Acushnet Holdings Corp., the parent of Titleist and FootJoy, reported third-quarter earnings and sales topped Wall Street expectations on strength in the U.S. golf market. On an analyst call, David Maher, president and CEO, said the U.S. is outpacing markets overseas in both golf rounds played and consumer spend due to resilient golf enthusiasts.

Maher said, “Against the backdrop of a very wet spring in open markets, particularly the West, I think the industry generally feels really good about what we’re seeing in participation in the U.S.”

He added, “It just speaks to the strength and resilience of the sport. And then when you refine that a bit into our dedicated golfer, you see that group is even more resilient than the broader consumer space.”

Acushnet reaffirmed its sales guidance for the year while slightly raising its earnings outlook. Shares of Acushnet closed up about $4.68, or 9.3 percent, Thursday to $54.84.

In the quarter ended September 30, sales increased 6.3 percent, or 6.0 percent on a constant-currency basis, to $593.4 million, topping analysts’ consensus of $565.4 million. The gains reflect higher sales volumes in Titleist golf clubs and higher average selling prices in Titleist golf balls and FootJoy golf wear, mainly apparel, partially offset by lower sales volumes in Titleist golf gear.

Net income climbed 10.6 percent to $57.3 million, or 85 cents a share, easily ahead of analysts’ consensus of 53 cents. Adjusted EBITDA rose 14.2 percent to $98.8 million, with the margin improving to 16.6 percent versus 15.5 percent for the prior year period.

Gross margins were down 80 basis points to 52.0 percent. Unfavorable manufacturing overhead absorption and increased promotional activity in footwear offset the benefits from higher sales volumes in Titleist golf clubs, higher average selling prices in Titleist golf balls, and lower inbound freight across all reportable segments.

SG&A expenses declined to 35.4 percent from 36.3 percent a year ago.

Titleist Golf Balls Sales Climb 6 Percent In Q2
By category, sales of Titleist golf balls increased 6.3 percent (6.2 percent increase on a constant-currency basis) to $192.6 million. Sales were up 16 percent year to date. The gains are primarily due to higher average selling prices of its Pro V1 and Pro V1x golf balls launched in the first quarter of 2023.

“The new Pro V1 and Pro V1 models are leading this growth and our golf ball manufacturing team is doing good work to keep pace with strong consumer demand,” said Maher on the call. “As we approach the holiday retail season, our golf ball availability position is healthy and we have transitioned to building inventory to support new product launches scheduled for early 2024.”

Maher noted that across worldwide tours, Titleist golf ball usage is more than seven times the brand’s nearest competitor. He added, “At the men’s and women’s U.S. Open championships, all four winners played a Titleist golf ball. Four different champions winning majors on four distinctly different golf courses showcase the quality total game performance and versatility that define the number one ball in golf.”

Sales of Titleist golf clubs jumped 17.6 percent (17.9 percent increase on a constant-currency basis) in the quarter to $181.0 million. The gains were largely due to higher sales volumes of its T-Series irons launched in the quarter, as well as TSR hybrids and Scotty Cameron Super Select putters, both of which were launched in the first quarter of 2023. This increase was partially offset by lower sales volumes of drivers, fairways and wedges. Year-to-date golf club sales were up 17 percent.

Maher said Titleist’s T-Series irons, launched in August, are “off to a solid start with early demand meeting our high expectations.” He noted that Titleist was the most-played iron on the PGA Tour this past season for the 19th time in the past 20 years and Titleist’s TSR drivers continue their streak as the most-played driver on tour. Titleist golf balls and golf clubs have posted year-to-date sales gains in all regions.

Sales of Titleist golf gear fell 19.4 percent (19.9 percent decrease on a constant-currency basis) to $47.7 million, primarily driven by lower sales volumes in golf bags and headwear due to strong sales volume in the third quarter of 2022 as supply chain and fulfillment constraints recovered from the first quarter of 2022. Titleist golf gear’s sales were up 9 percent year-to-date.

Maher said, “This third quarter decline was expected as we comped against last year’s outsized growth when much of our gear volume was delayed into Q3 as a result of supply chain disruptions we experienced in the first half of 22. We are pleased that our gear delivery and service have returned to healthy levels and that the timing of our business is on a normalized and demand-driven cadence.”

FootJoy’s sales increased 3.8 percent (3.4 percent increase on a constant-currency basis) to $136.7 million, primarily due to higher average selling prices in apparel as well as strength in the U.S. business. Sales were flat year-to-date.

Maher said, “Growth in the quarter was led by apparel and a modest increase in footwear as we effectively differentiate our new golf shoe products in a crowded retail environment. Affirming our comments in the last call, we expect the industry will continue to work through excess footwear inventories for the next few quarters. And we remain confident that our team will manage through this period while protecting FootJoy’s premium positioning and long-term interests.”

U.S. Paces Regional Growth For Acushnet
By region, sales in the U.S. grew 7.6 percent to $352.5 million. The gains were largely driven by increases of 14.0 percent in Titleist golf clubs, primarily driven by higher sales volumes of T-Series irons; a 7.9 percent in Titleist golf balls primarily driven by higher average selling prices of Pro V1 and Pro V1x golf balls; and 12.1 percent in FootJoy golf wear primarily driven by higher average selling prices in apparel and footwear. These increases were partially offset by a decrease of 20.2 percent in Titleist golf gear primarily as a result of lower sales volumes of headwear and golf bags due to the tough year-ago comparisons. U.S. sales are up 15 percent year-to-date.

“The U.S. is setting the pace with rounds of play up 4 percent year-to-date and on track to surpass their previous high mark from 2021,” said Maher. “We see this as positive commentary on the overall health of the sport and the additive impact of the expanding golfer base.”

Net sales in regions outside the U.S. increased 4.5 percent, or 3.8 percent on a constant currency basis.

In Japan and Rest of World, the increase in sales was primarily due to higher sales volumes in Titleist golf clubs. In EMEA, the increase in sales was primarily due to higher sales volumes of products that are not allocated to one of its four reportable segments and higher sales volumes in Titleist golf clubs. This increase in EMEA was partially offset by lower net sales in FootJoy golf wear and Titleist golf gear, mainly in footwear and golf bags, respectively. In Korea, the decrease in sales was primarily due to lower sales volumes of Titleist golf gear, products that are not allocated to one of the company’s four reportable segments, and FootJoy golf wear, partially offset by sales increases in Titleist golf clubs and Titleist golf balls.

Maher said Acushnet estimates that golf rounds played in EMEA, Japan and Korea were off low-single-digits through September, largely attributable to unfavorable weather compared to last year.

Based on its year-to-date performance and current projections for the fourth quarter, the company reaffirmed its full-year 2023 sales guidance range of $2,350 to $2,400 million. On a constant-currency basis, sales are expected to increase 5.0 percent to 7.2 percent. Acushnet now expects full-year 2023 adjusted EBITDA to be approximately $365 to $375 million, compared to $355 to $375 million previously.

Maher said the outlook “reflects continued strong demand for Acushnet’s products, underlying enthusiasm for the game of golf, and healthy fundamentals across the golf industry.”

The outlook also takes into account additional investments to build on momentum heading into 2024.

“We are enthused with the momentum behind our Titleist, FootJoy and Kjus brands and healthy market fundamentals and are confident in the investments we are making across our businesses to position Acushnet for sustaining leadership and growth,” said Maher. “Golf participation is vibrant with worldwide rounds and play tracking ahead of their 2021 peak and golf courses and retail partners are investing in their facilities and experiences to meet evolving consumer preferences.”

Photo courtesy Kohler Golf Academy/Titleist