• Net Sales: $621 million in Q3, a 5% year-over-year increase.
• Adjusted EBITDA: $107 million in Q3, up 9% from Q3 2023.
• Year-to-Date Net Sales: Over $2 billion, up 3% year-over-year.
• Year-to-Date Adjusted EBITDA: $392 million, up 4% year-over-year.
• Titleist Golf Ball Sales: Down 1% in Q3, up 5% year-to-date.
• Titleist Golf Clubs Sales: Up 19% in Q3, up 9% year-to-date.
• FootJoy Sales: Down 2% in Q3, down 3% year-to-date.
• Gross Profit: $337 million in Q3, up 9% from 2023.
• Gross Margin: 54.4% in Q3, up 240 basis points from prior year.
• SG&A Expense: $233 million in Q3, up 11% from 2023.
• Interest Expense: $13 million in Q3, up $4 million due to increased borrowings.
• Effective Tax Rate: 19.3% in Q3, compared to 16.5% in Q3 2023.
• Net Leverage Ratio: 1.8x at the end of Q3.
• Inventory Position: Declined 19% from year-end 2023 and 6% from Q3 2023.
• Cash Flow from Operations: Decreased year-to-date compared to 2023.
• Capital Expenditures: $43 million through the first 9 months of 2024.
• Shareholder Returns: $184 million returned through share repurchases and dividends year-to-date.
• Full Year 2024 Adjusted EBITDA Outlook: $395 million to $405 million.
• Full Year 2024 Net Sales Outlook: $2.45 billion to $2.5 billion.

• Warning! GuruFocus has detected 3 Warning Sign with TBLA.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Acushnet Holdings Corp (NYSE:GOLF) reported a 5% year-over-year increase in net sales for the third quarter, reaching $621 million.
• Adjusted EBITDA for the third quarter rose by 9% to $107 million compared to the same period in 2023.
• Titleist Golf Clubs experienced a significant 19% increase in net sales during the third quarter, driven by the successful launch of GT drivers and Fairway Metals.
• The U.S. market showed strong performance with a 6% increase in net sales for Q3 and a 7% increase year-to-date, benefiting from healthy participation and resilient consumer demand.
• The company maintains a strong balance sheet and cash flow position, with a net leverage ratio of 1.8x at the end of Q3, down from 1.9x in the second quarter.

Negative Points

• Titleist Golf Ball net sales were down 1% in the third quarter, with expectations of further declines in the second half due to inventory adjustments ahead of new product launches.
• FootJoy revenues decreased by 2% in the third quarter and 3% year-to-date, attributed to a soft apparel and footwear market.
• The EMEA region experienced a decline in sales, partially offsetting growth in other regions like Japan and Korea.
• Interest expense increased by $4 million in the third quarter due to higher borrowings.
• Year-to-date cash flow from operations decreased compared to the first nine months of 2023, primarily due to decreases in net income and changes in working capital.

Q & A Highlights

Q: Can you elaborate on participation and engagement trends in the current landscape, particularly in the U.S. market compared to international markets? A: David Maher, President and CEO, noted that U.S. rounds of play are up about 2% year-to-date, despite a slow start in the Southeast. The U.S. market is strong, with rounds on pace with the record levels of 2021. Internationally, rounds are projected to be down about 2%, with Korea slightly up and other regions down modestly. Overall, the game is in a good place, with major markets like the U.S. and Korea up significantly compared to 2019.

Q: What are the expectations for gross margin in the fourth quarter, and how is the promotional landscape and inventory in the channel today? A: Sean Sullivan, CFO, stated that the positive trend in Q3 gross margin is expected to continue, with the back half of the year approximating the first half. The promotional environment for equipment like balls and clubs is steady and normal, with some expected holiday promotions. Footwear may see more promotional activity, while apparel remains stable due to custom embroidery.

Q: How is the company managing inventory levels, and what are the expectations for year-end? A: Sean Sullivan, CFO, mentioned that inventory levels have improved, declining 19% compared to year-end 2023. The company is comfortable with current inventory levels and expects an increase at year-end to support the 2025 Pro V1 and club launches.

Q: What is the outlook for the full year 2024 in terms of adjusted EBITDA and net sales? A: Sean Sullivan, CFO, indicated that the adjusted EBITDA range has been narrowed to $395 million to $405 million. The net sales outlook is reaffirmed at $2.45 billion to $2.5 billion on a reported basis, with expectations towards the lower end due to FX impacts.

Q: How is the transition of the FootJoy footwear supply chain to Vietnam progressing? A: David Maher, President and CEO, stated that the transition is nearing completion, with the full move expected by early 2025. This transition is anticipated to enhance innovation and speed to market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.