Acushnet (US:GOLF)2023-05-07 03:07Financial Data and Key Metrics Changes - Consolidated net sales for Q1 2023 were $686 million, representing a 17% year-over-year increase [30][32] - Net income attributable to Acushnet Holdings was $93 million, up 15% compared to 2022 [32] - Adjusted EBITDA was $147 million, reflecting a 22% increase from the prior year [32] - SG&A expenses increased by 14% to $223 million, primarily due to higher selling and advertising expenses [31] - Gross profit for Q1 was $366 million, up 15% year-over-year, with gross margins at 53.3%, an increase of 100 basis points [59] Business Line Data and Key Metrics Changes - Titleist golf balls saw a 21% increase in sales, driven by the successful launch of new Pro V1 and Pro V1x models [24][30] - Titleist golf clubs reported a 16% increase in sales to $181 million [17] - FootJoy sales increased by 8% to $205 million, with double-digit growth in FJ apparel [18] - Titleist gear experienced a significant growth of 57% for the quarter [26] Market Data and Key Metrics Changes - The U.S. market grew by 25% in Q1, with all segments contributing to this growth [55] - Golf participation remains healthy globally, with U.S. rounds flat despite adverse weather conditions [19][19] - Japan and Korea showed mixed results, with Japan experiencing low single-digit growth and Korea seeing a slight decline [94] Company Strategy and Development Direction - The company is focused on product innovation and operational excellence, with ongoing investments in CapEx expected to reach $75 million for the year [35][64] - Acushnet aims to maintain its premium positioning in the market, with a strong emphasis on fitting and customization to enhance consumer experience [124][108] - The company is confident in its ability to navigate macroeconomic pressures and is committed to delivering strong free cash flow and returning capital to shareholders [36][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the golf industry and the dedicated golfer demographic, which has shown stability even during economic downturns [29][108] - The company anticipates steady demand for its products and is maintaining its guidance for the full year, expecting consolidated net sales to be between $2.325 billion and $2.375 billion [67][68] - Management noted that while there are headwinds from higher input costs, they expect to benefit from lower freight rates [38][66] Other Important Information - The company has a leverage ratio of 1.8 times, with total debt at approximately $829 million [33][61] - Cash flow from operations improved to an outflow of $86 million compared to $164 million in the prior year [63] - The company repurchased approximately 2.5 million shares for about $116 million during Q1 [65] Q&A Session Summary Question: Competitive backdrop for golf clubs and pricing trends - Management noted that they are pleased with the performance of the TSR lineup and anticipate competitive activity in the market [41][42] Question: Long-term expense savings from IP purchase - Management confirmed that the shift to an owned model has resulted in cost benefits, with amortization impacting the P&L positively [75] Question: Trends in consumer behavior during economic uncertainty - Management indicated that dedicated golfers tend to be resilient, with minimal trade-down behavior observed [108] Question: Improvement in retail sales moving into April - Management reported stable retail conditions, with no significant deviations from previous trends [110] Question: Demographic trends driving golf participation - Management highlighted the growth in junior and female golfers as positive trends for the sport [93][121]