Acushnet Holdings Corp., the parent of Titleist and FootJoy, reported third-quarter revenues climbed 8.0 percent year over year and grew up 25.0 percent compared to 2019. Earnings were down, as expected, but both earnings and sales were far ahead of Wall Street estimates and Acushnet sharply raised 2021 guidance.

“The company delivered a strong third-quarter performance, with sales growth versus both last year and pre-pandemic 2019 levels, despite being constrained by supply chain disruptions across all of our segments,” said David Maher, Acushnet’s president and chief executive officer.

Maher continued, “Our golf ball segment performed well against difficult year-over-year comparisons with robust demand across all models and markets. Double-digit growth in our Titleist club and FootJoy golf wear segments was fueled by our next generation T-Series irons, the continued success of our TSi metals and innovative new FootJoy footwear and apparel products. Our KJUS golf business continues to flourish both in the United States and Europe.

“Looking ahead, we anticipate supply chain disruptions to continue throughout the fourth quarter and into 2022. Despite these challenges, we are raising our full-year 2021 guidance. We remain committed to rewarding shareholders through our dividend program and today announced the expansion of our existing $100 million share repurchase program to $200 million. I am proud of my fellow associates who continue to navigate a complex and dynamic supply chain environment and rise up to these near-term challenges while most importantly keeping our long-term strategies their top priority.”

Summary of Third Quarter 2021 Financial Results
Third-quarter net sales of $521.6 million, up 8.0  percent year over year, up 7.0 percent in constant currency; up 25.0 percent compared to 2019

The increase in net sales on a constant currency basis resulted from an increase of $20.4 million in FootJoy golf wear primarily related to higher average selling prices in apparel and footwear categories, an increase of $13.9 million in Titleist golf clubs primarily driven by higher average selling prices and an increase of $1.8 million in Titleist golf gear. These increases were partially offset by a $4.6 million decrease in Titleist golf balls.

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 4.2 percent in the quarter primarily driven by an increase of $9.1 million in Titleist golf clubs and an increase of $8.2 million in FootJoy golf wear, partially offset by a decrease of $8.1 million in Titleist golf balls.

Net sales in regions outside the United States were up 12.9 percent and up 10.5 percent on a constant currency basis. In Korea, the increase in net sales was primarily due to an increase in FootJoy golf wear and in Japan the increase in net sales was primarily due to an increase in Titleist golf clubs.

Segment specifics:

  • 1.7 percent decrease in net sales (2.7 percent decrease on a constant-currency basis) of Titleist golf balls, largely due to sales volume declines in its performance golf balls and AVX models as a result of manufacturing and supply chain disruptions;
  • 12.3 percent increase in net sales (11.5 percent increase on a constant-currency basis) of Titleist golf clubs, largely due to higher average selling prices across all product categories and higher volumes of drivers and fairways, partially offset by lower volumes in wedges, putters and irons due to supply chain constraints;
  • 5.2 percent increase in net sales (4.1 percent increase on a constant-currency basis) of Titleist golf gear, largely due to higher average selling prices and sales volumes in golf bag and travel gear product categories; and
  • 18.9 percent increase in net sales (17.6 percent increase on a constant-currency basis) in FootJoy golf wear, largely due to higher average selling prices and sales volumes in apparel and footwear product categories, partially offset by lower sales volumes in its glove category due to supply chain constraints.

Net income attributable to Acushnet Holdings Corp. decreased by $23.9 million to $39.3 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 $70.3 million, down 29.1 percent year over year. Adjusted EBITDA margin was 13.5 percent for the third quarter versus 20.5 percent for the prior-year period.

Sales of $521.6 million came out well ahead of Wall Street’s consensus estimate of $416.54 million. EPS of 52 cents topped Wall Street’s consensus estimate of 13 cents.

Summary Of First Nine Months 2021 Financial Results
Year-to-date net sales of $1,727.4 million, up 45.0 percent year over year, up 40.9 percent in constant currency; up 31.6 percent compared to 2019

Consolidated net sales for the first nine months increased by 45.0 percent. On a constant-currency basis, consolidated net sales were up 40.9 percent largely due to sales volume increases across all reportable segments, as rounds of play and consumer demand for golf-related products remained elevated during the first nine months of 2021, coupled with the adverse impact of government-ordered shutdowns in the second quarter of 2020. 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 U.S. increased by 44.5 percent in the nine-month period driven by an increase of $99.4 million in Titleist golf balls, an increase of $87.5 million in Titleist golf clubs, an increase of $65.3 million in FootJoy golf wear and an increase of $21.7 million in Titleist golf gear, all driven by the same factors discussed above.

Net sales in regions outside the United States were up 45.5 percent and up 37.0 percent on a constant-currency basis. The increase in net sales in all regions was primarily driven by increased sales across all reportable segments also driven by the same factors discussed above.

Segment specifics:

  • 39.8 percent increase in net sales (36.6 percent increase on a constant-currency basis) of Titleist golf balls, largely due to higher sales volumes of its latest generation Pro V1 and Pro V1x golf balls launched in the first quarter of 2021 combined with the adverse impact of government-ordered shutdowns in the second quarter of 2020;
  • 55.1 percent increase in net sales (51.5 percent increase on a constant-currency basis) of Titleist golf clubs, largely due to higher sales volumes in all product categories except wedges and higher average selling prices across all product categories. The decrease in sales volumes of wedges was primarily due to supply chain constraints. Also contributing to the increase was the adverse impact of government-ordered shutdowns in the second quarter of 2020;
  • 37.0 percent increase in net sales (32.9 percent increase on a constant-currency basis) of Titleist golf gear, largely due to sales volume increases across all product categories combined with the adverse impact of government-ordered shutdowns in the second quarter of 2020;
  • 46.8 percent increase in net sales (42.0 percent increase on a constant-currency basis) in FootJoy golf wear, largely due to increased sales volumes and higher average selling prices across all product categories. Also contributing to the increase was the adverse impact of government-ordered shutdowns in the second quarter of 2020.

Net income attributable to Acushnet Holdings Corp. improved by $130.9 million to $205.3 million, 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 $333.3 million up 80.1 percent year over year. Adjusted EBITDA margin was 19.3 percent for the first nine months versus 15.5 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 December 17, 2021 to shareholders of record on December 3, 2021. The number of shares outstanding as of October 29, 2021 was 73,629,759.

During the quarter, the company repurchased 242,420 shares of common stock on the open market at an average price of $50.58 for an aggregate of $12.3 million. On October 20, 2021, 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 $200.0 million.

Impact Of COVID-19 On Business
Acushnet said in a statement, “In March 2020, the World Health Organization declared a pandemic related to the novel coronavirus (“COVID-19”), which led to government-ordered shutdowns of non-essential businesses, travel restrictions and restrictions on public gatherings and, as a result, our results of operations for the second quarter and first half of 2020 were negatively impacted. As restrictions were eased, the game of golf experienced a surge in rounds of play around the world, which resulted in increased demand for our products. On a company-wide basis, we quickly began to experience demand pressures across all brands and product categories, which challenged and continues to challenge, our supply chain and our ability to service our trade partners and golfers.

“During the first nine months 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 reportable 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, the emergence of virus variants and resurgences of positive cases has led to an increase in restrictions in some regions and could prompt increased restrictions in other regions, which could further disrupt our supply chain. Although we have seen increased rounds of play and demand for golf-related products, over the course of the pandemic, this could change as mass vaccination programs continue to advance and restrictions are further eased on other activities.”

2021 Outlook
The company expects full-year consolidated net sales to be approximately $2,080 to $2,110 million and Adjusted EBITDA to be approximately $305 to $325 million. On a constant-currency basis, consolidated net sales are expected to be in the range of 26.1 percent to 28.0 percent. The company’s outlook assumes no significant worsening of the pandemic, including incremental closures of global markets and additional supply chain disruptions.

Previously, Acushnet’s guidance called for full-year consolidated net sales to be approximately $1,930 to $1,990 million and Adjusted EBITDA to be approximately $285 to $305 million. On a constant-currency basis, consolidated net sales were expected to be in the range of 16.8 percent to 20.6 percent.

Photo courtesy KJUS