Acushnet Raises 2022 Sales Outlook On Robust Second Quarter

Acushnet Holdings Corp. reported second-quarter sales and earnings both easily surpassed Wall Street estimates. The parent of Titleist and Footjoy raised its outlook for sales for the full year while maintaining its profit guidance.

Second Quarter and Year-to-Date 2022 Financial Highlights

• Second quarter net sales of $658.6 million, up 5.4 percent year-over-year, up 10.6 percent in constant-currency;
• Year-to-date net sales of $1,264.7 million, up 4.9 percent year-over-year, up 9.1 percent in constant-currency;
• Second quarter net income attributable to Acushnet Holdings Corp. of $66.5 million, down 18.0 percent year-over-year;
• Year-to-date net income attributable to Acushnet Holdings Corp. of $147.5 million, down 11.1 percent year-over-year;
• Second quarter Adjusted EBITDA of $106.5 million, down 16.7 percent year-over-year;
• Year-to-date Adjusted EBITDA of $226.5 million, down 13.9 percent year-over-year; and
• Share repurchase program authorization increased by $100.0 million in July.

Earnings per share of 91 cents a share came in well above Wall Street’s consensus estimate of 75 cents. Sales of $658.6 million were well above Wall Street’s consensus estimate of $582 million.

“The company continues to build momentum, with second-quarter sales increasing 11 percent in constant-currency from growth across all segments. These results reflect the company’s commitment to product innovation, healthy consumer demand across our portfolio and the unwavering dedication of our associates,” said David Maher, Acushnet company’s President and CEO.

“Our supply chain is strengthening, particularly with respect to golf balls and golf clubs, and we are encouraged by our first half performance both in the marketplace and across golf’s pyramid of influence,” Maher continued. “Titleist Pro V1 and Pro V1x golf balls and Vokey wedges were trusted by the winners of all four men’s major championships in 2022, while Titleist drivers and Scotty Cameron putters were used by three of the four major champions.

“Given our strong sales performance in the first half, we are raising our full-year sales outlook, while maintaining our adjusted EBITDA guidance to reflect currency headwinds, higher freight costs and investments we are making to expand distribution and custom fulfillment capabilities for apparel and gear products. We believe these investments will support future growth, reduce lead times and pay long-term dividends for our trade partners and shareholders.”

Second Quarter 2022 Financial Results
Consolidated net sales for the quarter increased 5.4 percent, or 10.6 percent on a constant-currency basis. The increase on a constant-currency basis was driven by growth across all segments primarily as a result of higher sales volumes and higher average selling prices.

On a geographic basis, net sales in the U.S. were higher across all reportable segments primarily driven by increases of 17.9 percent in Titleist golf clubs and 17.8 percent in FootJoy golf wear. The increase in Titleist golf clubs was primarily driven by higher sales volumes of its newly introduced SM9 wedges, T Series irons and Phantom X putters, partially offset by lower sales volumes of drivers, fairways and hybrids. The increase in FootJoy golf wear was primarily due to higher average selling prices and sales volumes in footwear.

Net sales in regions outside the U.S. decreased 0.8 percent or increased 9.7 percent on a constant-currency basis. In Korea, net sales increased primarily due to increases in FootJoy golf wear, Titleist golf gear and Titleist golf clubs. In EMEA and Rest of World, net sales increased across all reportable segments.

Segment Specifics:

• 0.5 percent decrease in net sales (3.3 percent increase on a constant-currency basis) of Titleist golf balls. The increase on a constant-currency basis reflects the improvement of certain raw material availability;
• 7.5 percent increase in net sales (12.4 percent increase on a constant-currency basis) of Titleist golf clubs largely due to higher sales volumes of its newly introduced T-Series irons, SM9 wedges and Phantom X putters. This increase was partially offset by lower sales volumes of drivers, fairways and hybrids which were all in its second model year and were also impacted by component shortages and delays;
• 6.3 percent increase in net sales (12.3 percent increase on a constant-currency basis) of Titleist golf gear largely due to higher sales volumes and higher average selling prices. Sales volumes were higher across all product categories except golf bags, which were impacted by supply chain and fulfillment constraints; and
• 8.1 percent increase in net sales (13.7 percent increase on a constant-currency basis) in FootJoy golf wear due to higher net sales across all product categories, primarily in footwear due to higher sales volumes and average selling prices.

Net income attributable to Acushnet Holdings Corp. decreased 18.0 percent to $66.5 million, 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 $106.5 million, down 16.7 percent year-over-year. Adjusted EBITDA margin was 16.2 percent for the second quarter versus 20.4 percent for the prior year period.

First Six Months 2022 Financial Results
Consolidated net sales for the first six months increased 4.9 percent, or 9.1 percent on a constant-currency basis. The increase in constant currency was primarily related to an increase in FootJoy golf wear driven by higher sales volumes across all product categories and an increase in Titleist golf clubs primarily driven by higher sales volumes of its newly introduced SM9 wedges, T-Series irons and Phantom X putters.

On a geographic basis, net sales increased in the U.S. primarily as a result of increases of 10.0 percent in FootJoy golf wear and 7.9 percent in Titleist golf clubs. The increase in FootJoy golf wear was primarily due to higher average selling prices and sales volumes in footwear. The increase in Titleist golf clubs was primarily driven by higher sales volumes of its newly introduced SM9 wedges, T-Series irons and Phantom X putters. These increases were partially offset by a decrease of 3.4 percent in Titleist golf balls, primarily as a result of the limited availability of certain raw materials.

Net sales in regions outside the U.S. were up 6.3 percent, or 15.1 percent on a constant-currency basis. In EMEA, net sales increased across all reportable segments, primarily due to the adverse impact of government-ordered shutdowns in this region in the first quarter of 2021. In Korea, net sales increased in all reportable segments, except Titleist golf gear, which was impacted by supply chain constraints. In Japan, net sales decreased primarily due to supply chain and fulfillment constraints. In Rest of World, net sales increased across all reportable segments.

Segment specifics:

• 2.9 percent decrease in net sales (0.1 percent increase on a constant-currency basis) of Titleist golf balls. The increase on a constant-currency basis reflects the improvement of certain raw material availability;
• 5.3 percent increase in net sales (9.2 percent increase on a constant-currency basis) of Titleist golf clubs largely due to higher sales volumes of its newly introduced SM9 wedges, T-Series irons and Phantom X putters. This increase was partially offset by lower sales volumes of drivers, hybrids and fairways which were all in its second model year and were also impacted by component shortages and delays;
• 4.1 percent decrease in net sales (0.4 percent increase on a constant-currency basis) of Titleist golf gear. The increase on a constant-currency basis was primarily due to higher average selling prices across all product categories, partially offset by sales volume decreases in golf bags and headwear product categories due to supply chain and fulfillment constraints; and
• 15.8 percent increase in net sales (20.8 percent increase on a constant-currency basis) in FootJoy golf wear primarily due to increased sales volumes and higher average selling prices across all product categories.

Net income attributable to Acushnet Holdings Corp. decreased 11.1 percent to $147.5 million, 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 $226.5 million, down 13.9 percent year over year. Adjusted EBITDA margin was 17.9 percent for the first six months versus 21.8 percent for the prior year period.

Cash Dividend and Share Repurchase
Acushnet’s Board of Directors today declared a quarterly cash dividend of $0.18 per share of common stock. The dividend will be payable on September 16, 2022 to shareholders of record on September 2, 2022. The number of shares outstanding as of July 29, 2022 was 71,162,907.

During the quarter, the company repurchased 950,225 shares of common stock on the open market at an average price of $41.11 for an aggregate of $39.1 million. On June 16, 2022, the company entered into a new agreement with Magnus Holdings Co., Ltd. (“Magnus”), a wholly owned subsidiary of Fila Holdings Corp., to purchase from Magnus an equal amount of its common stock as it purchases on the open market over the period of time from July 1, 2022 through January 13, 2023, up to an aggregate of $75.0 million, at the same weighted average per share price. On July 26, 2022, Acushnet’s Board of Directors authorized the company to repurchase up to an additional $100.0 million of its issued and outstanding common stock, bringing the total authorization up to $450.0 million since the share repurchase program was established in 2019.

2022 Outlook
The company now expects full-year consolidated net sales to be approximately $2,200 to $2,250 million, up from its previous range of $2,175 to $2,225 million. On a constant-currency basis, consolidated net sales are now expected to increase from 6.8 percent to 9.1 percent, up from the previous range of 3.8 percent to 6.1 percent. For the full-year, Adjusted EBITDA is still expected to be approximately $325 million to $345 million. The company’s outlook assumes no significant worsening of the pandemic, additional supply chain disruptions or changes in the impact of foreign currency.

Photo courtesy Footjoy