Callaway Golf Company · NYSE:CALY
Callaway Golf — Merger or Acquisition (October 2020)
29 slides from Callaway Golf's merger presentation, Oct 27, 2020
Slide 1: Creating an Unrivaled Golf and Entertainment Business
Creating an Unrivaled Golf and Entertainment Business October 2020 Exhibit 99.2
Slide 2: Forward-Looking Statements
Forward-Looking Statements This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “may,” “should,” “will,” “could,” “would,” “anticipate,” “plan,
Slide 3: Transaction Summary
TRANSACTION SUMMARY 3 Management and Governance Structure and Ownership Timing and Approvals Chip Brewer to remain President and Chief Executive Officer of combined company; Dolf Berle to remain as CEO of Topgolf through a transition period following the close of the transaction, at which time he in
Slide 4: Creating an Unrivaled Golf and Entertainment Business
CREATING AN UNRIVALED GOLF AND ENTERTAINMENT BUSINESS New type of leader in golf and entertainment High-growth platform with ample liquidity Reach to entire $80B growing golf industry Coveted brands with momentum Leading technology and innovation $3.2B 2022 Est. Revenue $360M 2022 Est. Adjusted EBIT
Slide 5: Compelling Potential for Shareholder Value Creation
COMPELLING POTENTIAL FOR SHAREHOLDER VALUE CREATION ($ in millions) 2019 Pro Forma 2022E Longer Term Revenue $2,761 $3,200 ~10% Adj. EBITDAS $270 $360 Mid-t0-High Teens Combined Company Has Clear Line of Sight to Generating More Than $1B of Adj. EBITDAS
Slide 6: Highly Complementary Businesses
HIGHLY COMPLEMENTARY BUSINESSES Compelling Position with Growing Consumer Preferences for Active, Outdoor Experiences Retail Digital E-Commerce Venues Esports Courses Partnerships Connection to millions of golf and active lifestyle consumers Global reach across channels Family of in-demand brands Hi
Slide 7: Reach to All Golf Consumers
Appeal to youth via games and social atmosphere 51% of Topgolf guests identify as non-golfers 75% of non-golfers who visited Topgolf said they’re now interested in playing on a course4 REACH TO ALL GOLF CONSUMERS The #1 Driver on major worldwide tours #1 Putter on Tour 100’s of Sponsored Athletes ac
Slide 8: Callaway: Global Leader in Premium Golf Equipment and Active Lifestyle Soft Goods
CALLAWAY: THE GLOBAL LEADER IN PREMIUM GOLF EQUIPMENT AND ACTIVE LIFESTYLE SOFT GOODS Proven ability to deliver innovation, generate growth and capture efficiencies Five-year TSR: 187%; Three-year TSR1: 85% Operating Profit: 54% 3-year CAGR (Pro Forma, 2016-2019) Innovative breakthroughs capturing f
Slide 9: Topgolf: Category Defining Tech-Enabled Golf Entertainment Business
TOPGOLF: THE CATEGORY DEFINING TECH-ENABLED GOLF ENTERTAINMENT BUSINESS Proven early stage businesses realizing rapid growth with long-term potential 450 Potential for new venue expansion (domestic and international) 23M Venue visits in 2019 140+ Televised golf tournaments in 2019 that featured Topt
Slide 10: Venues Overview
VENUES OVERVIEW Topgolf venues introduce millions of guests to the brand, culture and technology each year What defines Topgolf venues? Social destinations for all Immersive gameplay Amplified technology High-quality food & beverage Our mission: connect people in meaningful ways through experiences
Slide 11: Venues Overview: U.S. Venues in Three Format Sizes
VENUES OVERVIEW 58 23 U.S. venues in three format sizes million venue visits in 2019 5 International venues1 Large venue 100+ bays 45 locations 100% of U.S. venues have fully reopened as of 9/7 and recently operating at 80-85% of 2019 same venue sales 1 Three owned-venues, two franchised venues Medi
Slide 12: Venues Generating Attractive Economics
VENUES GENERATING ATTRACTIVE ECONOMICS Target Avg. Venue Revenue1 $17 M Average Construction Cost per Venue3 $10-40 M 1-2 Near- to medium-term blended average across Large, Medium and Small venues 3 Topgolf seeks to finance underlying land and 75% of construction costs on the majority of its venues
Slide 13: Significant Venue Growth Opportunities
under construction, contracted or LOI years of domestic venue growth opportunity SIGNIFICANT VENUE GROWTH OPPORTUNITIES Innovation in multiple size formats Continued innovation across different venue sizes has expanded addressable market Proven success in all size formats and regions Identified oppo
Slide 14: Toptracer Range Overview
TOPTRACER RANGE OVERVIEW Puts ball flight and shot stats on screen and to your device …as Topgolf brings a leading ball-tracking technology to your driving range and onto your phone/tablet Highly visible broadcast partnerships expand range technology opportunity and grow brand… 7,500 active Toptrace
Slide 15: Toptracer Economics and Growth Opportunities
TOPTRACER ECONOMICS AND GROWTH OPPORTUNITIES 7,500 active bays worldwide Attractive recurring revenue potential with limited upfront investment Callaway expertise and network present compelling opportunity to accelerate Toptracer growth globally Highly visible brand presence featured in over 140 gol
Slide 16: Well Positioned to Capture the US Market
Well positioned to capture the US market Business model perfect for highly competitive market 2 Strong partnerships with high profile leagues 1 Data driven marketing products for player acquisition Ideally suited to capture expected significant sportsbook marketing spend Genius already establishing
Slide 17: Topgolf Financial Profile and Growth History
TOPGOLF FINANCIAL PROFILE AND GROWTH HISTORY 30% CAGR Revenue Growth 2017 -2019 Venues: 29% Toptracer Range: 233% 2019 Adjusted EBITDAS impacted by investment in growth infrastructure to achieve long-term earnings potential 2019 Adjusted EBITDAS unfavorably impacted by $18M due to the adoption of th
Slide 18: Brands Well Positioned in Current Environment
BRANDS WELL POSITIONED IN CURRENT ENVIRONMENT U.S. golf rounds played for September 2020 increased 25.5% compared to September 2019; September 2020 YTD rounds increased 8.7% vs same period last year despite early year shutdown1 Significant momentum in U.S. Club sales, including record third-quarter
Slide 19: Callaway On-Track for Record Q3
CALLAWAY ON-TRACK FOR RECORD Q3 Callaway set to deliver best third-quarter in company history Golf equipment segment continues to exceed expectations over the last few months Faster than expected recovery in softgoods led by outperformance in e-commerce Transition to consolidated distribution center
Slide 20: Well-Positioned to Fund Future Growth
WELL-POSITIONED TO FUND FUTURE GROWTH Ample liquidity to accelerate momentum More than $630M of cash and available facilities as of Q3, nearly $300M higher than same period of 2019 Significant projected excess capital provides cushion well above need Callaway investments near-complete, clear focus o
Slide 21: An Unrivaled Golf and Entertainment Business
AN UNRIVALED GOLF AND ENTERTAINMENT BUSINESS Highly complementary businesses well-positioned to accelerate growth across the platform Broad reach and significant consumer overlap enhances value for both businesses Multiple high-growth opportunities in early stages with more then 10 years of planned
Slide 22: Appendix
Vv TOPGOLF APPENDIX
Slide 23: Disclaimer: Regulation G
DISCLAIMER Regulation G In order to assist you with period-over-period comparisons on a consistent and comparable basis, today’s presentation includes certain non-GAAP information. This information excludes non-cash purchase accounting adjustments associated with the acquisition of OGIO and TravisMa
Slide 24: Appendix: Unit Economics of Topgolf Long Term Opportunity
APPENDIX: UNIT ECONOMICS OF TOPGOLF LONG TERM OPPORTUNITY Domestic Venues Toptracer Range International Venues Media Total Identified path to: 200 venues 152,500 bays1 250 venues ~2 Game Potential; $1.50 sponsorships revenue / visit Unit-level Revenue2 $6-24M $2,000 / Bay $1.1M / Venue N/A Total Rev
Slide 25: Appendix: 2022 EBITDA Supplement and Non-GAAP Reconciliation
APPENDIX: 2022 EBITDA SUPPLEMENT AND NON-GAAP RECONCILIATION 1 Callaway Golf charges include: Non-recurring transaction and transition costs associated with the acquisition of Jack Wolfskin, including banker's fees, legal fees, consulting and travel expenses, audit fees and valuations services, as w
Slide 26: Appendix: Combined Company Debt Commentary
APPENDIX: COMBINED COMPANY DEBT COMMENTARY Projected as of December 31, 2020 2022 Topgolf Callaway Total Topgolf Callaway Total Net Debt Summary: RCF/ABL 160 38 198 160 142 302 TLB 344 442 786 337 432 769 Convert 0 259 259 0 259 259 Other 51 49 100 47 25 72 Deemed Landlord Financing 152 0 152 475 0
Slide 27: GAAP Reconciliation Callaway Golf Company
GAAP RECONCILIATION CALLAWAY GOLF COMPANY Supplemental Financial Information and Non-GAAP Reconciliation (Unaudited) (In millions) Three Months Ended September 30, 2020 2019 GAAP Non-Cash Intangible Amortization(1) Non-Cash Amortization of Discount on Convertible Notes(2) Other Non-Recurring Charges
Slide 28: Callaway EBITDAS Reconciliation
CALLAWAY EBITDAS RECONCILIATION CALLAWAY GOLF COMPANY Non-GAAP Reconciliation and Supplemental Financial Information (Unaudited) (In millions) 1 In 2020, amounts represent certain non-recurring costs, including costs associated with the Company's transition to its new North America Distribution Cent
Slide 29: Topgolf EBITDAS Reconciliation
TOPGOLF EBITDAS RECONCILIATION 1 Charges include: Venue closure costs, the remeasurement of a contingent earnout obligation, non-recurring consulting and legal expenses, and the remeasurement of a stock-warrant liability. TOPGOLF INTERNATIONAL, INC Supplemental Financial Information and Non-GAAP Rec