GOLF - Earnings call transcript Q1 2019

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Operator

Good morning. My name is James, and I will be your conference operator today. At this time, I'd like to welcome everyone to Acushnet Holdings Corp.

First Quarter 2019 Earnings Conference Call. [Operator instructions] I'd now like to turn the call over to the Vice President of Investor Relations, Tony Takazawa. ahead. go please Sir,

Tony Takazawa

Maher. morning, cadence financial to XXXX. for This results by this the how CEO, are Good regarding and his to start year, timing the morning, Holdings rest of discuss the joined of David and President the for season, Acushnet positioned will and you. of provide Acushnet observations the welcome golf call we David and Thank we're QX business XXXX. our

spend the some for will discussing Acushnet the outlook results Pacheco, Next, CFO, financial time QX for overall Tom the year. our and rest of

We differ will Acushnet's These current statements from materially circumstances. uncertainty the on forward-looking are and call in subject to these expectations. be today. making forward-looking expectations and based may statements results are changes on Actual

metrics list will cause exchange we to securities making U.S. EBITDA. to factors actual with our and and currency we a and non-GAAP Explanations see revenues metrics, of items could of adjusted in these discussion, why results be filings today's how this that such David Commission. please differ, as including at the constant schedules financial reference reconciliations David? commission. use Throughout our in release, a For CEO, Maher. items the presentation that, Securities filings With press is this that and the slides accompany in to it Acushnet be introduce can with of GAAP basis Exchange pleasure to U.S. and found these and my

David Maher

our most directors golf. with approach results, insight business in these I are our industry's only that Thanks, season chip, swinging business much the a the gold playing our of the the commentary, of my enduring is inaugural reminding how call. prepared update I board Island for of retail the of the these the and around historic globe. major do week appreciate $X.XX has timing Acushnet's start cash all and Acushnet's to are seasons ago quarterly final will we where trusted the as and the Augusta Course business we of board's initiated helped only And at Long Tony. dividend announce I'm Acushnet's This the while public stage April, now we attractive in an sports and consisting The XXXX, courses, product want category showcased focus XXXX influence broad markets observations fun golf provide of time on course, golf fuel is anticipated pyramid total Women's into and be, early It and off before sportsmanship Black And days XX% our with dividend center durables, of few commence proven diverse second the of dedicated of morning, are two a playing share. and and country's talent strong weeks, for golf landscape. the Good year I remarks, by a per of open everyone. of fans to State since the confidence championship been golfer, having drive, dividend which Slide validation. additional as exciting core Bethpage X, share Masters and also of We it first-quarter victory PGA golfers on heart, believe merits commercial many heads quarterly of about as was saw consistent game's your cadence This as Junior mix our affirms today's declared Tom the moments opportunity. the the Holdings like positioning is game on laser-like while a long-term and golf one These business model, in can by putt address to golf great the of positioning And, game the next the today part National enthusiasm for of golf and that the our and to of industry a Tiger's of in increased golf return all kid. of still Acushnet it Amateur. was years moment and XXXX. start first are for an already on story increased brands portfolio, consumables on a display game Park. the inspiring May, of geared to builds final-round up and a great catapulted at and

weather As golf once on an part first-quarter is the rounds we again of part of and also is effect play inescapable story of know, narrative. all its

However, not the degree on prior west the in the we first-quarter in cold experienced wet to rounds. years. have and In was U.S, the drag a weather

and AVX early Japan, while I gear to However, And our contributed quarter a this metals XXXX. momentum, to and season the product favorable first South and about an get excited are ball new Headlines launch these Titleist now double-digit segments. each these was in of models partially levels sales, will growing were golf and U.K. offset gains Similarly, Acushnet's in of putters, Titleist cadence. franchise markets. the mid-Atlantic as the that, backdrop, given and wedges were in the and industry in irons, we and increase led planned for weather in by our into Pro golf quarter year-over-year healthy for southeast FootJoy and for its the all TS We starts Korea by with regions. our experienced in VX results gains declines

off and of were sales XX% for while posted consolidated constant down X% on sales for mentioned quarter were reported Now pace golf the up and previously Page up X% Acushnet's million that based $XX our were year. FootJoy upon full-year due XX% as for first X, Golf down of which our commentary, get quarter. nice we with months have expectations $XXX the starts and targets. for affirm Titleist on EBITDA the for will into turning balls, regional million in the in before the and set comps. revenue Gear and to currency. our was of the what the company, to also And we X quarter, segment I to deliver the position to confident seen the through XX% both remain adjusted XXXX, line I Adjusted EBITDA club period

Pro segments we'll a with X, in new Titleist starting launched look with models, which were quarter driven Page to take turning increased the presented and sales January. in constant balls, at results currency. by X XX% in Pro Acushnet's Now business golf And closer ball VXx VX

growth by and investment As championship, Pro golf Pro commitments response in worldwide optic has what been been meaningful participants VXx by up trade golf our VX the introduction the and you and including we using VXx Pro business VX golfers and X XXXX. Augusta positive win R&D, teed been the our last new golf of the for make in to Early from Pro of at Titleist players VX new byproducts XX first resoundingly and used XX% Pro Pro know, of line. balls ball in Fargo highest Titleist producing new these champion Through have including excellence XX Wells quality financial in a nice of ball and tours, Amateur, our models ball, additions are VX National this Max solid partners finishers. model. and availability our full Homa, XX yellow of the And performance, Pro new standards. ball, to organizational the of models week have and the Titleist poised top consistency new for the the VX manufacturing golf AVX Powered that week's is past ball across won his confident to the year tour franchise Women's we're golf our

million sales were is line golf and XX believe clubs, life last differentiating XX% positive business or the plan. moving club of down cycles year irons, club and Titleist with months Now eight-quarter metals, in wedges golf Titleist we our putters. versus product to and $XX for A attribute of

a the great in of year said, plan has just and on That with PGA this line plan is recent for many and the wins TS our events and looking what especially games. for line continue fitting Tour few with XXXX bring of launching have for quarter, prototype Titleist cycle season the as expect golf be golfers, seeding make into the TSX characteristics, challenging we XX first first-quarter to the Max this with with TS rest new introductions is product as reflective fairways prepare launch, most model we new the quarter momentum XX was Pan has XXXX, stagger Phantom third In Homa decline close product working will year, in our of early April, are and last odd-numbered we across and following who in even-numbered the the spin second flat introduced in which to new in of the to and the the launch our The growth success high driver generate on a you X in and launched play amateur of when stories all in third professional at and the As the and and years clubs. you been market putters, our begin in quarter. years. quarter. to we is comps model mallet expectations across soon and here tour in presented. debut meet TSX, the know, Scotty is the our to golfers designed XXXX, critical was irons, case and well, C.T. by X-year wedges And available drivers our TSX new and to their Cameron the process high putters speed irons

gear, fueled a of X% QX, gain in Slide quarter moving gains in fourth steady up travel bags, gear XXXX, and increase a to Titleist with by in which was robust X. Next, gloves gear. In the followed XX% healthy

partners new alike. have bags both Our and especially and Players by received been golfers trade well four Linksmaster's

years, and product these lines design good by the supply investments global the these both Over we've are few and in made capabilities our and work team. investments past of of reflective chain new

for women's moving FootJoy, doing In regional Titleist team for is sales glove were gear X% addition, is now and a up solid primary shoe FJ athleisure in a poised the to in and strong apparel capabilities. good and outerwear, In and and FootJoy success which year is start and a X this the ground XXXX. X Fury the final personalization continued for the was And driver, summary, and new our our earlier lines. selling demand footwear spikeless the customization X apparel growing shoe led job golf. of with executing were to fueled and by No. new segment, men's designs our No. golf. early great off No. on a launched by first-quarter growth business Flex expanding SL, also Pro models, growth performance

has response we and of season recently, FootJoy's FootJoy business U.S. sales last team, this increased to apparel Early expect our is collection. at our last team design the fall's the we started this debut. have positive to looking upon on added has resources successful shipping propel business As X% will and second now versus building grown, forward. to X, committed And been XXXX regionally continue business year. And our we market Slide

generally years now continue was in what to and operate retail and are team few positive from benefit correction. market sync, removed supply necessary efficiently what Our conditions, partners that a more a with our we trade far U.S. from and demand and rational

players Titleist now which were putter was for comps, the Japan-specific That pleased outlook of sales VGX X% of Sales South nice Japan, quarter. and uncertainties a over anticipated and given in helped some of quarter. which down Brexit posted Korea Japan Wedges, balls for region. comparisons decline admittedly conservative In for the region. the especially to the a and select the the quarter. season took wedge line. golf was start said, our weather, outside the around And putters first-quarter the in with U.S, ball one golf We Conversely, were and and market robust difficult jump X% turning Page in due double-digit to and the to gears of in the we've all in XX% retail growth start golf regions quarter by club result good This been to the in X Cameron posted introduction XXXX off primarily the the led with Looking during year-over-year region. gain a larger EMEA, EMEA has aided primary was our the for XXXX. while the gains the Vokey aforementioned approach

we weather and golf would continue like second believe the is position to as to in we a the Northeast Midwest, we here healthy see in industry the While better the across quarter. enter

the help Our on of products a turn, and game, team golf, golfer is them enjoy cannot master services, development in dedicated which spent their focus time play and their and the game's best attempting which will be mastered. to

continually supply competitive Acushnet, on we the a differentiate chain of ending and performance, competition. the and consistency, We focused from are us quality for pursuit and products manufacturing advantage our believe which that is product helps excellence never

And merchandised the us, four and a are first-quarter for our what will thanks five successful our it behind Tom to continued fitting Titleist of support. to our track again, products closing, performance. positioned stretch overview With are financial provide position specialists to will excited be we an now and trade to over for selling goals year. In months. and like for your our period next FootJoy on the and the confidently prepared, and Once I busy partners effectively interest hand over remain and and achieve

Tom Pacheco

Thanks, the a our of all solid call. for with associates would first partners and David, good and enabling to results. on to everyone echo we comments and quarter. us David's like pleased Overall, thank QX deliver our I are to trade morning,

a takes our right we on timing, were QX and almost up golf was by ball VXx X% down net Pro volumes AVX golf there number of as due Pro as and the million, constant golf Titleist X.X% launch and driven the While and Growth expected well $XXX versus to are basis. track puts a sales achieve goals year the Consolidated to XXXX. last for sales successful currency were new very business by of introduction VX on balls balls. of of increased

increases golf travel recognized footwear gear in also apparel, and FootJoy, and and We sales bags. Titleist

XXXX, rates launches result Scotty two-year As irons QX challenging of was AP a in had Gross year-over-year second model volumes anticipated lower Titleist as previously cycle. Vokey their year of of in a were over clubs as was expenses average Select and which mentioned, of last comparison the VGX interest increase $XX year of segments, compared Wedges, Cameron was profit irons, well profit of as net year. versus QX last to VXx. were selling and putters $XXX,XXX the reflecting million Research of and Pro income million, lower increase VX X% higher sales. volumes on was the the $XXX balls expense Operating higher result million an higher putters, Titleist due AVX. as to up $XX VX last by was Gross was well $XXX in million, was year, higher Pro Interest in the and primarily million, down a SG&A golf and expenses was points outstanding to offset versus versus and irons, million just lower mentioned. of volumes $X.X down up down expense $X driven the sales in about XX gross The XXXX. million slightly wedges development $X.X The of year. SG&A due decrease franchise and XX.X%, margins $XX borrowings. million, partially I up last by increase Pro basis product and advertising supporting the in an promotional expense launch all expenses across new as

QX million, the rate well was earnings. the operating was in discreet by year. net act amounts Acushnet income. expect review our our of mix your $XX tax for rate driven down provided million XXXX XXXX quarter we attributable benefit in release, and reconciliation changes was We calculation adjusted you effective year. compensation earnings finally, of in And tax to decline as described the now was effective to $X.X of EBITDA, geographic in income be offset due as around related U.S. related year. adjusted expense, tax the of our cuts realized first XX.X% tax to and in EBITDA the to to to of jobs in by million last assist have ETR To The XX.X% decrease last presentation. compared share-based a the to $XX.X slide Holdings $XX from Our down a XXXX the previously XX% million,

cash to CapEx at the Total at million. of approximately debt $XX about looking million end was Now March was had the $X.X balance QX on XXXX. of QX we outstanding sheet, $XXX XX, million. hand

activities manufacturing For about XXXX, continued we remainder our go-to-market initiatives. global expect and products, strategic CapEx our be to with of related this $XX support to in the of the the to IT spending million primarily investments investments to and year distribution support

to golf as current on in to return sales is of a to quarter, our favorable innovation, key marketing targeted long-term we connection CapEx a efficiency are golfer areas it as and R&D, and the invest success continue look few the This capital focus to the of and targeted we programs in business. deliver investment operational deploy internally.

per declared shareholders. David we as cash addition, to to noted, returned of In dividend share. represents approximately million a be $XX.X This $X.XX

we not process we repurchase to While stock do shares this expect open $XX quarter, and any begin the up an of in have authorization repurchase past to did million months. coming this to

We strategies also would growth at continue to favorable our support return. a drive long-term M&A which to opportunities, evaluate help and targeted

return stewards good opportunities various being both invest will on we evaluate have of business focused we carefully are to as capital capital, the in the to always, and shareholder to shareholders. and We

million. sales to XXXX $X.XXX growth X.X% On be versus a would to in X.X% our year. midpoint expect range, this XXXX. $XXX billion. of EBITDA up we the be versus to million And to reported of range revenues to midpoint. at the up outlook the is to last increase $X.XXX will X.X% represent currency at for $XXX This full-year about X% expect the to up As of in continue approximately And of we basis, consolidated for constant the XXXX, adjusted net forecasting billion range are we a

we two as first as XXXX As impacted only be sales various have launches product the momentum TS and half Phantom you in the in ongoing will expect cycles V but XXXX, to half in product powerful first comparisons by size QX XXXX X to of recall, launches. first half the major metals. had in in launches first of timing several and of We the well XXXX, Pro expected between QX, putters and the the the and half

consolidated continue basis. of XXXX to we we to to I flat net out reported on third in a irons XXXX first year. that this to approximately first expect also half result, a compared to As would expect be new the half sales launch like our point quarter

As good timing, we of are businesses. skewed be of a half is off how XXXX are will in we sales of helped The start. launch and the VXx XXXX a to being about toward the result new of golf we drive second the optimistic across QX little and second results, In QX half. with executing to sales industry success VX a expect than Pro and has summary, Pro this half more state the the our

to are forward exciting looking Q&A. now will turn With for over that, I an to and XXXX. We well-positioned Tony call the

Tony Takazawa

Thanks, Tom. questions. for up line the we open now James, can

Operator

[Operator Instructions] from Morgan. J.P. question Steven line from And of comes the Zaccone our first

open. is Your line

Steven Zaccone

product wanted morning, Great. I to Thanks very much. start with questions. Good guys. two

on the is one first launch. VX Pro The

saw Woods' why need and you of was basis? And launch, Just to the about years metals the in the just for multiple ago? golf outside curious existing how discuss it to And channel your to the well, is cadence? this balls complements two do Maybe your get launch. new offering launch relative hoping sense to your inventories you elaborate feel normal opinion TSX I offering? then to both U.S. year's get in progressing How the how launch

David Maher

morning, Okay. Good Steve.

AVX has Pro a validation So year with this with we're VX's bit and pleased established We're questions, validation. VX itself, global a real first. launching global performance different both of how Pro launch. I'll we're to from tour a from real a next three Pro hit We've VX pyramid got pleased a dynamic standpoint, as product and

the to the increased a mentioned been nice that's my in addition trial. in I added As line prepared some remarks, yellow's interest

there and pleased with are, Pro very a early global Inventories, is, one the be up of world. our we're that where more launches successful We'd manufacturers VX, right drag concerns around robust was are that. of We're at we're Pro Inventories not rounds give seeing channels. the the real history to now. flavor, a So that. here retail effectively on loading the we have see We VX. May, ought great in if time I'll

golfers which to our very set. of from normal. them So very high call but launch, net-net small benefit again, robust time golf band ought in product provides speed, and us launch believe outliers, for of the launch, we launch say, dedicated is more gives smaller and line, vast because this or launch, spin. golfer. And are meeting how and as but some, conditions, moderate to we then, about think high spin, maybe, profile, understand you much, TSX majority their lower dialed-in are needs a who got high thirdly, meets the that of year, of the a a of the that in I dedicated TSX condition. We would to very lower gives just servicing different a inventories and a to very of of want TSR would chance full there We've payers, be don't percentage the I accept product there's do needs chance TSX, a

into our it's showcase to XX% our way worldwide golfers, roughly XX% of really who set. golfer for us, our Just we But still of to TSX dedicated consideration will reference, our into the model. you fine-tune about design again to the fit account our usage. tours, for give fitting TSX will capabilities, players frame all or a really on think, fall excellence TSX, of a total

Steven Zaccone

the had of first had detail. drove as -- talk wanted you the And elaborate if line? the that a how maybe Pro -- could to any decline just X you to just think balance the since performance for in about was VX other I Thanks we see curious just just surprising quarter, on question. year, year-over-year the what when to look Great. can the I margin to I bit more launch? help some we to a expansion it's since Thanks. gross

Tom Pacheco

Steve. is Tom. This Thanks, Sure.

quarter of launch. gross the be in VX the You're right. expect to given of margins odd-numbered We Pro an up normally year strength would the first

decline However, product margin clubs, in timing gross result the directly to to too talked Titleist margin was volumes the in with just we in the which are the significant lower a overcome launches that of even improvement of about, related large golf club business.

think year, of about VXs, of launch should the some and of from you tailwinds gear all high kind get you continued and rebounds continued tailwinds higher performance As FootJoy balance are -- including the particularly the of as help, there high clubs QX that into are there. of with volume the irons Pro -- volumes as volumes

do we the gross balance improving so for see margins And of the year.

Operator

Your of next question Capital comes ROTH from Dave Go ahead, please. the line Partners. from King

now is line open. Your

Dave King

be large on first, you thinking the third irons launch guys. that the should as that? do you had that How think that when XXXX as guess, I launched then? the in you we yet [indiscernible] about to to clubs three quarter, Thanks. I as upcoming expect morning, Good we be launch,

David Maher

in happened we're about going to upon do and in we to that. fair little to be introduced so these much partners, grow to we them. haven't the what But XXXX, right well, etc. certainly say, be although, a would of build products we coy want Dave, starting bit our you're to how Yeah, try will pyramid trade not say the -- to terms yet, point

just historically that of to the Another conservative relates conservative month third a intention, it the way maybe give you we for thought to always late about straddles our we supply some build again flexibility season, is I we and early go we're to fourth launches end to the circumstances timing, which that but will again, September. can we launch. right with look launch prepping it is and at move as catch supplies But new summer that do tail take and to of allow. global what is of a organizing think yes, the is as That, forward We're it think approach we're your and August, XXXX to and product if to the going chain may always our -- going golf intend earlier upon upwards we the quarter. to relates to a

Dave King

color And quarter we the on playing helps. revenue quarter. by thinking about be should by guidance versus Thank That How guidance? the full-year appreciate out the you. then EBITDA, I In I you fair the level an increase do of QX, first when Should increase quarter, a etc.? Thanks. marketing. launch, amount in expect iron's of think same that you we in had

Tom Pacheco

Tom. is this Dave, Sure,

progression expect to given to the we've We given help the EBITDA be progression, similar the sales about progression. or guidance we've with the the

than that spend, the of sort your expect balance of slower mentioned, the terms In will do we that rate our over revenue. SG&A of year, SG&A grow a at

Dave King

Okay. Great.

it. appreciate I leverage. more Some

David Maher

Thanks, Dave.

please. question, Next

Operator

Imbro Inc. Daniel Next from line Stephens, comes of from the question

is line open. Your

Daniel Imbro

environment, Good morning. Wanted the Yeah. to the club particularly on guys. Thanks, side. start competitive on

the the tour U.S. would market. Pro new in last launch seeing there's maybe XXXX? environment a not Here rolling today of or a tour only number the manufacturers seemingly competitive the last or year compare have to you out level majority that new entered drivers, How in balls but of V balls

David Maher

I Daniel. say, of you -- handful would very two Golf maybe to over know last seen answers, years. the two balls, what similar we've

competitors previous we've say golf any our as in largely launch cycles. -- So surprises are launch cadence of not We're our and and on again, it's us. on to don't their nothing seen but deviate it's us balls in cadence

last all there. in months, different, competitors our top the a of a drivers, several six, club we've whole change there with not So of notably seven, The drivers situation, little in drivers. bit launched lot new just eight of lot seen a out

say, certainly seen we've we'd So but in of the as as landscape is it last previous year was the marketplace, more crowded club and I or the crowded, would is the rest cycles. driver two, than expect,

Daniel Imbro

And a up quick follow as Great. on that.

few Over the of particularly opened end going up PXG last higher, the years, ASPs higher kind really market. the have as of been

lowering but think dynamic is ASP seeing market from seeing now ASPs that the are now there of lower-price how entering lowering Are iron we're As the pricing cast-iron market, and their do more any rolling shifts you small changes? different a out point PXG we share, percentage years? on drivers, few kind of last that

David Maher

less the So has some It's I of part contributed bringing the terrific -- do commands part the with which And off-price ASP ASPs. the has us nice market, over couple a journey the higher years is and retail whole job really ASP product done in of to bump. has just industry products, seeing which last We're of frontline a the certainly the the then lot warrants to ASP think two-fold. correction. discounted other available

In any I that, terms whole having on one competitor's one again, an frankly competitor don't or lot see puts action. based a impact takes, on of of

not toward more as to a which see healthy seeing think I lot really two, of actions. of, positive golf on far push a only for one a and think case just, of the But four accustomed be fitting, only, you the result change Add what I clubs, in is years. category. three, a can continued over for club environment than we're last So that, is the competitor's viewed the in to again, as banking a whole we're this discussion, general, landscape is

Daniel Imbro

so much. Thanks

David Maher

Dan. Thanks,

Tom Pacheco

Thanks, Dan.

David Maher

Next question, please.

Operator

SunTrust. Go comes from the Swartz Michael line from please. question Next of ahead,

Your open. line is

Michael Swartz

appreciate to in us and the years of good were things wanted maybe some but some ago. launches, comparison comps Hey, quarter, that touch business be with right a may timing product think there club the and morning, didn't two of the of I I just the is bunch guys. on

$XXX again, was lens? So that I two Maybe million, your about would think I should and was, that from you 'XX still versus about go talk period that to thinking been? think we which driver XXXX, sales were puts million, be some revenue would've you. years ago about imply down Can for the it back how maybe a year from we and what of 'XX takes $XXX

Tom Pacheco

is Sure. Michael, this Tom.

significant did which In we for think is difference have I a us in versus fairly an the 'XX one year. launch, odd-numbered normal is 'XX, putter. putter 'XX for

occur launch until and in April. due in launch But putter a the We our actually launch putter had timing XX. the to of didn't also 'XX,

reasonably out Other that, 'XX a I think that of similar. So and than chunk and pushes were 'XX of QX into revenue QX.

Michael Swartz

Okay.

may be business helpful. is your missed, have Okay. I say you quarter? Did to for That's somewhere did 'XX? so had you unchanged question. like apologize, said, housekeeping you, very what before in I outlook think golf million? the may And more was PG of that a And then I $XX-or-so added it between

Tom Pacheco

Yes.

we've So, overall changed the said, a has outlook pretty small. is our was year. say few million quarter not for as in we PGA, dollars and the didn't It

Michael Swartz

Thanks. Great. Okay.

Tom Pacheco

welcome. You're

David Maher

Thank you.

question, Please. Next

Operator

ahead, Go Simeon question Your from please. comes Nomura Instinet. line next from the of Siegel

open. Your line is

Dan Stroller

morning. Dan Hey, Simeon. taking my Thanks for is questions. good for This on

be if On the would out? the M&A wondering in you you of go color And could I'm and that categories opportunity looking sort of secondly front, into tariffs. any there terms on then

an million low it? Wondering Or any like previously think of headwinds. you've if to mentioned you Thanks. been I update single-digit if a that? there's to mitigate able

David Maher

approach. been We're So clear Dan, last pretty PG will the a & we've years Kings. handle on Tom questions. to our few and your Links acquisitions, and tariff take golf M&A, couple certainly with made of the open-minded first and I in question we've will

consistent leverage focused with dividend. our and we've repurchase and by with is, which our And trade We broader distribution attention. bias. profile, distribution on strategy across is X, It's to on our synergistic M&A. focused a having on greatly close share that products number channel approach focus, can beginning golfer we It's of in Our benefit we are with where of we partners and the and profile from strong specific organic especially M&A, see for capital that we been dedicated look opportunities pay when that focused growth. and synergistic

M&A. So it your I'll that's question, second Tom. off then about the to hand how think to we And and framework

Tom Pacheco

increased Dan, if travel impact was that the as were progress time. if but a March would headwear, couple tariffs we Dave. primarily $X it Thanks, to in trade -- to talks say a tariffs, relates did those based thought recall, in our made have on it couple at the are year. million We The tariffs impact China place XXX to bags and the our Section and X, that gear. at to being on that delayed you on were to so of XX%, were that the golf XX% current are set in increase XX% our tariffs

early as news, week some Trump -- to $X the through of a now the in has the that of in heard of our to to we've threatening we've XX%. as season end bunch As is this million done $X lowered the But been X% administration we as extent. the tariffs to bunch million increase move a of and received product already

that actions impact -- in on XXXX -- be -- of XXXX. process we're mitigation minimize sorry, expecting high, but we it working to and would that are beyond And the not beyond mitigating so any

Operator

from question next comes Your line please. Casey of the Alexander Go Point. ahead, from Compass

Your line open. is

Casey Alexander

Hi, good morning.

clearly, And is consensus miss. as were presented These Let there out weeks a talking product quarter eight ago, you're estimates estimates, to me I earnings. it question. cadence. fourth-quarter when a ask about relates mean this you

time been do you the If size bit more about point a product to right would you that their over it again, and cadence transparent had have in to at estimates? little allowed people

David Maher

would we the might a focused of fair in might bit in We most about were with we from and QX, our to more realities. club QX of in sure it's something you of really our We efforts think a and half in seen, business color from first half. swing have a were painting on there focused efforts little the -- run we're on say, on Yeah, Clearly, take know were to plan, especially versus we've we first our can cadence much that, first our on provide was expectations. a the most in how future. And our the presenting on hey, we very half. what but line misunderstanding things -- the picture Casey, -- quarter-to-quarter golf, the

Casey Alexander

XX% gotten And statement was rounds year? down in start was were to or that in surprised -- that off given that you earlier Japan a was played Japan thought good what that I the Japan said a previously had you there

David Maher

from weren't is and past centric. others, at uniqueness functions to a of said other which all to differs market question, be In surprised as the to Japan, more and market the how tend that market very Japan with how and we it no, regions. your which retail-centric So it all opposed in that we've is commentary fitting on

big the pipelines in highest percentage Japan the again, it's through of at the just New Japan, sell in line you tend the faster product forecast the sold in to through, in market a on load market. realities sizable they remarks, be, would but way a be grew our in world. full-year mentioned markets. that, pipeline Other world. up relative other a commentary anywhere anywhere to tends on to ball I just are you more Japan It's with on it sales in in my that represent retail. than quarter capture loaded and when and they May business the positive else in markets, frame of to as golf then That's the loading our

always a will comping as So that's wedges in club and the a year clock putters, challenge. club expect, that but ago meaningful a be X-quarter you against quarter pipeline positive, our in do a our of journey one as all and even you'd in against good later if and year that, and journey, starts indexing near,

a talk surprise us, so So market, again, sell-in very of give again, the Japan to didn't terms does load-in, in uniqueness it newer good of the is opportunity but plan. about, Japan business us centric which,

Casey Alexander

was in to Okay. the instances at product rigid And this the the company the to a introduction And cycle. cycles? And response is than view of eight-quarter introduction my introduction Would public. competition became four three that last last sudden in question is also flexible to say the deviating cycles? time, rigid think company trying view a in changing you just referring that year, that of product introduction or more of of product is I the be to past point where from relation can There kind product when is all Acushnet that of their cycle. in eight-quarter pretty back the

David Maher

the be reality it to incredibly We're thinks cycles the we you question, and is do with foremost, have and -- a Good product borne Casey. the we're a would about X-product about can that, a borne in first challenging. in replacement all cycle golfer like talking vast of year, quarter still or portfolio it's of really, how imagine,

So make confident we're very lot sense. that in our X-year comfortable product of a and lifecycles approach

based the R&D nimble capabilities the said, to that -- on of we're changing always wins, consumer, increasing Now on and on agile market going needs our based of be based R&D our department.

always believe in in the we're within market, prompted approach, warranted agile we model, our and by we're our say nimble and own consumers to framework. So it's fair our capabilities, by be but and as by strongly that going to

Casey Alexander

for my you taking Thank Okay. questions.

David Maher

Thanks. Thanks, Casey.

Next question, please.

Operator

from next from comes Go Securities. line Wells of Conder Tim the ahead, Your please. question Fargo

open. Your line is

Tim Conder

Thank on you you, and thank Casey's Japan the and clarity for answering question.

of Japan, we're down, in there line we're U.S, to costs versus Korea, as EMEA as seeing characteristics the be the to Just the similar what maybe -- is one area? seeing on continue that again, dramatic not thought much in but what are here in that Korea there

David Maher

lot on a good little a The Korea I apply separately. question. touch doesn't of bit Korea, so to Korea, Tim, Yeah. I'll what a in talked about Japan

what club gear was Korea first noted. performances the had terrific framing in and [ph], story the in quarter You know as happened we balls and

And down a up? is and is was one, globally from are locally more line while Korea happening what question twofold: EMEA transitioning speaks the of to line. what now So it in more some of inspired to designed our shifts FootJoy, U.S. we're a why line is the Korea-centric, really apparel

day, transition very we're that, and fair what of at Korea is "hey, it in what really, So in says Japan they you're you that's in revenue shifting our FootJoy when a of some from markets, not we're through, our a the wholesale is, So you function it that But through capture you secondly, to of market, different it hit to retail. story had model of ship the from bit stand-alone calendarization. a separates the U.S. it recognition and the on shift more EMEA. and bit sell to as And when distinguishes And we how a and in." and store going a seeing FootJoy end how of very, they the terms of say, is what operate.

Tim Conder

Okay.

may just anything in halves the be happened there. R&D on back communication or quarterly to unusual And in two than was pulled the cadence that basis. margin? Understand rather a business the anything QX as that of forwards, expenses? adjusted much little the you and, on some circle of wanted year mean Okay. realistically the that was better suppressed then quarters, EBITDA your there may on the but Again, you that EBITDA, be that there But QX a marketing in

Tom Pacheco

was actual say operating you would know EBITDA EBITDA that function which is the unusual. sales purely discussed Tom. the and we've lower income, its No, margin and I this is itself impact gross a volumes really, by on driven are lower there the nothing the Tim, of and I mean, revenue margin.

Tim Conder

Okay.

could no magnified forward So or pull have that, anyway? that or of expenses timing Tom, in marketing R&D

Tom Pacheco

gentlemen. No, not Thank you, manner. Tim. No, unusual an in

Tony Ibarguen

Thanks.

We will some for and question, concluding have David. we'll time have comments then more one from

Operator

please. ahead, of Your Andress line the last Markets. Capital question Brett KeyBanc Go from comes from

open. Your is line

Brett Andress

tariffs escalation lift in really week, tariffs us like remind on demand looks to is manifest in how supply that situation a both the It what chain on and I today of could in of a which your regards touched itself a earlier And P&L to like back from four, was standpoint? there. everything guess China? the from and but in recent topic China, I guess, can you the consumer event the question, the

Tom Pacheco

Tom. is this Brett, Sure.

know, footwear more a of of do our apparel. So from concentration in much our have, business certain as you in we our particular, have you can supply and China of perspective, imagine, parts chain some

much that general. we in significant is, that not problem that minimize look So at take us, industry a But a actions for retail could the to mitigating closely but only have that perhaps would impact. of be would for monitor would more be to situation and we

David Maher

Brett, I'll too. on add that

our is ball in here production Our majority business, of Massachusetts.

Club local market. Secondly, Ball really IV happens the is in Thailand. assembly Clubs. rest in it our of in Plant

markets. done we fit, gear custom supply nice to tend diversifying assemble in teams has we gear, So of local that chain. a our And job

certainly four, may ago. three, five we we to than exposure had have lesser China a years have So

Brett Andress

I Understood. in retail year back some think the played they're of for And dollars, kind Obviously, earlier okay, the Datatech, again, to rounds tough the up pressure by but view, as some level industry. Thank you. compares. industry, of holding our reported from

retail So at what industry year? up mean expectations so held far you can that has for spend -- And standpoint? you're just relative this can how I talk but least, this the XXXX year, to about so maybe just far expecting you your from

David Maher

rounds that, I much for rounds, We're than sell-through. by would like of where -- you the under is the the said, nicely your some what weather. imagine globe Brett, we're the quarter you rounds way. again, are I'll southeast it's forth echoing speaking about season it just I'll are -- down, the pockets despite so decent know overall. good getting hard for the does retail golf it's seeing better global put Yeah. And expect, seeing much would you quite in up But is it west, reminder in Again, which holding shape hit comments looks pretty is stability. as was

in we're three into it. New weeks Here England, two,

for it's year, a QX. look number. from a So just again, now play we reminder, represents play the global data the is at XX% good. of But to XX% as that's globally anywhere and from QX pretty

out we August of that But April, early so sitting again, see and but really So efforts and in caution. us, any which sell-through, timeframe. in July, toward much even for happens there now our resources in are prompts geared days, into nothing September

Brett Andress

just played, April Any review you from on sit? where guys rounds

David Maher

recent, pockets to similar was than asking you'd like, around a There pretty you're more saw Northeast the been good, quarter. I pretty it's globe, good. we again, first think to going But around see and you're the in the it for again, a where April. what were world, wet Midwest, slower if Well,

see into the April, normalize. to things to soon wet tough we've key So different been will and up. had way around bit in think last little how thing one is And roll other, which -- globe. weather year or markets to time the got again, But after May, Midwest open we've no the outlying as this markets where year, the where many inputs a we a from Northeast we've last here certainly is, got like we we'd

Brett Andress

I color. Understood. the appreciate

David Maher

your And invite rounds thanks reporting whether of call. contribute your to in the interest and improves all play, We and Thanks. in to early time here two and do appreciate We Acushnet. Okay. ongoing look everyone wish all as QX. part best of again. quarter to Thanks, to for back we you your you forward

Operator

today's concludes conference call. This

You may now disconnect.

Acushnet (GOLF) 11 May 192019 Q1 Earnings call transcript