Callaway will host a conference call today, October 27th, at 5:30 p.m. Eastern time to discuss this transaction. Last year, Topgolf had a massive 13 million customer visits and that number is expected to continue growing rapidly through an aggressive expansion strategy that includes plans to open between seven and 10 new venues annually for the foreseeable future both in the U.S. and overseas. Young people are fickle. The Company provides information about its results excluding interest, taxes, depreciation and amortization expense, and non-cash stock compensation expense. The company asked the city for $2.6 million in A long-term forecast of each of these line items is not available without unreasonable efforts due to the variability of these items and the inability to predict them with certainty. Calloway's stock is at the same price as it was in 1998. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of Leaders Group. Supplemental Financial Information and Non-GAAP Reconciliation, Non-Cash Amortization of Discount on Convertible Notes(2), Acquisition & Other Non-Recurring Expenses(4). Topgolf is broadening and deepening and driving a younger demographic to be aware of golf, said Andy Pierce, global president of golf and consulting for Lagardre Sports and Entertainment. Another literal connective effort is Topgolfs latest plan to build a new venue on the site of a West Palm Beach, Fla., public golf course. Over the course of the initial 20-year ground lease, once construction is completed and Topgolf is open for business, the county will receive more than $625,000 in annual revenue, benefiting the San Bernardino County Regional Parks system, https://parks.sbcounty.gov/, which includes nine regional parks throughout the county and To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. But, it's one of us humans writing the story, we promise. Callaway is a leader in the global golf equipment market with a scale position in active-lifestyle soft goods and a proven ability to deliver strong returns, including company growth that has exceeded golf market growth for seven consecutive years. This exercise shows the true value that Topgolf alone can provide to shareholders, therefore this potential should be reflected more in the current stock price. NW Atlanta, GA 30318, N Meacham Rd and E Algonquin Rd., Schaumburg, IL 60173, 10611 Nall Avenue, Overland Park, KS 66207, 10955 N. Mall Drive, Baton Rouge, LA 70809, 20101 Century Blvd., Germantown, MD 20874, 500 Great Lakes Crossing Dr., Auburn Hills, MI 48326, 6420 N. Camden Ave., Brooklyn Center, MN 55430, 16851 N. 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Such forward-looking statements include, but are not limited to, statements about the benefits of the business combination transaction involving Callaway and Topgolf, including the anticipated operations, financial position, liquidity, performance, prospects or growth and scale opportunities of Callaway, Topgolf or the combined company, the strategies, prospects, plans, expectations or objectives of management of Callaway or Topgolf for future operations of the combined company, any statements regarding the approval and closing of the merger, including the need for stockholder approval and the satisfaction of closing conditions, and statements of belief and any statement of assumptions underlying any of the foregoing. https://huddleup.substack.com/p/callaway-and-topgolf-breaking-down People come back, it is a meaningful repeat business, he said. The average Topgolf hourly pay ranges from approximately $15 per hour for a Bay Host to $133 per hour for a Maintenance Associate. Topgolf employees rate the overall compensation and benefits package 3.5/5 stars. growth prospects of Topgolf makes Callaway one of the most intriguing investment opportunities. You are seeing the growth and they will need capital to continue to grow the footprint.. Berle will leave after a transition period and Topgolf will continue to operate from its Dallas headquarters. As part of the agreement, Callaway will issue 90 million shares of its common stock to Topgolf shareholders. Callaways continued strong cash generation and ample liquidity, including more than $630 million of cash and available credit facilities as of Q3 2020, position the company to fund Topgolfs continued growth with significant ability to pay down debt at the same time. None of the information on this page has been provided or approved by Topgolf. Topgolf is merging with Callaway in a deal valued at $2 billion Using the same EBITDA margin and revenue per venue, we are able to project out Topgolfs future performance and add additional assumptions regarding new venues from managements guidance. See our list below of Topgolf locations currently open, coming soon (under construction) and rumored. This includes favorable trends in rounds played and growth in beginning and returning golfers as well as broader consumer preferences for outdoor activities.2,3The combined company will have a highly diversified revenue mix, including Golf Equipment, 30%; Topgolf, 46%; and Softgoods, 24%4. WebTopgolf: An entertainment complex that provides competitive golfing games for individuals and groups of all ages and skill levels. SBJ I Factor is a monthly podcast offering interviews with sports executives who have been recipients of one of the magazines awards, including Forty Under 40, Game Changers and Sports Business Awards. Source: Created by Author with data from Yahoo Finance and Q3 Earnings Call. Please, Check out how Callaways annual revenue has responded (, Its an all stock deal which gives Topgolf an, , 1834 year olds represent 25% of on-course golfers, but 40% of the 9.9 million off-course golfers (i.e. It is all about having great experiences and sharing it. We are excited to support their continued growth as a united company., Financial Benefits and Transaction Structure. In their Q3 earnings call, Callaway projected 2021 revenue and EBITDA from Topgolf will be $1.06 billion and $158 million; this provides an EBITDA margin of 14.91%. He has been CEO since 2011, and was instrumental in the Amway Center winning a Sports Business Award for Facility of the Year in 2012. Drive Shack, backed by TaylorMade, this spring is set to debut its first golf/entertainment facility in Orlando with a three-story driving range that, like Topgolf, will offer a bar and restaurant experience. The deal is expected to close in early 2021. We are the subject of inquiries from the capital market world and our investors would look at it as a way to grow the company and get liquidity. If you would like to receive it directly in your inbox, subscribe now. If you enjoyed todays email, subscribe now to receive future emails directly in your inbox. The connective PGA of America efforts include Topgolf holding sponsorship and media events, and other fan engagement efforts tied to PGA of America events along with Topgolf promoting the PGA Junior League Golf program. On Tuesday, Callaway announced a definitive merger agreement which would see the Golf giant digest the remaining 86% of Topgolf they didnt already own at a ~$2 billion valuation. Sometimes we post sponsored content from this account, and it is labeled as such. It starts with the fact that the millennial audience is largely focused on experiences, Horne said. Its an all stock deal which gives Topgolf an implied equity value of ~$2 billion. The words may, should, will, could, would, anticipate, plan, believe, project, estimate, expect, strategy, future, likely, and similar expressions, among others, generally identify forward-looking statements, which speak only as of the date the statements were made and are not guarantees of future performance. Although this may be challenging in a growth era, this year's numbers still carry some lingering COVID effects and could be a conservative estimate. In a statement, the House Ways and Means chair explained A replay will be made available online approximately three hours following the live call and will remain available through October 27, 2021. Topgolf is expected to generate $1.06 billion in revenue and $158 million in EBITDA in 2021. 2023 Leaders Group. Both CEOs said golf equipment and golf entertainment venues have a chance to excel in the COVID-19 environment while other forms of entertainment have been severely restricted. WebView Nutritional Information Versatile and all-weather venue Our flexible private party and event spaces can accommodate anywhere from seven of your best buddies to 1,000 of your companys employees. And for Topgolf, despite its current success, how does it continue to scale and generate repeat visitors? Disclosure: I/we have a beneficial long position in the shares of ELY either through stock ownership, options, or other derivatives. The demographics making up Topgolfs customer base is exactly where Callaway is lacking. Chip Brewer will continue to lead the combined company as President and Chief Executive Officer. Paul O'Donnell, Business Editor. The number of shares to be issued is based upon an implied equity value of Topgolf of approximately $2 billion, including the 14% already owned by Callaway. Get the latest business insights from Dun & Bradstreet. However, once completed, management estimates that on average a typical venue generates $17 million in annual revenue and $5 million in adjusted EBITDA. Bottom line Topgolf has developed a unique way to engage an entire new generation of individuals that werent interested in golf before. We use Attention spans scatter. Topgolf contributed $336 million in revenue in Q4, which represented a 6 percent increase over the 2019 comp quarter. 6 Implied equity value of $1.739 billion when accounting for the various preferential rights of Topgolf shareholders and excluding assumed stock options and Callaways ownership position Based on industry valuations and the anticipated growth in venues, I believe the Topgolf business alone will be worth at least $4.3 billion by 2025. Investors are cautioned not to place undue reliance on such preliminary estimates. Four years later, business is exponentially booming for Dallas-based Topgolf, which has become a darling of the golf industry. A live webcast of the conference call and downloadable slides will be available online at: https://ir.callawaygolf.com. Upon completion of the merger, Callaway shareholders will own approximately 51.5% and Topgolf shareholders (excluding Callaway) will own approximately 48.5% of the combined company on a fully diluted basis. You may also opt to downgrade to Standard Digital, a robust journalistic offering that fulfils many users needs. This combination unites proven leaders with a shared passion for delivering exceptional golf experiences for all from elite touring professionals to new and aspiring entrants to the game. Topgolf was generating $1.1 billion in revenue pre-pandemic at 63 locations that drew more than 23 million customers in 2019. The Dallas company has grown at a 30 percent compound annual rate since 2017 and recorded $1.06 billion in sales last year with a net loss of $114.9 million. (760) 931-1771 During your trial you will have complete digital access to FT.com with everything in both of our Standard Digital and Premium Digital packages. Remaining privately-owned during those two decades, the company built locations in every region of the country. Other lead investors include Callaway, which took a stake in the company in 2006; Carolina Hurricanes owner Thomas Dundon, who bought a stake in 2011; and Providence Equity, which took an undisclosed stake in 2016. Tech entrepreneur Ryan Smith purchased a majority stake in the Utah Jazz yesterday, which values the team at $1.6 billion. Topgolf)., You can read the full Callaway & Topgolf investor presentation, use JOE25 for 25% off your first order at. Due to the constant popularity of Topgolf venues as well as the sport, I believe locations will continue to report exceptional revenues. For cost savings, you can change your plan at any time online in the Settings & Account section. Information regarding Callaways directors and executive officers is contained in Callaways Annual Report on Form 10-K for the year ended December 31, 2019 and its Revised Definitive Proxy Statement on Schedule 14A, dated March 27, 2020, which are filed with the SEC and can be obtained free of charge from the sources indicated above. Topgolf also hires PGA professionals as instructors at Topgolf venues, while the PGA Tour and the LPGA co-promote with Topgolf by holding sponsor and media activities at Topgolf venues. We use the Golf News Net byline sometimes just to change things up. Diluted earnings (loss) per share:. (1) Represents amortization expense of intangible assets from the acquisitions of OGIO, TravisMathew and Jack Wolfskin. If you would like to participate in the call, please dial 1-877-879-1183 or 1-412-902-6703, if calling internationally, approximately 15 minutes prior to the start of the call (access code: 5543896). With such dizzying expansion, its no surprise that the PGA Tour, PGA of America and LPGA have promotional partnerships with the company in an attempt to convert the hordes of casual and non-golfers who are flocking to Topgolf over to traditional golf. GNN may earn a commission from sales generated by those links. The majority of Topgolfs revenue comes from physical locations, but they also have a growing technology business, which Callaway envisions being a significant source of revenue in the future. Topgolf charges include: Venue closure costs, a regulatory settlement reserve, the remeasurement of a contingent earnout obligation, and the remeasurement of a stock-warrant liability. The parties expect to complete the transaction in early 2021, subject to satisfaction of these conditions. 2 National Golf Foundation, August Rounds Play, Published September 2020 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. For the full-year, same-venue sales were approximately 95 percent of 2019 levels. It is something that the game hasnt seen in a while.. university The combined company will also benefit from a strong financial profile, including: Topgolf is in the early stages of its growth with more than ten years of planned unit growth opportunity in its U.S. venues business and just 2% addressable market penetration in international venues and 1% in the Toptracer Range business. The Callaway golf business, and the game of golf itself is experiencing unprecedented growth, Brewer said. Additionally, EBITDAS excludes these same line items from forecasted net income. If you do nothing, you will be auto-enrolled in our premium digital monthly subscription plan and retain complete access for 65 per month. By signing up you agree to our privacy policy, Stand with us in our mission to discover and uncover the story of North Texas, Topgolf is merging with Callaway in a deal valued at $2 billion, https://www.linkedin.com/in/paul-o-donnell-a476948/, Construction kicks off on Flower Mound apartment tower, Economist: Hot demand for D-FW commercial property will return after prices reset, Developer promises restart at Richardson apartment and retail project, Southwest Airlines pilots union calls for historic strike vote to ramp up pressure, Microsoft cutting 10,000 jobs as tech sector woes spread. Looking for a great beer for Sunday through Thursday nights? I have no business relationship with any company whose stock is mentioned in this article. It is classified as operating in the Arts, Callaway's transition to a golf entertainment company provides opportunity for a higher valuation range. What do legacy golf companies like Callaway plan to do about it? (3) Represents non-recurring costs associated with the Company's transition to its new North America Distribution Center, implementation of new IT systems for Jack Wolfskin, and $0.7 million of severance related to the Company's cost reduction initiatives. More than half of Topgolfs customers identify themselves as non-golfers, giving Callaway early exposure to potential golfers. Kara Barry In addition, these preliminary estimates are not necessarily indicative of the results to be achieved in any future period. During the course of the preparation of the Company's consolidated financial statements and related notes as of and for the three months ended September 30, 2020, the Company and its auditors may identify items that would require the Company to make material adjustments to the preliminary estimates presented above. Topgolf, in addition to tapping into golf as a property, has seen their growth based in providing great experiences both in their venues and outside.. Topgolf states that about 51 percent of its customers are non-golfers who wind up swinging a club for the first time with their friends at a Topgolf venue, a statistic that has industry insiders brimming with optimism that the company can attract new and younger fans and players to the game, which skews to an older demographic. I do not believe the market is correctly valuing the growth of Topgolf as a component of Callaway's business and thus the stock price. https://www.ft.com/content/a3573b9e-dca8-11e5-8541-00fb33bdf038 Click below to sign in. Standard Digital includes access to a wealth of global news, analysis and expert opinion. With the completion of the 9 new venues in 2021, Topgolf will have 70 venues operating for the entirety of 2022. Capital is also needed to support the companys strategy to offer broader entertainment products either through acquisition or development. Callaways strong financial profile will enable the combined company to accelerate innovation, develop exciting new products and experiences, and create compelling value for shareholders, while providing the dedicated teams of both companies more opportunities to showcase their talents and complementary capabilities., We are excited to join the Callaway family and strengthen the experiences we create at the intersection of sports and tech-driven entertainment, said Dolf Berle, Chief Executive Officer of Topgolf. In the next 10 years, we think that we can double the size of the business and add another 8,000 bays, said Topgolf CEO Dolf Berle. The company has a proven ability to innovate to expand its addressable market and capture the potential of games and content on its interconnected platform. To supplement the GAAP results, the Company has provided certain non-GAAP financial information as follows: EBITDAS. The transaction is subject to the approval of the shareholders of both Callaway and Topgolf, as well as other customary closing conditions, including required regulatory approval. Callaway announced the deal along with its third-quarter financial results, noting 12% year-over-year revenue growth to $476 million. Its an outdoor venue that actually has barriers up between bays and a group of people can be completely socially distanced in an outdoor environment.. I am incredibly bullish on it, said Jeff Price, chief commercial officer for the PGA of America. Their CEOs explain the strat We dont rule it out, Anderson said of the possibility of going public. Award-winning original reporting, with in-depth profiles, timely research and expert opinions on the biggest issues and stories in sports business. 4 Based on 2022 projections The Company has provided reconciling information in the attached schedules. Topgolf This suggests that based on the current industry multiples and Topgolfs performance coming out of COVID, Callaway did not drastically overpay in the merger when you look towards the higher range of the valuation. On top of the golf experience, Topgolf customers can order food and beverage which is then brought out to them at tables and outdoor furniture located just behind the bays, which are usually situated on three stacked levels. It expects that to grow to $3.2 billion by 2022 and at a 10% rate after that. Its not exactly clear yet, but id expect more of the same. I am not receiving compensation for it (other than from Seeking Alpha). What began as a technology that enhanced the game of golf now encompasses a range of unmatched experiences where communities can discover common ground. Based on industry valuations and the anticipated growth in venues, I believe the Topgolf business alone will be worth at least $4.3 billion by 2025. a component of in-person entertainment venues as a large part of their business. 12+ Lunar New Year food events and specials at D-FW restaurants, French bistro La Parisienne to open at The Star in Frisco, New Chick-fil-A opens in downtown Dallas this week, La Casita has become one of the biggest bakeries in D-FW, and its just getting started, New legislative push begins to end Confederate Heroes Day as an official Texas holiday, Dallas Cowboys signing kicker Tristan Vizcaino to practice squad, Dallas ranked among the most congested cities in the U.S. as work from home is phased out, Tax relief, border security, state worker pay raises among Texas Houses top wishes, The Dallas Morning News 2022 All-area teams, football awards and more, Prime Prosper corner just north of Universals future Frisco theme park hits the market, 5 things to know about Brett Maher, Cowboys kicking situation, New Frisco shopping center is moving ahead with developer funding. While the company is expanding, it lacks a large presence in the Northeast and in Southern California, with no current facilities in Los Angeles or San Diego. And our climate-controlled bays mean your party will rock on through rain, heat, cold or whatever else Mother Nature throws at you. Topgolf currently has 28 open locations in the United States, with another dozen opening soon all over the place. These preliminary estimates should not be viewed as a substitute for full financial statements prepared in accordance with GAAP. The acquisition of Topgolf for $2.6 billion redefined Callaway (ELY) as a golf entertainment company. Through $750 million in acquisitions of premium apparel, footwear, and equipment brands like Jack Wolfskin, TravisMathew and Ogio, Callaway has desperately attempted to diversify their business and cater to a younger demographic which seems to be losing interest in golf or never picked it up in the first place. Topgolf is a global sports entertainment community headquartered in Dallas, Texas with locations in the United States, United Kingdom, and Australia. There are currently 58 Topgolf locations, 53 in the United States, 3 in the United Kingdom, and one in Australia. Cost of opening one TopGolf franchise is around Us $18 million. invrelations@callawaygolf.com, For Topgolf: The preliminary estimates presented above are the responsibility of management and have been prepared in good faith on a consistent basis with prior periods. It's a driving range where players of all skill levels can hit balls, each with an RFID chip in them, to different targets up and down the range. Upon arriving, he was immediately taken aback. In that time, Topgolfs value grew to equal that of Callaway, a dominant name in golf equipment and apparel. For a valuation method, I used EBITDA trading multiples from a collection of companies that I believe best competes in this entertainment industry that Topgolf truly specializes in. MEMBERSHIP TERMS: If you choose a Lifetime Membership, you will pay a one-time charge of $5.00 where applicable, and you will be subject to the Terms and Conditions contained in this Agreement. Secondly, can Topgolf look up your membership? There is a lot of white space. Therefore, adjusted revenue and EBITDA numbers for the full-year 2021 would be around $1.3 billion and $190 million. Call 1-800-GAMBLER (NJ/WV/PA/IL) or 1-800-9-WITH-IT (IN only) or 1-800-BETS-OFF (IA only) or 1-800-522-4700 (CO Only) or TN REDLINE: 800-889-9789. Being the good friend I am, I read it so you dont have to lets run through it. All rights reserved. Sources of data may include, but are not limited to, the BLS, company filings, estimates based on those filings, H1B filings, and other public and private datasets. 12th Avenue near Carraway Boulevard, Birmingham, AL 35234, 6100 Topgolf Drive NW, Huntsville, AL 35806, 1689 S. SanTan Village Pkwy Gilbert, AZ 85295, 9500 E. Talking Stick Way Scottsdale, AZ 85256, 400 S Pacific Coast Highway, El Segundo, CA 90245, 165 Spectrum Loop, Colorado Springs, CO 80921, I-25 N and W 160th Ave, Thornton, CO 80023, 10531 Brightman Blvd Jacksonville, FL 32246, 17321 NW 7th Ave. Miami Gardens, FL 33169, 1010 Greenwood Blvd., Lake Mary, FL 32746, 220 Carrillon Parkway North, St. Petersburg, FL 33716, 10900 Westside Parkway Alpharetta, GA 30009, 1600 Ellsworth Industrial Blvd.
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