Welcome to the Topgolf Callaway Brands second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Katina Metzidakis, Vice President of Investor Relations and Corporate Communications. Please go ahead. Thank you, operator, and good afternoon, everyone. Welcome to Topgolf Callaway Brands' second quarter 2023 earnings conference call. I'm Katina Metzidakis, the company's Vice President of Investor Relations and Corporate Communications. Joining me as speakers on today's call are Chip Brewer, our President and Chief Executive Officer, and Brian Lynch, our Chief Financial Officer and Chief Legal Officer. Earlier today, the company issued a press release announcing its second quarter 2023 financial results. In addition, there is a presentation that accompanies today's prepared remarks and may make it easier for you to follow the call. This earnings presentation, as well as the earnings press release, are both available on the company's investor relations website under 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-GAAP measures, we have reconciled the non-GAAP measures to the corresponding GAAP measures at the back of the presentation 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 statements contained in the presentation and the press release for a more complete description. With that, I'd now like to turn the call over to Chip Brewer. Thank you, Katina, and welcome to the team. Good afternoon to everyone on the call, and thank you for joining us today. Q2 was a solid quarter for Topgolf Callaway Brands, driven by strength across all our business segments. At the halfway point of 2023, here are just the highlights of what we see: market share gains and brand growth in golf equipment, a stronger economic model and proven growth algorithm in the Topgolf venue business, and continued growth in our apparel assets. We also see a resilient and engaged consumer across all of our businesses. We remain on track to deliver strong EBITDA growth for the full year and a transition to being cash flow positive, both at the corporate level as well as at Topgolf individually. This transition to being cash flow positive is an important milestone for our business, and we are confident it will ramp from here. Having said this, we also recognize that there is more quarterly noise in our results than would be ideal. Most significantly, last year's retail inventory catch up in our golf equipment business, and separately, the post-COVID surge in the events business at Topgolf, make year-over-year quarterly comparisons difficult and cloud the true progress we're making in improving the fundamental economic engine of our business. In our comments today, we hope to clearly explain the short-term volatility, as well as highlight the long-term positive story of continued improvement in the earnings power of our business and the resilience of our core modern golf consumers. With that said, let's shift gears and talk about the business segments. We'll start by discussing Topgolf. This is a business which is expected to add three million-four million new off-course golf participants each year for every 11 new venues, and thus will help drive growth across the entire modern golf ecosystem. With this growth, Topgolf will soon have more consumers visiting it than exist in all of U.S. on-course golf, including one half of the total on-course golf population, as many now participate in both on and off-course golf. In what is truly a synergistic relationship, Topgolf's sister brands at our company will be helping drive this growth and also have a competitive advantage and reach to all these modern golf consumers. As outlined by Artie in his June first fireside chat, there are three key performance drivers for our Topgolf venue business. First is our development pipeline, second is the same-venue sales growth, and third is the venue margin expansion. Let's walk through each one. Starting with our development pipeline, this quarter, we successfully opened two new venues in King of Prussia, Pennsylvania, and St. Petersburg, Florida, both of which drove excitement and brand heat in those regions. We're pleased to report that our new venues continue to perform extremely well, and that we remain on track to open 11 new owned and operated venues in 2023, in line with our guidance. Turning to our second performance driver, same-venue sales. As expected, Topgolf posted its seventh consecutive quarter of same-venue sales growth, despite challenges from temporary venue shutdowns from air pollution caused by the fires in Canada. Same-venue sales for the quarter was within our guidance range at approximately 1%, and the two-year stack, which takes out some of the post-COVID related volatility, shows an even more impressive 9% growth. As we discussed last quarter, we fully expected Q2 to be challenging from a comp perspective, as last year's same-venue sales benefited from a post-COVID surge in the events business. That said, we are maintaining our same-venue sales guidance for the full year based on the continued strength in the consumer portion of our business, along with new initiatives that will ramp during the second half and some nuances in the quarterly comparisons. Let me give you more detail on each of these and walk you through how we get to this conclusion. First, and most importantly, we have seen consistent and strong growth in the consumer-led portion of our business. This category represents the lion's share of our business, and we believe it is the best indicator of brand heat. Second, as of Q2, we have made continued progress on our digital journey, including reservations. In fact, U.S. Venue digital sales penetration increased eight points versus last year to approximately 34%. The largest driver of this growth is our digital inventory management system, PIE, which has now been rolled out to over half of our venues. This system allows us to maximize sales, improve the customer experience, and optimize costs. We continue to expect to have all venues on PI by the end of the year. More specifically to this section of our call, on an individual venue basis, it helps drive approximately a two-point increase in same-venue sales post-implementation, and given the timing of the rollout, we estimate it will add at least 1% to same-venue sales in Q4. Third, we have and are taking incremental pricing both in gameplay and food and beverage. Based on our experience, as well as competitive positioning, we believe this will have at least a 1% positive impact on same-venue sales, primarily in Q4. Fourth, we're excited about a new innovative marketing campaign, which will launch later this month. It is designed to both captivate and appeal to the modern golfer and to drive both incremental awareness and visits. I'm not going to ruin the surprise by trying to describe it to you on this call, but I'm sure you'll notice it, and I hope it makes you smile. Lastly, we believe our second-half comp will be slightly less challenging than our Q2 comp. This is because we expect the lap of last year's especially strong events business to be somewhat less of a headwind for the second-half of the year. Last year's Q4 comp was negatively impacted by approximately two points by venue closures due to extreme cold weather, which we don't expect to repeat this year. Moving on to our third performance driver, venue margin expansion. COGS and labor optimization, along with continued leverage of fixed overhead costs, drove sequential quarter-over-quarter improvement in our Q2 adjusted EBITDA margins. This, in turn, drove total segment EBITDA towards the high end of our range, despite same-venue sales coming in towards the low end. This is just a fantastic story, and it highlights how our venues are becoming increasingly profitable. PIE continues to be a key ingredient to our venue margin expansion. It does so by facilitating increased reservations, which in turn support more predictable labor scheduling and increased bay utilization. As mentioned, at the end of Q2, more than half of our venues had implemented PIE, and we expect to have all venues utilizing PIE by the end of the year. The Topgolf's team's excellent work over the last few years puts us well ahead of the plan laid out at the time of the merger and in a strong position to achieve the updated target venue unit economics we provided last quarter, including approximately 35% four-wall adjusted EBITDAR margins, 2.5-year payback period, a 20% return on gross investment, and 50%-60% cash-on-cash returns. Together, these targets represent a fundamental long-term improvement in the cash generation and profitability of our venue business. In essence, a step change in value. Lastly, turning to Toptracer. I want to quickly highlight its success in the quarter and continued dominant leadership position as golf's number one range technology. We continue to see healthy demand for this product, with accelerating bay installations versus Q1, and we are on track to install at least 7,000 bays this year, in line with our guidance. Moving to our golf equipment segment and another example of strong execution. We delivered improved U.S. market share performance in the second quarter in what has been an excellent year-to-date for our brand in both tour exposure and product performance. In June, we saw U.S. market share gains in every category in both the on- and off-course channels. For both the month of June and year-to-date, our brand is number one in drivers, fairways, hybrids, total woods, and irons. We're also number two in putters and golf ball, with strong shares in these categories as well. This performance shows the continued strength of our brand and our products. Our Paradym line of clubs, which launched in Q1, was the primary driver of this success. Paradym had continued strong demand throughout Q2 and has been exceptional on tour all year, with the Paradym driver winning an impressive nine times on the PGA Tour year-to-date. Not surprisingly, Paradym is the number one selling driver and fairway wood model year-to-date in the U.S. I'm proud of these results, and I believe our performance this year has further strengthened our brand. This, in turn, will benefit our shareholders, not only this year, but going forward. In other brand news, just last month, we announced the extension of our long-term partnership with Masters champion Jon Rahm. Jon will continue to play both Callaway and Odyssey equipment, wear Callaway headwear, TravisMathew apparel and footwear, and champion Topgolf's business, including the Topgolf logo on the side of his headwear. This is another wonderful example of how we are achieving synergies across our brands. Looking at the overall golf industry and the health of the game, the U.S. hard goods market continues to hold up quite well, down just 1.6% June year-to-date, consistent with our expectations. In addition, all signs point to golf participation remaining robust, with US rounds played up 5.5% through June year-over-year, and strong demand for consumables in the quarter. Looking ahead, our leadership position in R&D investment, and more specifically, our expertise in the use of AI in the development of product, gives me continued confidence in our current and future product pipeline. Turning now to Active Lifestyle. TravisMathew had double-digit growth again this quarter. The brand continues to successfully open new retail stores, including five year-to-date and totaling 46 overall. The team also continues to do a tremendous job executing the new women's category expansion, which has now grown to become a mid-single-digit% of overall sales, an early sign of success. TravisMathew also continues to find exciting ways to grow its brand in the modern golf ecosystem, including building additional synergies across our brands. In June, the brand had a very successful marketing activation event at the ACC Golf Tournament in Lake Tahoe. This high-profile event drew participation from several TravisMathew ambassadors, as well as Callaway brand ambassador, Stephen Curry, who went on to win the event via a dramatic walk-off eagle finish. Both Callaway and TravisMathew, including new TravisMathew brand ambassador, Reggie Bush, also participated at Topgolf's U.S. Open event at El Segundo. We feel incredibly proud to partner with ambassadors who share our excitement about the growing modern golf ecosystem, and our teams are increasingly enjoying opportunities to leverage cross-brand synergies. Moving along, Jack Wolfskin had a good first half despite choppy macro backdrop in Europe, as well as earlier shipment timing this year versus last year as supply chains corrected. Jack Wolfskin remains on track for steady growth in both revenue and profits for 2023. In conclusion, we're excited about the strategic direction of our portfolio of global brands in the growing modern golf ecosystem. In the near term, our brands are strengthening, and we remain on track to deliver impressive EBITDA growth and transition to positive free cash flow this year. This inflection point is just the first step in what will be a strong, long-duration story of overall growth in both EBITDA and cash flow. As we do this, our top capital allocation priority continues to be investing in the profitable growth of our business, most notably in new venues. This is an area where we have demonstrated strong competency in selecting, building, opening, and operating these unique and high-performing assets. Our Topgolf venues are delivering increasingly attractive returns, and we have a high degree of confidence in their performance, both out of the gate and over time. Looking forward, we remain excited and optimistic about our business, which benefits from a defined leadership position in modern golf, synergies across our portfolio of premium brands, and a clear path to continued profitable growth. Now I'll turn the call to Brian to provide more detail on our financials and outlook. Thank you, Chip, and good afternoon, everyone. We are pleased with our Q2 results, which showed strength across each of our segments and progress against each of the key Topgolf performance drivers Chip discussed, including continued development of 11 new venues this year, seven consecutive quarters of same-venue sales growth, and good progress toward our venue margin expansion goals. This progress, together with continued high consumer demand for on- and off-course golf, receding inventory levels, and improved liquidity, puts us in a strong position to deliver positive free cash flow this year and to meet or exceed our long-term financial targets. Now let's turn toward our second quarter financial results. Second quarter net revenue was $1.2 billion, an increase of 5.7% year-over-year, or 6.5% on a constant currency basis, which was in line with our guidance. This increase was led by Topgolf's robust 6.6% year-over-year revenue growth. We achieved this result despite an $8 million negative impact from changes in foreign currency exchange rates and the post-COVID inventory fill-in at retail and our products businesses, which primarily impacted the first half of 2022. Q2 non-GAAP operating income was $130.5 million, down approximately 3% and flat on a constant currency basis year-over-year. We are pleased with this performance, considering both the challenging lap of the inventory fill-in at retail and our products businesses, as well as the planned investments in labor and marketing we made in the Topgolf business. Q2 non-GAAP net income was $77.8 million, a decrease of $15.7 million compared to Q2 2022. The decrease is attributable to a $20.3 million increase in interest expense, primarily due to higher interest rates and the additional term loan debt related to our recent debt refinancing. Lastly, Q2 adjusted EBITDA was ahead of our guidance range at $206.2 million, down 0.5% compared to last year, primarily due to unfavorable changes in foreign currency rates. Q2 adjusted EBITDA increased 2% on a constant currency basis, and was driven primarily by operational efficiencies. Now let's turn to our segment performance. In the second quarter, Topgolf revenue increased $67.1 million to $471 million, a year-over-year increase of 16.6%, driven by the addition of 11 new venues and approximately 1% same-venue sales growth, which was within our guidance range. We estimate that the impact from temporary venue shutdowns caused by fires in Canada was worth about a point of same-venue sales. We believe it is helpful to compare same-venue sales on a two-year stack basis because it removes some of the COVID-related volatility and demonstrates the strength of our venue business. On a two-year stack basis, same-venue sales growth for Q2 was 9%. By comparison, Q1 2023 same-venue sales was 11%, and on a two-year stack basis was 14%. Topgolf segment operating income was $44 million, which was largely flat versus last year. As mentioned previously, this result in large part reflects the planned increase in marketing expenses related to Topgolf's Come Play Around marketing campaign and investments in labor we made in Q3 of 2022. Importantly, the underlying earnings power of this business continues to increase, and we remain on track to achieve our four-wall adjusted EBITDA margin target of 35% by 2025, if not sooner. Topgolf's adjusted EBITDA was $92 million, up approximately $6 million compared to Q2 last year, and at the high end of our guidance range, due to solid performance in our new venues and improved operational efficiencies at existing venues. Golf equipment net revenue was $451 million, flat year-over-year and up 1% in constant currency. This was good performance considering the previously mentioned retail channel fill-in last year and the unfavorable changes in foreign currency rates. These headwinds were largely offset by our increased market share gains in golf clubs, strong golf ball sales, and continued strength in overall rounds played. Golf Equipment segment operating income was $96.4 million, a 3.9% decline versus Q2 2022, primarily due to unfavorable changes in foreign currency exchange rates. This result was partly offset by stronger gross margins, which increased approximately 100 basis points year-over-year due to increased pricing and lower freight costs. Lastly, Q2 Active Lifestyle segment revenue was $258 million, slightly down or flat on a constant currency basis as compared to Q2 2022. This result was in large part due to a shift in timing of wholesale, wholesale shipments between Q1 and Q2 as compared to 2022. This is evident in our first half results, where Active Lifestyle revenue increased 13.3% year-over-year. Q2 Active Lifestyle operating income of $19.5 million decreased $3 million versus Q2 2022 due to planned operating expenditures to support growth, and was partially offset by gross margin increases related to price increases and a higher mix of direct-to-consumer business. Moving to our balance sheet. As a reminder, we completed a significant debt refinancing in March of this year, which added approximately $300 million of additional liquidity, reduced our cost of the refinanced debt, and extended the maturities of our credit facilities. We not only simplified and strengthened our capital structure, but also gave ourselves flexibility, flexibility on how to finance Topgolf venues, including self-financing, which provides us with another option as we decide how to finance future venues. As of 30th June 2023, available liquidity, which is comprised of cash on hand and availability under our credit facilities, was $648 million, compared to $415 million at 31st December 2022, and as compared to $640 million at 30th June 2022. At quarter end, we had total net debt of $2.24 billion, which excludes convertible debt of approximately $258 million, compared to $1.44 billion at the end of Q2 2022. This increase relates primarily to incremental new venue financing, the additional $300 million of term loan debt, and normalization of working capital for the non-Topgolf business. Our net debt leverage, which ex-excludes the convertible debt, was 4.1 times at 30th June 2023, compared to 2.7 times at June 30th, 2022. The year-over-year increase was due to new venue development and increases in working capital. Our net debt leverage ratio was in line with 31st March 2023, which is a little better than we discussed last quarter. We continue to expect our leverage to decline in the back half of the year as we generate free cash flow. Consolidated net accounts receivables, $397 million, compared to $376 million at the end of Q2, 2022. Non-Topgolf days sales outstanding increased slightly from 55 to 58 days. Our inventory balance increased to $840 million, compared to $640 million at June 30, 2022, and is down from our 31st December 2022, balance of $959 million. The team's active inventory management has led to a reduction of $119 million in the first half of 2023. Continued momentum in our golf equipment and Active Lifestyle segments gives us confidence that we remain on track to be at more normal levels of inventory by the end of the year. More importantly, we feel good about the quality of our inventory, as much of the older inventory was cleaned up during the pandemic. Gross capital expenditures were approximately $263 million for the first six months of 2023, compared to $243 million for the first six months of 2022. Net capital expenditures, which net out the proceeds from construction reimbursements, were $148 million and $154 million in the first six months of 2023 and 2022, respectively. For full year 2023, we expect total company net capital expenditures of $270 million, which includes $190 million from Topgolf. Before moving to our outlook, I want to comment on a few other matters. First is the Form 8-K we filed yesterday. Last week, we identified unusual IT system activity and immediately took proactive steps in consultation with our advisors to secure our systems. We activated our incident response plan and moved portions of our network offline as a precautionary measure. The majority of our systems are back online, and full access is expected to be restored in the coming days. Based on what we know now, we do not believe the incident will have a material effect on our business, operations, or financial results. During the quarter, we repurchased 1 million shares in open market transactions for a total cost of $17.8 million. I want to provide a brief update on our relationship with Full Swing, the owners of the Swing Suite indoor golf simulation technology that delivers golf ball tracking data and measures ball flight indoors. On August 1st, 2023, we acquired certain assets of the Swing Suite business for approximately $12 million. This small acquisition is strategically relevant to us as it allows us to control the use of the Topgolf brand in this channel, and from a financial perspective, it is immediately cash flow positive in year one. Now, turning to our balance of the year outlook. We are maintaining our full year 2023 revenue guidance range of $4.42 billion-$4.47 billion, and our adjusted EBITDA range of $625 million-$640 million. At Topgolf, we continue to guide to approximately $1.9 billion in revenue and an adjusted EBITDA range of $315 million-$325 million. We are also reaffirming same-venue sales guidance to be mid to high single digits. For the third quarter of 2023, we estimate revenue to be within the range of $1.05 billion and $1.075 billion, compared to $989 million in Q3 2022. For Topgolf, we estimate third quarter same-venue sales growth between 1% and 3%, which would represent 12%-14% growth on a two-year stack basis. We estimate Q3 consolidated adjusted EBITDA of $141 million-$154 million, which is slightly ahead of Q3 2022. Now, I'd like to provide some additional details so you can better understand our second half guidance, including the cadence between Q3 and Q4. Topgolf's second half venue sales growth will be more heavily weighted toward Q4 versus last year for several reasons. In Q4 2022, there was some unusually severe weather that led to the shutdown of a significant number of our venues, negatively impacting same-venue sales by approximately 2 percentage points. We are assuming that shutdown does not repeat in Q4 this year. Pricing we are taking at the end of Q3 should also provide at least a 1 percentage point lift to same-venue sales in Q4 versus Q3. Our PI initiative should also provide at least a 1 percentage point lift in same-venue sales in Q4 versus Q3. Further, we expect Topgolf profitability to improve in the second half as the year-over-year comparisons for marketing and labor become much easier, and increased pricing and improved operational efficiencies in our venues from PI and other initiatives continue. Moving to our products businesses, we expect growth in the second half as we will no longer be lapping the retail channel inventory fill-in that occurred in the first half last year. Our second-half golf equipment launch schedule is more heavily weighted toward Q4 this year, as opposed to Q3 last year. On a consolidated basis, we expect changes in foreign currency rates and lower freight expense to be tailwinds in the second half of this year, especially in Q4. Overall, and despite the ongoing macro volatility, our business fundamentals remain strong. The modern golf consumer remains healthy and engaged. We are on track to deliver double-digit revenue and EBITDA growth this year. We are also successfully managing down our inventories, and our liquidity position is strong. Finally, we expect to generate free cash flow this year on a consolidated basis and at Topgolf, well ahead of our plan at the time of the merger, which is a significant proof point for unlocking shareholder value. That concludes my prepared remarks for today. I will pass it back over to Chip for some additional comments, and then we'll open the call for questions. Thanks, Brian. Before we open the call for questions, I just wanted to wrap up by reiterating our confidence in our strategy and long-term outlook. Our incredible portfolio of brands provides us with unmatched scale and reach within the modern golf ecosystem, an ecosystem in which we believe we are the dominant player. Our businesses, both individually and collectively, have both high barriers to entry and are structurally positioned for accelerated profitable growth. Overall, we see a business that is well capitalized, has a long runway for continued growth, and is set to ramp up free cash flow by year-end and beyond. With this, we remain highly confident in our ability to meet or beat our long-term financial targets. We're optimistic about the future of modern golf and believe that our portfolio of premium brands uniquely positions us to be highly successful in it. Now we'll turn the call open for questions. Operator, over to you. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Please limit yourself to one question and one follow-up question. At this time, we will pause momentarily to assemble our roster. Our first question comes from Matthew Boss with JP Morgan. Please go ahead. Great, thanks. Chip, could you just elaborate on the progression of Topgolf same-venue sales that you saw through the second quarter, maybe any commentary on July, and just your overall confidence in the sequential back half improvement that you've embedded to hit your full year same-venue sales growth guide? Sure. You know, when we look at the quarter, Q2, Matthew, you know, we obviously were within our guide. It's our 7th consecutive quarter of positive same-venue sales. You know, there really wasn't much new in that quarter that we didn't identify going into the quarter, other than a small impact from the Canadian wildfires. You know, the consumer business remains strong. You know, venue margins are improving, the new venue growth is on track, you know, a lot of good positives there. We called out in advance that we're going to have events down a little year-over-year due to the post-COVID surge that we experienced in late 2021 and throughout 2022. When you look at the progression from there, you know, it's not much of a move to go to 1%- 3% that we're calling for Q3. Then, you know, we gave you several of the key initiatives that are further helping us in Q4. You know, we talked about the marketing campaign. We talked about the strength of the general consumer, which is the lion's share of our business. We also talked about a, a 1% improvement in pot from PIE, 1% from price, and 2% from the lap of the unusually severe cold weather that we experienced last year and don't expect to repeat. I think that kind of, at least, directionally, if not, provides a pretty specific walk of, you know, how we're getting to the, the full year number. That's great. Just to follow up on the equipment side, could you speak to recent retail sellout trends that you've seen, maybe relative to three months ago, and just market share gains that you've seen for the Callaway brand? Maybe just larger, how would you characterize the health and composition of your inventory in the channel today as we head into the back half of the year? Sure. Matthew, these are all, you know, really strong stories. We had a great quarter from a brand perspective, excellent market share results, and the market is staying very healthy. You know, the rounds played is the biggest highlight of that, being up 5.5%. There is no question that the core golf consumer remains engaged and active. Our inventories in the field, as you would expect, given our market share performance, they're in very strong position. They improved during the quarter, and we like where we sit going into the second half of the year from brand strength, product line, and the health of the consumer within the very important golf segment. Great color. Best of luck. Thank you. Our next question comes from Randy Konik with Jefferies. Please go ahead. Yeah, thanks, guys. Just to follow up on back on Topgolf to start here. Maybe just give us some perspective on how you're thinking about over the medium term, where we are, you know, with the dynamic between pricing and traffic. You know, how much further do you think you have on pricing, and how do you want us to think about normalized ability to drive same venue sales growth between pricing and traffic? I think in the past, you said one-third pricing, two-thirds traffic. I might have that backwards. Just give us a reminder, reminder parameters on how we should be thinking about the long-term opportunity to drive more productivity per box over the medium term at Topgolf would be very helpful. Absolutely, Randy. A really important, you know, point. If you look at our consumer business at Topgolf, you know, it really remains strong and resilient. You know, we're consistently driving same venue sales growth there and have throughout the entire first half of this year, and we're seeing a nice mix between pricing and traffic, so positive traffic as well as price. Price or spend per visit, a little higher than traffic, but nice momentum in both, candidly. In the long term, you know, what you can expect from us is that we are going to drive same venue sales growth at the venues above and beyond the inflationary effects of our cost basis. You know, the, in forecasting the inflationary cost basis right now is, is a dynamic process, right? You know, it had surged, now it's moderating. It'll likely continue to moderate, but we've shown, you know, with clear evidence that we can take price, and when we've taken price, we've seen no negative impact. It really comes down to the strength of demand in the consumer. The only other thing I want to add there is, you know, we've got these initiatives in place, the marketing campaign, PIE, you know, other factors that are driving margin expansion. You know, this is still early days on these. We have gas in the tank on these. These aren't going to time out in anywhere in the near future, and we're developing more. Great. Then just my last follow-up on, I want to go back to equipment as well. In talking about gas in the tank, you know, where do you think we are in the, from an, maybe perhaps from an industry and company-specific perspective, on the ability to drive further margin opportunity on clubs or just equipment generally through either customization, fittings, and/or ball plant, fixed cost leverage, as you drive more and more volume, gaining share on balls? Can you give us some perspective on that dynamic, on, you know, where you see, you know, margin opportunity or just opportunity, generally speaking, from these things would be super helpful. Thanks. Yeah, sure. Another, another positive story, Randy, because it's, it's early innings on all of these. We're really starting to ramp up the performance of the ball plan. I had the pleasure of visiting it a week ago, and they've just transformed that place. It's an impressive operation. The efficiencies are improving rapidly, a- as are the margins. You know, over the last several years, we've also seen a lot of inflationary pressures across the business, but a lot of those are moderating right now. You know, freight rates is a great example of that. But we're also seeing a moderate in, you know, other areas of the business. You know, throughout all of this, again, we have shown that we can operate quite successfully through any of these environments. In inflationary environments, we're able to pass it on. In non-inflationary environments, you know, we're able to, you know, sustain the demand side of our business. So you're seeing, even this year, margins, gross margins now, that are improving, and, you know, we feel good about the long-term outlook there. Super helpful. Thank you. Our next question comes from Alex Perry with Bank of America. Please go ahead. Hi. Thanks for taking my questions. I guess just first, can you give us a little more color on, you know, how the corporate events business is doing versus walk-in? Then, you know, any more color on how you think about, you know, the rest of the year in sort of corporate events versus walk-in. Does the guide assume, you know, that either part of those you know, those parts of the segment improve versus the trend you saw in the second quarter? Thanks. Yeah. You know, obviously, corporate events is, you know, we've, we've mentioned, is down year-over-year, but, you know, really performing well versus 2019 levels. If you looked at the two-year stacks or you looked at the comparison that wipes out some of the post-COVID, you know, surge, it's quite good. The consumer side of our business has been steadily good and re- remains there. You know, we're really not expecting significant change in these trends through the balance of the year. Our assumptions are not for marked change on any of those of those trends. Does that answer your question, Alex? Yeah, that's, that's really helpful. Appreciate that. Then I guess back to golf equipment. I think early in the year, you sort of said that you're thinking about the golf equipment business as sort of flat, you know, FX neutral for the year. You know, is that sort of how you're still thinking about it? Then could you just help us with any sort of quarter-quarterly fluctuations that we should be thinking about? You know, any sort of product launches we should be considering. Then just on golf balls, like, the, the growth there in the quarter is really was strong. Is that level of growth something, you know, that, that should continue going forward? Thanks. Sure. A couple questions there. Hopefully, I can get them all. The quarterly, the last two are the ones that I, I remember most clearly. Quarterly, we're gonna have a little bit more launch timing in Q4 as we currently plan it, versus Q3. That, that timing happens, you know, across quarters, so we'll give you our best estimate on that. As you know, from the golf equipment business, you know, between quarters, it can move a little bit. We do have more launch activity in the second half of this, or the second half of half two, Q4 versus Q3. On the ball side, we've had excellent results this year. You know, we're on track to grow for the full year. You know, really strong results, as you could see, during the quarter. Our, our growth in the ball will moderate during the second half of the year, for two reasons. One is we were constrained last year in Q2, so we had a little bit of carryover into Q3, which we haven't been constrained this year, so we won't have some of that carryover. Secondly, it's in our launch cycles, when we're at the tail end of a product, cycle for our urethane product, we have to shift the plant to producing the new product, and that's likely to be the case by the end of this year. There will be a little constraint that happens every other year. It's a normal course of business in the golf business, so not a. Something that you, for those that want to model, you should model it. Then, in terms of full year, yeah, we obviously are having an excellent year in our golf equipment segment. We had about a $100 million inventory fill in last year that we've talked about ad nauseam, it doesn't repeat this year, so we had to cover that. We're doing a pretty good job of that and growing share, and our forecast for the year remain unchanged. Perfect. That's really helpful. Oh, sorry, go ahead. Yeah, just as Chip mentioned, there's growth in the second half, but period-over-period, quarter-over-quarter, most of the growth will occur in the Q4. Again, as Chip mentioned, it can move depending on timing of shipments, but it's definitely heavily weighted towards Q4. Perfect. That's really helpful. Best of luck going forward. Okay. Thanks, Alex. Our next question comes from Daniel Imbro with Stephens Inc. Please go ahead. Yeah, thanks, Kevin. Thanks for taking our questions. Chip, I'll start on Topgolf as well, continue the trend. You know, same store sales moderated kind of sequentially. Maybe to follow up on Randy's question, can you just give the actual numbers or detail on traffic versus ticket growth? When you look at the Topgolf slowdown, I guess, how do you think about the risk of other leisure activities, whether it's pickleball or, you know, travel, or movies? Is that taking traffic away? Are you guys monitoring any data around, like, competitive, just uses of that leisure time? Or, or what are you seeing in terms of that when you look at the slowdown in sales? Well, Daniel, unless pickleball and the movies are taking away corporate events, I don't think there's any data that suggests it's having much impact on us. The same-venue sales is, again, I apologize, it's very strong on the consumer side of the business and resilient. There was no change in trend across the quarters. The, you know, we feel very good about that. The, the pickleball is obviously growing. You know, from time to time, you'll have a movie that comes out. We do compete against consumer activity. Pickleball is not a new trend, and you know, we have been growing in our business and our brand for seven consecutive quarters, as a matter of fact. We feel good about that. I also think, Daniel, that people on average only go to Topgolf, you know, 1.5 times a year. It's not something they're doing every week, that now they wanna go do pickleball and they have to replace it. They, they fit this in with their rotation of other activities that they wanna do. Daniel, steer me if I didn't answer the, the question completely, and I can provide any further value there. Oh, you asked about specific traffic versus price. Sorry. You know, I can give you just general. You know, in the quarter, because of events, the total traffic was down a little bit. The traffic was up nicely in the consumer side of our business. You know, for the full year, we expect it to be a mix of positive traffic and spend per visit, with majority being spend per visit. You know, we're gonna contribute 20%-25% of our same-venue sales growth through traffic. Yep. Thank you for, for all that detail. Then a follow-up on Topgolf. I guess, you mentioned obviously, corporate is the weak spot here, and that sounds specific. If we look at pre-COVID, I, I think corporate was 30% of total Topgolf revenue, but that was very 4Q weighted. I guess we're staring down the back half that has a much higher mix of corporate revenue historically. Corporate is the weak spot in Topgolf right now. I know Brian walked through a few points of maybe what's going to drive the acceleration into 4Q, but maybe you can just help investors bridge that gap of what you guys see to give you confidence in the improved sales, given the corporate uncertainty we're seeing. Okay, let me just correct a few numbers for you to start with, Daniel, because you're directionally correct, but the numbers were slightly inaccurate. Corporate, since we're saying that specifically, is on average, 21% of our total business in the venues for the full year. In Q4, it is roughly 28%. Maybe for Q4, you can round to that 30, but 28 would be a more precise number. You know, we obviously, you know, as we go through our, we've got pretty good vis-visibility on, you know, what the corporate trends have been, and, you know, we've factored them into our guidance as best we can, and, and given you is what I think is a walk on some of the other factors. I'm not sure if I can add too much more color right now in, in terms of. We, we prefer not to get into specific estimates by subcategory, by quarter. I'm sure you can understand why. Absolutely. I'll hop back in queue. Thanks for the color. Thank you. Our next question comes from Noah Zatzkin with KeyBanc Capital Markets. Please go ahead. Hi, thanks for taking my questions. Maybe, maybe switching gears to apparel, just hoping you could provide some color, both on inventory levels and channel health, along with the level of promotionality you're seeing in the channel. Then, I guess, relatedly, within Active Lifestyle, strong gross margin improvement in the quarter, hoping you could help bridge to the EBIT margin pressure you saw, then just any color on how we should think about margins there moving through the back half. Thanks. Okay. Brian, I'm going to throw that margin one your way. I don't know whether we have anything on that at this point. In terms of the field, inventories and inventory levels in general, you know, it's a little bit of the same story in golf equipment, but it's going to take a little longer, is the long and short answer of it. Inventories build up in the field over the 2022. They are in process of correcting. We had a strong sell-through quarter for our brands. We feel like we're in good position at or ahead of our plan from that basis. It's a little more promotional than it was. Well, it's a lot more promotional than it was in 2021 and 2022, when there were no inventory and nobody promoted anything. I wouldn't call it highly promotional right now, and, you know, we feel good about those trends. Brian, do you have any color for the margin expectations for the balance of the year? I think what you might be seeing, Noah, is just a little bit noise between the quarters, because Q1, you know, we had stronger volume than Q2, and it's another one of those COVID quarterly comparison issues, because our supply chain corrected this year. We shipped the product when we're supposed to ship it, which was Q1. Last year, we shipped a lot of it in Q2 because we couldn't get it. Now when you compare the quarters, you know, Q1, you know, and Q2 look wonky. If you look at the half, it looks pretty solid, and it's very representative. you know, we're on track or trend for our plan there. Yeah. For, for the, the second half, we would expect it to be up. The, the trends as Chip mentioned, is pretty good if you look at the half, the first half, but then second half, and we're going to continue to get some benefits from the freight and then also from FX, and that'll help those as well, and just the continued sales growth in the back half. Thank you. Very helpful. Thank you. Our next question comes from Martin Mittelberg with Raymond James. Please go ahead. Hi, this is Martin, on for Joe Altobelli. I appreciate your commentary about the ramp-up for 4Q. Just considering that 3Q guidance is a little bit softer than what the street expected, I was wondering if we can get a little bit more commentary around that. Thank you. Martin, it's hard for me to comment on what the street would have expected, because the street didn't have any of the information that we had in actual results. I think it's pretty logical and believable, when you look at how it ramps, based on the actual facts. I guess, hence the purpose of these calls. Okay, fair enough. There was a comment made on this earnings call and the virtual investor days as well, which suggests that you're opening the door for self-financing for Topgolf venues. Just wondering if we can get a little bit of idea of, you know, the reason that you're looking down that path and maybe what some implications could mean? Sure. Thanks, Martin. This is Brian. We wanted to provide, you know, flexibility to do so. Right now, the, the REITs, cap rates have been holding stable for us. I know everyone else has been seeing a lot of increased interest rates, but they've held reasonably stable, and I think there's a few reasons for that. We tend to run a competitive process. We have more REITs that have interest in, in working with us now. The venues have become more proven and are less risky to the REITs, so everything has been holding. Occasionally, you run into a site that, for whatever reason, a REIT may not be interested or just to keep, keep them honest on the rates. We wanted the flexibility to be able to self-finance if that proves to be economically feasible for us. Great, thank you. That's very helpful. Thank you. Our next question comes from John Kernan with TD Cowen. Please go ahead. All right. Good afternoon, guys. Thanks for taking my question. Sure. Brian, just wanted to go to the OpEx line, specifically the deleverage that's occurring on the operating expenses percent of sales. I think it was about 400 basis points in the first half. It was based on the Q3 guidance, you probably have to have significant leverage by Q4 on this line. How, how should we think about the balance between top line investing in, in Topgolf and, and that operating expense line, which seems to be driving a lot of the margin deleverage? Yep. I, I think a lot of it is, we know we've been talking about the labor and marketing all year and how those comps get a lot easier in the second half. I mean, it is significant. If you look at it as being... You know, it, it'll shift from being a headwind to a tailwind, first half, second half, and it's, it's 400-500 basis points. You get that plus the improved profitability, I mean, that's a significant lift there, and I think that's probably what you're, you're seeing. Okay, got it. It just seems like in Q3, it's gonna remain a pretty significant headwind, just based on the EBITDA guidance you gave for Q3, then it has to switch to a pretty meaningful tailwind by Q4. Yep, it, it does, 'cause a lot of the actions will happen in Q3, then it, it ramps towards Q4. Got it. Is the, like, meaningful improvement in the EBITDA margin by Q4, is that being driven more by Topgolf, or is it balanced between the golf equipment business and Topgolf? A lot of it is Topgolf for the things we just mentioned, plus the increase in same-venue sales. There's also improvements in other gross margin, the other business gross margins as well. You know, especially with the second half product launch, foreign currency, freight rate, I mean, it's all, it's all adding up to be a pretty nice improvement for the EBITDA margin. Okay, got it. Thank you. Our next question comes from Michael Swartz with Truist Securities. Please go ahead. Hey, good, good evening, guys. Just with regards to the, the, the Full Swing acquisition, maybe give us a little color on, on just the background of that acquisition, what it provides you, and then is that a material business in terms of revenue or, or EBITDA? Hey, Michael, it's Chip. Swing Suites is a... It's more of a strategic acquisition than it is a financially material one. Swing Suites, you know, for those on the call that are not familiar with it, is almost a lounge business that you would find at resorts and premium hotels. You visit Omni, and it's Topgolf Swing Suites, and you'd see these bays that you can go in and hit balls and play games and entertain. It has the Topgolf brand on it. It was a business that we had had prior to the merger. The previous owners had licensed out long-term license to Full Swing, it wasn't being controlled by Topgolf. It's a nice business. It has our brand on it. It has some good long-term potential, but it's a small business. It's, you know, roughly on a GAAP basis, you know, $5 million in revenue, so very small there. It'll be accretive from a cash basis, about $2 million, you know, starting next year. It'll be accretive this year, but I'm giving you annual numbers here, not partial year numbers. Not a material business, but a strategically very attractive one, part of the brand, something we do think we can grow, and something even potentially more importantly, we wanted to control, given, you know, how, you know, positively we feel about the Topgolf brand and the long-term potential there. ... That's helpful. Maybe, Brian, with regards to the, the, the, you know, the cash flow improvements to the back half of the year, I know a big part of that is, is working capital and bringing down inventory in the, in the products business. Just given the fourth quarter launch cadence, should we expect the, the, the inventory to come down more materially over the next two quarters relative to the, I think it was down $120 in the first half? Well, it's, it's come down a significant amount, and then you have to remember, toward the end of the year, we'll start ramping up for the, the launches next year. You have to build that into it, but that'll be, you know, next year's launch and next year's product. This year, it'll continue to come down, but there's usually less sales, less sales in the second half of the golf business anyway. It'll be in good shape by the end of the year. That, that's, I guess, that's the bottom line. Our inventory will be in great shape in all current. Thank you. Our next question comes from Eric Wold with B. Riley Securities. Please go ahead. Thanks. Good afternoon. Just kind of one question. I know that. If I kind of think back, you started your afternoon guidance, you raised it a little bit Q1, you've reaffirmed it on this call. It looks like a lot of the confusion has been around kind of like the quarterly cadence, given a number of wonky comparisons to last year. You know, the, the post-Omicron demand- Yeah spike at Topgolf, the equipment catch-up, the weather shutdowns in Q4. I guess, is that all? Obviously, there's, you know, there's still four months left in the year, you know, assuming nothing wonky happens in the next four months, does that kinda normalize everything such that the next year's quarterly cadence should be normal, but not have any weird comparisons in any certain quarters? Eric, this is Chip. The short and answer with, you know, obviously, fingers crossed, is yes. You know, what we had a decision to make at the beginning of the year, which, you know, do we start comparing against 2022 numbers? 2019 was so long ago. We made the obvious decision, which is probably the only decision, to do that. But, you know, it, it has a lot. 2022 still had a lot of COVID and, you know, what we'll call one-time noise in it. You know, this is not fundamental to our business. It doesn't really impact long term, but, you know, we had these inventory catch-ups and inventory, you know, shortages and, you know, periods where COVID was impacting consumers at Topgolf, and, you know, so there's. You know, bear with us as we get through it in the balance of the year, yes, it should be cleaner going forward. No, that's perfect. I appreciate it. Thank you. Our next question comes from Casey Alexander with Compass Point Research & Trading. Please go ahead. Yeah, thank you. I, I think this has been pulled apart in about every way possible so far. You know, the discussion that cash flows, you know, should turn positive for Topgolf at the end of the year is obviously a big swing. The golf business has always generated nice cash. What kind of cash flow range are you thinking about for 2024, and what would you like to do with it? Is it, is it to pay down debt? If so, what's kind of a net leverage ratio that you'd like to get it to on, like, a normalized basis? Hi, Casey, this is Brian. We're, we're not gonna provide guidance at this point on cash flow for next year, but we agree that it will generate a significant cash flow. As far as what we do with it, paying down debt is an obvious one. Investing back in the business is our primary one we do. We, we have plenty of availability at this point, so we'll monitor it, and we'll, we'll balance it between investing back in the business, making sure our leverage ratios are on track to decrease. I mean, longer term, we want to get below three times, and then, a balance between returning capital to shareholders and other investments, smaller investments. All right. Thank you. Thank you, Casey. This concludes our question and answer session. I would like to turn the conference back over to Chip Brewer for any closing remarks. Well, thank you, everybody, for dialing in. We appreciate your participation and questions, and we'll look forward to engaging with you post-call where appropriate, and look forward to continuing to update on our, our journey. I do wanna say I'm very pleased, and I believe that the business is continuing to strengthen its fundamental economic engine, and I hope that came through in our comments. Thank you for your time. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.