Acushnet Holdings Corp.’s sales grew 7.6 percent on a currency-neutral basis in the first quarter despite continued supply chain disruption to help earnings fly past Wall Street’s targets. The growth was led by FootJoy, up double-digits across all product categories; and Titleist clubs, driven by the successful launch of new Vokey SM9 wedges, shown lead photo, and continuing success of T-Series irons.
“We are excited for our innovative product lineup in 2022, which began with successful launches in the first quarter led by new Titleist AVX and Velocity golf balls, Vokey Design SM9 wedges, FootJoy Tour Alpha and FJ Fuel golf shoes, and new performance apparel collections from FJ and KJUS,” said David Maher, Acushnet’s president and CEO.
Net sales for the quarter increased 4.3 percent to $606.1 million, exceeding Wall Street’s consensus target of $572 million. The gains at FootJoy were due to sales volume increases and higher average selling prices across all product categories. The gains at both FootJoy and Titleist golf clubs were partially offset by decreases in Titleist golf gear due to supply chain and fulfillment constraints and Titleist golf balls primarily as a result of limited availability of certain raw materials.
On a geographic basis, sales in the U.S. decreased $13.5 million, or 4.4 percent, to $295.1 million, primarily as a result of a decrease of $10.6 million in Titleist golf balls, primarily due to limited availability of certain raw materials and a decrease of $4.6 million in Titleist golf gear, largely due to supply chain and fulfillment constraints.
On a constant currency basis, net sales in regions outside the U.S. increased 21.2 percent. In EMEA, sales jumped 31.8 percent to $112.4 million with gains across all reportable segments that reflect the adverse impact of government-ordered shutdowns in this region during the first quarter of 2021. In Korea, sales increased 6.6 percent to $85.7 million with gains in all reportable segments except Titleist golf gear which was impacted by supply chain constraints. In Japan, sales decreased 10.6 percent to $45.8 million with declines in all reportable segments except FootJoy due to supply chain and fulfillment constraints. In Rest of World, net sales advanced 10.9 percent to $67.1 million.
By segment, Titleist golf balls’ revenues fell 5.6 percent (3.5 percent decrease on a constant-currency basis) to $163.8 million. The decline was due to lower sales volumes across all models as a result of limited availability of certain raw materials.
Titleist golf clubs’ sales grew 3.2 percent (6.1 percent increase on a constant-currency basis) to $160.8 million. The improvement was primarily driven by higher sales volumes of the newly introduced SM9 wedges launched in the first quarter of 2022 and T-Series irons launched in the fourth quarter of 2021. This increase was partially offset by lower sales volumes of drivers, hybrids and fairways which were all in their second model year and were also impacted by component shortages and delays.
Titleist golf gear sales were down 16.9 percent (14.1 percent decrease on a constant-currency basis) to $44.1 million. The decline was due to sales volume decreases in golf bags and headwear product categories due to supply chain and fulfillment constraints, partially offset by higher average selling prices across all product categories.
FootJoy sales jumped 24.0 percent increase (28.2 percent increase on a constant-currency basis) to $197.6 million. The gain was primarily driven by increased sales volumes and higher average selling prices across all product categories primarily driven by EMEA.
Net income decreased $4.0 million to $81.0 million, or $1.10 a share, down 4.7 percent year over year, primarily as a result of a decrease in income from operations, partially offset by a decrease in income tax expense. EPS of $1.10 was well above Wall Street’s consensus estimate of 79 cents.
Adjusted EBITDA was $120.0 million, down 11.3 percent year over year. Adjusted EBITDA margin was 19.8 percent for the first quarter versus 23.3 percent for the prior-year period.
Acushnet affirmed its full-year outlook and expects full-year 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 growth is expected to be in the range of 3.8 percent to 6.1 percent.
In 2021, sales of $2,147.9 million were up 33.2 percent year over year on a reported basis and 30.6 percent on a currency-neutral basis. Full-year adjusted EBITDA in 2021 was $328.3 million, up 40.8 percent compared to 2020.
Maher concluded, “We believe the golf industry is structurally healthy and are pleased with the initial response to our 2022 product offerings. Looking forward, we are enthused by the game’s momentum as the golf season opens up in northern markets and anticipate that our supply-side environment will improve over the course of the year.”
Photo courtesy Titleist Vokey SM9 Wedges