Acushnet Holdings Corp. Q3 FY2024 earnings call

• During Q3, Acushnet delivered net sales of $621 million, a 5% Y/Y increase, with adjusted EBITDA of $107 million, up 9% Y/Y. YTD net sales up 3% to over $2 billion, adjusted EBITDA $392 million, up 4% Y/Y.
• Titleist Golf Ball: Q3 down 1% Y/Y, YTD up 5% led by Pro V1 momentum; expect Golf Balls sales to be modestly down in H2 as preparing for new Pro V1 launch in Jan.
• Titleist Golf Clubs: Q3 up 19% due to GT drivers and Fairway Metals; YTD up 9% with growth in all regions.
• Gear: Q3 up 9%, YTD up 3% related to higher sales volumes in travel with Club Glove.
• FootJoy: Q3 down 2%, YTD down 3%; executed well in soft apparel/footwear market; nearing full transition of footwear production lines to Vietnam facility.
• Regionally: US market up 6% Q3, YTD up 7%; Japan up slightly, EMEA down; rounds outside US projected off 2% YTD.

Titleist Golf Ball: Q3 net sales down 1%, YTD up 5%. Titleist Golf Clubs: Q3 up 19%, YTD up 9%. Gear: Q3 up 9%, YTD up 3%. FootJoy: Q3 down 2%, YTD down 3%. Products not allocated: Q3 and YTD down.

• Narrowed adjusted EBITDA range to $395 million to $405 million for full year 2024.
• Reaffirmed net sales range of $2.45 billion to $2.5 billion on reported basis, closer to midpoint of constant currency range.
• Q4 outlook: sales growth in all segments except Golf Balls (end of 2-year product cycle); expected adjusted EBITDA improvement in Q4 with incremental SG&A and R&D investments.
• Anticipate restructuring charge in Q4 related to full transition of footwear supply chain to Vietnam.
• Starting 2024 10-K, combine Titleist Golf Balls and Clubs into Titleist Golf Equipment segment.

• Weather variability impacting rounds of play.
• Promotional activity in footwear during holidays.
• FX impacts affecting net sales outlook.

Q: Elaborate on participation and engagement trends across geographies?

A: David Maher stated US market strong, rounds up 2% YTD; Korea and Japan up, EMEA down; rounds vs 2019 baseline: US, Korea up 20+%, Japan up 10%, worldwide up ~15%.

Q: Follow-up on gross margin and promotional landscape in Q4?

A: Sean Sullivan said Q3 gross margin positive, back half gross margin approximates first half; David Maher noted equipment (balls/clubs) in steady state, footwear may have promotional activity at holidays.