Acushnet's sales advanced by 2.3 percent in the third quarter to $347 million, driven primarily by the launch of the company's new Titleist 718 golf irons and 818 hybrids. On a constant-currency basis, sales were up by 2.9 percent. The company's management said it was particularly encouraged this quarter by a gain of 4.6 percent in the U.S., noting that the retail market is weathering its structural correction “fairly well” and is approaching a healthier state.
In the rest of the world, Acushnet's revenues inched down by 0.1 percent, or by 1.1 percent on a currency-neutral basis. Revenues in South Korea were up by 5.9 percent, or by 6.4 percent in the local currency. The Europe, Middle East and Africa (EMEA) region saw sales gain 2.7 percent, but they were up by only 0.5 percent in local currencies due to the weaker pound. The management pointed out in a conference call with analysts that the EMEA region has been very resilient. Sales in Japan were down by 13.7 percent, or by 6.9 percent in yen. In the rest of the world, revenues rose by 8.5 percent, or by 2.9 percent in constant currencies.
Sales of FootJoy golf shoes and clothing improved by 3.3 percent, or by 3.7 percent in local currencies, primarily due to higher average selling prices and a sales volume increase in the apparel category. Sales of Titleist golf clubs jumped by 9.5 percent, or by 10.3 percent in constant currencies, due to higher sales volumes. Titleist‘s revenues from golf balls were down by 3.5 percent, or by 3.1 percent on a currency-neutral basis, due to lower volumes in both the ProV1 line and the brand's performance models, which are in their second year of a two-year product life cycle. On the other hand, the company recorded an increase of 1.3 percent, or by 2.1 percent on a currency-neutral basis, in sales of Titleist golf gear, primarily due to sales volume growth in its travel gear category.
The company's gross margin gained 0.6 percentage points to 49.8 percent, driven by higher margin for Titleist clubs and FootJoy golf wear, partially offset by a lower gross margin for Titleist golf balls. The adjusted Ebitda margin advanced by 1 percentage point to 9.3 percent. Net income improved by $14.8 million to $9.3 million, primarily as a result of lower interest expenses and higher income from operations, partially offset by higher income taxes.
Acushnet narrowed its guidance for the full year, projecting sales in the range of $1,545 million to $1,555 million in 2017. Previously, it had predicted sales ranging from $1,545 million to $1,565 million. Adjusted Ebitda is expected to be in the range of $220 million to $225 million in 2017, versus a range of $220 to $230 million.