Acushnet Holdings Corp., the parent of Titleist, Footjoy and KJUS, reported sales came in better-than-expected in the fourth quarter, jumped 33.2 percent overall for 2021, and are expected to expand around mid-single digits in 2022. David Maher, Acushnet’s president and CEO, told analysts that demand across product lines and regions continues to outpace pandemic-strained supply.
On a conference call with analysts, Maher stressed that golf industry fundamentals are strong.
“We’re encouraged by the game’s momentum with U.S. rounds up 5 percent in 2021, and up 20 percent or almost 90 million rounds versus 2019,” he said. Maher said the participation increase over the past two years was aided by play from some 800,000 new golfers, led by juniors and women, according to the National Golf Foundation. Outside the U.S., Acushnet is seeing similar golf participation trends with rounds played projected to be up over 10 percent in 2021.
Maher said Acushnet continues to make strategic investments to help position Titleist and Footjoy to capitalize on the uptick in interest in golf play that started amid lockdowns in the early stages of the pandemic.
Said Maher, “Investments in product development and golfer connection are at all-time highs, our major capital investment in golf ball operations is well underway, and increased spending behind the company’s digital platforms is strengthening our b2b and b2c capabilities, which will positively impact how trade partners and golfers interact with our brands.”
For the fourth quarter, sales were essentially flat at $420.6 million against $420.5 million and grew 1.4 percent on a currency-neutral basis.
Sales were well above Acushnet’s guidance that called for sales of $368 million at the midpoint of the range. Sales were expected to be down primarily due to lower volumes in golf clubs as 2020’s TSi metals launch was anniversaried.
The adjusted EBITDA loss in the quarter was $5.0 million against a positive EBITDA of $48.1 million a year ago, reflecting a focus on prioritizing production capacity towards building inventory for 2022 as well as the expected golf club sales decline. The loss was lower than company guidance calling for a loss of $18 million at the midpoint.
Gross profit in the quarter was lower due to increased inbound freight costs, the negative impact of raw material and component shortages on production costs and lower golf club sales. Operating expenses were up across all reportable segments primarily due to higher advertising and promotional and selling expenses.
For the full year, Acushnet’s revenues were up 33 percent to $2.15 billion with double-digit gains in every segment and every region. Maher said, “At the core of this growth is the momentum generated by Pro V1 golf balls, TSI drivers, T-Series irons, FJ Premiere and HyperFlex golf shoes and many other successful new products.”
Adjusted EBITDA increased 41 percent to $328 million and the company generated $314 million in operating cash flow. Said Maher, “Gross margins held up well throughout the year as the tangible impacts of supply chain-related cost increases were more than offset by favorable sales mixes, higher ASPs and reduced promotional activity.”
By category, Titleist golf ball’s sales of $668 million were up 32 percent on the year, led by record sales of Pro V1 and Pro V1x golf balls launched in the first quarter of 2021. The growth was led by the EMEA, U.S. and Japan markets and benefited from some recovery in demand for corporate custom golf balls following a decline in 2020.
Titleist clubs also saw growth for the year of 32 percent, to $552 million, led by new TS1 metals. Gains were seen in every product category, which is especially notable given the club’s two-year product lifecycles. Said Maher, ”In achieving this growth, our team has pushed the limits of supplier components availability and our own production capacity as we chased steady demand throughout the year. Titleist TS1 drivers had an especially strong year and were the number one driver on the PGA Tour in 2021.”
Titleist gear posted a 29 percent gain on the year, to $193 million, with growth in all product categories. Maher said the gear team likewise “did great work to keep product flowing as we strive to maintain field inventories and keep pace with brisk demand.”
Footjoy’s sales increased 40 percent to$581 million as both footwear and apparel grew at accelerated rates. Said Maher, “The FJ brand is healthy and vibrant, inspired by innovative footwear, ranging from the classic-inspired Premiere, the athletic Flex, and Pro SL, the number one spike-less shoe in golf.” Footjoy’s momentum in apparel and outerwear is particularly strong in the U.S., EMEA and Korea
Titleist apparel in Asia and the KJUS, the Swiss-based golf and ski brand acquired in 2019, also posted robust growth for the year. KJUS was especially strong in the U.S. market which was up over 50 percent.
By region for the year, all markets were up over 20 percent for the year.
“Demand for Acushnet products was consistent across regions,” said Maher. “Typically we see outlier markets for one reason or another. But this was not the case in 2021 as the Acushnet success story played out similarly across our largest markets in the U.S., EMEA, Japan, and Korea. This is a testament to the good work of our global sales and marketing teams in positioning our products and our supply chain leaders who effectively coordinated tight availability to best meet global demand.”
On a currency-neutral basis, sales in the year grew 34.0 percent in the U.S., 26.1 percent in EMEA, 26.5 percent in Japan, 26.2 percent in Korea, and 29.5 percent in Rest of World.
Said Maher, “Looking forward, we’re encouraged by strong golfer participation and enthusiasm for the game, including a golfer base that grew in both 2020 and 2021. Market fundamentals are strong, trade partners are healthy and channel inventories are generally lean. Looking inwards, the talented Acushnet team is motivated to build upon our momentum as we structure our business for continued growth in spite of supply chain limitations, which we expect will impact our business throughout the year.”
Acushnet’s outlook calls for 2022 consolidated net sales to be approximately $2,175 to $2,225 million and adjusted EBITDA to be approximately $325 to $345 million. On a constant currency basis, consolidated net sales are expected to be in the range of up 2.7 percent to up 5.0 percent.
Photo courtesy Acushnet/Footjoy
