Callaway Golf Company · NYSE:CALY
Callaway Golf — Debt Investor Presentation (February 2022)
38 slides from Callaway Golf's debt investor presentation, Feb 17, 2022
Slide 1: Callaway Golf Company Lender Presentation
Exhibit 99.1 Callaway Golf Company Lender Presentation February 17, 2022
Slide 2: Important Notices
IMPORTANT NOTICES Forward-looking Statements. During the presentation, any comments made about future plans, events, financial results, performance, prospects, or growth opportunities, including statements relating to the Company’s and Topgolf’s financial outlook (including revenue, Adjusted EBITDA/
Slide 3: Today's Presenters
TODAY’S PRESENTERS Chip Brewer President & CEO Brian Lynch EVP, CFO and Chief Legal Officer Patrick Burke Senior Vice President, Global Finance 2
Slide 4: Agenda
AGENDA Transaction Overview 1 Company Overview & Key Credit Highlights 2 Financial Overview 3 Appendix 4 3
Slide 5: Transaction Overview
ee Transaction Overview
Slide 6: Transaction Overview
TRANSACTION OVERVIEW § Callaway Golf Company (“Callaway” or the “Company”) is a leading global provider of premium golf equipment, apparel and entertainment operating through a portfolio of global brands and ventures, including Callaway Golf, Odyssey, OGIO, TravisMathew, Jack Wolfskin, and Topgolf E
Slide 7: Transaction Sources & Uses and Pro Forma Capitalization
TRANSACTION SOURCES & USES AND PRO FORMA CAPITALIZATION ($ in millions) ($ in millions) Pro Forma Maturity 12/31/2021A 12/31/2021A Sources Amount ($) New ABL Revolver ($500mm) -- 3 $352 $518 Combined Cash & Cash Equivalents New Term Loan B 950 Callaway Golf Indebtedness Total Sources $950 4 Various
Slide 8: Summary of Indicative Term Loan B Terms
SUMMARY OF INDICATIVE TERM LOAN B TERMS Borrower: Callaway Golf Company Guarantors: Material domestic subs (including Topgolf), subject to certain customary exceptions § First Lien on substantially all assets of the Borrower and Guarantors (including (i) equity interests of subsidiaries held by the
Slide 9: Execution Timeline
EXECUTION TIMELINE February 2022 March 2022 S M T W T F S S M T W T F S 1 2 3 4 5 1 2 3 4 5 6 7 8 9 10 11 12 6 7 8 9 10 11 12 13 14 15 16 17 18 19 13 14 15 16 17 18 19 20 21 22 23 24 25 26 20 21 22 23 24 25 26 27 28 27 28 29 30 31 ELY Q4 2021 Earnings Market Holiday Timing Event th Week of February
Slide 10: Company Overview & Key Credit Highlights
Company Overview & Key Credit Highlights
Slide 11: Summary Credit Highlights
SUMMARY CREDIT HIGHLIGHTS Leading tech-enabled golf and active lifestyle company delivering premium equipment, apparel 1 and entertainment Operate in attractive golf, outdoor and entertainment segments positioned to benefit from strong 2 industry tailwinds Diversified portfolio of coveted brands and
Slide 12: Our Business Has Transformed Over the Past Five Years
OUR BUSINESS HAS TRANSFORMED OVER THE PAST FIVE YEARS WE ARE IN A STRONGER POSITION TODAY 1 FY 2016 FY Pro Forma 2021 GOLF EQUIPMENT Topgolf • Market leader in highly attractive worldwide golf market 38% • New period of growth for golf with interest in the game at an all-time high Golf Golf Equipmen
Slide 13: Our Addressable Market Is Increasing
OUR ADDRESSABLE MARKET IS INCREASING 1 TOTAL GOLF PARTICIPATION ON THE RISE OFF-COURSE GOLF • Off-course golf remains the fastest growing segment across the golf ecosystem in the US, Dining, Sports, Media up 25% in 2021 to 12.4M participants (from & Entertainment 2 9.9M 2019) 37.5 • Projected 30M To
Slide 14: Well-Positioned for a Sustainable Future
WELL-POSITIONED FOR A SUSTAINABLE FUTURE TOPGOLF GOLF EQUIPMENT APPAREL • Significant cash generation leading to less funding • Multi-year increase in consumer spending • TravisMathew expansion into key accounts and needed from Callaway expected with new entrants to the sport category expansion oppo
Slide 15: Topgolf: The Category-Defining Tech-Enabled Golf Entertainment Business
TOPGOLF: THE CATEGORY-DEFINING TECH-ENABLED GOLF ENTERTAINMENT BUSINESS VENUES TOPTRACER RANGE MEDIA Cutting-edge entertainment facilities Transforming the traditional driving Facilitate engagement across the with attractive economics and range experience and televised golf Topgolf ecosystem through
Slide 16: Topgolf Venues Generating Attractive Economics
TOPGOLF VENUES GENERATING ATTRACTIVE ECONOMICS Target Avg. Venue US Venue Revenue Breakdown 1 $17 M Revenue (2021) 29% Target Avg. Venue Level 1,2 29% Adjusted EBITDAR $5 M 33% Average Construction 3 4% Cost per Venue $10-40 M 34% Target Average Cash Food and Beverage Gameplay Events Other on Cash R
Slide 17: Toptracer Generating Attractive Economics
TOPTRACER GENERATING ATTRACTIVE ECONOMICS $200M+ UNIT-LEVEL LONG-TERM 1 CASH ADJ. EBITDA OPPORTUNITY • 15k+ active bays worldwide as of December 2021 Annual Target Revenue • Attractive recurring revenue potential with limited upfront $2,000 per Bay investment • Callaway expertise and network present
Slide 18: Golf Equipment: Innovating to Maintain Leadership Position
GOLF EQUIPMENT: INNOVATING TO MAINTAIN LEADERSHIP POSITION CONTINUED LEADERSHIP IN GOLF INDUSTRY • #1 overall golf club company and #1 or #2 market share in every 1 major club category over the past 4 years • Continued significant investment in R&D over the past 10 years, enabling the use of Artific
Slide 19: 2022 Product Launches Off to a Great Start
2022 PRODUCT LAUNCHES OFF TO A GREAT START Chrome Soft Golf Balls Rogue ST Drivers Rogue ST Fairway Woods Precision Technology delivers tightest Fastest, most stable drivers ever, with industry- Fastest fairway woods ever, that are up to 10 dispersion, consistently fast leading innovations that crea
Slide 20: Soft Goods: Maintaining Momentum in a High-Growth Segment
SOFT GOODS: MAINTAINING MOMENTUM IN A HIGH-GROWTH SEGMENT • Southern California-based active lifestyle • Germany-based outdoor brand focused on • Performance apparel and golf and lifestyle bags brand that is styled for both on and off the function and design since 1981 golf course • Enthusiasm for t
Slide 21: Key Business Highlights
KEY BUSINESS HIGHLIGHTS UNIQUE ASSET WELL-POSITIONED STRONG TRACK RECORD Proven ability to drive both A unique new business, Brands ideally situated for the revenue and Adjusted EBITDA strategically positioned at the current and post-pandemic growth through various center of the growing golf, enviro
Slide 22: Financial Overview
ee Financial Overview
Slide 23: Recent Performance Update
RECENT PERFORMANCE UPDATE • Full year Combined Pro Forma Net Revenue +42% to ~$3.3 billion Achieved Record Results in 2021 • Full year Combined Pro Forma Adjusted EBITDA +347% to $448 million Change vs. Change vs. ($ in millions) FY 2021 • Pivotal year, marked by exceptional 2020 2019 results, signi
Slide 24: Topgolf Segment Update
TOPGOLF SEGMENT UPDATE Venue Update • Fourth quarter walk-in traffic and event business sales for both social and corporate events surpassed 1 expectations, driving Q4 2021 same venue sales to +6% over 2019 levels 1 • Full year 2021 same venue sales were approximately 95% of 2019 levels, meaningfull
Slide 25: Golf Equipment Segment Update
GOLF EQUIPMENT SEGMENT UPDATE • Record year for Golf Equipment with sales over $1.2 billion, up 25% YoY vs. 2020 • Demand and interest in golf remains high and inventory remains low • Hard goods retail sell-through trends well even after a strong 2020 • Customers are telling us that they expect a st
Slide 26: Apparel and Gear Segment Update
APPAREL AND GEAR SEGMENT UPDATE TravisMathew 1 • Own retail comp store sales up 67% vs. 2020 • Ecommerce sales increased 30% vs. 2020 • Expanded product range to include women’s apparel as part of the His & Her Cloud Collection launched in December, and more cold weather gear within the Outerwear Co
Slide 27: Strong Financial Position with Ample Flexibility
STRONG FINANCIAL POSITION WITH AMPLE FLEXIBILITY We are in a very strong liquidity position • Business has $753M in available liquidity Status Quo Pro Forma ($ in millions) % Change 12/31/2021A 12/31/2021 as of December 31, 2021, including Topgolf business with a fully paid off cash Cash and Cash Eq
Slide 28: Summary of Historical Financial Performance
SUMMARY OF HISTORICAL FINANCIAL PERFORMANCE Commentary Revenue ($M) $3,277 • 2021 was a record year for Callaway $2,761 $2,306 $1,231 $1,060 $716 • Topgolf delivered exceptional results, as increased $2,046 walk-in traffic and social events booking led to $1,701 $1,589 higher-than-anticipated sales
Slide 29: Summary Credit Highlights
SUMMARY CREDIT HIGHLIGHTS Leading tech-enabled golf and active lifestyle company delivering premium equipment, apparel 1 and entertainment Operate in attractive golf, outdoor and entertainment segments positioned to benefit from strong 2 industry tailwinds Diversified portfolio of coveted brands and
Slide 30: Appendix
ee Appendix
Slide 31: Organizational Structure
ORGANIZATIONAL STRUCTURE U.S. Entity Foreign Entity Callaway Golf Borrower Company • $500mm New 5 Year ABL • $950mm New 7 Year Term Loan B • $259mm Convertible Note (1) • $44mm Other Indebtedness (2) • ¥6bn Japanese Facilities German Acquisition Corp Callaway Callaway Golf TopGolf TravisMathew, Ogio
Slide 32: Segment Reconciliation
SEGMENT RECONCILIATION CALLAWAY GOLF COMPANY Consolidated Net Sales and Operating Segment Information (Unaudited) (In thousands) Operating Segment Information Operating Segment Information Non-GAAP Non-GAAP Constant Constant Three Months Ended Currency Twelve Months Ended Currency (1) (1) December 3
Slide 33: Adjusted EBITDA Reconciliation (2020 and 2021)
ADJUSTED EBITDA RECONCILIATION (2020 and 2021) CALLAWAY GOLF COMPANY Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In thousands) 2021 Trailing Twelve Month Adjusted EBITDA 2020 Trailing Twelve Month Adjusted EBITDA Quarter Ended Quarter Ended March 31, June 30, Septembe
Slide 34: Adjusted EBITDA Reconciliation (2019)
ADJUSTED EBITDA RECONCILIATION (2019) CALLAWAY GOLF COMPANY Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In thousands) 2019 Trailing Twelve Month Adjusted EBITDA Quarter Ended March 31, June 30, September 30, December 31, Total 2019 2019 2019 2019 Net income (loss) $ 4
Slide 35: Adjusted EBITDA Reconciliation (2016)
ADJUSTED EBITDA RECONCILIATION (2016) CALLAWAY GOLF COMPANY Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In thousands) Twelve Months Ended December 31, 2016 Total Net income (loss) $ 189,900 Interest expense, net 1,747 Income tax provision (benefit) (132,561) Depreciat
Slide 36: Topgolf Detailed Financial Disclosure
TOPGOLF DETAILED FINANCIAL DISCLOSURE ($ in millions) (1) FY Reported FY Pro Forma Q4 2021 (10 months) (12 months) Net Revenue $336 $1,088 $1,231 (2) Segment Income from Operations $6 $58 $40 Depreciation & Amortization $29 $93 $111 Non-cash Rent $6 $13 $13 Non-cash Compensation Expense $4 $14 $16 (
Slide 37: Topgolf Adjusted EBITDA Reconciliation (2021)
TOPGOLF ADJUSTED EBITDA RECONCILIATION (2021) CALLAWAY GOLF COMPANY 2021 Topgolf Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In millions) Twelve Months Ended December 31, 2021 (1) Segment Operating Income $ 58.2 Depreciation and amortization expense 93.1 Non-cash stoc
Slide 38: Topgolf Adjusted EBITDA Reconciliation (2019 and 2020)
TOPGOLF ADJUSTED EBITDA RECONCILIATION (2019 and 2020) TOPGOLF Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In thousands) Twelve Months Ended December 31, 2020 2019 Net income (loss) $ (346,307) $ (114,866) Interest expense, net 51,899 40,865 Income tax provision (bene
Callaway Golf — Debt Investor Presentation (February 2022) on 6ix