Acushnet Holdings Corp. reported significant improvement in earnings in the first quarter ended March 31 as sales grew 42 percent. Revenues grew 34 percent on a currency-neutral basis.

“Acushnet is off to a promising start to 2021 as demand for all Acushnet product categories is strong and rounds of play momentum continues. Exceptional validation of new Titleist Pro V1 and Pro V1x golf balls, TSi drivers, and FootJoy golf shoes on the worldwide professional tours carries over into strong sell-through and market momentum. Our gear and performance wearables businesses are also in great shape. Sales growth across all segments was fueled by our Product Development teams and the outstanding execution of our Operations teams by keeping pace with strong consumer demand,” said David Maher, Acushnet company’s president and chief executive officer. “As reflected by our first-quarter results, our supply chain is holding up well, and we are confident that our teams will always strive to deliver the highest quality products and service to our trade partners and golfers.”

Maher continued, “I am extremely proud of the continued dedication and agility that the Acushnet team has demonstrated in the current environment. We are well-positioned for the future thanks to their hard work and resilience.”

Consolidated net sales for the quarter increased by 42.1 percent, or 37.8 percent on a constant currency basis, due to sales volume increases across all reportable segments. On a constant currency basis, sales of Titleist golf clubs, Titleist golf balls, FootJoy golf wear, and Titleist golf gear increased $58.7 million, $53.1 million, $23.5 million and $7.6 million, respectively, as the high levels of rounds of play and consumer demand for golf-related products that Acushnet saw in the second half of 2020 continued through the first quarter of 2021. In addition, first-quarter net sales in 2020 were unfavorably impacted by the pandemic-related shutdowns. Sales volume growth of products that are not allocated to one of its four reportable segments also contributed to the increase in net sales.

On a geographic basis, net sales in the United States increased by 46.3 percent in the quarter primarily due to an increase of $41.7 million in Titleist golf balls, an increase of $37.2 million in Titleist golf clubs, an increase of $13.4 million in FootJoy golf wear and an increase of $5.2 million in Titleist golf gear, all driven by the same factors discussed above.

Net sales in regions outside the United States were up 37.7 percent or up 28.7 percent on a constant currency basis. In Korea, Japan and the Rest of the World, the increase in net sales was primarily driven by increased sales across all reportable segments. In EMEA, the decrease in net sales primarily resulted from the pandemic-related shutdowns in this region during the first quarter of 2021.

Segment specifics:

  • 49.4 percent increase in net sales (45.7 percent increase on a constant-currency basis) of Titleist golf balls driven by higher sales volumes of its latest generation Pro V1 and Pro V1x golf balls launched in the first quarter of 2021.
  • 67.2 percent increase in net sales (63.0 percent increase on a constant-currency basis) of Titleist golf clubs primarily driven by higher sales volumes of its TSi drivers, fairways and hybrids and Phantom X putters, and higher average selling prices across all categories, partially offset by lower sales volumes of its previous generation wedges.
  • 22.1 percent increase in net sales (17.5 percent increase on a constant-currency basis) of Titleist golf gear primarily driven by sales volume increases across all categories of the gear business.
  • 22.2 percent increase in net sales (18.0 percent increase on a constant-currency basis) in FootJoy golf wear primarily driven by sales volume increases in footwear and golf gloves and higher average selling prices across all product categories.

Net income attributable to Acushnet Holdings Corp. increased by $76.1 million to $85.0 million, up 855.1 percent year over year, primarily as a result of an increase in income from operations, partially offset by an increase in income tax expense.

Adjusted EBITDA was $135.3 million, up 156.3 percent year over year. Adjusted EBITDA margin was 23.3 percent for the first quarter versus 12.9 percent for the prior-year period.

Cash Dividend and Share Repurchase
Acushnet’s Board of Directors today declared a quarterly cash dividend of $0.165 per share of common stock. The dividend will be payable on June 18, 2021 to shareholders of record as of June 4, 2021. The number of shares outstanding as of April 30, 2021 was 74,063,851.

In March 2021, the company resumed share repurchases under its share repurchase program. During the quarter, the company repurchased 56,156 shares of common stock on the open market at an average price of $42.34 for an aggregate of $2.4 million. On April 2, 2021, the company repurchased from Magnus Holdings Co., Ltd. (“Magnus”), a wholly-owned subsidiary of Fila Holdings Corp., 355,341 shares of common stock for an aggregate of $11.1 million. At the completion of this transaction, the company no longer had an obligation to repurchase shares of common stock from Magnus.

2021 Outlook
The company expects full-year consolidated net sales to be approximately $1,795 to $1,875 million and Adjusted EBITDA to be approximately $255 to $285 million. The company’s outlook assumes no significant worsening of the COVID-19 pandemic including incremental closures of global markets and additional supply chain disruptions.

Impact Of COVID-19 On Business
Acushnet wrote, “Throughout 2020, our business was significantly impacted by the COVID-19 pandemic to varying degrees. The negative impact was primarily experienced in the first and second quarters when our manufacturing and distribution operations in the United States and Europe were shut down and most on-course retail pro shops and off-course retail partner locations were closed for varying lengths of time due to government-ordered shutdowns in the United States and Europe. By the end of June 2020, our manufacturing facilities and distribution centers and substantially all golf courses, on-course retail pro shops and off-course retail partner locations in the United States and Europe had re-opened. The game of golf experienced a surge in rounds of play around the world, in part due to its outdoor field of play and ease of social distancing. This surge resulted in increased demand for our products during June 2020 and even greater demand for our products during the second half of 2020 in the United States and Europe. On a company-wide basis, we quickly began to experience demand pressures across all brands and product categories, which challenged and continue to challenge, our supply chain and our ability to service our trade partners and golfers. During the first quarter of 2021, rounds of play remained high and we continued to see an increase in demand for our products, leading to increased sales volumes across all segments. However, during this period, we also experienced supply chain disruptions causing shortages of various raw materials and increased freight charges. While government-ordered shutdowns and restrictions have eased in most regions and mass vaccination programs are underway, it is nevertheless possible that a resurgence of positive cases could prompt a return to tighter restrictions in certain regions, as we saw with the lockdown in the United Kingdom during the first quarter of 2021. While we have seen increased rounds of play and demand for golf and golf-related products, as mass vaccination programs advance and restrictions are further eased on other activities, the increase in rounds of play and demand for golf-related products could decrease.

“At the beginning of the third quarter of 2020, we amended our credit agreement to, among other things, provide debt covenant relief for each of the fiscal quarters ending between September 30, 2020 and September 30, 2021. On March 5, 2021, we issued a notice exercising our right to early termination of the covenant relief period. As of March 31, 2021, we had approximately $111.1 million of unrestricted cash and $376.0 million of availability under our revolving credit facility.”

Photo courtesy Acushnet, FootJoy