Clubs and balls weigh on Acushnet’s results

Lower sales of Titleist golf clubs, Titleist golf balls and FootJoy golf shoes drove down Acushnet's sales for the fourth quarter of 2018. They declined by 2.3 percent from the year-ago quarter to 343.4 million, or by 1.4 percent in constant currencies.

In Europe, the Middle East and Africa (EMEA), revenues were down by 0.2 percent in constant currencies. In the U.S., they gained 0.1 percent to $203.2 million, but they jumped by 21.0 percent in Korea, backed no doubt by the fact that the company is controlled by a Korean shareholder. Sales declined on a currency-neutral basis by 8.8 percent in Japan and by 1.6 percent in the rest of the world.

Sales of FootJoy golf shoes and clothing went down by 2.9 percent, due to lower footwear sales, partially offset by an increase in apparel.

Sales of Titleist golf clubs decreased by 5.5 percent, as the launches of its TS drivers and TS fairways in September were offset by lower volumes for irons, which had been launched in the third quarter of 2017.

Titleist's revenues from golf balls fell by 2.7 percent, as a result of a planned sales volume decline for Pro V1 and Pro V1x balls, which are in their second model year. The segment also suffered from a volume decline for performance golf ball models as a result of fewer golf rounds played in the quarter. This was partially offset by a sales volume increase for the new AVX premium performance golf balls.

On the other hand, the company recorded an increase of 13.8 percent in sales of Titleist golf gear, driven by higher sales volumes for golf bags and headwear.

The gross margin inched down by 0.1 percentage point to 50.9 percent, while the adjusted Ebitda dropped by 11.7 percent to $36.1 million and net income tumbled by 37.4 percent to $11.4 million, primarily as a result of a decrease in income from operations.

For the full year, sales reached $1,633.7 million, up by 4.7 percent from the previous year in dollars and by 3.1 percent in constant currencies. The gross margin inched up by 0.1 percentage point to 51.5 percent, and the adjusted Ebitda margin dipped by 0.2 percentage points to 14.1 percent. The group's net income rose by 1.2 percent to $99.9 million.

For 2019, the group is projecting sales in a range of $1,620 to $1,630 million. They should generate adjusted Ebitda of between $227 million and $233 million.