Acushnet Holdings Corp. reported first-quarter earnings handily topped Wall Street’s guidance, led by robust double-digit gains for Titleist golf balls and clubs tied to successful launches.

Acushnet maintained its guidance for the year.

In the quarter ended March 31, sales rose 13.2 percent, or 17.2 percent on a constant currency basis, to $686.3 million, surpassing Wall Street’s consensus estimate of $626 million.

Net income climbed 15.2 percent to $93.3 million, or $1.36 a share, topping Wall Street’s consensus estimate of $1.09.

“The Acushnet team is excelling on the product development, manufacturing and supply chain management fronts,” said David Maher, Acushnet’s president and CEO, on an analysts call. “My talented teammates are doing great work adapting and strengthening our capabilities, adding agility and capacity to meet steady demand.”

Maher noted that each segment and region reported gains in the quarter.

United States Paces Regional Performance
By region, the U.S. turned in the top performing, climbing 25.3 percent to $369.9 million. The U.S gains were driven by a 23.0 percent in Titleist golf balls, 21.2 percent in FootJoy golf wear, 19.7 percent in Titleist golf clubs, and 66.2 percent in Titleist golf gear.

The increase in Titleist golf balls in the U.S. was primarily driven by higher sales volumes from its latest generation Pro V1 and Pro V1x golf balls. The rise in FootJoy golf wear was primarily driven by higher sales volumes across all product categories, led by apparel. The increase in Titleist golf clubs was primarily driven by higher sales volumes of its TSR drivers, fairways and hybrids, partially offset by lower sales volumes of wedges which are in their second model year. The increase in Titleist golf gear was primarily driven by higher sales volumes across all product categories reflecting improvements in supply chain and fulfillment constraints versus their impact in the first quarter of 2022.

Net sales outside the U.S. increased 1.7 percent, or 9.4 percent, on a constant currency basis, as some weakness in EMEA was offset by double-digit gains elsewhere.

EMEA sales were $104.8 million, down 6.8 percent on a reported basis and up 0.2 percent on a currency-neutral basis. Currency-neutral sales increased across all reportable segments except FootJoy golf wear.

Japan’s sales reached $46.4 million, up 1.3 percent overall and advancing 15.9 percent on a currency-neutral basis. Sales increased in all reportable segments in Japan except Titleist golf clubs, which were flat

In Korea, sales were $89 million, up 3.9 percent on a reported basis and 9.9 percent on a currency-neutral basis. Sales in the Rest of World segment were $$76.2 million, up 9.1 percent on a reported basis and 19.8 percent on a currency-neutral basis. Korea and Rest of World both saw increases across all reportable segments.

Golf Balls Leads Category Gains
By product category, sales of Titleist golf balls grew 17.2 percent (20.6 percent on a constant currency basis), to $192.0 million. The improvement was primarily due to higher sales volumes of Titleist’s latest generation Pro V1 and Pro V1x golf balls launched in the first quarter of 2023.

Titleist golf clubs’ sales expanded 12.4 percent (16.3 on a constant currency basis) to $180.8 million, primarily driven by higher sales volumes of Titleist’s TSR drivers and fairways launched in the third quarter of 2022 and TSR hybrids launched in the first quarter of 2023. Lower sales volumes of second-model-year wedges partially offset this increase.

Titleist golf gear sales surged 51.9 percent (57.4 percent on a constant-currency basis) to $67.0 million. The gains were primarily due to higher sales volumes across all product categories reflecting improvements in supply chain and fulfillment constraints versus their impact in the first quarter of 2022.

FootJoy’s sales improved 3.9 percent (7.8 percent on a constant-currency basis) to $205.3 million, primarily driven by increased sales volumes in apparel reflecting improvements in supply chain constraints.

Improved Gross Margins Support Earnings Beat
The earnings improvement was boosted by the sales gain and an increase in gross margins by 100 basis points to 53.3 percent

SG&A expense increased 13.7 percent to $222.5 million, but remained flattish as a percent of sales, at 32.4 percent against 32.3 percent a year ago. R&D expenses increased 4 percent to $14.5 million, accounting for 2.1 percent of revenues against 2.3 percent a year ago.

Adjusted EBITDA was $146.8 million, up 22.3 percent year over year. The adjusted EBITDA margin was 21.4 percent for the first quarter versus 19.8 percent for the prior year’s period.

Inventories were $639.1 million at the quarter’s end, down 4.9 percent versus levels at the end of 2022 but up 42.4 percent from constrained year-ago levels.

Outlook
The company affirmed its full-year outlook. Tom Pacheco, CFO, noted that Acushnet has historically not significantly changed guidance until the company gets through the first half of the year.

“Overall, we continue to see steady demand for golf and Acushnet products,” said Pacheco. “We are pleased with the success of our recent launches and are excited about our upcoming product introductions over the balance of the year. As you would expect, our outlook continues to be cautioned given the overall economic environment.”

Pacheco said Acushnet still expects currency to be a headwind for balance of the year, and to a greater degree in the second quarter, but all segments are expected to show growth on a constant currency basis for the full year. Acushnet expects margins will continue to benefit from lower air freight, but the company expects “some headwinds from higher input costs and the return of promotion activity albeit lower than pre-pandemic levels.”

Full-year consolidated net sales are expected in the range of $2,325 to $2,375 million, up about 3.5 percent at the mid-point versus 2022. On a constant-currency basis, consolidated net sales are expected to be in the range of up 5.0 percent to up 7.2 percent. Adjusted EBITDA of roughly $345 million to $365 million, 4.9% at the mid-point versus 2022.

Maher concluded, “As we look ahead to the balance of the year, we are well-positioned to meet the continued demand for our products and are encouraged by the resilience and engagement of Acushnet’s core consumer, the game’s dedicated golfer.”

Photo courtesy Titleist