Core Insights - The article emphasizes the importance of efficiency ratios as indicators of a company's financial health and operational efficiency [1][2][3][4][5]. Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a higher ratio indicating better performance [2]. - **Asset Utilization**: This ratio assesses how effectively a company converts its assets into sales, with higher values suggesting greater efficiency [3]. - **Inventory Turnover**: This ratio indicates a company's ability to manage inventory relative to its cost of goods sold, with higher values reflecting better inventory management [4]. - **Operating Margin**: This ratio measures the efficiency of a company in controlling operating expenses relative to sales, with higher values indicating better expense management [5]. Screening Process - A screening process was applied using the aforementioned efficiency ratios along with a favorable Zacks Rank (Zacks Rank 1) to identify potential investment opportunities [6]. - The screening narrowed down over 7,906 stocks to 10, focusing on those with efficiency ratios above industry averages [7]. Selected Companies - **Vital Farms (VITL)**: Offers pasture-raised foods and has a four-quarter average positive earnings surprise of 45.3% [8][7]. - **Acushnet (GOLF)**: Designs and distributes golf products, also reporting a four-quarter average positive earnings surprise of 45.3% [9][8]. - **Texas Capital Bancshares (TCBI)**: Focuses on local business ties in Texas and has a four-quarter average positive earnings surprise of 30.2% [10][8]. - **Commerce Bancshares (CBSH)**: Engages in general banking services with a four-quarter average positive earnings surprise of 7.9% [11][8].

Core Viewpoint - Acushnet (GOLF) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. Acushnet's Earnings Outlook - The recent upgrade for Acushnet reflects an improvement in its underlying business, which is expected to drive the stock price higher as investors respond positively to this trend [5][10]. - Analysts have raised their earnings estimates for Acushnet, with the Zacks Consensus Estimate increasing by 1.7% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Only the top 5% of Zacks-covered stocks receive a "Strong Buy" rating, indicating superior earnings estimate revisions and potential for market-beating returns [9][10].

Group 1 - Acushnet Holdings (NYSE: GOLF), owner of the Titleist brand, is being revisited for investment potential due to its strong brand presence in the golf industry [1] - The company is recognized for its appreciation in the golf sector, indicating a positive outlook for its market position [1] Group 2 - Crude Value Insights provides an investment service focused on oil and natural gas, emphasizing cash flow generation as a key metric for value and growth prospects [2] - Subscribers have access to a comprehensive stock model account and in-depth cash flow analyses of exploration and production (E&P) firms, enhancing investment decision-making [2]

Core Concept - Captain Morgan Sliced is launching the "Play the Slice" campaign, encouraging fans to share their golf swings on social media for a chance to win a golf getaway [1][2]. Group 1: Campaign Details - The "Play the Slice" contest runs until the end of July, inviting participants aged 21 and over to post their golf slices on Instagram [1]. - The campaign is an official partnership with the Breezy Open, featuring events in Virginia, New Jersey, and Georgia, along with Sliced Lounges and rewards [2]. - The contest includes a grand prize of a golf trip for four to Hilton Head, South Carolina, which includes flights and accommodations [1]. Group 2: Brand Messaging - The campaign emphasizes a fun and relaxed approach to golf, celebrating all types of swings, including imperfect ones [4][5]. - Captain Morgan Sliced is marketed as a premium ready-to-drink beverage with a 5.8% ABV, available in Original and Sweet vs. Heat variety packs for a suggested retail price of $19.99 [5]. Group 3: Merchandise - A limited-edition "Play the Slice Collection" will be launched later this summer in collaboration with Pluto Golf, featuring various golf apparel and accessories [4]. Group 4: Company Background - Captain Morgan is the number one selling spiced rum in the U.S., with a diverse portfolio of flavored rums [8]. - Diageo, the parent company, is a global leader in beverage alcohol, with products sold in over 180 countries [11].

Summary of Key Points from the Conference Call Industry and Companies Involved - **Industry**: Lifestyle & Growth Platforms - **Companies Mentioned**: - SharkNinja (SN) - YETI Holdings (YETI) - Acushnet (GOLF) - Revolve (RVLV) Core Insights and Arguments - **Tariff Impact**: - In Q1, tariffs led to a 60 basis points decline in adjusted gross margin (GM) to 50.2% for the companies involved, with potential gross costs amounting to hundreds of millions [7] - Estimated gross cost of $100 million due to a 145% tariff on China-sourced products and a 10% tariff on goods from other countries, resulting in a net 450 basis points decline in GM [7] - Tariffs expected to indirectly reduce top-line growth by 300 basis points due to a softer consumer environment and supply chain disruptions [7] - **Mitigation Strategies**: - Companies are diversifying supply chains, aiming for 90% of US volume to be sourced outside of China by Q2, leveraging suppliers in Southeast Asia and building strategic inventory in the US [7] - Cost reductions through supplier concessions, value engineering opportunities (over 1500 identified), selective pricing, and operational expense optimization [7] - Acushnet plans to offset over 50% of the gross tariff impact this year, with further relief expected in FY26 [7] - Revolve is engaging in cost-sharing discussions with manufacturing partners and diversifying sources outside of China, although this is a long-term strategy [7] Additional Important Insights - **Company Valuations and Price Targets**: - **Acushnet Holdings Corp.**: Price target of $75 based on ~13x 2026E EV/EBITDA; risks include slowing industry growth and adverse weather [8] - **Revolve Group, Inc.**: Price target of $24 based on ~30x FY26 P/E; downside risks include economic weakness and competition [9] - **SharkNinja Inc.**: Price target of $175 based on ~19x FY26E EV/EBITDA; risks include supply chain headwinds and increased competition [10] - **YETI Holdings, Inc.**: Price target of $53 based on ~18x FY26E EPS; risks include competition and economic weakness [11] - **Inventory Exposure**: - Approximately 22% of Revolve's FY24 inventory purchases are directly exposed to tariffs, with management anticipating a GM reduction of 240 basis points due to tariffs and shifts in consumer demand [7] - **Strategic Focus**: - Companies are focusing on managing inventory levels tightly, reducing safety stocks, and pausing non-critical capital expenditures to preserve cash flow and minimize risk [7] This summary encapsulates the key points discussed in the conference call, highlighting the impact of tariffs, mitigation strategies, company valuations, and strategic focuses of the involved companies.

Financial Performance - Net sales for Q1 2025 were $703.372 million, a slight decrease of 0.3% compared to $707.554 million in Q1 2024[24] - Gross profit for Q1 2025 was $337.162 million, down from $342.352 million in Q1 2024, reflecting a gross margin of approximately 47.9%[24] - Net income attributable to Acushnet Holdings Corp. for Q1 2025 was $99.372 million, an increase of 13.1% from $87.762 million in Q1 2024[24] - Basic net income per share for Q1 2025 was $1.62, compared to $1.36 in Q1 2024, representing an increase of 19.1%[24] - The company reported a comprehensive income of $105.835 million for Q1 2025, compared to $76.632 million in Q1 2024[27] - Net income for the three months ended March 31, 2025, was $99,025,000, an increase of 17.1% compared to $84,559,000 in the same period of 2024[30] - Total net sales for the reportable segments reached $670.491 million for the three months ended March 31, 2025, with Titleist Golf Equipment contributing $421.092 million, FootJoy Golf Wear $178.436 million, and Golf Gear $70.963 million[103] - The total operating income for the consolidated segments was $114.547 million for the three months ended March 31, 2025, compared to $120,595 million before income tax[103] Assets and Liabilities - Total assets as of March 31, 2025, were $2.403 billion, up from $2.180 billion as of December 31, 2024[22] - Total liabilities increased to $1.618 billion as of March 31, 2025, compared to $1.383 billion at the end of 2024[22] - The total shareholders' equity as of March 31, 2025, was $780,284,000, a decrease from $903,087,000 as of December 31, 2023[32] - Cash and cash equivalents decreased to $40.599 million as of March 31, 2025, from $53.059 million at the end of 2024[22] - Accounts receivable decreased by $254,549,000 in Q1 2025, compared to a decrease of $267,847,000 in Q1 2024[30] - Total inventories decreased to $538.1 million as of March 31, 2025, from $575.9 million as of December 31, 2024[51] Cash Flow and Financing - Cash flows used in operating activities amounted to $(120,254,000) for Q1 2025, compared to $(109,516,000) in Q1 2024, reflecting a decrease in cash flow[30] - Cash flows provided by financing activities were $118,145,000 in Q1 2025, up from $101,571,000 in Q1 2024[30] - The company recorded a non-cash gain on deconsolidation of $20,887,000 related to Lionscore during the three months ended March 31, 2025[41] - The company had $597.6 million of outstanding indebtedness at variable interest rates, with a potential increase of $6.0 million in annual pre-tax interest expense for a one percentage point increase in interest rates[171] Research and Development - Research and development expenses rose to $18.859 million in Q1 2025, compared to $16.453 million in Q1 2024, indicating a focus on innovation[24] - Research and development expenses amounted to $16.0 million, indicating the company's investment in innovation[104] Shareholder Activities - The company declared a dividend of $0.235 per common share for the first quarter of 2025, totaling $14.576 million, compared to $0.215 per share in the previous year[78] - As of March 31, 2025, the company had $415.5 million remaining under its share repurchase authorization, having repurchased 540,944 shares at an average price of $67.73, totaling $36.637 million[84] - The company recognized a share repurchase liability of $99.1 million for 1,476,851 shares as of March 31, 2025, reflecting ongoing repurchase agreements with Magnus Holdings[82] Tax and Regulatory - The company's effective income tax rate decreased to 17.9% for the three months ended March 31, 2025, down from 21.7% for the same period in 2024, resulting in a tax expense of $21.6 million, a decrease of $1.8 million year-over-year[76][77] Risks and Challenges - Acushnet Holdings Corp. continues to face risks related to global economic conditions, competition, and supply chain disruptions, which may impact future performance[13] - The company is exposed to commodity price risks for materials used in manufacturing, including polybutadiene and titanium[177] - Inflationary pressures may adversely affect the company's operating results, particularly in raw materials and wage rates[178] Compensation and Employee Benefits - Share-based compensation expense was $6,941,000 in Q1 2025, slightly down from $7,424,000 in Q1 2024[30] - The total net periodic benefit cost for pension benefits was $2.243 million for the three months ended March 31, 2025, compared to $2.271 million in the same period of 2024[75] - The number of PSUs that vested during the three months ended March 31, 2025, was 151,848, resulting in the entitlement to receive 196,795 shares of common stock[91] - The cumulative undelivered shares of common stock as of March 31, 2025, were 517,542 for RSUs and 546,789 for PSUs[94] Foreign Exchange and Derivatives - The gross U.S. dollar equivalent notional amount of foreign exchange forward contracts was $206.2 million as of March 31, 2025[63] - For the three months ended March 31, 2025, the company reported total losses from foreign exchange forward contracts of $549,000 compared to gains of $3.461 million in the same period of 2024[67] - The company expects to reclassify a net gain of $4.6 million related to foreign exchange derivative instruments from accumulated other comprehensive loss into cost of goods sold within the next 12 months[66]

Core Insights - Acushnet reported revenue of $703.37 million for the quarter ended March 2025, a decrease of 0.6% year-over-year, while EPS increased to $1.62 from $1.43 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $696.62 million by 0.97%, and the EPS surpassed the consensus estimate of $1.32 by 22.73% [1] Financial Performance Metrics - Titleist golf balls net sales were $213.30 million, slightly below the estimated $214.43 million, reflecting a year-over-year increase of 2.6% [4] - FootJoy golf wear net sales were $178.40 million, falling short of the $188.85 million estimate, representing a year-over-year decline of 7.3% [4] - Titleist golf gear net sales reached $71 million, exceeding the estimated $69.87 million, with a year-over-year increase of 4.1% [4] - Titleist golf clubs net sales were $207.80 million, surpassing the estimated $188.46 million, marking a year-over-year increase of 1.9% [4] Stock Performance - Acushnet shares have returned 15.5% over the past month, outperforming the Zacks S&P 500 composite's return of 10.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Acushnet reported worldwide net sales of $703 million, a 1% increase year-over-year [6] - Adjusted EBITDA was $139 million, reflecting a decrease of $15 million due to increased investment in the equipment segment [6][18] - Gross profit decreased by $5 million compared to the first quarter of 2024, primarily due to higher manufacturing costs [19] Business Line Data and Key Metrics Changes - Golf equipment net sales increased by almost 4%, driven by new product launches and strong performance in the EMEA region [7][11] - Titleist golf ball business grew by 4%, with significant gains in the EMEA region [8] - FootJoy sales declined by 5%, attributed to lower closeout footwear sales and targeted product line rationalization [10][19] Market Data and Key Metrics Changes - The US market saw a 1% increase, while EMEA grew by 4% [11] - Japan and Korea experienced declines of 24% each, primarily due to poor weather affecting the golf season [11] - Rounds of play in the US were down 2%, but worldwide rounds were slightly up, led by a 15% increase in EMEA and the UK [12] Company Strategy and Development Direction - The company is focused on executing a full slate of product fitting events across all markets [11] - Acushnet is adapting its supply chain to mitigate tariff impacts, with plans to source more components from non-China territories [14][26] - The company aims to maintain a strong consumer base and provide exceptional product experiences while navigating tariff uncertainties [17][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the core consumer, the dedicated golfer, despite macroeconomic uncertainties [17][25] - The company expects a gross tariff impact of approximately $75 million in 2025, with plans to mitigate over 50% of this impact [25][26] - Future guidance remains uncertain due to changing trade policies, with no updates provided until more clarity is achieved [25] Other Important Information - Capital expenditures for the first quarter were $11 million, with a planned total of approximately $85 million for 2025 [22] - The company returned roughly $51 million to shareholders through share repurchases and cash dividends [23] - The effective tax rate in Q1 was 17.9%, down from 21.7% the previous year [21] Q&A Session Summary Question: Guidance and Consumer Demand - Management indicated that the decision to pause guidance updates is due to less visibility rather than a change in consumer demand [30][31] Question: Tariff Mitigation Actions - Management outlined that pricing would be a last resort, focusing first on supply chain adjustments and cost-sharing with suppliers [34][36] Question: Impact of Tariff Changes - If the China tariff rate were to decrease, the potential mitigation of the $75 million impact could be significant [41][42] Question: Demand Trends in Asia - Management noted a slow start in Asia due to weather but observed improvement in March and April [43][44] Question: Currency Exchange Rate Impact - A potential tailwind of $20 million was discussed if current exchange rates persist, impacting overall financial outlook positively [49][50] Question: Diversification from China - Management confirmed plans to diversify sourcing away from China while maintaining some supply chains for non-US markets [56][58]

Financial Data and Key Metrics Changes - Acushnet reported worldwide net sales of $703 million, a 1% increase year-over-year [6] - Adjusted EBITDA was $139 million, reflecting a decrease of $15 million due to increased investments in the equipment segment [6][17] - Gross profit decreased by $5 million compared to the first quarter of 2024, primarily due to higher manufacturing costs [19] Business Line Data and Key Metrics Changes - Golf equipment net sales increased by almost 4%, driven by new product launches and strong performance in the EMEA region [7] - Titleist golf ball business grew by 4%, with significant gains in the EMEA region [7] - FootJoy sales declined by 5% due to lower closeout footwear sales and targeted product line rationalization [9][19] Market Data and Key Metrics Changes - The US market saw a 1% increase, while EMEA grew by 4% [11] - Japan and Korea experienced declines of 24% each, attributed to poor weather affecting the golf season [11] - Rounds of play in the US were down by 2%, but worldwide rounds were slightly up, particularly in EMEA and the UK [12] Company Strategy and Development Direction - The company is focused on executing a full slate of fitting events across all markets and enhancing product offerings [11] - Acushnet is adapting its supply chain to mitigate tariff impacts, with a focus on regional diversification and vertical integration [12][15] - The company plans to take pricing measures if tariff costs become permanent, but has not yet passed these costs to consumers [16] Management's Comments on Operating Environment and Future Outlook - Management characterized 2025 as a year of stability and improving profitability for FootJoy, with a focus on premium sales [10] - The macro environment remains uncertain due to changing trade policies, leading to a cautious approach in providing full-year guidance [24] - The core consumer remains strong and resilient, with expectations for low single-digit sales growth in the first half of 2025 [26] Other Important Information - The company returned approximately $51 million to shareholders through share repurchases and dividends [23] - Capital expenditures for the first quarter were $11 million, with plans for approximately $85 million in 2025 [22] - The effective tax rate in Q1 was 17.9%, down from 21.7% the previous year [21] Q&A Session Summary Question: Guidance and Consumer Demand - Management indicated that the decision to pause guidance updates is due to less visibility rather than changes in consumer demand [30][31] Question: Tariff Mitigation Actions - Management emphasized that pricing is the last resort, focusing first on supply chain adjustments and cost-sharing with suppliers [35][36] Question: Impact of Tariffs on Financials - A significant portion of the estimated $75 million tariff impact is related to China, and management is exploring ways to mitigate this [42][25] Question: Demand Trends in Asia - Management noted a slow start in Japan and Korea due to weather but observed improvement in March and April [45][46] Question: Footwear Market Dynamics - Management expressed confidence in the footwear business, highlighting new product launches and a focus on premium offerings [71][72]

Core Insights - Acushnet reported quarterly earnings of $1.62 per share, exceeding the Zacks Consensus Estimate of $1.32 per share, and up from $1.43 per share a year ago, representing an earnings surprise of 22.73% [1] - The company posted revenues of $703.37 million for the quarter, surpassing the Zacks Consensus Estimate by 0.97%, but down from $707.55 million year-over-year [2] - Acushnet has surpassed consensus EPS estimates three times over the last four quarters, while it has topped revenue estimates only once in the same period [2] Earnings Outlook - The sustainability of Acushnet's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.36 on revenues of $723.61 million, and for the current fiscal year, it is $3.48 on revenues of $2.51 billion [7] Industry Context - The Leisure and Recreation Products industry, to which Acushnet belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment [5][6]