Acushnet Holdings Corp. reported earnings climbed 21.2 percent in the second quarter despite a 7.6 percent revenue decline. The parent of Titleist and FootJoy maintained its earnings guidance but slightly lowered its sales outlook for the year.

Wally Uihlein, Acushnet President and CEO, said, “We are encouraged by what we continue to view as improving structural stability of the golf industry and believe that the broad rationalization is a positive for the commerce of golf. Near term, the industry is experiencing the effects of the US retail correction as well as the impact of unfavorable weather on rounds played, but we believe that the longer term forecast remains bright. The dedicated golfer has been Acushnet’s primary focus and our proven strategy to address their needs is the key to our ongoing success. We remain optimistic about the future and our ability to strengthen our market positions over time.”

David Maher, Acushnet COO, said, “The U.S. retail channel correction and the impact of weather on rounds and fittings have been near term realities affecting the golf industry and our business. Acushnet associates are executing well while navigating these headwinds. The growing strength of the ProV1 franchise, Titleist gear and the success of the FootJoy Pro/SL golf shoes are great examples of how we continue to fortify our positions on multiple fronts as we work closely with our trade partners to deliver value added products to dedicated golfers. We are excited about our upcoming new product introductions and we are looking forward to building upon our brand momentum in the back half of the year.”

Summary of Second Quarter 2017 Financial Results

Consolidated net sales for the quarter decreased by 7.6 percent, or by 6.6 percent on a constant currency basis. Several significant factors, primarily in the United States, had a negative impact on the business this quarter. These factors include the ongoing effects of the reduced U.S. store count and retail consolidation, unfavorable weather conditions which negatively impacted rounds of play as well as golf club fitting and trial engagements, and promotional activity by competitors that impacted the golf ball category. As a result, consolidated net sales in the United States decreased by 8.5 percent in the quarter.

Acushnet posted a year-on-year decline in net sales in regions outside the United States of 6.6 percent, down 4.5 percent on a constant currency basis, with Korea up 7.5 percent, offset by Japan down 13.4 percent and EMEA down 3.4 percent.

Segment specifics:

  • 6.6 percent decrease in net sales (5.6 percent decrease on a constant currency basis) of Titleist golf balls as a result of a sales volume decline in both the ProV1 franchise and the performance models, the latter of which are in their second year of their two-year product life cycle.
  • 21.1 percent decrease in net sales (20.3 percent decrease on a constant currency basis) of Titleist golf clubs due to lower sales volumes, primarily in the iron series, Scotty Cameron Select putters and Vokey Design wedges, all of which are in the second year of their two-year product life cycle. This decrease was partially offset by an increase in average selling prices across all product categories, in particular the new 917 model drivers and fairways.
  • 5.6 percent increase in net sales (6.3 percent increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to higher average selling prices across all categories of the gear business.
  • 5.8 percent decrease in net sales (4.1 percent decrease on a constant currency basis) in FootJoy golf wear primarily due to a sales volume decline in the footwear and glove categories.

Net income attributable to Acushnet improved by $5.9 million to $33.0 million, primarily due tolower interest expense and lower other expense, partially offset by lower income from operations. Adjusted EBITDA was $71.8 million, down 13.5 percent year over year. Adjusted EBITDA margin was 16.8 percent for the second quarter versus 17.9 percent for the prior year period.

Summary of First Six Months 2017 Financial Results

Consolidated net sales for the first six months of 2017 decreased by 4.6 percent, or by 3.8 percent on a constant currency basis. Consolidated net sales in the United States decreased by 5.8 percent in the six month period; this decrease was largely due to the factors that impacted net sales in the second quarter as described above. Acushnet posted a year-on-year decline in net sales in regions outside the United States of 3.3 percent, down 1.5 percent on a constant currency basis, with Korea up 14.7 percent, offset by Japan down 12.0 percent and EMEA down 1.2 percent.

Segment specifics:

  • 2.4 percent decrease in net sales (1.7 percent decrease on a constant currency basis) of Titleist golf balls. This decrease was driven by a sales volume decline of the performance and Pinnacle golf ball models which are in their second year of the two-year product life cycle and was partially offset by a sales volume increase of the newly introduced Pro V1 and Pro V1x golf balls.
  • 16.5 percent decrease in net sales (15.6 percent decrease on a constant currency basis) of Titleist golf clubs. This decrease was primarily driven by lower sales volumes of Vokey Design wedges, the iron series and the hybrids, all of which are in the second year of their two-year product life cycle. This decrease was partially offset by an increase in average selling prices across all product categories, in particular the new 917 model drivers and fairways.
  • 6.4 percent increase in net sales (6.7 percent increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to higher average selling prices in all categories of the gear business and higher sales volume growth in travel gear.
  • 3.5 percent decrease in net sales (2.0 percent decrease on a constant currency basis) in FootJoy golf wear primarily due to a sales volume decline in footwear, partially offset by a sales volume increase in apparel.

Net income attributable to Acushnet improved by $20.4 million to $71.1 million, primarily a result of lower interest expense and lower other expense. Adjusted EBITDA was $150.3 million, down 7.4 percent year over year. Adjusted EBITDA margin was 17.4 percent for the six months ended June 30, 2017 versus 18.0 percent for the prior year period.

Updated 2017 Outlook

  • Consolidated net sales are expected to be in the range of $1,545 to $1,565 million in 2017.
  • Consolidated net sales on a constant currency basis are expected to be in the range of a decrease of 0.7 percent to an increase of 0.6% in 2017.
  • Adjusted EBITDA is expected to be in the range of $220 to $230 million in 2017.

Previously, the company predicted consolidated net sales in the range of $1,565 to $1,595 million,  consolidated net sales on a constant currency basis to increase in the range of 1.8 percent to 3.7 percent in 2017, and adjusted EBITDA to be in the range of $220 to $230 million in 2017.

Photo courtesy Titleist