Acushnet Holdings Corp., the parent of Titleist, FootJoy and KJUS, reported second-quarter net income was down 94.0 percent, adjusted EBITDA fell 56.3 percent and sales slid 35.1 percent.

“After a challenging start to the second quarter, the game of golf, with its outdoor field of play and ease of social distancing, has been in high demand in recent months and the broader golf community has done great work to safely welcome golfers back from the shutdown and accommodate the increased interest in the sport,” stated David Maher, Acushnet’s president and chief executive officer. “Following the re-opening of our production facilities and distribution centers in late May, we have seen strong demand across all segments of our business, and most notably for Titleist golf balls, which have directly benefited from increased rounds of play.”

Maher continued, “My fellow Acushnet associates have effectively embraced new safety and social distancing protocols throughout our organization, and I am especially appreciative of their dedication and resolve during these unprecedented times.”

Impact Of COVID-19
Through the second quarter of 2020, Acushnet’s business was significantly disrupted byCOVID-19. In Asia, its operations were impacted earlier in the year and are at varying stages of recovery, with Korea nearly fully recovered and other markets continuing to progress. In the United States and Europe, as a result of government-ordered shutdowns, most on-course retail pro shops and off-course retail partner locations were closed for some portion of March, most of April and part of May 2020. As a result, the company was forced to temporarily close, or substantially limit, its operations in manufacturing facilities and distribution centers in the U.S. and Europe from the end of March until mid-May 2020.

Given the uncertainty of the pandemic, Acushnet drew down $200.0 million under its revolving credit facility on April 1, 2020, which it subsequently repaid on June 30, 2020. On July 3, 2020, the company amended its 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. As of June 30, 2020, the company had approximately $109 million of unrestricted cash and $220 million of availability under its revolving credit facility.

Manufacturing facilities and distribution centers were re-opened in mid-May 2020. By the end of June 2020, substantially all of its golf courses, on-course retail pro shops and off-course retail partner locations in the United States and Europe had re-opened. Rounds of play and consumer demand significantly increased in June and July 2020; however, there is no assurance that this trend will continue or that any resurgence of COVID-19 will not cause further disruption to our business.

Second Quarter 2020 Financial Results
Consolidated net sales for the quarter decreased by 35.1 percent. On a constant-currency basis, consolidated net sales were down 34.1 percent, with all reportable segments down because of the impact of COVID-19

The decrease in net sales was partially offset by results from KJUS, which it acquired in the third quarter of 2019. The results from KJUS have not been allocated to any of its reportable segments.

On a geographic basis, net sales in the U.S. decreased 43.3 percent in the quarter as a result of the impact of the COVID-19. Net sales were lower across all reportable segments with Titleist golf balls sales down $50.7 million, FootJoy golf wear sales down $28.8 million, Titleist golf clubs sales down $25.8 million, and Titleist golf gear sales down $7.9 million. The decrease in net sales was partially offset by results from KJUS.

Net sales in regions outside of the United States were also negatively impacted by COVID-19.

Net sales in regions outside the United States were down 24.8 percent and down 22.6 percent on a constant-currency basis. This decrease in net sales was due to decreases in sales volumes across all reportable segments as a result of the impact of the pandemic in all regions except Korea. Korea’s net sales increased primarily due to higher sales volumes from FootJoy golf wear in all product categories and Titleist golf clubs.

Segment specifics:

  • 41.1 percent decrease in net sales (40.3 percent decrease on a constant-currency basis) of Titleist golf balls;
  • 32.3 percent decrease in net sales (31.6 percent decrease on a constant-currency basis) of Titleist golf clubs;
  • 30.8 percent decrease in net sales (29.9 percent decrease on a constant-currency basis) of Titleist golf gear; and
  • 40.1 percent decrease in net sales (39.2 percent decrease on a constant-currency basis) in FootJoy golf wear.

Net income attributable to Acushnet Holdings Corp. decreased by $36.2 million to $2.3 million, down 94.0 percent year-over-year, primarily as a result of a decrease in income from operations partially offset by a decrease in income tax expense.

Adjusted EBITDA was $33.1 million, down 56.3 percent year-over-year. Adjusted EBITDA margin was 11.0 percent for the second quarter versus 16.4 percent for the prior-year period.

First Six Months 2020 Financial Results
Consolidated net sales for the first six months decreased by 20.9 percent. On a constant-currency basis, consolidated net sales were down 19.8 percent due to decreases across all reportable segments primarily as a result of the impact of COVID-19. The decrease in net sales was partially offset by results from KJUS.

On a geographic basis, net sales in the U.S. decreased 26.8 percent in the six month period as a result of the impact of COVID-19. Net sales were lower across all reportable segments with Titleist golf balls sales down $68.1 million, FootJoy golf wear sales down $31.3 million, Titleist golf clubs sales down $26.4 million, and Titleist golf gear sales down $9.8 million. The decrease in net sales was partially offset by results from KJUS.

Net sales in regions outside of the U.S. were also negatively impacted by the pandemic.

Net sales in regions outside the United States were down 13.9 percent and down 11.5 percent on a constant-currency basis. This decrease in net sales was due to decreases in sales volumes across all reportable segments, primarily as a result of the impact of the COVID-19 pandemic in all regions except Korea. Korea’s net sales increased across all reportable segments with the exception of Titleist golf gear, which decreased slightly. Additionally, results from KJUS partially offset declines in EMEA.

Segment specifics:

  • Net sales across all of reportable segments were down as a result of the impact of COVID-19 on sales volumes;
  • 30.7 percent decrease in net sales (29.8 percent decrease on a constant-currency basis) of Titleist golf balls;
  • 16.5 percent decrease in net sales (15.7 percent decrease on a constant-currency basis) of Titleist golf clubs;
  • 17.5 percent decrease in net sales (16.1 percent decrease on a constant-currency basis) of Titleist golf gear;
  • 22.1 percent decrease in net sales (21.1 percent decrease on a constant-currency basis) in FootJoy golf wear.

Net income attributable to Acushnet Holdings Corp. decreased by $62.2 million to $11.2 million, down 84.7 percent year-over-year, primarily as a result of a decrease in income from operations, partially offset by a decrease in income tax expense.

Adjusted EBITDA was $85.9 million, down 38.6 percent year-over-year. Adjusted EBITDA margin was 12.1 percent for the first six months versus 15.6 percent for the prior-year period.

Cash Dividend and Share Repurchase
Acushnet’s Board of Directors today declared a quarterly cash dividend in an amount of $0.155 per share of common stock. The dividend will be payable on September 18, 2020 to shareholders of record on September 4, 2020. The number of shares outstanding as of July 31, 2020 was 74,294,130.

There were no share repurchases made during the second quarter. As reported previously in April 2020, the company temporarily suspended stock repurchases under its share repurchase program in light of the COVID-19 pandemic. The company has the ability to resume repurchases in its discretion.

2020 Outlook
Given the high degree of uncertainty related to the COVID-19 pandemic, the company has withdrawn all previously issued fiscal 2020 guidance, and the company is not providing further guidance at this time.

Photo courtesy Acushnet