Good day, and welcome to the Topgolf Callaway Brands' Fourth Quarter 2024 Conference Call. All participants will be in listen-only mode. There will be an opportunity to ask questions after today's presentation. Please note this event is being recorded. I would now like to turn the conference over to Katina Metzidakis, Investor Relations. Please go ahead.

Good afternoon and welcome to Topgolf Callaway Brands' fourth quarter earnings conference call. I'm Katina Metzidakis, Vice President of Investor Relations and Corporate Communications. Joining me on today's call are Chip Brewer, our President and Chief Executive Officer; Brian Lynch, our Chief Financial Officer and Chief Legal Officer; and Artie Starrs, Chief Executive Officer of Topgolf. Earlier today, the company issued a press release announcing its fourth quarter and full year 2024 financial results. Our earnings presentation as well as our earnings press release are both available on our Investor Relations website under the Financial Results tab. Aside from revenue, the financial numbers reported and discussed on today's call are non-GAAP measures. We identify these non-GAAP measures in the presentation and reconcile the measures to the corresponding GAAP measures 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. Please review the safe harbor statements contained in the presentation and the press release for a more complete description. With that, I'd like to turn the call over to Mr. Brewer.

Thank you, Katina. Good afternoon everyone and thank you for joining our call today. Starting on Slide 4, Q4 was a strong quarter for our company as both our Golf Equipment business and TravisMathew delivered year-over-year growth on the top and bottom line and Topgolf delivered better than expected same venue sales on improving traffic trends as well as record Q4 venue level margins. For the full year, Golf Equipment delivered another year of excellent brand performance maintaining its leadership position in U.S. golf club market share and driving record share in golf ball. In Active Lifestyle, TravisMathew delivered another strong brand and financial year while the team at Jack Wolfskin right sized their business, so it is now positioned for profitability going forward. At Topgolf, despite top line pressure, they delivered $337 million in EBITDA and approximately 34% venue level EBITDA margins, which were flat versus 2023 and up 500 basis points versus 2019. Topgolf also impressively delivered over $100 million in free cash flow. Additionally, our total company free cash flow of $203 million was also above expectations, thus further strengthening our financial position, a point Brian will cover in more detail during his comments. I view all of this as evidence of our enviable brand positions as well as the dedication of our employees whom I would like to publicly thank for their commitment to our company. As we look forward to 2025 in our guidance, on the product side of our business we remain confident in the health of our Golf Equipment category, our brand position in it and our 2025 product lineup. We expect the TravisMathew brand to deliver year-over-year growth on both the top and bottom line and Jack Wolfskin to return to profitability. At the same time, we are facing year-over-year headwinds from foreign exchange, budgeting back to target incentive compensation levels, which were not paid in 2024 and to a lesser extent tariffs. As you'll see on Slide 5, these will negatively impact our core business EBITDA by approximately $75 million year-over-year, with foreign exchange alone impacting us by approximately $60 million on the top line and $40 million on the bottom. This will unfortunately impact our financial results this year. However, we expect to be able to mitigate a good portion of these headwinds via operational improvements. And on an organic basis, thus normalizing for the foreign exchange, incentive comp and tariff headwinds, we anticipate our EBITDA to be up approximately 6% driven by gross margin improvements and cost savings. Looking further forward, post separation with Topgolf, we see the opportunity for further cost savings as we anticipate scaling our corporate overhead back to a level more consistent with the size of the business without Topgolf. We anticipate being able to grow our Golf Equipment revenues slightly faster than the golf market overall, consistent with our long-term track record, and we anticipate gross margin improvements from both initiatives we already have in place as well as from a potentially more stable foreign exchange environment. We remain very optimistic about the future of this business. Turning to Slide 6 in our 2025 guidance for Topgolf, the midpoint of our guide is approximately $270 million in EBITDA with same venue sales down mid single digits for the full year and 10% to 13% in Q1. Venue level EBITDA margins are anticipated to be approximately flat year-over-year driven by the team's strong operational execution. This contemplates headwinds of approximately $45 million due to a change in the reporting structure from a Gregorian to a retail calendar, the sale of World Golf Tour that occurred in 2024, re-budgeting for full bonus and a small impact from foreign exchange. After considering these headwinds, we expect full year EBITDA to be down approximately $22 million year-over-year less than you would expect based on a normal flow through from same venue sales due to the cost savings and operational efficiencies that are being implemented across the business. I am pleased with the action Topgolf has taken to navigate a difficult operating environment, particularly with its delivery of strong venue level margins and free cash flow, but I also recognize the need to drive same venue sales growth. We believe the same venue sales performance is primarily a reflection of a macro, consumer and category issue. Having said this, we're committed to improving same venue sales as quickly as possible as it is our number one focus for this business. Along those lines and in anticipation of the separation of these businesses later this year, we've asked Artie Starrs, Topgolf’s CEO, to join us on this call. Artie will give us more detail on Topgolf’s performance and the initiatives in place to address same venue sales. As you can see on Slide 7, on a consolidated basis for 2025, we are guiding towards a midpoint of approximately $460 million in EBITDA and we once again expect to be free cash flow positive. On the strategic front, we are productively working towards the separation of Topgolf, evaluating both a spin in the second half of this year and a potential sale. For this call there is nothing new to report on this process other than all options are still on the table and we're making steady progress. Let's now turn to segment level performance. Artie will talk you through Topgolf and then I'll rejoin to speak to golf equipment and active lifestyle. Artie, over to you.

Thanks Chip. As Chip mentioned, Topgolf generated over $100 million of free cash flow, marking our second consecutive year of positive cash generation. While same venue sales growth isn't where we would like it to be, continued operational improvements and new venue development helped us deliver adjusted EBITDA of $337 million, which represents growth of 11% versus 2024. I'd like to share our performance for each of our key focus areas along with what to expect for 2025 starting with same venue sales. Same venue sales remained pressured in the fourth quarter at down 8% with walk-in or 1-2 bay down 10% and our 3+ bay events down 5%. While sales were down, we saw sequential improvement driven by better traffic and better than expected holiday events with traffic up year-over-year for 3+ bay during November and December. A big thank you to our events team for delivering these results. While spend per visit drove most of the decline in same venue sales in Q4, this was driven by check management including lower F&B spend from lower alcohol attachment. Chip mentioned our Q1 2025 same venue sales trends have been softer than expected so far in part due to the LA fires and unusually severe cold weather. Approximately half of the business quarter-to-date has experienced what we would characterize as unfavorable weather year-over-year. Approximately a quarter has been neutral and a quarter has been favorable. Year-to-date, same venue sales with favorable weather is up high single digits. Neutral weather are down low- to mid-single digits, but those seeing unfavorable weather are down high teens. Winter weather always causes volatility, but this year has been particularly negative versus prior year and the historical averages in our markets. In total, our Q1 guide for down 10% to 13% incorporates approximately five point impact from the severe winter and the LA fires and one point from one less day in the quarter due to last year's leap year. There is no doubt the macro environment for premium out of home entertainment is currently facing headwinds. However, I'm proud of how our teams are operating in this environment with a focus on the player and the in-bay experience. Our key player experience metrics likelihood to return, fun and price value are improving. Year-over-year in the fourth quarter, likelihood to return scores improved 100 basis points; fun scores improved 160 basis points and value scores improved 240 basis points. This is a result of improvements we've made in the player experience with the launch of The Sure Thing golf club, continued game innovation to provide new news and more reasons to visit, simplification of our pricing and booking flow in our digital channels and continued focus on our teams delivering fun and world-class hospitality at Topgolf. In 2024 our traffic trends improved throughout the year with Q4 seeing the best performance of the year. While we are encouraged by some of our leading indicators, it's clear we must make faster and bolder changes in how we go-to-market and we're doing just that. Specifically, new and relevant experiences for our players, more compelling and accessible value and a streamlined corporate structure that better serves our venues. As it relates to new and relevant experiences, we've executed on our strategy to bring more consistent new news and partner with big brand names that have strong equity with our target demographics. We launched the Sonic the Hedgehog game in Q4, and we recently launched Captain America: Brave New World Topgolf experience. Both are already among our most played. Going forward, you can expect large media and gaming properties to be a part of the Topgolf Bay experience multiple times per year. Additionally, we now have a more disciplined and inside-based approach for marketing calendar planning. On value, both actual price and price perception are an obstacle for many players. To tackle this, in the fourth quarter, we tested removing booking fees in approximately 30% of the portfolio and it drove higher website conversion. We removed booking fees system-wide in January, while taking modest gameplay price. On events, we've given our in-venue sales teams more tools and better processes to increase business development and that has resulted in increased lead conversion rates. Combining our efforts on value and new experiences, we're actioning against two large player segments where we have existing equity and a clear right-to-win, family outings and late night social occasions. We recently launched this with a more disruptive value offer in three multi-venue markets. The offer is simple. $30 per hour of gameplay late night on Thursday, Friday and Saturday, we call it DJ Nights, where we bring DJs into the venue late night in addition to a late night bites menu as well as Sunday Funday, which primarily targets families. In addition to owned internal media assets and paid digital and social, we are testing linear television media in two of these markets. While only a couple of weeks in, the sales and specifically traffic gains have exceeded our expectations, and we are very optimistic although it is early. I'm encouraged by the larger group sizes and strong F&B spend, visit to date, areas where our pricing model and experience proposition have competitive advantages. In addition to our 120-minute standard reservation, these model markets are pioneering our new 60 and 90-minute reservation products, which we believe will further support improvement in conversion rates on the web and in the app. Our teams in these markets are extremely energized by the late night and Sunday traffic, and we plan to roll out these changes across more venues in the coming weeks. More broadly, we will continue to test new ways to connect with our players and increase their engagement with Topgolf. New and relevant experiences and improving our value perception will support traffic growth, but we also have initiatives that can drive growth in the Bay. We're in the process of transitioning to a new point-of-sale system, which will not only be a win for our venue playmakers as it streamlines operations but will also enable a better experience with in-bay food and beverage ordering capabilities. Throughout the year, we'll be rolling out mobile capability, starting with payment at the end of Q1, ordering in the summer and a full new menu alongside point-of-sale rollout in Q4. We will continue to use our consumer data platform to build frequency with our existing players and to inform design of seasonal passes and loyalty programs. Moving on to our second key focus area, margin growth, we had a strong end of the year for venue level profitability. The venues generated EBITDA margins of approximately 36%, a record for the fourth quarter, and we saw EBITDA margins for the full year of 34% despite seeing sales headwinds. This underscores the efficient operations our teams can deliver with improving player experience scores. And the efforts we have made to improve our labor model which delivered approximately 100 basis points improvement year-over-year. In 2025, we will continue to advance margin initiatives, particularly on the labor side, which we expect will improve venue level profitability and allow for investment into profitable traffic driving value. While we are wholly committed to driving a return to growth in same venue sales, we also believe we have a long-term opportunity to grow our venue margins. Moving on to our third key focus area, venue development. We had another strong cohort in 2024, opening six new Topgolf venues and completing one BigShots conversion. Our Q4 openings in Ridgeland, Mississippi, and Burlingame, California, just outside of San Francisco, validate the brand is relevant across the country. Overall, we have a portfolio of building designs that meet local needs and drive strong unit economics. And while we are pleased with our track record and venue development it’s clear our team and resources need to be primarily focused on driving same venue sales and continuing to increase put through at our existing venues. As previously communicated, we will have five venues slated to open in 2025, four of which are planned to open in the fourth quarter. We continue to have high conviction in our white space opportunity, but believe we are making the right prioritization in the near-term. Finally, I want to cover our home office support structure as we prepare for the separation. We are in the process of reorganizing with three clear intentions. One, optimized leadership focus around driving same venue sales growth; two, simplify work for our venue team so they can focus on continued improvements in the in-bay experience; and three, further lower our cost base. This work is well underway with the recent onboarding of Erin Chamberlin, our Chief Operating Officer; and Josh Belkin, our Senior Vice President of Revenue Management and Player Engagement. Both Erin and Josh bring a wealth of experience in the casino and travel hotel industries with a focus and track record of driving profitable growth. While I’m excited about the leadership team I get to work with side-by-side, we know at the heart of the brand are our venue playmakers and our venue directors of operations who lead them. We are streamlining our home office structure to better support our venues and run a more agile organization. To summarize, we have a robust and targeted set of initiatives to improve same venue sales and are primarily focused against this. We expect same venue sales to improve throughout the year as labs get easier as we bring new news to the Topgolf experience along with targeted value and as we stabilize the events business. We have improved our talent and capability in key areas of focus in driving sales and continued margin expansion while improving the player experience. I’m really excited about the future at Topgolf as our teams are driving action against our key focus areas. We believe these will drive both top line growth and cash flow. Back to you, Chip.

Thanks, Artie. Now turning to Golf Equipment. The sport of golf remains strong. In 2024, rounds played grew 2% year-over-year, marking the fifth consecutive year where rounds played have exceeded 500 million. Furthermore, interest in the game and participation continued to increase with U.S. on-course golf participation up 1.5 million to 28.1 million. Additionally, U.S. sell-through and industry golf shipments both grew low-single digits as well. Our Golf Equipment business performed exceptionally well from a brand perspective in 2024 and our global revenues were up slightly on a currency-neutral basis. Our tour staff had multiple wins, including one women’s and two men’s majors. Our club brand continued to lead in the technology and innovation ratings, and our golf ball brand showed continued improvement in its overall brand rating and the number of people that rated it as their favorite ball. Our U.S. dollar market share place us as the number one club brand for the third consecutive year and the ninth out of the last 10 years. We were number one in total clubs, drivers, fairway woods and hybrids and AI Smoke was the number one model in drivers, fairway woods and irons. We also had a very successful year in putters, driven by our Ai-ONE product line. In Golf Ball, we maintained our position as the number two golf ball on the back of a successful launch of our Chrome Tour brand. As you can see on Slide 8, we have a long-term track record of steadily growing our share in this category. Looking forward, in January, we announced some exciting new launches. In golf clubs, our new elite product line is our most complete lineup in memory, delivering new technology and outstanding performance from top to bottom. Turning to Putters. During Q4, we launched our square-to-square product line featuring a zero-torque design. This product is sold through extremely well and is creating excitement in the marketplace. On the ball side, we’re launching new and improved versions of our Supersoft and our ERC product lines this year as this is primarily an ionomer year for us. However, we're also adding a little energy to the Chrome Tour lineup with the addition of our Triple Diamond offering, a model that based on our testing delivers the fastest ball speeds of any tour ball on the market. We are forecasting our golf equipment revenues to be down slightly year-over-year, primarily due to foreign exchange but also because all of the big four golf OEMs are launching full new wood lineups this year, something that doesn't happen every year and because we have less new product planned for the second half of the year. Operating income will also be down due to the lower revenues as well as the previously mentioned headwinds. On an organic basis, thus excluding the headwinds and FX operating margin would have been forecast to be up slightly. Switching gears to our third and final segment, Active Lifestyle. Market conditions in this segment were challenging during 2024 with continued softness in global apparel markets. But TravisMathew had a strong Q4 and a good year overall. For the full year, sales were down a little, primarily due to the lapping of the before mentioned 2023 corporate channel sell in. Excluding this timing issue, sales were up approximately 7%, thus outperforming the market overall. Looking at categories, the brand continues to perform well in its core men's category and is also gaining momentum in key new categories such as outerwear and women's. For 2025, we are projecting operating conditions to be similar to 2024 but expecting the TravisMathew brand to outperform the market and deliver growth on both the top and bottom line. This is a profitable business with strong prospects. Jack Wolfskin performed roughly consistent with expectations in Q4. For the full year, the business was challenged due to lower sales in Europe, which were partially offset by continued strong performance in China. During 2024, we rescaled the cost base of this business while at the same time working on our European product market fit by refocusing on the brand's core products and positioning. We are expecting revenues for 2025 to be down because of our rightsizing efforts, but profitability to be up. This business remains a small part of our overall company. But we believe we have it well positioned for profitability in 2025 and beyond. Overall for 2025, we're expecting our active lifestyle category revenues to be down year-over-year due to foreign exchange as well as the lower revenue projections for Jack Wolfskin, but for operating income to be higher. In conclusion, we closed 2024 on a strong note. And as we enter 2025, we remain focused on executing our strategic initiatives, bringing exciting new products and programs to market and driving continued operating efficiencies. In the near-term, we're also navigating some short-term headwinds, which are impacting this year's outlook. Given the strength of our brands and their market positions, our operational capabilities and our strong financial position, we're confident we will get past these short-term headwinds and return to growth. And as we execute on our strategy, we believe we'll be able to deliver significant shareholder value, especially vis-à-vis the current market value of our equity. Thank you, Brian, over to you.

Thank you, Chip, and good afternoon, everyone. Before jumping into our financial results for the quarter, I want to note that our GAAP results were impacted by the $1.45 billion non-cash accounting charge related to the impairment of the Topgolf goodwill and intangible assets. You may recall that the implied negotiated price for the Topgolf merger was $1.987 billion, payable in common stock but the purchase price for accounting purposes was impacted by the stock price increase between signing and closing. And as a result, we recorded a $3.1 billion purchase price, even though no additional shares were issued. Following the impairment, the remaining carrying value of the Topgolf assets on our books is $1.6 billion. Importantly, this non-cash charge does not impact our liquidity or operational flexibility. Now turning to Q4 financial results. Q4 consolidated revenues of $924 million increased 3% year-over-year. This increase was largely driven by increased revenue on Golf Equipment with the Active Lifestyle segment up slightly and Topgolf revenue consistent with the prior year. Q4 adjusted EBITDA of $101 million increased 45% driven by improved operating results across each segment. Moving to segment performance. At Topgolf, Q4 revenue was approximately flat at $439 million. Revenue from new venues opened since Q4 last year offset an 8% decrease in same venue sales. The same venue sales results included better than expected performance in both the 3+ bay events business and the walk-in 1-2 bay business. Topgolf Q4 operating income was $27 million, up $4 million compared to the prior year, while adjusted EBITDA increased 14% year-over-year to $84 million. The adjusted EBITDA growth was driven primarily by improved venue level margins. EBITDA margins for the quarter exceeded expectations and represented a record high in Q4. Moving to the Golf Equipment segment. Revenue was up 13% to $225 million year-over-year. This result was driven by the continued success of both our Golf Clubs business and Chrome family of golf balls as well as the successful launch of our new Ai-ONE Square 2 Square putters in Q4. The seasonal golf equipment operating loss of $3 million was a $17 million improvement compared to the prior year, primarily due to increased sales volume. In our Active Lifestyle segment, Q4 revenue increased 1% year-over-year. This increase was due to an increase in apparel sales primarily TravisMathew. Jack Wolfskin reported approximately flat year-over-year revenue and continues to perform well in China. Operating income increased to $24 million compared to $20 million in the prior year, primarily driven by the increased revenue and cost savings initiatives at Jack Wolfskin resulting from the recent rightsizing of that business. Moving to balance sheet and liquidity on Slide 16. Our available liquidity, which is comprised of cash on hand and incremental borrowing capacity under our credit facilities continued to strengthen. As of December 31, 2024, our available liquidity increased $54 million to $797 million due to better cash flow generation and as the company continues to manage working capital and capital expenditures. At year end we had total net debt of $2.3 billion, which per our usual practice excludes convertible debt of approximately $258 million compared to $2.2 billion for the same time last year. This increase is attributable to increased venue financing debt related to new venues, partially offset by a reduction in term loan debt including our second quarter discretionary $50 million principal paydown of our term loan B. It is helpful to evaluate our net leverage position by excluding the venue financing debt associated with our Topgolf venues, which is akin to capitalized rent with no additional principal or bullet repayment. In Q4, our REIT-adjusted net debt was $818 million over $150 million lower versus last year. Our net debt leverage, which excludes convertible debt was 3.9x as of December 31, 2024 compared to 3.8x in the prior year. This increase was primarily due to increased venue financing debt. Importantly, our venue financing adjusted net debt leverage ratio, which burdens adjusted EBITDA with the venue financing interest payments, which are akin to rent, declined to 1.7x versus 1.9x in the prior year. We remain comfortable with these leverage levels. Our inventory balance decreased $37 million or 5% to approximately $757 million at the end of Q4 2024. We are comfortable with the quality of our inventory. Shifting gears. Full year consolidated adjusted free cash flow was $203 million, which was ahead of our previous guidance. This performance reflects better-than-expected earnings as well as cash generation during the fourth quarter. The timing of the receipt and payment of inventory and continued management of capital expenses and working capital. Gross capital expenditures for 2024 were $295 million, and we received reimbursements of approximately $115 million from our financing partners, for net capital expenditures of approximately $180 million with approximately $55 million relating to the non-Topgolf business and $125 million coming from Topgolf. Looking specifically at guidance for 2025 on presentation slides 5 through 7, you can see that there will be some significant headwinds as Chip previously described. For 2025, we expect revenue to be in the range of $4 billion to $4.185 billion, representing an approximate 3% decline year-over-year at the midpoint of guidance. When excluding the FX and other headwinds previously mentioned, we expect full year 2025 organic revenue growth to be down slightly year-over-year. For the core business, we are projecting revenue to be in the range of $2.275 billion to $2.35 billion, representing a 5% decline year-over-year at the midpoint. Excluding the FX and other headwinds organic revenue is projected to be down 2%. For Topgolf specifically, we expect 2025 revenue to be in the range of $1.725 billion to $1.835 billion, representing a decline of 2% year-over-year at the midpoint. Excluding the headwinds, the guidance would represent full year organic revenue growth of approximately 1%, driven by new venues partially offset by our same venue sales forecast of down mid-single digits. Turning to profitability. We anticipate adjusted EBITDA for 2025 to be in the range of $415 million to $505 million, representing a $128 million decline year-over-year at the midpoint. Excluding FX and the other headwinds, the guidance represents full year organic adjusted EBITDA growth of minus 1%. We are projecting core business adjusted EBITDA in the range of $175 million to $205 million. Excluding the FX and other headwinds, core business adjusted EBITDA is expected to grow by $14 million or 6%. We are projecting Topgolf adjusted EBITDA in the range of $240 million to $300 million. Excluding the headwinds, Topgolf adjusted EBITDA is expected to decline by approximately $22 million on an organic basis. Now turning to Q1 specifically. For Q1, we are forecasting consolidated revenue of $1.045 billion to $1.085 billion and adjusted EBITDA of $125 million to $145 million. Overall, we had a strong finish in 2024, we face some short-term headwinds in 2025 as discussed earlier. This will be a reset year as we navigate these headwinds and pursue the separation of Topgolf. The important part is that our Callaway Golf and TravisMathew brand – the Jack Wolfskin business has successfully rightsized its business and our liquidity position remains solid. We believe this will position us well to navigate the 2025 headwinds, return to sustainable growth, execute on our strategic initiatives and create shareholder value. With that said, I would now like to turn the call back over to the operator for Q&A.

Thank you. The first question comes from Matthew Boss with JPMorgan. Please go ahead.

Great, thanks. And I appreciate all the color. Chip and maybe, Artie, could you elaborate on same venue sales trends when the weather has been neutral at Topgolf. Maybe just walk through the expected progression in 2025? Or what constraints do you see from returning to positive same venue sales in the back half of the year?

Sure. I'll take it. Thanks, Matt. Yes. So the sort of the neutral weather markets, which we characterize as it's approximately the same year-over-year. They're currently running down to down low mid to single digits. So an improvement from what we had seen in Q4. And we obviously have easier laps balance of year. So when we set the guidance and we look at the base trends, we’re comfortable with that. I’m pretty excited about what we’re seeing in these model markets in terms of how the consumer is responding to some of the value messaging that we have in place. Some of the traffic numbers we’re seeing are extremely exciting. But I think the base guidance that we put forward, Matt, is really – this is the trend of the business that’s not weather impacted, and we have a lot of conviction in that. The final thing I would add is that in Q4, our teams just did an extraordinary job of improving player metrics, and that’s continued in Q1. So when I think about the base trends, improving player metrics and introducing some more value that’s profitable in the market. I feel good about the guide.

Great. And then maybe, Chip, on Golf Equipment, could you speak to initial reception of the Elyte launch in clubs, Square 2 Square and putters. And just if you could elaborate on drivers of the 2025 organic forecast in this segment?

Sure. We’re really proud of the Elyte product line and have just recently launched it out there and are excited about the prospects for the year. We do have a little bit more challenging year from a share perspective because of the launch of all of the big four OEMs this year, which is not something that happens every year. But very proud of our product line and optimistic as the year develops. And as we get it into hitting base, we’re hearing great performance feedback and we find that that’s our time to shine. On the Square 2 Square product line, we launched that in Q4. That’s that zero-torque design. And that’s done exceptionally well. That’s a category that’s hot in the golf market right now. We think we have a better design and approach to it. And so clearly something that we see that has energy. Did that answer the question, Matt?

Yes, it does. Best of luck.

The next question comes from Alex Perry with Bank of America. Please go ahead.

Hi. Thanks for taking my questions here. Just first, the corporate events comp accelerated nicely in the quarter. Can you talk about the key drivers there? Were there any strategy changes that you think helped drive the acceleration in the corporate events comp? And then what is the outlook for corporate events versus walk-in for 2025? Are you continuing to see green shoots on the corporate side? Thanks.

Yes. Thank you very much, Alex. The teams did a great job in Q4, and I’ll put it into two – sort of two buckets. The first is we gave a bit more flexibility. These events and corporate events by and large are sold locally. So you’re competing with other local establishments. And we give the teams a bit more flexibility in terms of product design, length, duration, the menu and price, and that paid, I think, significant dividends. The second thing I would say is we’re a business that’s got some nice scale now. We’re in most of the large DMAs, and we’re able to bubble up a lot of those learnings in the local market. I’ll provide one specific example where we had a few venues that were selling to a national retailer in their holiday parties very well. And we had some other venues that we’re getting some resistance and we’re able to take those learnings into the home office for that national retailer and ended up tripling our sales with that group. So I’d say it’s a competitive advantage we have at Topgolf where at the local level, we’ve got super energized teams, and we’ve given them some more flexibility. And then in the home office, we put in, I think, more rigorous and better structure and making sure that these learnings are getting into the right places at the right time. In terms of 2025 and the guidance, we expect walk-in to be a little bit better than events this year. The weather has impacted both channels year-to-date. I think the one thing I will say, the holiday events still seem to be a real source of strength for us, and we expect that to continue in 2025.

Really helpful. And then my follow-up is on the core golf equipment biz. Can you talk about the expectation for the core business to be down year-over-year? Is it mostly just the function of a tough year from a market share perspective given some of the competitive launches or is there anything to do with channel inventory levels? I guess what drives the core business down year-over-year and in 2025?

It's mostly FX. So if you wanted to pick the one largest as we mentioned, it's in the core business, there's $60 million of headwind from FX alone. And then beyond that, if you're looking at the golf equipment, we talked about the launch cadence this year, where we have more of our big competitors launching than in last year. And we also have less launches planned of our own in the second half of the year. And then in active lifestyle, we've intentionally scaled back the Jack Wolfskin business as we've resized that business and restructured it for profitability going forward.

Very helpful. Best of luck going forward.

The next question comes from Joe Altobello with Raymond James. Please go ahead.

Thanks, guys. Good afternoon. On the core business, I guess I'll stay there for a second. So if I take a step back and I look at that business, I think in 2019, your core business did about $210 million of EBITDA I'll call it a $1.7 billion of revenue. And the EBITDA guide for this year is below that on roughly $600 million of incremental revenue. So I understand the FX headwinds year-over-year, but has something changed structurally with that business to cause profitability to come down materially in six years?

No, Joe. Nothing structural at all. FX is again the primary driver of that. And we'll work through the FX over time. It's a lagging process there where we – the markets don't take enough price to offset initially, but they will over time, and we've worked through these cycles in the past. There are some other changes obviously throughout that the TravisMathew business is now bigger. The Jack Wolfskin business is smaller, but nothing structural. And again, on an organic basis, just normalizing for FX in the one-year period and the FX would be more dramatic relative to 2019 significantly. So we're still driving 6% improvement in EBITDAR on lower revenues. So structurally, I think we're in good shape and headwinds that we'll work through.

Got it. Just to follow-up on that. The top cost free cash flow guidance in 2025, I apologize if you missed it?

We didn't provide specific guidance, Joe, on cash flow, but we gave you the elements of that in the earnings deck, including the CapEx and EBITDA, including VFCI for each of the segments.

Okay. Thank you.

The next question comes from Megan Clapp with Morgan Stanley. Please go ahead.

Hi, good evening. Thanks so much. I have a question for Artie and then maybe a follow-up for Chip and Brian. So first question on Artie, again, a lot of helpful detail on kind of the initiatives you're undertaking to improve same venue sales. So thank you for that, and it's nice to hear that you've had some positive early learnings. But I guess if you just take a step back, same venue sales have been negative for six quarters and you've talked about a lot of initiatives that you've been working on with us over the last several quarters. So as you kind of take a step back from a high level, can you just provide some perspective on really what's changing as you look to 2025 relative to the last several quarters? And maybe related to that, when you think about to Matt's question earlier, inflecting to positive same venue sales at some point in the future. How much do you really think is in your control versus needing a little bit of macro help? I guess you mentioned lower alcohol attach rates in the quarter. I'm not sure if that was new or not, but is there anything you're seeing just in the macro that suggests it could be kind of a tougher battle in 2025?

Yes, we'd certainly love to see the macros improve, but we think we're going to get same venue sales going even if that doesn't happen. And what I tell you versus last year, what's different? Number one, the consumer environment's different and two, how we're tackling it is different. Most notably, if I look at the first half of last year when we were applying some promotions and targeted value on maybe specific digital channels and specific sort of shoulder parts of the business, we drove some incrementality a couple points with the Free 30 and the Free Play promotions. But this year we're really providing value when our players can truly use it, which is Sunday and late night, which is two ownable equities for us. We've done a bunch of research in terms of why players love Topgolf, why they come to Topgolf. Where do we have a competitive advantage? Those are two segments and two parts of the business where we have bays to sell. And it's very profitable for us to provide the price point that we're targeting. The other thing is the price point sharp. So how we price, which is by the hour, just saying 30 bucks is in this environment for six people, that's five bucks a player. And that's extraordinary value. The beauty of this for us, if you take Sunday for example, Sunday is 15% of our business. Gameplay is half the business. So, we're basically putting 7%, 7% to 8% of the business on a nice promotional value. But what we're seeing come out of it is larger group sizes, strong, it's early, but in some respects stronger F&B spend. So, the groups that are coming, they're socializing, they're spending more when they come. And, the traffic numbers are extremely encouraging and the sales as well. In terms of a couple other things that I didn't get into much detail in my script on, but the beginning of Q2, because people come into the venue, really gameplay is like the anchor price, if you want to think of it that way. That's what kind of gets people in. We've done some deep statistical work on how our F&B prices compare and how people are navigating the menu and we're rolling out a simplified menu with some targeted pricing moves inside the menu that we don't expect that the player to see, but we expect to yield some comp growth and higher margins. And we saw sequential traffic improvement through most of last year and before the weather hit was continuing. So, I sort of feel like with this value construct, with some of the F&B work we're doing, we've got a strong slate of new news to get people excited about coming to Topgolf. I'm very optimistic.

Great, thank you. And then just a follow-up for Chip or Brian. I know you said no update on the spin, but just when you announced the spin, I think the expectation was to get to 3x or under leverage within 12 months of the spin. Since then, just given kind of the headwinds you talked about, your EBITDA expectations are lower. So, can you just update us on how we should be thinking about your expectations for pro forma leverage of that core business? And can you still get to 3x within 12 months?

Sure. Megan. Again, we're not giving specific guidance, but we're very pleased with the way we finished Q4 with our cash flow – is very strong. We expect to be cash flow positive for the total company and Topgolf in 2025. And in a spin situation, we would use. Our intention is to have a retained stake that we would use to help us delever. So, we feel very good about where we are now and where we're headed.

Yes. Megan, I'll just add that as a board and a management team, we're going to ensure that both businesses are in strong financial and strategic positions at the time of separation. There are a lot of different paths for that and that's a commitment of ours.

Okay, thank you.

This concludes the question-and-answer session. I would like to turn the conference back over to Chip Brewer for any closing remarks. Please go ahead.

I would just thank everybody for tuning in today on the call. We appreciate your time and we look forward to continuing to keep you updated as the opportunities present in the May call, if not before. Thank you so much.

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