Acushnet Holdings Corp., which owns Titleist and FootJoy, reported a profit in the third quarter against a loss a year ago due to improved margins and lower interest expense. Sales improved 2.3 percent.

Wally Uihlein, Acushnet President and CEO said, “We are encouraged to see that the global golf industry continues to structurally improve through the first nine months of 2017. While near term, US demand trends have been impacted as the focus shifted to important life priorities in areas hit by the recent hurricanes, it is good to see many areas are recovering well as a sense of normalcy returns. We are confident that our proven strategy, dedicated associates and valued trade partners will enable us to leverage a stronger industry and extend our success over the long term.”

David Maher, Acushnet COO, said, “Acushnet delivered a solid third quarter with global growth driven by the United States and South Korea. We are particularly pleased with the recent launch of the Titleist 818 hybrids and the 718 irons including the new AP3. Tour adoption was strong at introduction, the global roll-out with our trade partners was well executed, and initial golfer response to these new golf clubs has been terrific. New Titleist DT TruSoft golf balls, and FootJoy’s DNA Helix golf shoes were also launched successfully in the quarter. Looking forward, the Acushnet innovation engine is in high gear and we are excited about the many new product offerings coming from Titleist and FootJoy in 2018.”

Summary of Third Quarter 2017 Financial Results

Consolidated net sales for the quarter increased by 2.3 percent, or by 2.9 percent on a constant currency basis, driven primarily by the launch of the Titleist 718 irons and 818 hybrids.

On a geographic basis, consolidated net sales in the United States increased by 4.6 percent in the quarter. Net sales in regions outside the United States were down 0.1 percent, and up 1.1 percent on a constant currency basis, with Korea up 6.4 percent and Rest of World up 6.3 percent, offset by Japan down 6.9 percent.

Segment specifics:

  • 3.5 percent decrease in net sales (3.1 percent decrease on a constant currency basis) of Titleist golf balls driven by sales volume declines in both Pro V1 and performance models. In the United States, sales volumes were impacted by unfavorable weather conditions as well as increased competitive promotional activity in the marketplace.
  • 9.5 percent increase in net sales (10.3 percent increase on a constant currency basis) of Titleist golf clubs due to higher sales volumes, primarily due to product launches in our iron series and hybrids.
  • 1.3 percent increase in net sales (2.1 percent increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to sales volume growth in our travel gear category.
  • 3.3 percent increase in net sales (3.7 percent increase on a constant currency basis) in FootJoy golf wear primarily due to higher average selling prices and a sales volume increase in our apparel category.

Net income attributable to Acushnet improved by $14.8 million to $9.3 million, primarily as a result of lower interest expense and higher income from operations, partially offset by higher income tax expense.

Adjusted EBITDA was $32.2 million, up 15.0 percent year over year. Adjusted EBITDA margin was 9.3 percent for the third quarter versus 8.3 percent for the prior year period.

Summary of First Nine Months 2017 Financial Results

Consolidated net sales for the first nine months of 2017 decreased by 2.7 percent, or by 2.0 percent on a constant currency basis.

On a geographic basis, consolidated net sales in the United States decreased by 3.0 percent in the nine month period. Net sales in the United States were impacted by a reduced store count as a result of the retail channel disruptions in 2016 as well as unfavorable weather conditions which negatively impacted both rounds of play and golf club fitting and trial activities. Acushnet posted a year-on year decline in net sales in regions outside the United States of 2.4 percent, down 0.8 percent on a constant currency basis, with Korea up 11.9 percent, offset by Japan down 10.4 percent.

Segment specifics:

  • 2.7 percent decrease in net sales (2.1 percent decrease on a constant currency basis) of Titleist golf balls. This decrease was primarily driven by a sales volume decline of our performance golf ball models which were in their second year of the two-year product life cycle and was partially offset by a sales volume increase of our newly introduced Pro V1 and Pro V1x golf balls. In the United States, sales volumes were impacted by a reduced store count as a result of the retail channel disruptions in 2016, unfavorable weather conditions which negatively impacted rounds of play, as well as increased competitive promotional activity in the marketplace.
  • 10.0 percent decrease in net sales (9.2 percent decrease on a constant currency basis) of Titleist golf clubs. This decrease was primarily driven by lower sales volumes of Vokey Design wedges, which were in their second model year, and prior generation irons. In the United States, sales volumes were impacted by a reduced store count as a result of the retail channel disruptions in 2016 as well as unfavorable weather conditions which negatively impacted golf club fitting and trial activities. This decrease was partially offset by an increase in average selling prices, in particular for the new 917 model drivers and fairways.
  • 5.0 percent increase in net sales (5.4 percent increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to higher average selling prices in all categories and higher sales volume growth in the travel category.
  • 1.7 percent decrease in net sales (0.5 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 $35.2 million to $80.4 million, primarily as a result of lower interest expense and higher income from operations.

Adjusted EBITDA was $182.5 million, down 4.1 percent year over year. Adjusted EBITDA margin was 15.1 percent versus 15.3 percent for the prior year period.

Declares Quarterly Cash Dividend

Acushnet Holdings board of directors today declared a quarterly cash dividend in an amount of $0.12 per share of common stock. The dividend will be payable on December 15, 2017, to stockholders of record on December 1, 2017. The number of shares outstanding as of September 30, 2017 was 74,451,977.

Updated 2017 Outlook

  • Consolidated net sales are expected to be approximately $1,545 to 1,555 million in 2017.
  • Consolidated net sales on a constant currency basis are expected to be in the range of a decrease of 1 percent to a decrease of 0.4 percent in 2017.
  • Adjusted EBITDA is expected to be approximately $220 to $225 million in 2017

Previously, the outlook called for consolidated net sales in the range of $1,545 to $1,565 million in 2017;  consolidated net sales on a constant currency basis in the range of a decrease of 0.7 percent to an increase of 0.6 percent in 2017, and adjusted EBITDA in the range of $220 to $230 million.

Photo courtesy Titleist