in.

In the presentation and press release for a more complete description.

And with that I'd now like to turn the call over to Jim.

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

Good afternoon to everyone on the call. Thank you for joining us today and also thank you for your patience. We apologize for the late start.

Good or not good afternoon to everyone on the call. Thank you for joining us today and also thank you for your patience, we apologize for the late start.

I am pleased to report another quarter of strong results and look forward to providing more detail around our outlook for the year ahead.

But first I wanted to take a moment to acknowledge the incredible year. We just concluded two.

2021 was a pivotal year for Callaway, marked by exceptional results, significant growth, and strong momentum across all our business segments. We closed on the acquisition of TANF.

2021 was a pivotal year for Callaway marked by exceptional results significant growth and strong momentum across all our business segments.

We closed on the acquisition of top golf in Q1 <unk>.

transforming our company into the unrivaled leader in the modern golf and lifestyle apparel space.

Transforming our company into the unrivaled leader in the modern golf and lifestyle apparel space.

Amid continued high demand for our golf equipment and lifestyle products, our global sales and operations teams were tired of it.

delivering quarter after quarter of impressive results despite significant global COVID-related operating challenges.

The team has proven itself to be an impressive and battle-hardened asset for all of us.

Team has proven itself to be an impressive and battle hardened asset for.

In addition, we've increasingly made key investments in infrastructure and people to support a larger business.

In addition, we have increasingly made key investments in infrastructure and people to support a larger business.

and to set us up for continued growth and financial success.

And to set us up for continued growth and financial success.

I want to personally thank all of our global employees for their hard work throughout the year.

Our positive results would not be possible without your dedication and passion for this business.

Shifting to Q4, our results came in better than expected led by another quarter of exceptional results from Topgolf and continued high demand for both golf equipment and lifestyle apparel and gear.

Shifting to Q4, our results came in better than expected led by another quarter of exceptional results from top golf and continued high demand for both golf equipment and lifestyle apparel and gear.

Total net revenue was $712 million, up 90% year over year, and adjusted IBDI was $14 million, up $27 million.

Total net revenue was $712 million up 90% year over year, and adjusted EBITDA was $14 million up $27 million.

Turning to Topgolf, for the quarter, both walk-in traffic and event sales surpassed our expectation.

Turning to top golf for the quarter, both walk in traffic and event sales surpassed our expectations drew.

driving same venue sales to an impressive increase of 6% over 2019 levels.

Driving same venue sales to an impressive increase of 6% over 2019 levels.

For the full year, same venue sales were approximately 95% of 2019 levels.

For the full year same venue sales were approximately 95% of 2019 levels.

meaningfully higher than projected and an encouraging and very strong result given the operating environment.

Meaningfully higher than projected and an encouraging and very strong result, given the operating environment.

A resurgence in corporate events business drove most of the same venue sales positive surprise in Q4. Walk-in sales and smaller social events had been strong for some time and continued their trends.

A resurgence in corporate events business drove most of the same venue sales positive surprise in Q4 walk in sales and smaller social events had been strong for some time and continued their trends.

While this will have an impact on Q1 results.

It was promising to see that our UK venues, which experienced Omicron impacts approximately a month ahead of our US venue.

It was promising to see that our UK venues, which experienced omicron impacts approximately a month ahead of our U S venues bounce back very quickly and are now once again performing quite well.

bounce back very quickly and are now once again performing quite well.

This is a good indicator of the resiliency we expect in the US business through the remainder of Q1 and we're already starting to see some signs of this anticipated improvement.

This is a good indicator of the resiliency, we expect in the U S business through the remainder of Q1, and we are already starting to see some signs of this anticipated improvement.

For the first quarter of 2022, we're expecting same venue sales to be down slightly compared to 2019.

For the first quarter of 2022.

We're expecting the same venue sales to be down slightly compared to 2019.

And for the full year, we anticipate low single digit growth over 2019 levels.

New venue openings continued on pace with our 72 Bay Fort Myers, Florida location opening strongly in mid-November.

New venue openings continued on pace with our 72 Bay Fort Myers, Florida location opening strongly in mid November .

while we're on venues, I want to remind everyone on the success rate we're consistently delivering.

While we're on venues I want to remind everyone on the success rate we're consistently delivering here.

We had nine very successful openings in 2021, and the financial performance of this group is on track to exceed our expectations despite the challenging operating environment.

We had nine very successful openings in 2021 and the financial performance of this group is on track to exceed our expectations. Despite the challenging operating environment.

I've had a ringside seat watching Topgolf open venues for nearly 10 years now, and in my opinion, we are uniquely good here.

I've had a ringside seat watching top golf open venues for nearly 10 years now.

And in my opinion, we are uniquely good here.

As a result of increasing brand strength.

competency of our real estate team and our operating team's expertise. This is now a proven and repeatable model.

Competency of our real estate team and our operating teams expertise. This is now a proven and repeatable model a.

a fact that I believe the financial community may not fully appreciate yet.

The fact that I believe the financial community may not fully appreciate yet.

For 2022, we are confident in our ability to deliver at least 10 new venues, with the potential of adding an 11th in very late Q4.

For 2022, we are confident in our ability to deliver at least 10, new venues with a potential to adding an 11th in very late Q4.

We're also extremely excited about the lineup for this year with our first two southern California locations opening in the Los Angeles area in Q1, and Q2, one in Ontario, which is just east of La.

And the other analysis of <unk> near Sofa Stadium.

The El Segundo location is particularly intriguing as is the first venue to include an on-course element.

We're also going to locations, particularly intriguing as is the first venue to include and on course element in.

and in true Topgolf fashion, this will not be your typical golf course. It'll be a 10-hole lighted course, perfect for nighttime rounds, incorporating elements of entertainment and our Top Tracer technology to create a truly unique guest experience.c

Additional locations of note include Seattle and Baltimore.

both of which will feature our latest premium venue enhancements.

Both of which will feature our latest premium venue enhancements as well as Callaway fitting base.

It is important to note that due to the disruption in the development activities in 2020, the timing of this year's venue openings will be heavily weighted towards the back half of the year with five expected to open in Q4. This timing will impact this year's contribution from new venues.

Shifting to Top Tracer, we installed over 1,700 new bays, bringing our total for the year to just under 7,000 new bay installations.

Shifting to top tracer instead.

We installed over 70 to 170 500, new base, bringing our total for the year to just under 7000, New Bay installations.

We remain encouraged by continued strong demand and expect to install 8,000 bays or more in 2022. Lastly, with anocking in the Air Control Center with a small order ofep consulate. We okayed anpresenter.

We remain encouraged by continued strong demand and expect to install 8000 base or more in 2022.

Lastly, within the top golf media business.

Pleased to announce that we are leveraging our mobile game development expertise from World Golf Tour to launch a new game later this year that caters to the younger more traditional gamer.

Whereas the existing game focus is more on the traditional golfer.

While we expect the game to have minimal contribution to our financial results in 2022, we believe that it will provide future upside as our community of digital customers continues to grow.

While we expect the game to have minimal contribution to our financial results in 2022, we believe that it will provide.

Future upside as a community of digital customers continues to grow.

In addition, in due time, we'll integrate this new game into our digital offerings at both our venues and Top Tracer range.

In addition in due time, we will integrate this new game into our digital offerings at both our venues and top tracer ranges. Thus.

thus driving synergies from our game development capability.

Thus driving synergies from our game development capabilities.

Moving to our golf equipment segment, we're pleased to report that demand remains very high for our clubs and balls and trade inventory remains low across the industry.

Moving to our golf equipment segment. We're pleased to report that demand remains very high for our clubs and balls and trade inventory remains low across the industry.

According to the National Golf Foundation's annual report, the number of on-course golfers increased by approximately 300,000 in 2021 to 25.1 million players, marking the fourth straight year of increased participation in traditional golf.

Off-course participation also continued to grow with 24.8 million people visiting non-traditional venues such as Topgolf and 5 Iron.

Off course participation also continued to grow with.

With $24 8 million people visiting non traditional venues such as top golf in five iron.

and approximately half of those playing exclusively off course.

And approximately half of those playing exclusively off course.

Looking out over the next 12 months and beyond.

As Topgolf venues continue to expand, we expect even more new players to be introduced to the sport both on and off course.

As topped up venues continue to expand we expect even more new players to be introduced to the sport both on and off course.

For Q4, our golf equipment results were in line with our expectation.

For Q4, our golf equipment results were in line with our expectations.

As we explained last quarter, we anticipated some softness in Q4 revenues as we made the decision to shift production to build 2022 new launch products.

As we explained last quarter, we anticipated some softness in Q4 revenues as we made the decision to shift production to build 2022, new launch product.

In addition, we launched several new products in the comparable fourth quarter of 2020, thus creating an uneven year-over-year comparison.

In addition, we launched several new products in the comparable fourth quarter 2020, thus, creating an uneven year over year comparison.

As we look ahead to Q1 in the full year 2022, we are seeing promising momentum with the launch of our new Rogue ST family of woods and irons and new chrome soft golf balls.

As we look ahead to Q1 and the full year of 2022.

We are seeing promising momentum with the launch of our new Rogue STI family of Woods, and irons, and new chrome soft golf balls.

Reception has been very positive so far pre books are up significantly and feedback on the product has been outstanding with Rogue STB and the number one driver on tour in its first week on tour at the tournament of champions and Callaway, receiving more gold metals than any other manufacturer and golf Digest recent hot list.

The new launch product will be available to retailers starting next week.

The new launch product will be.

Available retailers starting next week.

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

For the full year.

Iterating.

Golf equipment business will grow based on continued strong demand from consumers price increases on our new launch product and the opportunity for a restocking at retail.

Turning to our apparel and gear.

In our apparel and gear segment, revenue is up 33% year over year in Q4, led by a 40% increase in apparel and a 19% increase in gear.

In our apparel and gear segment revenue was up 33% year over year in Q4 led by a 40% increase in apparel and a 19% increase in gear.

Travis Matthews continued to grow at a roaring pace with her own retail comp store sales up over 67% versus 2020.