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Good afternoon, and welcome to the Topgolf Callaway Brands Q4 and Full Year 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there'll be an opportunity to ask questions. [Operator Instructions]. 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 fourth quarter and full year 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 fourth quarter and full year 2023 financial results. We've also published an updated presentation with supplemental information that we suggest you follow during today's call. If necessary, we will extend today's call to give ample time for our question-and-answer session. Our 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 identify the non-GAAP measures in the presentation and reconciled 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. We encourage you to review the Safe Harbor statements contained in the presentation and the press release for a more complete description. And with that, I'd now like to turn the call over to Chip Brewer.

Thank you, Katina. Good afternoon, and thank you for joining our call today, everybody. Starting on Slide 3, we ended 2023 on a positive note, beating our Q4 expectations for both revenue and EBITDA. This was driven by continued strength in both our golf equipment business and at TravisMathew, as well as better than expected performance at Topgolf, where same venue sales outperformed on strong holiday results, and where we continue to drive improvements in venue level profitability. Looking across our businesses, for the full year, golf equipment delivered excellent brand performance, maintaining its leadership positions in golf club market shares and in the overall technology and innovation ranking. Our Active Lifestyle segment delivered solid growth in revenue and profitability, driven by continued momentum at TravisMathew and at Topgolf, the team delivered 1% same venue sales growth for the full year, on top of 7% growth in 2022, as well as an impressive 100 basis points of venue level adjusted EBITDA margin expansion. They also added 12 new venues with the 11 new builds and one purchased via the BigShots acquisition. 2023 also marked an important financial inflection point for our company that being our transition to positive free cash flow. Our results showed $160 million of free cash flow at the consolidated level and $49 million at the Topgolf level. As you know, given the variable timing of REIT reimbursements, we believe the most appropriate cash flow metric is embedded cash flow, which is free cash flow excluding new venue and store growth CapEx. Using this metric, we delivered $221 million and $94 million at the total company and Topgolf levels. These numbers reflect positive trends in our fundamentals. Looking forward, we expect our cash flow will stay meaningfully positive from here and that our embedded cash flow will increase slightly this year. We anticipate our EBITDA, cash flow, and EPS growth will all ramp significantly in 2025 through 2028 due to the leveling off of corporate investments, the tipping point of economies of scale across our businesses, and lower overall corporate interest expense as our positive cash flow allows us to pay down debt over time. In support of this, we're providing illustrative 2026 through 2028 numbers in our earnings deck. These are Exhibits 21 and 23. As I'm sure you can tell, I remain convinced and excited about the long-term earnings power of this business. We have demonstrated the strength of our golf equipment business over a long period of time. The Callaway brand is strong and we are set up for an excellent 2024 with an outstanding new product range. Our Active Lifestyle segment has grown rapidly in both revenue and profits, and although, the Topgolf business has experienced some post-COVID same venue sales volatility, when you look past that, you see a business that is clearly strengthening and proving itself as a unique and appreciating asset with strong returns. Topgolf's track record for selecting and opening venues is extraordinary. They virtually all do well and average opening results have exceeded our targets. This is a skill set that has been built up over years and relies on multiple teams and functions across our organization. It makes us unique. Others have tried, but as of yet no one has been able to replicate our model. And it supports our strong confidence in our capital allocation strategy. In addition, our venues are increasingly profitable over time with what we believe is a clear path to further upside. I'll even add we have now shown we can do this in the face of same venue sales volatility. In short, the venues are achieving the return targets we communicated and are long, durable, and appreciating assets. To help demonstrate these points, we have included updated cohort and historical data in our earnings presentation. These are Slides 16 through 18. They show increasing average venue sales over time and increasing EBITDAR. There is volatility over short periods of time, but over the longer periods the trends are clear. As for the durability of the assets, the UK venues are now approaching 20 years old and still continue to grow both sales and profitability. Before speaking about where we're going this year, I'd like to put our longer-term opportunity into context by highlighting the underlying strength of the sport of golf and how the modern golf ecosystem is evolving. As shown on Slide 4, per the National Golf foundation, there are now a total of 45 million on and off course golfers, up 9% year-over-year and up 32% since 2019. Within this, an estimated 26.6 million Americans played golf on course in 2023, up 1 million year-over-year in what was the largest one year growth in participants since 2001, driven by an all-time high of first time on course golfers of 3.4 million. I believe it is both impressive and instructive that this far past-COVID on-course golf is still seeing this kind of momentum. At the same time, 32.9 million Americans participated in off-course golf, up 18% year-over-year and up 41% since 2019. The game of golf at large is clearly benefiting from a large influx of participants capital, the benefit of more flexible work environments, a positive change in perception of the game, especially with teens and young adults, and the structural growth of off-course golf. Within this context, Topgolf alone is adding 3 million to 4 million new unique visitors each year and will have over 30 million unique visitors in 2024, thus making it a major force in overall golf with a larger individual participation than total on-course golf. In response to those that may question if off-course golf will drive on-course, we now know that around two-thirds of today's on-course beginners are coming to the course with off-course experience, compared to less than 40% five years ago. And already 10% of today's total on-course players credit Topgolf for getting them to the golf course. Now, turning to our 2024 guidance. I'm proud to report that we are once again projecting growth in revenue, EBITDA, and embedded cash flow. We have also planned our business somewhat conservatively given the uncertain consumer environment, and we are continuing to invest in key corporate infrastructure and profitability initiatives, both at the corporate level and at Topgolf. Like our venues, we feel very good about the long-term returns on these investments and we believe we will show leverage on them relatively quickly most likely by 2025. Lastly, via specific projects, some of which I'll share with you today and with more to come throughout the year, we are also now entering the stage where we will be unlocking more of the exciting revenue, brand and digital synergies that our structure uniquely allow. Now I'd like to walk you through our business segment performance. At our Topgolf venue business, both during the quarter and for the full year, we made progress on our three key performance drivers. Starting with venue unit growth, we successfully and strongly opened eight venues in Q4 for a total of 11 new venues in 2023. Our new venues continue to perform extremely well. We also added one venue via acquisition in 2023, and in early January of this year, we purchased one additional venue from BigShots in Bryan, Texas, adjacent to Texas A&M University for approximately $7 million. As of this call, we now own and operate 94 venues and have five Topgolf franchise locations and three BigShots franchisee locations. We expect to add another seven new Topgolf venues this year, two in the first half, and five in the second half, for a total of eight new venues in 2024. We also expect to help open two international franchisee locations. For 2025, we're expecting to return to opening 10 to 11 new owned venues. Moving on to same venue sales performance. In Q4, our same venue sales declined 3%, which was meaningfully ahead of our expectations, driven by stronger than expected results in our one to two bay consumer oriented business, particularly at the end of December. For the quarter, our one to two bay same venue sales was flat, just as it was in Q3. Our three plus bay, primarily corporate business continued to stabilize during the quarter and had its second consecutive quarter of relative improvement. As a reminder, corporate is usually approximately 30% of sales in Q4 and 20% for the full year. Our December results were undoubtedly helped by weather as we had challenging weather in December 2022, but seasonally very mild weather in December 2023. Having discussed the quarter, I'm pleased to report the full year same venue sales ended in positive territory, up 1%. This is a notable achievement, particularly when you consider the strength of our 2022 same venue sales growth and the strong two-year stacks as shown in Exhibit 9. Our one to two bay business, which is primarily consumer and comprises 80% of our annual venue revenues was up 4% for the full year. And when you consider our comp sales versus pre-COVID levels, our one and two bay consumer business is up 11% versus 2019, while the three plus bay corporate business is up 1%. Looking ahead, our 2024 guidance recognizes a tough comp in Q1 and some poor weather to start the year in January. With this, we're expecting Q1 same venue sales to be down potentially high-single-digits. After Q1, we see somewhat easier comps and are forecasting approximately flat same venue sales for the full year. As we've previously discussed, our two points of weakness on same venue sales during the second half of 2023 were mid-week traffic and events. To help address the mid-week opportunity, we're in process of implementing weekday promotions, primarily half off game play, Monday through Wednesday via the app. Our test markets indicate this new mid-week promotion will help keep us competitive with other entertainment and leisure options. We'll be net profitable and will also help drive our digital business, which will in turn provide a long-term benefit. We do not believe they will be a major driver of sales growth, but they will help and appear to be an appropriate response that balances short and long-term needs. To help further stabilize events, we're improving our programs and value adds for both smaller events such as team buildings or birthday parties, as well as larger corporate bookings. Looking further down field, we are developing additional consumer offerings, not necessarily value oriented, that we are going to be announcing in early Q2. We're also starting to really scale our digital offerings, something I'll speak more about in a moment. We believe both of these initiatives will be appealing to consumers and could create upside. Moving on to our third and final key performance driver venue margin expansion. This is really the biggest highlight of 2023 for Topgolf. Topgolf has experienced increased efficiencies driven by our PIE inventory management system, along with a new labor model and COGS and initiatives that together are working beautifully. As a result, our 2023 venue level adjusted EBITDA margin increased approximately 100 basis points year-over-year to approximately 34%. And in Q4 alone, we expanded EBITDAR by approximately 370 basis points despite our highest margin business, the events business being down during the quarter. Hopefully this provides confidence in our ability to continue to drive improvements in this important metric. 2023 was an important year for laying the technology foundation in our venues with the rollout of Toptracer across all U.S. venues, thus allowing a common gaming platform as well as the rollout of our PIE inventory management and booking system across all venues. These critical steps enable us to turn our efforts towards accelerating in venue digital capabilities, creating new gaming innovation as well as bringing cross brand synergies to life in 2024 and beyond. To this end, we've created a new commercial and digital team within Topgolf dedicated to optimizing revenue management and driving our digital business. Examples of what the Topgolf digital team is working on are shown on Slide 13 and I encourage you to review it, so you have the appropriate feel for the impact these initiatives will have on our business. One specific project that I'll mention is our company-wide consumer data platform, which is now expected to be up and running by the second half of this year. This important project will unlock digital synergies across the brands and is expected to be a significant catalyst for future growth opportunities across our brand portfolio. Speaking of cross-brand synergies, there's a lot to be excited about in the coming weeks as shown on Slide 14. Starting just last week, all Topgolf players will have the opportunity to upgrade to Callaway branded premium clubs at all venues. By mid-year, this will include clubs specifically designed by Callaway for use in bay by both established golfers and those new to the game. In the near future, we will be able to upsell this program via the app and in reservations. All Topgolf golf professionals are on Callaway golf staff and can now exclusively sell Callaway golf equipment to their students. Callaway will be hosting organized club fitting events at all venues beginning with the first major of 2024, and will also be the official equipment sponsor of Topgolf's league nights. In addition, our respective marketing teams are leaning into our Callaway Chrome Tour Golf Ball launch to promote sales and trial of our new golf ball. Our goal is 200,000 new users coming specifically from Topgolf. We also plan to show various Callaway branded limited edition golf balls in venues throughout the year. We have an exciting Callaway and Topgolf golf club program that will run across all venues, and TravisMathew will increase his presence in approximately one-third of the venues where the price point works effectively. And later in the year, we'll be implementing a new Callaway digital kiosk in the lobby of all venues; a piece that we hope will amaze and delight all the new and existing golfers that visit the venues during the year. Also, towards the end of this year or early next, we'll be introducing specific Callaway branded golf equipment designed for the beginner golfers being introduced to the sport via Topgolf. We will then leverage the consumer data platform and our digital teams to market this product to these new players, thus creating a competitive advantage and reach to what should be the largest single source of new golfers in the modern golf ecosystem. We expect over 30 million unique players will walk into Topgolf venues in 2024, with a strong in venue Callaway brand presence, the ability to trial Callaway premium equipment in our bays, and an advantage in digital reach as well. We're excited about brand Callaway being front and center with this next-generation of modern golfers. At the same time, Callaway and TravisMathew will be working to drive awareness and visits to Topgolf. All of this is in addition to the synergies we've already been enjoying, such as a lower cost of capital and faster venue expansion at Topgolf, shared corporate services, Toptracer sales synergies, tour exposure as well as other key partnerships across the brands and operational support, including distribution and sourcing. Our 2024 forecast for Topgolf is specifically called out under our guidance section. So I won't speak to it directly here. I'll add that we expect Topgolf to be free cash flow positive on its own right, and we're delighted with the direction of the business. Moving to golf equipment. The business performed exceptionally well from a brand perspective in 2023. Our U.S. dollar market share placed us as the number one club brand and the number two golf ball brand. In clubs alone, we were the number one in total clubs, drivers, fairway woods, hybrids and irons. This was led by our 2023 launch of Paradigm. In Q4, we had a highly successful launch of our new Ai-ONE putter line. Global revenues were up 5% in Q4 and approximately flat on a full year currency neutral basis, despite an approximately $100 million headwind related to 2022's retail inventory catch-up. Golf demand remained robust through 2023, rounds played grew 4% year-over-year and 2023 marks the fourth year in a row where rounds played have exceeded $500 million. And I've already discussed with you the strength and participation, including new entrants. In early January, we announced some very exciting new launches in both clubs and golf ball. In clubs, our new family of Ai Smoke drivers, fairway woods and irons truly embody Callaway’s leadership in R&D. These clubs feature an Ai Smart Face which optimizes performance using swing dynamics from thousands of golfers and micro deflections across the face. Our marketing people say, it's best, it's sweeter from every spot, both longer and more forgiving. On the ball side, we recently launched our new line of Chrome Tour, Chrome Tour X and Chrome Soft Golf Balls, which reflect the culmination of many years of R&D work, as well as the extensive upgrade of our Chicopee Ball manufacturing facility. We are effectively launching a new brand in Chrome Tour, a brand that will complement our existing strength in Chrome Soft and Supersoft. This is a big launch for us and something we don't take lightly. We deferred doing it previously, instead waiting until we further proved out our design thesis and manufacturing capabilities. We are proud of our record in golf ball and both our sales and market share record over the last eight years supports this. Still, we believe we have more potential. We believe we make the best performing and most consistent ball in golf and we now feel ready to tell the world about it. As we forecast the golf equipment segment for 2024, we're encouraged that field inventories have returned to more normalized and healthy levels with no abnormal items to lap this year. And consumer interest in the game remains high and we're excited about the potential opportunity for our business to outperform the market given the strength of our new launches. As a result, we expect both revenues and profits to be up in this segment. Switching gears to our third and final segment, our Active Lifestyle division grew 9% in 2023 and continued to expand margins. Top-line growth was driven by continued brand momentum at TravisMathew, which had a strong year from both a top and bottom line perspective. In 2023, TravisMathew grew in all channels, including adding six new stores and launching into the women's category. In 2024, they plan to open eight to 10 new stores, slowly expand their international footprint as well as amplify the fantastic women's product with marketing and stronger in-store exposure. The women's product is resonating nicely and although it is still small from a percentage basis, we're optimistic on its long-term potential. Also at TravisMathew in 2023, we had an approximately $35 million inventory fill in, in our corporate channel that will not repeat in 2024. This will cause some year-over-year comparison issues for 2024 versus 2023. Excluding this, we continue to expect strong revenue growth at TravisMathew both this year and going forward. Jack Wolfskin margins were challenged in Q4 due to continued softness in Europe, driven by continued high field inventories and despite strong performance in China both in Q4 and for the full year. That said, the Jack Wolfskin business grew slightly on the top-line and was approximately breakeven in EBITDA in 2023 overall. We now have new leadership in place in Europe and we're optimistic for stabilization followed by growth during the balance of 2024 and into 2025. Overall, for 2024, we're expecting approximately flat revenues with operating income slightly down in this segment. In conclusion, 2023 ended on a strong note and 2024 has begun with exciting new products and programs across our brands. We remain confident in our strategic initiatives and our ability to grow our cash flows from here. The growth is forecast to be modest for 2024 as we both continue to invest in the business and we are also planning cautiously. Cash flow, EBITDA and EPS then ramp nicely as our cash flow compounds and as we leverage our scale. Thank you for your time today. And Brian, over to you.

Thank you, Chip, and good afternoon, everyone. As Chip mentioned, we are pleased with how we finished 2023. We had fourth quarter revenue growth across each of our operating segments. Topgolf opened eight new venues in the fourth quarter alone and finished the year with same venue sales growth of plus 1%, while also increasing venue level adjusted EBITDAR margins by approximately 100 basis points year-over-year. Our golf equipment business finished the year with the number one U.S. golf equipment market share for golf clubs and number two in golf balls. We also achieved positive free cash flow for the year, both on a consolidated basis and at Topgolf. Those were important financial milestones for us and we achieved them well ahead of our plan that we set at the time of the merger. We remain in a strong financial position. Our cash and cash equivalents increased $213 million to $394 million at December 31, 2023, compared to the prior year, which is after taking into account over $15 million in common stock purchases, including $12 million in the fourth quarter, and deploying approximately $30 million for the BigShots acquisition. Our available liquidity, which is comprised of cash on hand and availability under our credit facilities, increased $327 million to $743 million due to proceeds from the company's new term loan and better than expected cash flows this year. Given the strength of our businesses, and our solid financial position, we believe we are well-positioned to entering 2024 and we expect to grow revenue, adjusted EBITDA and embedded cash flow again this year. Now, turning to our fourth quarter results. We grew consolidated revenues 5% year-over-year to $897 million, driven by growth across all three operating segments and led by Topgolf venues, which were up 9%, and golf clubs, which were up 17%. Given the seasonality of our businesses, we typically report an operating loss in the fourth quarter. In the fourth quarter of 2023, our non-GAAP operating loss improved 74% to a loss of $6.6 million. This improvement was driven by a significant improvement in segment operating income in the Topgolf and Active Lifestyle segments. Non-GAAP fourth quarter net loss increased to approximately $5.4 million compared to last year, largely due to the increased D&A and interest expense related to new venue development. Adjusted EBITDA of $69.8 million increased 91% compared to last year and exceeded the high end of our guidance range by approximately $12 million due primarily to better than expected revenue and venue margins at Topgolf. Moving to segment performance. At Topgolf, Q4 revenue grew 7%, driven primarily by new venues, partially offset by better than expected same venue sales of minus 3%. The beat in Q4 same venue sales was driven by better than expected traffic in our one and two bay consumer business, which benefited from a strong holiday season and year-over-year favorable weather in December. Topgolf operating income increased to $23 million in the fourth quarter compared to $3 million in the prior year, and adjusted EBITDA increased $30 million to $73 million. These improvements were driven primarily by the increased revenue as well as continued operational efficiency gains in the venues. The operational gains included improved labor management, the impact of PIE being rolled out in all venues, and lower food and beverage costs due to Topgolf increased scale. Moving to Q4 results for golf equipment. Revenue increased 5% to $199 million, primarily due to an expected shift in golf club launches, partially offset by a decline in golf ball sales, as we prepared for the 2024 launch for our new Chrome Tour Ball, which launched on February 2. Golf equipment operating income decreased $21 million due to the expected lower production volumes in the second half of 2023 as compared to the prior year, resulting in unfavorable cost absorption as well as a return to normal promotional levels as we mentioned last quarter. In our Active Lifestyle segment, Q4 revenue grew 3% primarily due to increased apparel sales which was led by TravisMathew. Operating income increased to $20 million compared to breakeven in the prior year. This increase was driven by increased revenue and margin as a result of a higher mix of margin accretive direct-to-consumer sales as well as tailwinds from lower input costs year-over-year. Moving to balance sheet and liquidity highlights. As I mentioned earlier, at December 31, 2023, our available liquidity increased $327 million to $743 million compared to the prior year due to proceeds from the company's new term loan and better than expected cash flow this year. At year-end, we had a total net debt of $2.2 billion, which excludes convertible debt of approximately $258 million compared to $1.9 billion at the end of 2022. This increase relates primarily to incremental new venue financing and the additional $300 million of term loan debt. As a reminder, we think it is also helpful to evaluate our net leverage position by excluding the venue financing REIT debt, which is essentially capitalized rent with no additional principal or Board repayment required. Including the REIT debt, our REIT adjusted net debt is $971 million at the end of 2023, compared to $997 million at the end of 2022. Our net debt leverage, which excludes convertible debt was 3.8x at December 31, 2023 compared to 3.4x at the year-end 2022. This change was driven by the opening of additional venues in Q4 2023 versus the prior year. Our REIT adjusted net debt leverage ratio is 1.9x, compared to 2.0x in the prior year. We feel comfortable with these leverage levels. Our inventory balance decreased $165 million or 17% from $959 million at year-end 2022 to $794 million at the end of 2023, a significant achievement by our teams who actually managed this inventory reduction in light of the post-COVID surge in 2022. We continue to expect our Active Lifestyle inventory to decrease in 2024 as our apparel businesses normalize their inventory. We feel good about the quality of our inventory. Capital expenditures for the 12 months ended December 31, 2023, were $482 million and we received reimbursements of $277 million from our REIT arrangements for net capital expenditures of $205 million, of which $146 million is related to Topgolf. Net CapEx was approximately $30 million lower than our $240 million guidance due to the timing of REIT reimbursements. Consolidated free cash flow and embedded cash flow were $160 million and $221 million, respectively, both ahead of expectations. As a reminder, embedded cash flow was free cash flow minus growth CapEx for new venues and retail stores. This metric provides a good view of the cash generation power of our business as it stands today, and it eliminates the noise from the timing of REIT reimbursements. Looking ahead, we believe we will grow embedded cash flow in 2024. In light of FX headwinds and continued corporate infrastructure investments this year, the growth in embedded cash flow is expected to be modest in 2024, but ramp in 2025 through 2028. We also expect to remain free cash flow positive both in our consolidated business as well as Topgolf. Given our better than expected cash generation in 2023 and assuming we are on plan for 2024, we would expect to begin paying down our term loan debt later in 2024. I would now like to provide an update on our outlook for 2024. Our outlook reflects both our confidence in our business as well as a potentially softer consumer environment in 2024. All in all, we expect revenue, EBITDA, and embedded cash flow growth in 2024. As I mentioned last quarter, we are in Phase 2 of our Topgolf journey. In Phase 1, we funded Topgolf's operations and venue development. This phase was very successful as we increased the pace of new venue development and at the same time improved venue profitability, resulting in significant revenue and adjusted EBITDA growth. As expected however, this accelerated development had a negative impact on earnings per share due to the increased interest expense and D&A associated with that development. Topgolf was now free cash flow positive and self-funding with REIT or developer led financing and we have moved to Phase 2. In Phase 2, which we will be in through 2024, we expect to scale our business further, grow embedded cash flows and stabilize EPS. We also expect to be at the tail end of our post-merger investments in corporate infrastructure. In 2025 through 2028, we expect to be in Phase 3 of our Topgolf journey where we will have further growth and our cash flows begin to meaningfully exceed our capital requirements. As a result of the increased scale leveling of corporate investments and the impacts of the cash flow generation on interest expense, we would expect EPS to begin to grow in 2025 and ramp from there. Before moving to specific 2024 guidance, I want to highlight why we have so much confidence in the long-term performance of this business. I refer you to Slide 18, which depicts 2023 adjusted EBITDAR margin by venue cohort. As you know, our venues open well and quickly ramp to attractive revenue, margin, and profit generation. This is consistently true and an attractive element of the Topgolf business. As shown on Slide 18, you can see that the venue adjusted EBITDAR margin not only doesn't decrease with age of the venue, but if anything, it actually increases with age. And this effect is even more pronounced when looking at venue pre-tax income due to the D&A being somewhat frontloaded in the first five years. Overall, it is clear that Topgolf venues open with strong economics that improve over time and the venues are appreciating assets over the long-term. At present, approximately half of our venues open in the last five years. Accordingly, we expect the profit contribution from our venues to expand over time. With that said, let's turn to 2024 guidance. Looking at our 2024 guide holistically, as Chip mentioned, we view 2024 as an investment year in which we are focused on driving the digital transformation at Topgolf and separately largely finishing necessary post-merger investments in corporate infrastructure, including information technology systems and cybersecurity. Now let's look at more specific guidance for 2024. There will be a few headwinds as we enter 2024 in addition to the investments I just mentioned. First, there's the revenue headwind in the Active Lifestyle business that Chip called out earlier. The second is related to foreign currency. In addition to unfavorable translation based on recent rates, there are also foreign currency hedging gains in 2023 of approximately $13.4 million that will not repeat in 2024. Overall, we estimate these foreign currency changes will negatively impact revenue by approximately $10 million and adjusted EBITDA by approximately $20 million. Lastly, the Topgolf business will be lapping 11% growth in same venue sales in Q1 2023, which was partially due to a post-COVID surge in our events business, which is resulting in our same venue sales estimates of down high-single-digits in Q1 and flat for the full year both as compared to 2023. For 2024, we anticipate consolidated net revenue growth of approximately 6% versus the prior year to $4.515 billion to $4.555 billion. Consolidated revenue growth is expected to be driven by low-single-digit growth in the golf equipment segment and growth of approximately 11% at Topgolf. The Topgolf growth is primarily due to new venue growth. Moving to 2024 adjusted EBITDA. We're guiding to a range of $620 million to $640 million, which would represent growth of 4% to 7%, approximately commensurate with the projected revenue growth. As mentioned earlier, we would expect to begin to see leverage in 2025. We are projecting Topgolf adjusted EBITDA to be approximately $350 million or 17.9% margin, which would be approximately 60 basis points of expansion on a year-over-year basis. We expect non-GAAP diluted EPS of $0.26 to $0.34 compared to $0.49 this year. This decrease is primarily due to increased depreciation and amortization expense as well as increased venue financing interest due to additional venues. We have included in the investor deck today on Slide 23, an estimated walk from EBITDA to EPS for 2024. Finally, we expect to spend approximately $475 million in gross capital expenditures in 2024 compared to $482 million in 2023. The decrease is due to less new venue development in 2024 compared to the prior year. We estimate REIT reimbursements of $214 million in 2024 compared to $277 million in 2023. Now, turning to Q1 specifically. In Q1, we expect consolidated revenue of $1.14 billion to $1.16 billion flat to slightly down versus 2023. This decrease is largely related to the Active Lifestyle corporate channel headwind Chip mentioned and Topgolf's expected decrease in Q1 same venue sales. We also expect Q1 adjusted EBITDA of $130 million to $140 million, compared to $157 million in the prior year. This decrease is primarily related to the flat to down revenue combined with projected unfavorable FX in the 2024 investments. These factors along with increased D&A and interest expense related to new venues will negatively impact first quarter EPS, which we estimate to be approximately breakeven to a slight loss compared to $0.17 last year. We have provided today in the investor presentation a lot of new and more detailed information in response to investor inquiries. I hope you find this information helpful. Overall, we are pleased with where we are as a business. Despite significant headwinds, since the merger, from unfavorable foreign currency and rising interest rates, we have achieved greater growth in cash flow than we expected at the time of the merger. We are also encouraged that we are at the tail end of our post-merger investments and are beginning to capture the synergies with Topgolf as Chip described. We are excited about the progress we have made since the merger and beginning in 2025, we expect to reach the scale and infrastructure necessary to begin ramping embedded cash flow and earnings. We look forward to reporting to you on our progress. We will now open the call for questions. Operator, over to you.

We will now begin the question-and-answer session. [Operator Instructions]. The first question is from Alex Perry with Bank of America. Please go ahead.

Hi, thanks for taking my question here. I guess I just wanted to ask, what does the flat Topgolf comp assume in terms of walk-in versus corporate? Maybe just give us some help in terms of how you're thinking about those two pieces of the business. Would you expect the corporate events business to return positive following the 1Q against the easier comps? And what are your sort of forward bookings indicating, it looks like that accelerated a bit in the fourth quarter. Is that a trend you expect to continue? Thank you.

Sure. Alex, this is Chip. So for Q1, we're expecting a tough comp as you would expect overall, but specifically in the corporate business. The corporate business was still at that post-COVID surge point in the first quarter last year, and then we saw the change in trend after that. After first quarter, we do expect corporate events to stabilize and we're already seeing that. You can see that in the data right now. The walk-in business has been stable over the last several quarters and we do expect that to improve through the year as well. So we're seeing an improving trend. We have easier comps after Q1 and pretty clear direction, I think, in terms of what we've seen and consistency with what we've seen over the last four or five months.

Perfect. That's really helpful. Best luck going forward.

Thank you.

The next question is from Megan Alexander with Morgan Stanley. Please go ahead.

Yes. Thanks. Could you maybe just to follow-up on that is there any way to quantify the weather impact to January and whether you've seen same menu sales improve from that level?

Megan, we saw headwinds from weather in January. We saw tailwinds from weather in December, which is somewhat what you'd expect this time of year some volatility around that. In January, the weather headwind was roughly about 200 -- 250 basis points relative to the full quarter. We don't read too much into that other than that's one of these things that happen this time of year. The trends that we were seeing in really for the second half of last year are indeed the trends that are continuing. And we feel good about the direction overall of our same venue sales with some clear opportunities that we've talked about with the mid-week promotions and the digital efforts and other initiatives that we're developing that we think will have a positive impact on same venue sales.

Super helpful. I guess maybe to that point on some of the mid-week promotions you're doing, I think you ran some tests during the fourth quarter, I guess. How do you make sure that you've been doing this on Tuesday as well? But how do you make sure that it doesn't cannibalize some of the weekend traffic you're seeing?

Well, we track that specifically, and that is indeed the one thing that we were most guarded against. So our results have indeed shown that it not only doesn't cannibalize the weekends, it's additive from a traffic perspective and therefore net profitable. And we're obviously also relatively measured in the promotion that we're now implementing. Half off gameplay only through the app, which is not too dissimilar from what we saw on the Tuesday. But we think that it'll have a positive impact and we did indeed trial that before we implement it.

The next question is from Randal Konik with Jefferies. Please go ahead.

Hey, good evening, everybody. I guess, Brian, maybe you could give us some perspective on, we know the comp guide for the first quarter. We know the comp guide for Topgolf. I'm saying -- I'm talking about for the year around flat. Can you give us a little perspective of how we should be thinking about that comp trajectory throughout the year and then back on the mid-week business for Topgolf versus the weekend business, could you just give us some, maybe frame it out a little bit on what's the difference? How different is the trend in mid-week versus weekend? Are you still seeing a very stable, solid business on the weekends? And the mid-week has just been the problem that should be solved in the next quarter or so. Just to give us a little flavor on how we should be thinking about the trajectory of Topgolf comps overall throughout the quarters. And then mid-week versus weekend will be super helpful. Thanks, guys.

Hey Randy, it's Chip. I'm going to jump in on this one. And then Brian, if you have anything to add, jump in. We are still seeing strong results on the weekends, so the weekends are continuing to comp positively for us, as we mentioned last quarter, so no change in trend on that. And through Q4, we continue to see a weaker overall result in the consumer business mid-week. So those are consistent. And it's also a good news story because we can be targeted about how we address that specifically with it only being a mid-week issue on the consumer portion of our business. And then in terms of how it's going to, or at least we're forecasting it to work through the full year in terms of same venue sales, the math works that we're projecting a high-single-digit down in Q1 after a big comp gain a year ago in Q1, and then for the balance of the year, low to mid-single-digits positive to get us to that flat number for the full year.

Great. Thanks so much.

Thank you.

The next question is from Daniel Imbro with Stephens Inc. Please go ahead.

Yes. Hey, good evening, everybody. Thanks for taking our questions. Chip, maybe I'll get away from the trend here, ask about the non--Topgolf part of the business. Trying to look through the guidance a little bit. Obviously, you talked a little about a lot of exciting synergies and momentum, but if we strip out Topgolf EBITDA from total, it looks like kind of remaining EBITDA will be down year-over-year in 2024. I know in 2023 we had headwinds in the golf equipment from lower production. But can you walk through the puts and takes around why that core or that non-Topgolf EBITDA will be lower year-over-year, Brian and the guide.

Brian, why don't you take that one and then I'll jump in.

Sure. On the non-Top -- again, just want to remind you that FX is going to be a headwind next year. We talked about $10 million revenue, but there's also some hedge gains, about $13 million, $14 million that are going away. And then there's a bunch of investments that we talked about during our script in the corporate business as well. So that's probably $30 million headwind right there, $33 million, yes.

And then Daniel, we are seeing the golf equipment business, we are projecting that to be up mid to high-single-digits this coming year. The Active Lifestyle, roughly flat. The golf equipment business increasing profitability. The Active Lifestyle flat to slightly down.

Helpful color. I'll get the rest offline. Thanks, guys.

The next question is from Kate McShane with Goldman Sachs. Please go ahead.

Hi, thank you for taking our question. Just with regards to the new innovation Ai Smoke, how big of a launch is this relative to the paradigm and with the Chrome Tour Golf Ball, is there a significant price differential between that and the average ball price?

Sure, Kate. Let me start on golf ball. Golf ball, this is a bigger launch for us than we have had last year. It's our premium ball launch and in fact, it's basically a new brand that we're introducing to the market. So on the golf ball side, big launch, big opportunity; pricing is up on this product versus where we were previous as well. And relative to average ball, higher price point. In fact, this matches the price points of the most premium golf balls that have any market share in the market. In the club side of the game, the Ai Smoke is a very significant launch for us and a very comprehensive. It's similar in terms of scale to paradigm, potentially the one key difference is in the irons side of that, in that we're launching the irons for Ai Smoke at a price point that fits a larger portion of the market. The Paradigm iron was priced in a premium category where the Ai Smoke is more consistent with our irons that have historically established higher market share positions.

Thank you.

The next question is from Casey Alexander with Compass Point Research. Please go ahead.

That last question was my question, so I'll step back in the queue. Thank you.

Okay.

And the next question is from Joe Altobello with Raymond James. Please go ahead.

Thanks. Hey, guys, good afternoon. First question, quick one, just to clarify, Chip, because I think earlier you said, you're expecting golf equipment revenue to be up low-single digits. And I think just now you said mid to high. So maybe I heard two different things. I just want to clarify that.

Yes, Joe. We're mid to high is the estimate for golf equipment. I'm sorry; low to mid, low to mid is the estimate for golf equipment. If I misspoke earlier, low to mid is the correct number.

Okay. And in terms of that, that growth, how much of that is coming from pricing, obviously, with the new ball launch, new club launch this year, et cetera.

Not much of it from pricing this year. The club side of it is pretty consistent pricing as mentioned, the irons is at a slightly lower price point than the paradigm iron. The ball was a higher price point, so it's not a significant move in terms of pricing this year.

Okay. Thank you.

The next question is from John Kernan with Cowen. Please go ahead.

Excellent. Excuse me, thank you. I guess, Chip, can you talk about the synergies and quantify them a bit more between on-course and off-course golf and how much those are embedded in your targets as you push into fiscal 2026 and then 2028 as you lay out in the presentation today?

Sure. Yes, the synergies are an ongoing effort, John, that we're unlocking here. And if you look at the journey we've been on, we've clearly added cost saving synergies with shared costs across the business. We've clearly ramped the growth rate of Topgolf. We've strengthened that overall organization, we believe, and they're demonstrating some of the results there. And we're really now moving into the more exciting stages from a brand, a digital, and a revenue perspective. So we're well ahead of what we expected to deliver in terms of the operational efficiencies, the cost of capital, if you would, the growth rates that we're delivering, sourcing synergies, all of those have been realized as per our expectation and as shown in the deck. And now we're getting our arms around these digital synergies, brand synergies, et cetera, that we think can drive some significant market share and revenue growth and brand strength over the coming years.

Got it. Thank you. And maybe Brian, Slide 24 that you have in the deck today, you show the change in leverage ratio. If you were to consider the venue financing rent versus what's now largely considered interest expense, would you consider changing the way you report? I mean, a two term difference in the leverage ratio is pretty significant at this point. And just move the interest expense, the venue financing interest expense, and consider it rent at this point. There's obviously no principal due on any of the landlord financing. It looks like the market is penalizing you for some of the leverage on the balance sheet. Would you consider any changes to how this is treated in your reporting?

We agree with you. We think that is the better way to look at it since there is no bullet or payment at the end, and that's why we tend to focus more on that. Since not everyone's doing that, we just providing both ways for people to look at it. But I understand your point.

The next question is from Noah

Hi, thanks for taking my question. Maybe just to follow-up on the revenue synergies, just in terms of quantifying the revenue and adjusted EBITDA synergies related to those, how should we think about what's kind of behind us, and then what's ahead of us still? And then relatedly, just how should we think about the magnitude of the opportunity related to the CDP intro in the second half of 2024? Thanks.

Sure. What's behind us is clearly those synergies that come from cost, and although that will continue, right? We're -- all of these investments that we're making both at corporate and at Topgolf, provide synergy. When you hear us talking about adding investments in cybersecurity and workday, other big infrastructure projects, you may allocate those into the corporate side of the business, but those are spread across the entire business and in essence, a synergy. Our ability to fund the venues to be able to use term debt effectively to have a lower cost on term debt that gets extended across the business is a clear synergy that's already in place. We've scaled the growth of the Topgolf business and funded initiatives that are clearly bearing fruit. The revenue and brand synergies, we're not fully quantifying those yet, but we think they're going to be significant. We talked very clearly about the reach here, right? This is -- Topgolf is got more than half of all golfers in the U.S. will visit Topgolf. It is the largest source of new golfers going forward and is continuing to scale. It's larger than off -- than on-course golf and we obviously have an advantage in reach there that can be very significant going forward. The consumer data platform is going to be very significant for us across our -- all of our businesses. We've been investing in that across the business over the last year plus. We're going to be having that up and running by the end of the year and it is potentially significant, increasingly significant, starting towards the end of this year and going into next year. So stay tuned on that. But it is a big and important new project. How you market to consumers and how you approach consumers and how you engage with consumers, in today's day, in world and increasingly in the future is going to be digital. We've going to have a reach advantage in that and some capabilities that others will not have.

Thank you.

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

I want to thank everybody for tuning in today. I apologize we went a little long. We had a lot of material to cover, as you can tell. And we're really trying to be best-in-class in terms of our transparency and data that we present to you. We feel very confident in our venue business. We feel very confident in our golf equipment business. The venue business is clearly a long duration and appreciating asset and we've presented a lot of data that is new and in support of that. So I invite you to take a look at that in due course. Thank you for your time and we look forward to talking to you at the end of Q1.