Filed by Callaway Golf Company

Pursuant to Rule 425 Under the Securities Act of 1933

And Deemed Filed Pursuant to Rule 14a-12

Under the Securities Exchange Act of 1934

Subject Company: Callaway Golf Company

(Subject Company Commission File No.: 001-10962)

This filing relates to the proposed merger involving Callaway Golf Company, a Delaware corporation (“Callaway”), 51 Steps, Inc., a Delaware corporation (“Merger Sub”) and Topgolf International, Inc., a Delaware corporation (“Topgolf”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of October 27, 2020, by and among Callaway, Merger Sub and Topgolf.

The following is a transcript of the third quarter 2020 earnings conference call hosted by Callaway Golf Company on November 9, 2020.

CORPORATE PARTICIPANTS

Casey Alexander

Analyst, Compass Point Research & Trading LLC

MANAGEMENT DISCUSSION SECTION

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Callaway Golf Company Third Quarter 2020 Financial Results Conference Call. At this time, all participant lines are in listen-only mode. After the speakers’ presentation, there will a question-and-answer session. [Operator Instructions] Please be advised today’s conference is being recorded. [Operator Instructions]

It’s now my pleasure to hand the conference over to Head of Investor Relations, Patrick Burke. Please go ahead.

Patrick Burke

Vice President-Treasury, Investor Relations and New Business Development, Callaway Golf Co.

Thank you, Holly, and good afternoon, everyone. Welcome to Callaway’s third quarter 2020 earnings conference call. I’m Patrick Burke, the company’s Head of Investor Relations. Joining me on today’s call are Chip Brewer, our President and Chief Executive Officer; Brian Lynch, our Chief Financial Officer; and Jennifer Thomas, our Chief Accounting Officer.

Today, the company issued a press release announcing its third quarter 2020 financial results. A copy of the press release and the associated presentation are available on the Investor Relations section of the company’s website at ir.callawaygolf.com. Most of the financial numbers reported and discussed on today’s call are based on US Generally Accepted Accounting Principles. In the few instances, where we report non-GAAP measures, we reconcile the non-GAAP measures to the corresponding GAAP measures at the back of the presentation in accordance with Regulation G.

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Q3 2020 Earnings Call				09-Nov-2020

Please note that this call will include forward-looking statements that involve risk 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.

Please note that in connection with our prepared remarks, there is an accompanying PowerPoint presentation that may make it easier for you to follow the call today. This earnings presentation is available for download on the Callaway Investor Relations website, under the webcast and presentations tab. Also in the same tab, you can choose to join the webcast to listen to the call and view the slides. As a webcast participant, you were able to flip through the slides.

I would now like to turn the call over to Chip.

Oliver G. Brewer III

President, Chief Executive Officer & Director, Callaway Golf Co.

Thanks, Patrick. Good afternoon and thank you all for joining today’s call. Starting on page 5 of the presentation, we are pleased to be with you today to discuss our Q3 results, results that have exceeded our expectations and strengthen our confidence in the future. This call will allow us to do a deeper dive and answer questions regarding the results as well as share some views on what we believe is a positive outlook for our business.

With the recently announced plans to merge with Topgolf, we are naturally anticipating further questions on that subject as well. To the degree we can, we will certainly answer these questions, but due to time constraints, the primary focus of this call is intended to be the Callaway Golf business.

To aid analysts and by extension investors in further understanding the Topgolf business along with the strategic and financial merits of the merger, we are planning a two-hour Topgolf deep dive and analyst presentation for 11 O’clock Pacific Time, this Thursday November, 12. This presentation will include certain key members of the Topgolf management team and will be recorded and posted on our website.

Having said this and turning to page 6, let’s now jump into our results. As covered in our press release, Q3 represented record results in terms of both sales and earnings. We were pleased with our results in virtually all markets and business segments.

Our golf equipment segment has been experiencing unprecedented demand globally as interest in the sport and participation has surged. We saw strong market conditions in all markets globally. According to Golf Datatech, US retail sales of golf equipment were up 42% during Q3, the highest Q3 on record. US rounds were up 25% in September and are now showing full-year growth, despite the shutdowns earlier this year. We also believe there will be a long-term benefit from the increased participation as we are welcoming both new entrants and returning golfers back to our sport.

Golf retail, outside of resort locations, remains very strong at present and barring a shutdown situation has not been sensitive to the upticks in COVID cases. Inventory of golf retail is at all-time lows and is likely these low inventory levels will continue into next year.

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Callaway’s global hard goods market shares remained strong during the quarter. We estimate our US market share is roughly flat year-over-year. Our share in Japan is up slightly and our share in Europe is down slightly.

On a global basis, I believe, we remain the leading golf company in terms of market share and total revenues and the number two ball company. In the US, third-party research showed our brand to once again be the number one club brand in overall brand rating as well as a leader in innovation and technology. Over the last several years, we have shown resilience with these important brand positions. We have also started to show our 2021 product range to key customers and are receiving strong feedback.

Turning to a soft goods and apparel segment, with total revenue only down 3.4% year-over-year, this segment also experienced a rapid recovery in demand during the quarter. The speed and magnitude of the recovery exceeded our expectations. Like our golf equipment business, this segment appears to be well positioned for both the months and years ahead both during the pandemic and after.

Looking at individual businesses in this segment both our TravisMathew and Callaway branded businesses experienced significant year-over-year growth during the quarter. Jack Wolfskin was down year-over-year, but only 16% on a revenue basis with improved trends continuing into October. The hero of the soft goods and apparel segment is certainly e-com, a channel that was strengthened by investments we made over the last several years.

As a result of these investments, we were able to deliver 108% year-over-year growth in this channel during the quarter. E-com is now a significant portion of the channel mix of this segment. We believe our expanded capabilities and strength here will bolster this business growth prospects and profitability going forward.

Long-term we continue to expect our apparel and soft goods segment to grow faster than our overall business and with that growth to deliver operating leverage and enhanced profitability. And although the pandemic delayed our efforts, we still believe we’ll be able to deliver [ph] 15 million (00:07:16) of synergies in the segment over the coming years.

During the quarter, we also made good progress on key initiatives, including the transition to our new 800,000 square foot Superhub distribution center, located just outside of Fort Worth, Texas. We are now completely consolidated into this new facility.

We also made further progress in our Chicopee golf ball facility modernization with productivity rates in this plant ramping positively during the quarter. The primary investment phase on both of these significant projects is behind us now.

Looking forward, we are in a strong financial position and are pleased with the pace of our recovery and the business trends we’re seeing. With the resurgence in the virus, there clearly could be some volatility over the next few months. Portions of Q4 are likely to be at least partially impacted by the increase in restrictions being put into place globally.

Fortunately, for us, these are low impact months for our golf equated business and we currently expect to continue to benefit from increased year-over-year demand. In our apparel and soft goods segment, the impact will be larger than our golf equipment business, but these businesses too are fortunate to be well-positioned in this environment and also benefit from strong e-com capabilities, which should offset some portion of any potential negative impacts in markets where in-store shopping might be constrained. We also benefit from global scale and diversity across all of our segments.

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Q3 2020 Earnings Call				09-Nov-2020

As demonstrated by our Q3 results, we are fortunate in that our principal business segments are well-positioned for consumer needs and trends both during the pandemic and afterwards. In addition, we are confident that we have both the brands, human capital and financial strength necessary to not only weather this storm, but to also perform well during it and to emerge stronger than when we entered the crisis.

In closing, while we are pleased with our recent results and outlook, the safety and health of the company’s employees, customers and partners continues to be paramount in our minds. As we operate our businesses, we are careful to follow appropriate protocols for social distancing, in-office capacity management, personal protective equipment and other safety precautions.

In addition, our thoughts and prayers continue go out to those directly impacted by the virus and those diligently working on the frontline, protect, serving care for the rest of us.

Brian, over to you.

Brian P. Lynch

Executive Vice President, Chief Financial Officer & Chief Legal Officer, Callaway Golf Co.

Thank you, Chip. We are happy to report record net sales and earnings in the third quarter of 2020. We feel fortunate that both our golf equipment and soft goods businesses are recovering faster than expected as both businesses support healthy, active outdoor lifestyles and activities that are compatible with social distancing. This faster-than-expected recovery has placed us in a position of strength. Our available liquidity, which includes cash on hand, plus availability, under our credit facilities increased to $630 million at September 30, 2020, compared to $340 million of September 30, 2019.

We’re also excited about our prospective merger with Topgolf, which also provides a healthy active outdoor activity that is compatible with social distancing. And Callaway-Topgolf merger is a natural fit. With a significant overlap in golf consumers, there should be significant advantages to both businesses through increased consumer engagement, marketing and sales opportunities and faster growth that could be achieved on a standalone basis. And the best part is that these synergies provide upside to the financial model we provided.

The financial returns of this transaction are so compelling we did not need the synergies to justify the transaction. Growing the Topgolf [indiscernible] (00:11:17) businesses alone will create significant shareholder value. We look forward to discussing the Topgolf business further during the virtual investor conference on Thursday.

In evaluating our results for the third quarter, you should keep in mind some specific factors that affect year-overyear comparisons. First, as a result of the Jack Wolfskin acquisition in January 2019, we incurred non-recurring transaction and transition-related expenses in 2019.

Second, as a result of the OGIO, TravisMathew and Jack Wolfskin acquisition, we incurred non-cash amortization in 2020 and 2019, including amortization of the Jack Wolfskin inventory step-up in the first quarter of 2019.

Third, we also incurred other non-recurring charges including costs related to the transition to our new North American distribution center in Texas. Implementation costs related to the new Jack Wolfskin IT system and severance costs related to our cost reduction initiatives.

Fourth, the $174 million non-cash impairment charge in the second quarter of 2020 is non-recurring and did not affect 2019 results. Fifth, we incurred and will continue to incur non-cash amortization of the debt discount on the notes issued during the second quarter of 2020. We have provided in the tables to this release, a scheduled breaking out the impact of these items on the third quarter and first nine months results and these items are excluded from our non-GAAP results.

Callaway Golf Co. (ELY)				Corrected Transcript
Q3 2020 Earnings Call				09-Nov-2020

With those factors in mind, I will now provide some specific financial results. Turning now to slide 10. Today, we are reporting record consolidated third quarter 2020 net sales of $476 million compared to $426 million in 2019, an increase of $50 million or 12%. This increase was driven by a 27% increase in the golf equipment segment resulting from a faster-than-expected recovery and the strength of the company’s product offerings across all skill levels. The company’s soft goods segment is also recovering faster-than-expected with third quarter 2020 sales decreasing only 3.4% versus the same period in 2019.

Changes in foreign currency rates had an $8 million favorable impact on third quarter 2020 net sales. Gross margin was 42.2% in the third quarter of 2020 compared to 44.9% in the third quarter of 2019, a decrease of 270 basis points.

On a non-GAAP basis, gross margin was 42.7% in the third quarter compared to 44.9% in the third quarter of 2019, a decrease of 220 basis points. This decrease is primarily attributable to a decline in gross margin in the soft goods segment due to the impact of COVID-19 on that business, including our proactive inventory reduction initiatives, partially offset by favorable changes in foreign currency exchange rates, an increase in e-commerce sales and a slight increase in overall golf equipment gross margins.

Operating expenses were $137 million in the third quarter of 2020, which is a $14 million decrease compared to $151 million in the third quarter of 2019. Non-GAAP operating expenses for the third quarter were $135 million, a $12 million decrease compared to the third quarter of 2019. This decrease is due to decreased travel and entertainment expenses and the actions we undertook to reduce costs in response to the COVID pandemic.

Other expense was $6 million in the third quarter of 2020 compared to other expense of $7 million in the same period the prior-year. On a non-GAAP basis other expense was $3 million in the third quarter of 2020 compared to $7 million for the comparable period in 2019. The $4 million improvement was primarily related to a net increase in foreign currency related gains, period-over-period, partially offset by $1 million increase in interest expense related to our convertible notes.

Pre-tax earnings was $58 million in the third quarter of 2020 compared to pre-tax earnings of $33 million for the same period in 2019. Non-GAAP pre-tax income was $65 million in the third quarter of 2020 compared to nonGAAP pre-tax income of $37 million in the same period of 2019.

Diluted earnings per share was $0.54 or 96.6 million shares in the third quarter of 2020 compared to earnings per share of $0.32 or 96.3 million shares in the third quarter of 2019. Non-GAAP fully-diluted earnings per share was $0.60 in the third quarter of 2020 compared to fully-diluted earnings per share of $0.36 for the third quarter of 2019. Adjusted EBITDAS was $87 million in the third quarter of 2020 compared to $57 million in the third quarter of 2019, a record for Callaway Golf.

Turning now to slide 11. The first nine months of 2020 net sales was $1.2 million compared to $1.4 million in 2019, a decrease of $174 million or 13%. The decrease was primarily driven by the COVID-19 pandemic, partially offset by an increase in our e-commerce business. The decrease in net sales reflects a decrease in both our golf equipment segment, which decreased 7%; and our soft goods segment, which decreased 21%. This decrease also reflects a decrease in all major regions and product categories, period-over-period due to COVID-19. Changes in foreign currency rates positively impacted first nine months 2020 net sales by $2 million.

Callaway Golf Co. (ELY)				Corrected Transcript
Q3 2020 Earnings Call				09-Nov-2020

Gross margin was 42.7% in the first nine months of 2020 compared to 45.8% in the first nine months of 2019, a decrease of 310 basis points. Gross margins in 2020 were negatively impacted by the North America warehouse consolidation and in 2019 were negatively impacted by the non-recurring purchase price step-up associated with the Jack Wolfskin acquisition.

On a non-GAAP basis, [ph] excluding these recurring item (00:18:01) – excuse me, non-recurring items, gross margin was 43.3% in the first nine months of 2020 compared to 46.6% in the first nine months of 2019, a decrease of 330 basis points. The decrease in non-GAAP gross margin is primarily attributable to the decrease in sales related to the COVID-19 pandemic, cost associated with idle facilities during the government mandated shutdown and the company’s inventory reduction initiatives. The decrease in gross margin during the first nine months was partially offset by an increase in the company’s e-commerce business.

Operating expense was $592 million in the first nine months of 2020, which is $111 million increase compared to $481 million in the first nine months of 2019. This increase is due to the $174 million non-cash impairment charge related to the Jack Wolfskin goodwill and trade name.

Excluding the impairment charge and other items previously mentioned, non-GAAP operating expenses for the first nine months of 2020 were $410 million, a $58 million decrease compared to $468 million in the first nine months of 2019. This decrease is due to our cost reduction initiatives, decreased travel and entertainment expenses, as well as a reduction in variable expenses due to lower sales.

Other expense was approximately $7 million in the first nine months of 2020 compared to other expense of $28 million in the same period of the prior-year. On a non-GAAP basis, other expense was $3 million for the first nine months of 2020 compared to $24 million for the same period 2019. The $21 million improvement is primarily related to a $22 million increase in foreign currency related gains period-over-period, including the $11 million gain related to the settlement of a cross-currency swap arrangement.

Pre-tax loss was $80 million in the first nine months of 2020 compared to pre-tax income of $127 million for the same period in 2019. Excluding the impairment charge and other items previously mentioned, non-GAAP pre-tax income was $113 million in the first nine months of 2020 compared to non-GAAP pre-tax income of $155 million in the same period of 2019.

Loss per share was $0.92 or $94.2 million (sic) [94.2 million] (00:20:35) in the first nine months of 2020 compared to earnings per share of $1.13 or 96.2 million shares in the first nine months of 2019.

Excluding the impairment charge and the items previously mentioned, non-GAAP fully-diluted earnings per share was $0.98 in the first nine months of 2020 compared to fully diluted earnings per share of $1.35 for the first nine months of 2019. Adjusted EBITDAS was $175 million in the first nine months of 2020 compared to $216 million in the first nine months of 2019.

Turning now to slide 12, I will now cover certain key balance sheet and cash flow items. As of September 30, 2020, available liquidity, which represents additional availability under our credit facility, plus cash on hand was $637 million compared to $340 million at the end of the third quarter of 2019. This additional liquidity reflects improved liquidity from working capital management, our cost reductions and proceeds from the convertible notes we issued during the second quarter.

We had a total net debt of $498 million, including $443 million of principal outstanding under our Term Loan B facility that was used to purchase Jack Wolfskin. Our net accounts receivable was $240 million, an increase of 7% compared to $223 million at the end of the third quarter of 2019, which is attributable to record sales in the quarter.

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Q3 2020 Earnings Call				09-Nov-2020

Days outstanding decreased slightly to 55 days as of September 30, 2020 compared to 56 days as of September 30, 2019. We continue to remain very comfortable, if not pleasantly surprised with the overall quality of our accounts receivable at this time.

Also displayed on slide 12, our inventory balance decreased by 5% to $325 million at the end of the third quarter of 2020. This decrease is primarily due to the high demand we are experiencing in the golf equipment business, partially offset by higher soft goods inventory related to COVID-19. Our teams have done an excellent job being proactive with regard to managing the inventory as soon as COVID hit us. They continue to be highly focused on inventory on hand as well as inventory in the field. We’re very pleased with our overall inventory position and the inventory of retail, particularly on the golf side of the business which remains low at this time.

Capital expenditures for the first nine months of 2020 was $31 million compared to $37 million for the first nine months of 2019. With expect our capital expenditures in 2020 to be approximately $35 million to $40 million, up slightly from the estimate we provided in May, but down substantially from our $55 million of planned capital expenditures at the beginning of the year due to our cost reduction actions.

Depreciation and amortization expense was $203 million for the first nine months of 2020. On a non-GAAP basis, depreciation and amortization expense, excluding the $174 million impairment charge was $29 million for the first nine months of 2020 and is estimated to be $35 million for the full-year of 2020. Depreciation and amortization expense was $25 million for the first nine months of 2019 and $35 million for full-year 2019.

I am now on slide 13. As we previously reported, we are no longer providing other specific financial guidance at this time due to the continued uncertainties surrounding the duration and the impact of COVID-19. Although, we expect some level of continued volatility due to the ongoing pandemic, third quarter trends have thus far continued into the fourth quarter.

Perhaps more importantly, all of our business segments as well as the Topgolf business support in the outdoor active and healthy way of life that is compatible with the world of social distancing and we now appreciate even further than all of our businesses are likely to be favored in both the realities of the current environment as well as anticipated consumer trends post-pandemic. These circumstances along with our increased liquidity will allow us to weather the pandemic and emerge in a position of strength to the benefit of our businesses and the Topgolf business post-merger.

That concludes our prepared remarks today and we will now open the call for questions. As Chip mentioned in his remarks due to time constraints, the primary focus of the Q&A should be the Callaway business and we have scheduled a virtual conference on Thursday to discuss the Topgolf business further. Operator, over to you.

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Q3 2020 Earnings Call				09-Nov-2020

QUESTION AND ANSWER SECTION

Operator: [Operator Instructions] And our first question is going to come from the line of Daniel Imbro with Stephens.

Daniel, obviously, yeah, I’m speculating on the long-term impact of the positive increase in participation that we’re seeing now, but I can’t imagine it can be anything, but positive, right?

We’re getting returning golfers and we’re getting new entrants and the new entrants are from multiple demographics. It’s addictive game. It’s a game that once you play you’re more likely to play again. So, the only conclusion that I can make is that it is a net positive for the long-term health of the industry and that it will favor our long-term growth rates.

But I’m unable to quantify that for you at this point of time. And clearly, golf is going to be one of those uniquely attractive segments that’s going to perform well in the pandemic and one would also believe post-pandemic based on the logic we’re talking about. And our supply chain is laboring to keep up currently, but it’s one of our strengths of our business and we have high confidence in it. And we’re making progress against those fronts and it should be an asset for the company and for our shareholders going forward.

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Q3 2020 Earnings Call				09-Nov-2020

So, I would expect there to be some volatility in the results for Q4. I wouldn’t call it overly meaningful, but it will impact some of the trends. We were continuing to see very strong results prior to the recent constraints that are put into place.

And then, if you look forward, we’re pleased with the overall trajectory of that business and we’re expecting next year to have some volatility in it and a very difficult time predicting it, given what we’re seeing as upticks in the virus and volatility around that. But the long-term trend of that business is very positive. We’re hearing good sellthrough results and the investments that we’ve made into that business are starting to resonate.

Callaway Golf Co. (ELY)				Corrected Transcript
Q3 2020 Earnings Call				09-Nov-2020

Yeah. Excellent. Thanks for taking my questions. And congrats on a nice quarter, we’ll focus on the Callaway brand and business here. I wanted to just pose a longer term question, your ASPs have risen quite a bit in the past several years, the innovation profile support – obviously supported that.

I’m just wondering, where you think the long-term gross margin profile of the business can go to given that soft goods are now becoming a bigger portion of the overall business. You sound more confident on the Jack Wolfskin piece of the business. Can you – when you look at that there’s targets you gave us at the – on the prior call with Topgolf included. How does the overall margin profile and particularly the gross margin profile, the Callaway business fit into that? Thank you.

As we talked about right now, we just finished big investments in terms of the distribution center. We’re – for the largest part finished with our golf ball modernization and as those ramp up in scale, you will see gross margin improvement within that. You’re also going to see gross margin improvement with the soft goods segment at large and the movement of that business to its direct-to-consumer portions, which are meaningful portions of those businesses, so a lot of long-term positive outlooks relative to gross margin.

We’re not quantifying those at this point. And to the best of our ability, we baked those into the only guidance that we had given, which is the Topgolf merger 2022 guidance, but all positive trends moving forward on the gross margin basis.

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Q3 2020 Earnings Call				09-Nov-2020

And some of the investments we’ve made in the Jack Wolfskin business are also coming in nicely. And as you can see over the last two quarters, it’s outperformed its largest competitors. And so, we’ve clearly made some nice progress there and we’re showing some strength there.

I think looking into the first half of next year, you got to be very confident in the long-term outlook, but you’re going to need to also be aware there’s likely to be continued volatility. So, we don’t feel confident predicting anything other than long-term trends right now and the long-term trends are very positive for these businesses.

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It is going to be an ongoing investment thesis for us. Not central to our success story, but we like what we’re seeing there. And if it does hit, we’ve got significant upside. So, pleased with what we’re seeing there. What was the second part of the question, Alex?

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Q3 2020 Earnings Call				09-Nov-2020

Operator: I’d now like to turn the call to Chip Brewer for closing comments.

Oliver G. Brewer III

President, Chief Executive Officer & Director, Callaway Golf Co.

Well, thank you everybody for dialing in. We appreciate your interest and the opportunity to spend time with you. We also look forward to talking to you on Thursday. And in the good things side of the world, I also want to congratulate Patrick Burke on 25 years with the company today. So, celebrating anniversary that I know you can congratulate him after the call. And thank you so much for your time.

Operator: Thank you for participating in today’s conference call. You may now disconnect.