The Titleist and FootJoy parent is maintaining its H1 outlook calling for a low-single-digit sales increase and year-over-year flat Ebitda despite a Q1 that was affected by a slow start to the golf season in some regions of the world. Operating income fell by 2.8 percent to $121.4 million from $124.9 million for the period ended March 31 despite 3.1 percent sales growth to $707.6 million against $686.3 million. Net income fell by 5.9 percent to $87.8 million from $93.3 million as year-over-year gross margin improved by 10 basis points to 53.4 percent.
Geographically, sales declined in all regions of the world except for the U.S. The company blamed the lower sales on poor seasonal weather that delayed the start of the golf season in the EMEA and Korea. Period sales in the EMEA swung 5.3 percent lower on a constant-currency basis to $101.7 million. In Japan and Korea, Q1 revenues were down by 4.8 percent and 10.7 percent, respectively, to $37.2 million and $75.3 million. In the group’s home U.S. market, where rounds played soared 21 percent in March despite poor weather in the southeast quadrant, Q1 sales rose by 13.1 percent to $418.2 million.
Acushnet executives said they were pleased with the strength of golf ball and club sales in Q1, which each benefitted from ongoing progress in the company’s North American distribution center that was offset by delayed starts to the golf season in both the EMEA and Asia where results are projected to improve in Q2 as their respective playing days commence.
On a constant currency basis, Titleist golf ball sales lifted 9.4 percent higher in Q1 to $208.0 million. Titleist golf club revenues increased by 14 percent to $203.9 million as Titleist golf gear sales jumped by 2.4 percent to $68.2 million. FootJoy sales, down by 5.7 percent to $192.4 million, were up 1 percent in the U.S. but fell in the EMEA, Japan, and Korea. The company told analysts that the U.S. footwear market is down approximately 12 percent from a year earlier and close to the 2019 levels, but inventories are up between 2 and 4 percent. Corrections to the EMEA and Japan footwear inventories is forecast sometime over the next two quarters.
As far as the company’s Titleist golf ball business goes, President and CEO David Maher told analysts, “…Annually, there are about 150 or so million more rounds of golf being played today than in 2019. So you do the math on that, what it means to a golf ball company…We’ve been producing golf balls at near full capacity for some time to keep pace with demand…So without pointing to one singular event, I would say that overall demand is up…We were a bit constrained last year from a supply standpoint and lead times were longer than we would have liked. That is no longer the case.”
