Welcome to the Topgolf Callaway Brands Virtual Investor Event with Topgolf CEO, Artie Starrs. All participants will be in a listen-only mode. You may submit online questions at any time today using the window on the webcast. Please note, this event is being recorded. I would now like to turn the conference over to your host, Ms. Lauren Scott, Director of Investor Relations. Please go ahead, ma'am. Thank you. Hi, everyone, and thank you for joining us today. I'm Lauren Scott, Director of Investor Relations for Topgolf Callaway Brands. Today's session will last approximately an hour and a half and will consist of a presentation followed by Q&A. During the presentation, Chip Brewer, our President and CEO, will provide a brief introduction, then hand the call to Artie Starrs, Topgolf's CEO, for a deep dive on the venue business. After the presentation, we will hold a live Q&A session with Chip, Artie, and Brian Lynch, our CFO. We will be taking questions from our covering research analysts over the phone and will also be addressing questions that are entered via the webcast portal, which I will relay to our speakers. Please note that this call is intended to focus on the Topgolf business, so we ask that you keep your questions focused largely on this segment. Before turning the call to Chip, I want to call out our Safe Harbor slide. As a reminder, comments today will include forward-looking statements regarding our future plans and projected performance, and our actual performance may differ from the statements made today. Information on our risk factors that could affect our business are available in our SEC filings. We will refer to certain non-GAAP measures today, which you can find reconciliations for in the appendix for the presentation. With that, I'll turn the call to Chip for introductory remarks. Thank you, Lauren. Hello, everyone, thanks for joining us today. I'm Chip Brewer, President and CEO of Topgolf Callaway Brands, the leader in modern golf. Modern golf is an exciting and growing space made up of traditional on-course golf, combined with a dynamic and inclusive off-course golf phenomenon. At Topgolf Callaway Brands, we're proven operators with attractive and unique assets, we have an unrivaled competitive position and structural growth. Our business is comprised of three segments that feed on and support each other. First is our legacy golf equipment business, approximately $1.4 billion in revenues last year, a proven business with strong profitability. Second is our active lifestyle segment. This segment was approximately $1 billion in revenues in 2022, and is made up of three primary brands: Callaway, Jack Wolfskin, and TravisMathew. It's both high growth and generates positive cash flow. Last but not least is Topgolf, our largest segment from both a revenue perspective and growth. A business that is transforming both our company and the game of golf at large. An amazing business that we're going to dive deeply into today with the help of its CEO, Artie Starrs. Looking at this slide, it's clear that we have a growth story with strong competitive dynamics and compelling financials. The chart shows our April 2021 Investor Day growth targets for the years 2021 through 2025. These are 10% to 12% annual revenue growth and 15% to 18% EBITDA growth, delivering at least $800 million in total company EBITDA by 2025. We're tracking at or above these targets. Within this, Topgolf is expected to be approximately one half of this year's projected EBITDA and is the biggest part of our growth and profitability story long term. With that, I'll turn the presentation over to Artie Starrs to dig deeper into this exciting business. Thanks, Chip. Good morning, everybody. I'm Artie, and I'm excited to talk to you today about Topgolf. I'll give you a general overview of our business, specifically our venue business, its improving unit economics, our short and long-term growth levers. I've led the business and had this privilege to do so for the last two years. Proud of our team and the improvements that we've made, but I really just believe we're just getting started. At Topgolf, we're on a mission. As a brand, we're on a mission to grow, evolve, and expand access to player participation in the game of golf through creating a more fun, a more simple, and easier ways to play this great game. We track our success through balls hit, a very simple measurement, and have statistically found that this is a measurement of player satisfaction or joy, highly correlated with revenue per player and likeliness to return, and it's a call to action that informs our game innovation and player hospitality commitments on the tee line every single day. We track this daily, and just last week reported at our global company summit, we are on track to meet this robust 50 billion balls hit goal. We're a driving force at Topgolf, and all of us playmakers here are proud of the role that we're playing in the game. Approximately 40% of our players are female, 40% of our players are non-white, and this is adding to the diversity of the modern golf ecosystem that Chip talks about as we are representative of the communities we serve. Half our players are non-golfers, defined as those who otherwise would play once, at least once a year. As we shared on our last earnings call, a growing number of golfers, 10% of new golfers, are attributing off-course golf as their entry point into picking up the game and entering the modern golf ecosystem. We tend to build in highly visible and desirable retail-dense locations, and while our frequency levels are currently relatively low, we view this as a significant opportunity, which is informing our digital strategy, which I'll talk about in more detail shortly. On the venue business, as I mentioned, this is the focus for today, and specifically our US venue business. Our overall venue business today constitutes 95% of revenues. The growth model is fairly simple: same venue sales, margin expansion, and our development pipeline. Our confidence in the growth model has increased over the past year as the strategy of focusing on the bay experience, what you see right behind me, is working, and we have significant runway ahead, as evidenced by our enhanced new venue return targets. We believe we have a proven and repeatable model, and one of the drivers of these improved returns is driven by Topgolf benefiting from being a part of Topgolf Callaway Brands. It has allowed us to achieve scale benefits and create synergies among the brands and accelerate growth. We currently have 82 owned and operated venues, opened 1 in the 1st quarter in Charleston, South Carolina, and expect to open 2 more over the next month. We're on track to have 92 open at year-end, totaling 11 openings for this year. The returns we're seeing are strong. The improved returns targets are a result of the continued success we are seeing in new venue openings, combined with actual venue performance in our venues with longer operating history. I want to highlight specifically the 2.5 years payback, 2.5 years. When we review venues internally, when I sit in underwriting meetings, we are specifically citing a fully loaded month's payback as a key determinant of financial success. Looking back on 2022, I'd like to take a moment to just underscore last year's results as they provided key learnings of what this business is capable of achieving in 2023 and beyond. Last year, we built and successfully opened 11 venues. In fact, we had six open in six weeks. This is a tough putt using golf language, but we did it. We can grow comp sales with a balance of traffic and price, with approximately a third of our growth coming from traffic. Throughout the year, we made improvements in bay utilization, measured at peak times when we are on a wait, and digital. These are linked, the rollout of PIE, our Popularity Inventory Engine, had a lot to do with this. We have significant runway ahead to improve both, and we are. Perhaps most exciting is the continued growth in EBITDA margin. Despite increasing our investment in marketing, broad inflation pressure, and specifically a significant increase in wages, and while not relying on price to do so, we improved EBITDA margin significantly. That said, we believe we have room to take more price in 2023, as we have seen little to no resistance to date, specifically at peak demand. As I mentioned earlier, I'm going to walk you through our growth pillars, comp growth, same venue sales, margin expansion, and our development pipeline. Let me go into each one of these in a bit more detail. On sales and comp growth, if we look back a few years ago at Topgolf, the business and strategy was focused on walk-in, which was really walk-up players. The concept started, we started selling a bucket of balls, and we built the corporate events business, selling and executing larger events. Over the last couple of years, we've listened to our players, studied the consumer, and developed a comprehensive strategy to allow for reservations and their desire to plan ahead and to serve smaller group occasions. We started offering a smaller group event as an extension of our event sales team, and we are in the process of migrating that into a digital product. PIE, our Popularity Inventory Engine, enabled us to better cater to the needs of our players. We can offer easier access, provide more value, and better meet more of our players' needs. We are seeing this with our digitally booked 2-bay players, returning more often than through traditional events booking. This also frees up our events team to go after the largest, most profitable bay-utilizing events. 2-bay bookings are now 10% of our business and growing. Broadly, all events, corporate and social 2-bay, we view as our happy meal. It's like the introduction to the brand and the Topgolf experience in the same way we all got at McDonald's when we were kids. Specifically on PIE, as you can see, is a key unlock, and let me provide a bit more detail on where it came from, what it's currently doing, and what it will enable in the future. As a reminder, our most prevalent player complaint is wait times. I hear this all the time. In most venues, this is Friday and Saturday nights and Sunday afternoons. It's not uncommon to experience 2, 3, and even 4-hour plus wait times at Topgolf. Because of the various channels of access we've built, large events, small events, walk-in reservations, and walk-up, managing this inventory, especially when all players were allowed to extend their time, is extremely complex. In addition, we sell our gameplay in the form of time, and while many players were walking up, the cost, group size, and specialness of the Topgolf occasion, it's clear players were planning. We just weren't allowing them to do so. There had to be a digital solution for this that's a win for the player, a win for our playmakers and our teams, that would also provide incremental economics and allow us to grow faster with greater flow through. In the restaurant world, where I came from previously, you just turned digital ordering on and connected to your point of sale. In this business, we needed business rules and logic to develop an algorithm and follow on in-venue training to allow our directors of operations to manage demand better. That's what PIE is, an internally developed tool based on years of operating these venues, informed by the operators themselves, that connects the player to the occasion with bay utilization as the primary output function. It's paying off now and setting us up for the long term to do much more. Currently, we are seeing just north of 2% sales lift as venues roll onto PIE. We had PIE in 36 venues by the end of Q1, and will be in all venues by year-end. It immediately drives digital mix as more reservations are available and gives us the ability to charge different reservation fees based on time of day, and provides more predictability for our operators in how to staff. We are thrilled with how it's going, but we're much more excited about what it will enable in terms of comp growth and margin expansion in the future. Immediately expands our digital mix and thus digital engagement, having relevant communication with our players. It will allow for demand smoothing by using price to minimize wait times during peak and sell bays when demand is less, such as earlier in the week on Mondays, Wednesdays, and Thursdays, specifically. It allows for pricing opportunities for premium experiences, such as a middle bay on the third floor on a Friday night, and perhaps most importantly, variable length reservations, shorter times for smaller groups, longer times for larger groups. Let me touch on the marketing piece for a moment, and there's a lot that we're doing to capitalize on better bay utilization, but one of the biggest areas of opportunity is continuing to increase our brand awareness. Our marketing campaign with the tagline, "Come Play Around," plus the buzz on social media we create with new openings, both locally and nationally, and with our brand ambassadors, we are driving significant improvement in our brand awareness. Our in-venue media partnerships model is also evolving, where we are moving from a large number of small, local, or regional partners to a select group of brand-building national partners. Late last year, we announced a multi-year agreement with Honda Acura as our national auto partner. These deals are win-wins. Honda is a longtime PGA Tour sponsor and has been long embedded in the game of golf. They saw the opportunity to present their brand in a unique way to potential customers. We saw a world-class brand that develops automobiles relevant to our player base. You can expect more of these deals in selected large verticals that will be complementary to our brand identity and accretive to our unit economics. A bit on the fun side, you may have seen Marcus Smart and Al Horford, the Boston Celtics, tell the story of what drove their down three games to the Miami Heat comeback to tie the series up last week. They referenced in interviews and social media, canceling a team film session to reset their team dynamic by going to Topgolf in Miami before Game four of the Eastern Conference finals. There's a lot of buzz happening in a very organic way here at Topgolf. That being said, half of our players in our markets still don't know who we are, and we are going to continue to invest in building our brand awareness authentically. We'll launch a second wave of the campaign in Q3 of this year. You'll begin to see more retail-like messaging from us, where we highlight specific existing promotions, like our 50% off gameplay on Tuesdays, which we run in most markets, and periodic game and food and beverage innovation. That said, the focus right now is driving awareness. Looking ahead, we have a clear roadmap. This growth in top line, coupled with improved margins, has created a step change in our venue economics. We've materially improved the venue margins over the last 2 years through a more efficient labor model, simplifying our menu, which proved especially prudent during supply chain disruptions, and focusing on the core F&B offerings our players want, that our playmakers can make well and quickly. All this while turning marketing on. funding a significant increase in wages in the second half of 2022, lapping unsustainable staffing levels across hospitality as we came out of the pandemic. Today, we are tracking well against the 35% target. The majority of the improvement from our prior 32%+ guidance to 35%, we are already seeing through continued labor and menu optimization, and what I would generally call benefits of scale, both the scale of Topgolf and the scale of Topgolf Callaway Brands. Between supplier contracts, adding talent to key positions in engineering and food and beverage, and our broader Topgolf Callaway Brands operating partners, we are realizing the benefits, but it's just the beginning. When we add onto this, the impact of digital, as we roll out Pi across all venues and the immediate reservation fee mix, higher visibility into demand, which impacts staffing levels, and the opportunity to more dynamically price and adjust bay time per occasion, which improves bay utilization, we are confident in our ability to achieve our 35% target. These economics are extremely attractive, and revisiting them, 35% margins across a variety of venue sizes, two and a half year paybacks, which we underwrite to, and the 18% to 22% gross returns. Many of our larger venues are already performing at or above these levels. I'd like to take a moment to discuss our real estate program for a minute, which has been a key enabler of our venue economics and allowed us to make this 35% target across the entire portfolio. At the highest level, we are just getting started in building Topgolfs, both domestically and internationally. Our progress on venue design and market fit, which I'll discuss shortly, is not only enabling our improved returns and paybacks, but has also expanded our addressable market. We see 250 opportunities today with our current formats, leaving just shy of 170 markets that we are tracking and working opportunities to build at various stages. We see a similar opportunity internationally, where outside the UK and Canada, we have franchise partners doing the same work. On our pipeline, our track record over the last two years has been strong, and we've delivered on our commitments. Beyond the 21 openings since the beginning of 2021 through the end of Q1, 2023, we've expanded our presence in major West Coast markets like Los Angeles, San Francisco Bay Area, and Seattle. In these markets, development is much more complex and more expensive, but our performance has been outstanding. We've done this in smaller markets like Boise, Idaho, Fort Myers, Florida, and Knoxville, Tennessee, to name a few, where our performance has also been outstanding. We're opening 2 new venues over the next month in King of Prussia, just outside of Philadelphia, Pennsylvania, and St. Petersburg, Florida, and we remain on track to open 11 venues this year. Some examples of our venues, we're confident our suite of proven small, medium, and large market designs, chosen based on our significant experience to date, balancing location, site visibility, growth rate of the trade area, and cost, position us very well to build out this addressable market. We're particularly excited about our newest venue format. We're calling it internally, the hybrid, a term we're borrowing from golf. This format maintains the key features that, as a player, you'd expect from Topgolf, but through a more efficient footprint that is optimized for market demand. On the financing front, let me talk about the financing of these venues. We've long had a small group of trusted and outstanding real estate partners who have supported Topgolf and financed our venue construction and land purchase. The universe of partners has expanded in recent years as our business has grown. Our venue economics have improved since joining Topgolf Callaway Brands. This has allowed us to maintain competitive cap rates and successfully finance improvements on ground leases. Notwithstanding, our balance sheet is in a position where we can self-finance venues if necessary. This gives us a significant competitive advantage to continue to develop our long-term pipeline with credibility in the marketplace, while actioning on the best sites we see for brand representation and long-term venue economics. Now, we're on track to be self-funding and free cash flow positive here at Topgolf in 2023. Our guidance for 2023 CapEx is $190 million, which approximately 75% of this invested towards adding new venues, remodeling venues that have been open for some period of time, eight, nine years, and maintaining existing venues in a brand building way. Over the long term, this CapEx will grow as new venues open. In the short term, it may vary with the timing of reimbursements. Most importantly, we are confident in our growth model of building new venues, combined with the overall venue economics, will result in improving free cash flow characteristics going forward. We're clearly at a tipping point in 2023. Let me close by recapping our short- and long-term growth opportunities. First, on 2023, which we believe will outperform our long-term targets. On same-venue sales, PIE is working and driving 2% of comp growth and also helping us to continue to grow our walk-in and two-bay event business. We have the opportunity to take more base price and optimize pricing at peak demand. All of this leads to higher bay utilization. When we met last year at Investor Day, we were running in the low 70s. We ended the year at 75%. We're now approaching 80%, with still room to grow. On the margin front, they have and will continue to significantly improve. Most of the actions needed to drive margins from 32% to 35%, we began to see late last year in the first part of this year, and we continue to see the benefits of scale I mentioned earlier. Digital growth enabled from PIE is only going to help. On the pipeline, we opened 11 last year, we'll open 11 this year, two more in the next 30 days, and our multiyear pipeline is strong. I was just in market earlier this week. Our new venues continue to perform very well against our target returns. We have ready-enabled financing partners and can self-finance if necessary. On the long term, on same-venue sales growth, we are in the early innings of brand awareness and digital. Significant upside. Our focus today is on bay utilization at peak, but over time, awareness and digital will allow us to drive full week utilization. We're still at well less than 40% utilization, looking at all hours across the week of a venue. On margin expansion, one thing I cannot stress enough is we are still in the relatively early innings in maximizing the economics here. Most of the work to date over the last couple of years has been of the blocking and tackling nature. We'll continue to see the benefits of scaling, in particular with our partnerships and large vendor contracts. On the development side, our track record is clear, and building venues of this size is complex and challenging. It takes real expertise, time, talent, and a long-term view. Our development program is a material competitive advantage. Oh, by the way, we're just talking about the addressable market today with our current venue designs. I'm confident we'll have more and better iterations in the years to come. Thank you for your time, and back to you, Lauren. Great. Thanks, Artie. Now we'll move on to the Q&A portion of the call. For our research analysts on the line, to ask a question, you press star and then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you can press star and then two. We ask that you limit your questions initially to one and a follow-up, and then you can get back in the queue if you have additional questions. All other participants, please continue to use the webcast portal to submit questions, and we will address as many as we can. I've seen some coming in, so thank you for submitting those already. Operator, I'll hand it to you to take our first question from our analyst. Thank you very much. Our first question today will be from Joe Altobello from Raymond James. Please go ahead. Thanks. Hey, guys, appreciate the question. I guess first question, not surprising. Maybe kind of give us some insight into how, you know, trends are progressing here quarter to date in April and May overall. Maybe kind of talk about, you know, walk-ins versus small events and corporate events, and maybe any signs of the corporate business starting to recover at all? Lauren, you want me to take it? Yes, Artie, thanks. Great, yeah. you know, we're not gonna give, you know, intra-quarter trend guidance. I think we'll just reiterate what we, you know, what we said in the last earnings call, which, you know, we feel good about. you know, what I'd say about, you know, balance of year, you know, we feel good about our plans for the balance of year. Our walk-in business is very strong. We are experiencing a little bit of softness. We believe it's short term in the corporate events, which Chip mentioned. We've got ample opportunity to take some price, and we're really excited about what's happening on digital. You know, as we get PIE on all these venues, it's just gonna enable us to do a lot more for the player, and have a more meaningful impact on comp growth. No, I certainly appreciate that, Artie. I guess, just to follow up on that, you know, the small events business, I think you guys talked about that being down year-over-year in Q2. Maybe help us understand what the drivers of that are, you know, given all the, all the work you've done there? I'm sorry. The small events business- He's saying- Was down in Q2. It was mostly down in second quarter, yeah. The walk-in plus the two-bay business is extremely strong, I guess. The our one two-bay business. Small event. Is coming in nicely. Okay. Yeah, Artie, on the earnings call, I had mentioned that the, we had to lap a big surge last year in the. Oh, in Q1. The small events for the two-bay. You're correctly identifying. The better way to look at this is the combination of walk-in and that two-bay, and that we're very strong on that. That individual two-bay was a surge coming out of Omicron early last year that extended into the first half of Q2 and gave us a little bit of headwind on that, but. That's right. You're. Thank you. The bigger picture issue here. Okay. Super. Thank you, guys. Thank you, Joe. The next question will be from Alex Perry from Bank of America Securities. Please go ahead. Hi, thanks for taking my questions, and thanks for the presentation here. Just to clarify, the mid to high single digit same-venue sales guide includes a 2% comp lift from PIE for the year. Mm-hmm. What is sort of the per venue comp lift that you're seeing from PIE? Maybe sort of venues with PIE, how are they comping versus in the margins of those that do not? How much of the PIE benefit is from dynamic pricing versus better bay utilization? Just to clarify, are you already doing dynamic pricing, or is that, you know, is that still to come? Sorry, multiple part question, but the implied acceleration to high single digits comps in the second half, like, you know, is there? You know, what's in there? What's driving that? Is that just, you know, there's more, there's a 4-point benefit from PIE or something that's driving that in the back half? Or is that like, you know, implied acceleration in corporate events? Yeah. I'll answer the first, the last part first. You know, we don't really have comps on the PIE venues yet. We've just been rolling it out, but we have control, so we're able to control the portfolio that's on it versus not on it. We're seeing, you know, 2-plus points of lift. For balance of year, you know, that's where 2 of the points is coming from. As I mentioned, we do have, we see an opportunity to take both base pricing and do more at peak. Whether it be reservation fees or different base pricing on Friday and Saturday nights. Then you may recall that, and we would expect that to be, you know, low to mid single digits in terms of pricing. You may recall, Chip mentioned in Q4 of last year, the winter storms were particularly acute, and we had a significant portion of our portfolio was shut down for 3 days, and it was a 2-point headwind last year, which will be a 2-point tailwind. That gives us confidence that in the mid to high single digit guidance that we provided. In terms of where we are on PIE, I cannot stress enough how early we are. We are not doing dynamic. We are doing the basics. We are really just opening up and allowing our players and playmakers to have more reservations at this point. We are seeing some more reservation fees. The base number is so low, the%, if I shared it, is not really relevant. We're just so early with this to see the lift that we're already seeing. You mentioned dynamic pricing. I've mentioned it as well. The things that we're going to be able to do to present potentially lower prices to drive people to come in on Monday, Tuesdays, and Wednesdays and Thursdays, and higher prices on Friday and Saturday, you know, some early testing, we're very bullish on it, but we need to get the basic platform out to the entire Topgolf venue system. Gotcha. And- Yeah, sorry. Go ahead. Alex, I'll just add that we don't have to do high single digit to hit our guide for the second half of the year. Just the math on that, we can do mid to high second half and hit our guide. You know, it's just a math equation, clarification, because there seems to be some angst out there that whether we're going to be able to hit our second half guide, and as you can gather, we're, we believe we can, and to articulate that, but the math is not such that you have to be, accelerate, to the high single digit level. Yeah. Gotcha. Just one clarifier and then my follow-up question. The dynamic pricing would be, sounds like more of a 2024 unlock. Is that correct? I wanted to ask about a slide that you had in a prior Topgolf deck, where you know, called out 8 venues that are, you know, outperforming and 3 that were sort of, you know, underperforming your expectations. What's driving... I think that was the 2022 cohort of openings. Yeah. What's sort of driving the outperformance or underperformance of those venues? Yeah, it's a great question. Of the 11, if I recall the slide correctly, you know, eight of the 11 were, you know, what I call new market entry. The sort of the revenue path that venues take when we bring Topgolf to a market, we're finding are a little bit different. It's really a reflection of, you know, improving our own forecasting and underwriting internally, but, you know, just wanted to be transparent. The other three venues are doing well, but the way they ramp, what you can think about if you open a second Topgolf in a market, and the market is broadly exposed to Topgolf, there might be less immediate demand to show up. They've been before versus it's the first time that they've been. I would tell you know, the cohort of 11 venues are doing well. Just the opening, you know, how the first 6 to 12 months ramps up, is a little bit different. On, you know, on dynamic pricing, you know, I'm not going to tell you exactly when we're going to have or if exactly, we're going to do what the airlines do. I'm just telling you with 3-to-4-hour waits. We have a significant opportunity to provide more certainty to players and can use price to do that. We're very early, but we're seeing, you know, really nice lift with just the basics right now. Perfect. That's really helpful. Best of luck going forward. Thank you. Our next question is from Noah Zatzkin, from KeyBanc Capital Markets. Please go ahead. Hi, thanks for taking my questions. Just a couple quick ones from me. Sure. I think you called out 80% bay utilization. Are you thinking of any kind of target utilization number? How should we think about the opportunity from a utilization perspective with PI? Second, I know you reiterated the kind of 11 venues for this year target, but could you provide any color, or how do you think about, like, the potential risk for any of those slipping, or what's your degree of confidence there? Thank you. Sure. You know, bay utilization, I referenced kind of separating it into two categories. One is at peak, which is the, you know, 70%, 75%, and 80% that we've talked about, and that basically is a measurement of when we're out of weight, and it's an operating measure of how well we are effectively filling the bays with the demand. You know, 100% is not possible because of, you know, turning over bays, but, you know, I think a stretch target for us will be somewhere in the, you know, in the high 80s, certainly. We have some venues that have done that and are able to do it. You know, so that's how I talk about peak. Overall utilization, which is the longer term opportunity, is massive. I mean, we've got, you know, less than 40% on average, overall utilization in our venues, and this is where the, you know, the PI work in presenting different prices that can maybe move someone from a Friday night occasion to a Monday or a Wednesday, and see a different price presented to them. It can significantly smooth demand and the experience that our playmakers can provide. It not only improves comp, but it improves the unit economics as well. I'm sorry, the other question, Lauren? He was asking about the risk for 11- Oh, the risk of 11 venues. Yeah, we feel. I mean, I was on site this week, and saw a couple projects that are under construction. We feel really good about, you know, the 11 venues that we're gonna open this year. We expect to, and all the information we have, you know, construction's well underway, and based on our experience to date of where projects need to be at certain points in time, we think we're gonna open 11. Thank you. Very helpful. Operator, I'm gonna jump in with a couple that we've been getting through the chat. Artie, can you provide some more detail on the unit economics? In particular, how should investors think about average maintenance CapEx, refreshed CapEx and cadence for the venues, and pre-opening expense? Maintenance CapEx, we estimate, you know, somewhere between $300,000 and 500,000. You know, it kind of varies with the size of the venue. You know, we have venues as big as Topgolf Las Vegas and obviously smaller venues, so there's a bit of a range there. Refresh, which Once again, it kind of depends upon the traffic that a venue is seeing, has and, you know, the weather that it might sit in. That's approximately $3 to 4 million, and that's every 8, 9, maybe even 10 years, based on the venue. Pre-opening, approximately $2 million per venue. Great. Then another question- One One second. Yeah. Yeah. One, I mean, one thing that I'll, you know, want to say about pre-opening, because I'm sure it sounds like a big number. This is a key part of our success, and these venues open really well because we're so ready to open, and it's embedded in our months' payback. We've, you know, we've analyzed that, and when we look at the two and a half years of pre-openings in there, and we think the returns are super compelling and are proud of what the work that our pre-opening teams do. Great. Artie, another one from the chat. Is there any risk of refinancing drying up, or do you feel confident future units can be financed and at similar terms? How much visibility do you have on future unit refinancing? Yeah, I mean, the market conditions are, you know, have changing, are changing and will always change. I'm, you know, whatever speculation I have in the long term isn't, I don't think is relevant. I can tell you the market today is good. We have ample partners ready, willing, and able to support our financing. Some venues are a little more complex than others, but we have the benefit of we're not gonna compromise on sites, and we have the balance sheet where we're underwriting to gross returns in addition to the months' payback. If we have to self-finance, we will. I was with one of our financing partners earlier this week, and there's a very competitive market out there to finance Topgolfs, and I think they're seeing the unit economic- many of our financing partners have done a deal with us before, and they're seeing the returns in the venue economics live, and, you know, they're excited to be our partner. Great. One more for me, and then I'm gonna go back to the queue. This is from Randy Konik at Jefferies. Two-part question. First, how do you unlock frequency at the venues, and what's been the holdback other than wait time? Second part of the question is: How do you think about kind of the Monday through Thursday utilization? You talked about that a little bit already, but, you know, can you give us a perspective on how things like Half Price Tuesdays have increased utilization rates, maybe when that was. Yeah. introduced and yeah. Yeah, you know, the frequency number, it's obviously, it's a massive opportunity, and, you know, I look at it as only upside. We're obviously considering various longer term things like loyalty and membership and things that, you know, adjacent businesses have done. The focus is really getting digital stood up in all venues so that when you wanna come to Topgolf, you know what you're getting. That's gonna be the biggest move we make, is just being able to, in every venue, when I wanna go, get on your app and go. You all may be surprised that you can't do that today across all Topgolf venues, but you can't. You can do it in some, but we're in the process of rolling that out. I just can't understate how, based on my experience in the restaurant industry and studying retailers, just how important that is. Our model is a little bit more complex, managing these, you know, multiple channels. We're seeing the benefits pay off, and there's just, you know, just being digitally enabled with the, with the consumer, with the players, big. The other thing is I think we have an opportunity with traditional golfers. We're rolling out our coaching platform with Toptracer and the PGA. We have at least one, in some venues, multiple directors of instruction. I mean, the most likely people that are gonna come to Topgolf a lot are golfers, and being a part of Callaway and all the things we're doing in the venues and being on Jon Rahm's sleeve, Griot winning this weekend, all this stuff gives us more and more equity with people who are more inclined to wanna come hit golf balls and have a burger and a beer. You know, sometimes it gets lost, but golfers, like, are fanatical. We're the only place you can play at night. I really think that we have a long-term opportunity to continue our equity with hardcore golfers. Lauren, I was getting so excited, I forget the other half. I think he was asking about Half Price Tuesdays. Oh, yeah. off peak. Yeah. Yeah. Which The, you know, value is always a, you know, it's a delicate balance. You know, every brand sort of, you know, has their own opportunity in how they message it. Half Price Tuesdays has been a tremendous success. Our focus is driving awareness on it. The utilization is meaningfully higher on Tuesdays. Meaning our business on Tuesday is much bigger than on Monday and Wednesday. We have not fully communicated it. Like, if you think about our awareness levels, just think about what our 50 off awareness levels are. Before we roll out an additional Wednesday or a Monday promotion, this company, this brand is gonna be focused on maximizing Tuesday. How do we make Tuesday look like a Friday? What PIE enables for Monday, Wednesday and Thursday is, you know, if you've ever booked a ticket on Southwest Airlines, for instance, envision a world where you see, okay, I can go to Topgolf on a Friday night for $70 an hour, but if I choose to go on Wednesday, I could go for $45 or $50. Just the transparency of that, and for the player and for the consumer to see it, you know, the early signs are it is going to enable us to smooth demand, reduce some of the wait times on Friday night, and increase utilization at off peak. Okay. Thanks, Ari. Chad, back to you. I know we have a couple more in the queue. Yes, we do. The next question from the phone will be John Kernan from Cowen. Please go ahead. Excellent. Thanks for the presentation, Artie. Very helpful. Hi, John. My pleasure. Yeah, I think a lot of questions have been on the top-line profile of Topgolf, which has been, you know, quite impressive, since you bought the business back in 2020. I guess our questions are more on the bottom line impact the business is having, and how do we think about deferred landlord financing going forward? It is a line item on the income statement. Moving higher, I think the variance in a lot of people's models for the consolidated business has been more on the ETF line than the sales line or the EBITDA line. When we think about the financing of Topgolf's future unit growth, which seems like it's gonna be quite significant, how do we think about deemed landlord financing and how to run that through the model? Brian, you want me to say something, hand it to you? Sure, you can start. I'll jump in. Yeah, I think one thing that I did wanna, you know, use this call to clarify is just regardless of how that or a lease or a venue financing might work, you know, the unit economics are, you know, are identical. I'll let Brian kind of go through the specifics of the DLF. Great. You want me to just walk through how it works? Yeah, or just I think he's trying to model it, so he wants to know, like, how much DLF will go up, as you add a venue. Sure. You know. If you take a representative- Right. medium-sized venue, $30 million development cost, for example, John, you would. Right increase the debt by $30 million. That's what hits our books for the construction and the land. You'd have about $2.2 million of interest related to DLF. You know, $1.9 million of that is non-cash. I mean, is cash. You have another small piece for non-cash, then you'd have, you know, $600,000 of interest related to the land. ... $2.8 million or so of interest for that. Does that answer your question? Yeah, that's definitely helpful. Just as capital expenditures relates to the financing, CapEx, on a net basis, came way down this year or down pretty significantly versus where it was in 2022. Is this kind of the net CapEx run rate we should keep in our models the next couple of years as you open a similar amount of units? It's probably a little bit higher than that. It does vary year to year, depending on the timing of the reimbursements, and that's what you see. Last year was probably too high because of just the timing. This year was a little bit lower, but it's around $200 million. Okay. Got it. Thank you. The next question will be from George Kelly, from Roth MKM. Please go ahead. Hi, everybody. Hi, George. Thanks for taking my call. Thanks, George. This has been super helpful. Two for you. I'll start with a question on your international business, the franchise, the partner business. Curious, why hasn't that location base expanded faster? What? What can you do to kind of accelerate your openings internationally? Yeah. You know, I think the biggest opportunity we have internationally is in Asia. You know, COVID was particularly challenging there. You know, I'll also say that it's hard to get a Topgolf up and running. You know, I think one of the things we're, you know, we maybe benefit from in scale in the US, what our international partners is not that dissimilar from what Topgolf experienced 10, 12, 14 years ago. What they are benefiting from is the improved economic model that we are now producing versus what they might have expected in the when they signed the franchise agreements. You know, of the 6 venues that are open, you know, 3 of them are performing very well, at or above US targets. You know, if you've been to Dubai, if you've been to Germany, if you've been to Australia, I mean, these venues are, you know, pretty inspiring. We had the franchisees in Dallas last week. We had a global summit. I think the enthusiasm was extremely high. You know, I talked to, talked in a former life about when franchisees are enthusiastic and the economics are good, things will take care of themselves. You know, we have terrific partners, and, we've got shovels in the ground, you know, that have started earlier this year and more to come later this year. I expect the next couple of years for it to really pick up. Okay, thanks. Second question for me on your prepared remarks, you mentioned that the West Coast venues in bigger metros are outperforming the average unit economics that you've disclosed. Can you just maybe high level, you know, what is the AUV? What is the margin? Anything you can provide on some of those like, locations. Yeah, I'm not going to get into the specifics by market for, you know, competitive reasons in terms of volumes and margins. What I, what I will say is, you know, a lot of these more densely populated markets on the West Coast and the Northeast, the costs are different. I think there's some resistance historically around, you know, looking at what labor might cost, what construction might cost. I think one of the benefits of, you know, being part of Topgolf Callaway Brands is we were able to jump right in a couple of these markets, and we're seeing, you know, returns above what I shared today in these markets. I'm not going to get into the precise specifics, but you've got an avid player base, you've got people who love Topgolf, you have strong incomes, you have diverse populations. You know, in some markets, obviously, in California, you benefit, you got good weather, you know, and that doesn't hurt either. We do well in bad weather also. Thank you. Thank you. The next question will be from Daniel Imbro, from Stephens. Please go ahead. Hi, guys. This is Joe Enderlin on for Daniel. Hi, Joe. Hey. Yeah, we wanted to ask what the implementation of PIE looks like to the consumer. Does scheduling on the app look different for venues with and without it? Does the implementation show up to the consumer at all? Is it a different display, or how should we think about that? No, it's. Follow-up. Oh, sorry, go ahead. The consumer wouldn't know, other than they're going to see a lot more reservations. They're going to see a lot more access. Think of it as in a non-PIE venue, you might see less than half of the access that you would see in a PIE venue in terms of number of reservations we're offering. Got it. That makes sense. As a follow-up, wanted to ask about the cost to implement. Is there a notable cost for each incremental venue you're adding PIE to? The only real cost is in-venue training, and, you know, while it's on the heavier end of training, we do training all year. You know, when we get a new F&B product, we get a new technique. This is on the heavier side, but Training is loaded into our P&L. It's part of our unit economics. It's just part of what we do every day. Got it. That's helpful. Thank you, guys. That's all for us. Thanks, Chip. Great. I think we've made it through our analyst queue. If there's other analysts on the line, you just hit star one to ask questions. We have a number of questions coming in through the chat. I'm gonna start going through some of these. Artie, are you concerned at all about emerging competition in the Topgolf inspired marketplace with other kind of entertainment golf concepts? I mean, I think any e-executive is looking at the competition all the time. We look at the competition probably a bit more broadly. You know, I mentioned, we sell time. We sell a good time. You know, we look at restaurants, we look at golf entertainment venues, we look at non-golf entertainment venues. Yeah, I wouldn't say that golf entertainment specifically has me concerned, but I would say other brands, other businesses that are occupying people's times and providing joy and value, yeah, I mean, we want to win that war. But I'm not particularly concerned about, what's happening inside, you know, outdoor golf entertainment. That's the question. One kind of higher level, more strategic, actually, for Chip and Brian in the room. Just given the disconnect between your strong operating performance and your stock price of late, are you considering any strategic alternatives to unlock value? How are you thinking about addressing that? Geez, that's a doozy. I'll take that one. Yes, of course, we would, and we do. We recognize that it's our fiduciary responsibility to regularly evaluate strategic options that could enhance shareholder value, including changes in portfolios such as spins or sales. We regularly do this, both with the engagement of our board of directors and outside advisors, and we'll continue to do this. Having said that, we also fundamentally believe our current structure provides a competitive advantage for our company's long-term growth and financial performance, thus, any alternative strategic option would need to be viewed as superior to what we believe is a compelling position and a promising future. Great. Artie, this one's for you. This, Casey Alexander at Compass Point. Of the 160 plus venues still to be developed, what is the breakdown of large, medium, and small venues? You know, it would be premature to say exactly, because these markets are going to change. You know, we're not going to be able to build, you know, it's going to take. You know, we said we're going to build 11 this year. We built 11 last year. You roll that out, we've got many years of growth and how big a market is and the site we specifically get, you know, beyond 2 or 3 years, it would be premature to say what% is what. What we can say is, we have the venue prototypes today that will economically work in those markets that currently have the population and the demographics that'll, you know, drive the experience and the economics and shareholder value for us at Topgolf Callaway. You know, over the next 2 to 3 years, it's a mixed bag of small, medium, and large. You know, the next 2 that we're opening happen to be large, so. Great. I'm going to combine two questions, both synergy related, so, probably more for Chip and Brian. How do the other businesses within Topgolf Callaway Brands help the Topgolf business? Specifically, what synergies are there that are benefiting the overall company? Tangentially, what stage are we in with respect to integrating the Topgolf user profiles with the Callaway user profile or TravisMathew profile for cross-selling purposes? Okay. I'll take a crack at it, and Artie, jump in if you, if you choose to. You know, we're obviously in the very early innings on the synergy front, with the exception of the really significant synergy on the scale and access to capital and strategic clarity that we've provided to Topgolf to allow them to scale their business and improve their business at a much faster rate. You're seeing a very clear and certain synergy in terms of the fundamental improvement and the scaling of that Topgolf business that has happened over the last several years. The credit, you know, really needs to go to Artie and the playmakers and the team there, but there's a strong enabler there on the scale that we've been able to provide with the combination Topgolf Callaway. In terms of what the other brands... Obviously, I guess it's kind of obvious with the reach that we have now in modern golf, there's really no competitor that can match our reach to golfers of all levels. It's a fundamental competitive advantage over time, that will increasingly provide us market share advantages and awareness advantages and, you know, something that nobody could hope to really match out there... The other brands covet that reach that Topgolf provides. In terms of the things that other brands, TravisMathew, and Callaway, most specifically provide for Topgolf, you know, there's some reach and credibility within the golf category, right? You know, it's not a coincidence that Jon Rahm has the Topgolf logo on his sleeve, that Rose Zhang, in her pro debut this week, which we're very excited about, adding her to our staff, that Topgolf is on the side of her headwear. The relationships that we're able to leverage jointly, whether that be St. Andrews or the PGA of America, you know, their coaching platforms on Toptracer, the sales of products at the venues, the pros, they had a teaching pro. They have directors of instruction, directors of golf at each of the venues. You know, they're on the Callaway staff. One just qualified and played in the PGA of America, a major. You know, it's a Callaway staff professional. He's going back and teaching lessons. He didn't have the same success Michael Block did, but he is a wonderful player and a wonderful teacher. You know, we're developing products for him to introduce people to the game of golf. It's a really cool synergy that we're excited about. We're early innings on this. It's really a unique and exciting difference maker for our company. Great. Brian, I'm going to direct this one to you. The current financing model for Topgolf seems to run the business at a, you know, over 3.5 times leverage. As Topgolf gets to be a bigger and bigger part of the overall business, how does this impact the consolidated company's leverage trajectory over time? Is there a leverage target for the overall company we should think about to go along with the 2025 EBITDA and sales targets? Sure. As they continue to develop, as you mentioned, the leverage ratio will trend down on that. We'll be able to leverage that. You know, I think that we said that by 2025, we'd like to be down below 3 times or below, I still think we're on track for that. Great. Artie, back to you. In terms of the REIT reimbursements, can you talk about, you know, kind of how that process works, how long the lags can be, and just kind of give some context there around, you know, how it impacts CapEx? Yeah, you know, it varies, you know, by deal. Sometimes it's real time, sometimes it's 30, 60, 90 days. Sometimes we don't finance, and that's throughout the course of the project. Sometimes we won't finance the project until after the venue is open. If you're looking at it in terms of dollars in and when we get reimbursed, you know, it could be anywhere from close to real time, or if it takes 12 months to open a, to build a project. The midpoint of your capital in is 6 months. You don't do it until the very end, it could be, you know, 6 to 9 months, you know, net lag. Great. Let's see here. I guess, Artie, what's your confidence in the resiliency of Topgolf demand in a macro downturn, and what are you embedding in the guidance for the year? Yeah. We don't have, we don't have significant data where the brand has been through, you know, a downturn or a prolonged downturn, if that's what the question is. We can look back to 2007, 2008, 2009, our venues in the UK, and they performed well. It is a different experience. In terms of people wanting to go out, hit golf balls, and have a beer, I believe we're in one of the categories that is a break from, you know, what might be tough times. I was in the movie business at one point in time. I was in the pizza business for a while, and those businesses have similar attributes to this one, where they're a bit of a break and a time to get together, and it doesn't necessarily require travel, so I'm optimistic. But it's ultimately going to be incumbent on us providing value to the player at that point in time. You know, I think when we look at our utilization levels, our digital penetration, and our relatively low awareness, you know, I feel really good about our ability to grow even in a difficult environment. Great. Let's see. Regarding the new venue pipeline and looking out 18 months, are you seeing any change in the number of new development, kind of mixed-use projects that you're being considered for or any change in REIT behavior, given the higher interest rate environment? I wouldn't say materially. I mean, there are individual partners that are ebbing and flowing, but in aggregate, the market is pretty good, and we're seeing a lot of new sites. I, as I mentioned, I was in market earlier this week. I had breakfast this morning with a, you know, with a city that, you know, wants a Topgolf. You know, one thing that we didn't talk about is, we'll have our second sort of formal city partnership in Montebello, California, in Q1 of next year, and that's an area that'll be our second one in addition to El Segundo. Yeah, there's a lot of golf courses across the country that have, you know, are underutilized, and putting a Topgolf on them, like El Segundo, has proven to be an economic win. It's been well reported, you know, how the golf course was doing, is doing now in terms of the tax revenue that the city is receiving, and we think we have an outstanding story to tell. If anything, there's more channels for us to put Topgolfs on versus mixed use or fee simple land purchase. I, you know, if anything, we're seeing more opportunities, not less. Yeah, there's individual partners that ebb and flow, but in aggregate, the pipeline is strong. Pipeline's strong. Great. Just kind of looking back at our 2022 Investor Day guidance for Topgolf for 2025, you know, we had some targets put out there. Is that guidance still intact? Any updates there? That might be a Chip question. What was the question again? Which is, I was expecting an Artie question. Sorry. Are there any? I can- Kind of based on what we've outlined today, any changes to the 2025 guidance that we put out at Investor Day? Artie, any change in your guidance? I'm not changing my guidance, but I think I can share that the number embedded for 2022 and 2023, against that guidance, we are ahead. Yeah. I thought you raised your EBITDA targets, so that should help the cause as well, right? Yes, it should. Yeah, we feel good about our 2025 guides. As stated, we're on track or ahead. Great. I know I want to leave some, a little bit of time for Chip to do some closing remarks. I'm going to do one more from one of our research analysts, Eric Wold, B. Riley. Artie, can you give us a sense of how dynamic the variable pricing can be within the venues? How often and kind of how much could or would that change heading into a day? For example, you know, on a Wednesday, would that be relatively fixed, or if reservations are lagging heading into the day, would you toggle pricing lower or higher, you know, to see if it spurs demand? I mean, the player's going to guide what we do. I mean, we don't want to go all the way to maybe airline pricing. There are some things that we're studying with what airlines have done. I think we're studying what hotels have done. We're kind of in a unique category in between some of those characteristics and, you know, traditional restaurant or maybe even fine dining in terms of the reservation element. You know, we can do whatever the player wants. I mean, with PIE, we'll be able to do whatever works for the player and works for our teams in the venues. It would be premature to say exactly what we're going to do on a Wednesday. What I'm communicating today is that we have upside in our business model based on the significant wait times that we are seeing in the demand for Topgolf and the relatively low utilization. This, you know, institution of putting PIE into all venues, it does take some time. But by the end of this year, we'll have it complete. You know, we'll follow the player and how they want to interact with this. Great. Thank you, Artie. I know we have a couple more questions in here, and folks, if we didn't get to your question, we'll do our best to get back to you after the call. I do want to leave a little bit of time for Chip just to give some closing remarks. All right. Well, thank you, Lauren, and Artie, great job. It's a pleasure to have you on here. I speak for the entire team. We really appreciate you and your team making this happen. A pleasure. The Thank you, Chip. Looking at this last slide, a little summary, you know, it talks about the Topgolf business unit and just how excited we are about the future of this business. Providing exciting growth to Topgolf Callaway Brands portfolio is really an understatement. It is providing growth in revenue, profitability, and cash flow. It's a highly relevant brand with differentiated experience. You know, I had the advantage of being around this business for a long time prior to the merger, including being on the board for 10 years, and the consumer loves this brand. It has not had a consumer issue in its existence, and I know from running businesses, that's an awfully good place to start with a business. The brand has strong momentum, and it has clear runway for continued growth. Artie talked today about three growth drivers, pretty simple, pretty compelling: same venue sales, operating margins, and new venues. We've got runway on all three of those growth drivers. We look at point three, proven and repeatable venue model. You know, we feel really good about the venue business and how proven and repeatable it is. We're confident in our pipeline, we're confident in our ability to operate these venues, and we're unique in the marketplace in our ability to do that. It's also developing very, very compelling unit economics. Artie talks about a 2.5-year fully loaded payback. We talk about 50% to 60% cash on cash returns. That's an awfully good place to be allocating capital, and it's an awfully good place to be allocating capital because of, it's just got an exceptional competitive moat. It also provides exciting synergies with Topgolf Callaway Brands, and it's not only just transforming our company, it's transforming the sport of golf. Off-course golf is already larger than on-course golf. It'll be the greatest growth driver of the total golf ecosystem that we've seen in our lifetime, you know, we're excited to be part of it. We appreciate your time today. Great job. Thank you for doing this, and we'll look forward to continuing to engage with you and hopefully continuing to drive results like we have over the last couple years. Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.