Acushnet (GOLF) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Acushnet Holdings Corp.'s unaudited condensed consolidated financial statements show total assets at $2.27 billion and quarterly net income at $70.2 million Condensed Consolidated Balance Sheet Highlights (Unaudited) | (USD in thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,093,524 | $996,692 | | Total assets | $2,274,158 | $2,196,677 | | Total current liabilities | $479,187 | $451,135 | | Total liabilities | $1,365,234 | $1,283,805 | | Total shareholders' equity | $898,709 | $903,087 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | (USD in thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $683,867 | $689,363 | $1,391,421 | $1,375,653 | | Gross profit | $371,754 | $368,523 | $749,693 | $734,195 | | Income from operations | $106,023 | $106,490 | $227,404 | $231,394 | | Net income | $70,164 | $74,364 | $154,723 | $167,983 | | Diluted EPS | $1.11 | $1.09 | $2.47 | $2.45 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | (USD in thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Cash flows provided by operating activities | $102,117 | $119,617 | | Cash flows used in investing activities | ($22,110) | ($53,350) | | Cash flows used in financing activities | ($63,019) | ($62,381) | | Net increase in cash | $14,851 | $3,637 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2024 net sales decreasing 0.8% to $683.9 million and H1 2024 net sales increasing 1.1% to $1.39 billion Results of Operations Net sales for Q2 2024 decreased 0.8% to $683.9 million (up 0.6% constant currency), with H1 sales growing 1.1% Net Sales by Reportable Segment - Three Months Ended June 30 | (USD in millions) | 2024 | 2023 | % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | Titleist golf balls | $247.5 | $237.6 | 4.2% | 5.3% | | Titleist golf clubs | $177.5 | $188.0 | (5.6)% | (4.1)% | | Titleist golf gear | $68.9 | $69.9 | (1.4)% | 0.1% | | FootJoy golf wear | $157.2 | $158.2 | (0.6)% | 0.7% | Net Sales by Reportable Segment - Six Months Ended June 30 | (USD in millions) | 2024 | 2023 | % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | Titleist golf balls | $455.5 | $429.6 | 6.0% | 7.1% | | Titleist golf clubs | $381.4 | $368.8 | 3.4% | 4.7% | | Titleist golf gear | $137.1 | $136.9 | 0.1% | 1.2% | | FootJoy golf wear | $349.6 | $363.5 | (3.8)% | (2.9)% | - Gross margin increased to 54.4% in Q2 2024 from 53.5% in Q2 2023, primarily due to lower manufacturing costs in Titleist golf balls, partially offset by repositioning of second-model-year golf clubs[113] - SG&A expenses for H1 2024 increased by $18.1 million, which includes $7.0 million of restructuring costs associated with the company's footwear manufacturing joint venture[128] Liquidity and Capital Resources The company maintains liquidity through cash from operations and credit facilities, with $565.8 million available under its revolving credit facility - As of June 30, 2024, the company had $565.8 million of availability under its multi-currency revolving credit facility and $34.6 million under local credit facilities[140] - During the six months ended June 30, 2024, the company paid $28.1 million in dividends and repurchased $72.8 million of its common stock[143] - The company entered new share repurchase agreements in March 2024 (up to $37.5 million) and June 2024 (up to $62.5 million), with $302.2 million remaining under authorization as of June 30, 2024[144][145] - Full-year 2024 capital expenditures are expected to be approximately $80.0 million[146] Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rates, foreign exchange, and commodity prices, using derivatives to mitigate these risks - A hypothetical one percentage point increase in interest rates on $305.9 million of variable-rate debt would increase annual pre-tax interest expense by $3.1 million[158] - The company uses foreign exchange forward contracts with a gross notional amount of $209.7 million as of June 30, 2024; a 10% U.S. dollar weakening would decrease the net settlement asset by $14.7 million[160][161] - The company faces commodity price risks for materials like polybutadiene, urethane, titanium, steel, and various fabrics used in its products[164] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2024 - The principal executive and financial officers concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[166] - No material changes occurred in internal control over financial reporting during the fiscal quarter ended June 30, 2024[166] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various lawsuits arising from normal business operations, with unpredictable outcomes - The company is involved in lawsuits associated with the normal conduct of its business, and the outcome of these actions is not predictable[168] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes have occurred to the risk factors described in the company's Annual Report on Form 10-K for the year ended December 31, 2023[169] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during Q2 2024, totaling 587,520 shares at an average price of $63.83 Common Stock Purchases - Q2 2024 | Period | Total Shares Purchased | Average Price Paid per Share (USD) | | :--- | :--- | :--- | | April 2024 | 208,689 | $63.09 | | May 2024 | 209,000 | $63.66 | | June 2024 | 169,831 | $64.94 | | Total | 587,520 | $63.83 | - As of June 30, 2024, the approximate dollar value of shares that may yet be purchased under authorized plans or programs is $302.2 million[170] Defaults Upon Senior Securities No defaults upon senior securities were reported - None[171] Mine Safety Disclosures No mine safety disclosures were reported - None[171] Other Information No other information was reported - None[171] Exhibits This section lists exhibits filed with Form 10-Q, including repurchase agreements, credit agreement amendments, and CEO/CFO certifications - Key exhibits include the Stock Repurchase Agreement with Magnus dated June 14, 2024, the Third Amendment to the Credit Agreement, and CEO/CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[173]