FAIRHAVEN, MA – August 11, 2017 – Acushnet Holdings Corp. (NYSE: GOLF) (“Acushnet”), a global leader in the design, development, manufacture and distribution of performance-driven golf products, today reported financial results for the three and six months ended June 30, 2017.
Wally Uihlein, Acushnet President and CEO, said, “We are encouraged by what we continue to view as improving structural stability of the golf industry and believe that the broad rationalization is a positive for the commerce of golf. Near term, the industry is experiencing the effects of the US retail correction as well as the impact of unfavorable weather on rounds played, but we believe that the longer term forecast remains bright. The dedicated golfer has been Acushnet’s primary focus and our proven strategy to address their needs is the key to our ongoing success. We remain optimistic about the future and our ability to strengthen our market positions over time.”
David Maher, Acushnet COO, said, “The U.S. retail channel correction and the impact of weather on rounds and fittings have been near term realities affecting the golf industry and our business. Acushnet associates are executing well while navigating these headwinds. The growing strength of the ProV1 franchise, Titleist gear and the success of the FootJoy Pro/SL golf shoes are great examples of how we continue to fortify our positions on multiple fronts as we work closely with our trade partners to deliver value added products to dedicated golfers. We are excited about our upcoming new product introductions and we are looking forward to building upon our brand momentum in the back half of the year.”
Consolidated net sales for the quarter decreased by 7.6%, or by 6.6% on a constant currency basis. Several significant factors, primarily in the United States, had a negative impact on the business this quarter. These factors include the ongoing effects of the reduced U.S. store count and retail consolidation, unfavorable weather conditions which negatively impacted rounds of play as well as golf club fitting and trial engagements, and promotional activity by competitors that impacted the golf ball category. As a result, consolidated net sales in the United States decreased by 8.5% in the quarter.
Acushnet posted a year-on-year decline in net sales in regions outside the United States of 6.6%, down 4.5% on a constant currency basis, with Korea up 7.5%, offset by Japan down 13.4% and EMEA down 3.4%.
- 6.6% decrease in net sales (5.6% decrease on a constant currency basis) of Titleist golf balls as a result of a sales volume decline in both the ProV1 franchise and the performance models, the latter of which are in their second year of their two-year product life cycle.
- 21.1% decrease in net sales (20.3% decrease on a constant currency basis) of Titleist golf clubs due to lower sales volumes, primarily in the iron series, Scotty Cameron Select putters and Vokey Design wedges, all of which are in the second year of their two-year product life cycle. This decrease was partially offset by an increase in average selling prices across all product categories, in particular the new 917 model drivers and fairways.
- 5.6% increase in net sales (6.3% increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to higher average selling prices across all categories of the gear business.
- 5.8% decrease in net sales (4.1% decrease on a constant currency basis) in FootJoy golf wear primarily due to a sales volume decline in the footwear and glove categories.
Net income attributable to Acushnet improved by $5.9 million to $33.0 million, primarily due to lower interest expense and lower other expense, partially offset by lower income from operations.
Adjusted EBITDA was $71.8 million, down 13.5% year over year. Adjusted EBITDA margin was 16.8% for the second quarter versus 17.9% for the prior year period.
Consolidated net sales for the first six months of 2017 decreased by 4.6%, or by 3.8% on a constant currency basis. Consolidated net sales in the United States decreased by 5.8% in the six month period; this decrease was largely due to the factors that impacted net sales in the second quarter as described above. Acushnet posted a year-on-year decline in net sales in regions outside the United States of 3.3%, down 1.5% on a constant currency basis, with Korea up 14.7%, offset by Japan down 12.0% and EMEA down 1.2%.
- 2.4% decrease in net sales (1.7% decrease on a constant currency basis) of Titleist golf balls. This decrease was driven by a sales volume decline of the performance and Pinnacle golf ball models which are in their second year of the two-year product life cycle and was partially offset by a sales volume increase of the newly introduced Pro V1 and Pro V1x golf balls.
- 16.5% decrease in net sales (15.6% decrease on a constant currency basis) of Titleist golf clubs. This decrease was primarily driven by lower sales volumes of Vokey Design wedges, the iron series and the hybrids, all of which are in the second year of their two-year product life cycle. This decrease was partially offset by an increase in average selling prices across all product categories, in particular the new 917 model drivers and fairways.
- 6.4% increase in net sales (6.7% increase on a constant currency basis) of Titleist golf gear. This increase was primarily due to higher average selling prices in all categories of the gear business and higher sales volume growth in travel gear.
- 3.5% decrease in net sales (2.0% decrease on a constant currency basis) in FootJoy golf wear primarily due to a sales volume decline in footwear, partially offset by a sales volume increase in apparel.
Net income attributable to Acushnet improved by $20.4 million to $71.1 million, primarily a result of lower interest expense and lower other expense.
Adjusted EBITDA was $150.3 million, down 7.4% year over year. Adjusted EBITDA margin was 17.4% for the six months ended June 30, 2017 versus 18.0% for the prior year period.
Declares Quarterly Cash Dividend
Acushnet Holdings board of directors today declared a quarterly cash dividend in an amount of $0.12 per share of common stock. The dividend will be payable on September 15, 2017, to stockholders of record on September 1, 2017. The number of shares currently outstanding is 74,451,977.
Updated 2017 Outlook
- Consolidated net sales are expected to be in the range of $1,545 to $1,565 million in 2017.
- Consolidated net sales on a constant currency basis are expected to be in the range of a decrease of 0.7% to an increase of 0.6% in 2017.
- Adjusted EBITDA is expected to be in the range of $220 to $230 million in 2017.
Investor Conference Call
Acushnet will hold a conference call at 8:30 am (Eastern Time) on August 11, 2017 to discuss the financial results and host a question and answer session. A live webcast of the conference call will be accessible at www.AcushnetHoldingsCorp.com/ir. A replay archive of the webcast will be available shortly after the call concludes.
About Acushnet Holdings Corp.
We are the global leader in the design, development, manufacture and distribution of performancedriven golf products, which are widely recognized for their quality excellence. Driven by our focus on dedicated and discerning golfers and the golf shops that serve them, we believe we are the most authentic and enduring company in the golf industry. Our mission – to be the performance and quality leader in every golf product category in which we compete – has remained consistent since we entered the golf ball business in 1932. Today, we are the steward of two of the most revered brands in golf – Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wear brands. Additional information can be found at www.acushnetholdingscorp.com.
This release includes forward-looking statements that reflect our current views with respect to, among other things, our operations and financial performance. These forward-looking statements are included throughout this release and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information such as our anticipated consolidated net sales, consolidated net sales on a constant currency basis and adjusted EBITDA. We use words like “guidance,” “outlook,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable” and similar terms and phrases to identify forward-looking statements in this release.
The forward-looking statements contained in this release are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. Certain of these factors and other cautionary statements are included in this release or in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis” in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 30, 2017 as updated by our periodic reports subsequently filed with the SEC. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.
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