GOLF - Earnings call transcript Q4 2019

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Acushnet Holdings Corp. 4Q 2019 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

now vice turn relations. president would to conference I Lennon, Ms.Sondra FP&A Instructions] like the to over [Operator and investor go ahead. Please

Sondra Lennon

Acushnet Good us full-year you Thank earnings Holdings for XXXX morning, and fourth call. for conference quarter everyone. today joining

are Chief me our President and Tom Officer. Maher, Chief Joining David our Officer; Executive morning and this Financial Pacheco,

statements making changes would expectations. are to today. everyone that remind I the turn to call current Acushnet's call Before on Actual from uncertainty the will based over may forward-looking be expectations like These subject these on to materially differ forward-looking in David, I are results statements we and circumstances. and

For Securities please and our a results presentation, that press and actual filings that cause to see the with Exchange accompany list our differ, Commission. U.S. of release, factors could today's the slides

today's to press year-on-year increases and Commission. the sales to and also accompany we we metrics, currency. financial GAAP reconciliations currency Exchange this how be discussion, in metrics use to when this at Securities the including our found regional filings schedules in basis adjusted with these slides in U.S. that note referring items are will and Please EBITDA. be segment reference constant to and as the a release, Explanations these of items revenues we and and making non-GAAP can Throughout referring why that presentation, of decreases, such sale in constant and

period. note we XXXX, period XX, also please referring ended year-to-date XX-month are XX-month comparisons, a And when the or comparable as to to full-year or that referring results December

David. over I'll that, to With the call turn

David Maher

current morning's we strategic the results XXXX, your fourth present over the and time will our XXXX Sondra, view good Acushnet's We quarter you, morning, of how and today. see On us coronavirus for outline we discuss months. appreciate impacting this coming call, and Thank full-year priorities for our everyone.

new by product for an sheet, shareholders. commitment wide and introductions, strong continued stating to XXXX increased And was the an operational balance successful to by defined of I will our Acushnet, another excellence, organization return year that begin of strengthening capital

As future importantly, we across for we our seek strengthen growth. prospects continue to key business competitive our as advantages our to investments and fortify make

to our Slide Now to X. getting Please results. turn right

quarter, in For the or Adjusted I was EBITDA constant fourth as Acushnet increase about revenues by the X% as period. especially XX% in $XX in having this gains on And for FootJoy golf X.X%, a posted VX by quarter the minute, was almost healthy representing increased Wear. for with strong gains Golf growth well as season an a will currency. million, talk led Pro double-digit balls, quarter holiday

in the expansion billion EBITDA full adjusted up an sales X% $XXX increased on almost million, to gross currency. XX.X%. over aided year, margin were $X.XX by constant X% of Full-year just and to X% For

Tom will I more achievements and partners good work valued efforts share And XXXX, as must we important success. foundation excellence our our our support year. discuss ongoing the in XXXX. to through the their especially the as returned my commitment by versus trade $XX representing are associates dividend and of I their detail, repurchase XX% increase Acushnet throughout thank also and fellow over in an of shareholders million appreciative am to programs for

turning Now to Slide X.

Titleist business. X%. gain was We and Pro balls. for the golf our increase an VXx, look new which the for headline year full-year to every measure, deliver about VX and Starting of just Golf The terrific will and of the with of XXXX at XX% segments. quarter business Pro success Ball core was By the performance helped strength XXXX a for

both across in investment professionals golf's ball and advantages commitment and manufacturing. influence alike. These team's precision golf to begins our ball affirmed competitive with our with R&D leading amateurs success are This golf pyramid unwavering of

first In top was any other VXx golf of VX since gold-ranked unmatched fact, a ball VX the been quality to launched the Pro played golfers has in is this known testimony for. Pro and We or year long than in that in VX XXXX, fall XXXX. superiority performance ball-to-ball Pro of and new believe more Titleist XXX the Pro the consistency

out ball. highest As also quality Japan. we millions one achieved also the market consistency. growth the and urethane have or said in for our manufacturing And to with golf and in make the experimental of meet ball, strong rounding challenge to in we only markets of TPU-covered golf but fourth ball balls by golf not that year, test ability the in make golf ability we performance the before, in our standards the multilayer led for lies golf are pleased And ball U.S. the gains all quarter global thermoplastic great

new represents you launch product years represents call. will golf of Test Pro of our development market which to to XX% outside $XX ball strengthening up AVX upon details products marketed line this as multiyear a $XX golf summer ball share EXP-XX, of We on performance cover see we the in our next and the technology late this opportunities the construction our opportunity. product price help look range, forward with roughly ahead. and construction and introduction VX and manufacturing which and new to to build in open a investment will believe and this We capabilities,

clubs. to moving Now

Our sales Club quarter business for strong full the year off X% with a and XXXX, X% Titleist year. the Golf had for in

and its the activity majority mark the Tour has TS was and late know, XXXX. launch as made quickly overall one with The the years. takes PGA on XXXX EBIT-numbered business. driver momentum number Titleist you product And the As such, launched place of in Driver results Titleist pleased new in we the are club strength our of in these and

model of championships. PGA European tours. and used putters, No.X were Newport were masters, outdone, worldwide to Cameron putter U.S. year Tours, irons the all U.S. great with open across our Titleist winners also PGA be Vokey Scotty and championship No.X and across the Not by wedges Cameron a the

benefited spring season. half second from of clubs momentum into and irons, launch we fitting the this T-Series expect club new successful the to carry Titleist busy

sales fueled Slide golf by new for in category. were all headwear our successful brand growth X, which Gear, the full the posted of the definitive club, Gear launch for their in quarter, however, Titleist to long-held and X% position LinksMaster only product has bag and X X% in travel. the gains strengthened turning categories, was this Now by the year, spag, in increase led lead a series FootJoy, sister as position gloves glove Titleist number off behind

supply ongoing gear our the of to by product chain investing committed excellence. are business in development creation We and

continued advancements and future X% FootJoy, In glove in gain golf, growth to quarter number and lead and strong will in this a increase and drive in the profitability the this with product expect X% year for We shoe year. category. the the X finished

and New in increase propelled business. Flex and pace global a performance our for in Fury XXXX, double-digit new models outerwear footwear set the apparel

was led weather in year. Korea our a in increased and a turn is new now X gains for healthy new favorable of and stream play FootJoy U.S., will poised in for these by Korea, painted rounds in aided picture footwear EMEA apparel a by here Slide regional the business. view believe of of The each the start and were launches I strong in the especially which to markets. and we offerings XXXX, outerwear U.S. fast XXXX, and throughout is steady and of

and quarter from for quarter see, EMEA, golf Korea's XX% by In the the while mainly off in Japan, period for year. our the and growth growth you U.S. led and Titleist shoes, and the the was down clubs. was for balls comes FootJoy as X%

last against Japan were This is increase markets. and we which posted in TS mainly the Japan launch, quarterly QX in sales ball decline in double-digit calendarization due for comped in QX year's all other as occurred and strong year. Driver to Golf

not offset clubs enough declines in was this and golf However, to FootJoy.

season as this are business to our stabilize will our XXXX inventories and plans. in Japan expect early benefit We channel in launch improved,

ahead on looking as Slide to Now X. XXXX, outlined

As all golf our you what industry and healthy in control we spending, degree caution this of impact internal with uncertainty overall stability. it inventories contributing rounds to and structurally expect, over with balances of may the play, channel business. outlook can We its about is how some consumer coronavirus believe the would our enthusiasm

with of new to levels, rights new growing all across entertainment we dynamic athletes in and new as and we value. see wide tours, the is game captivating, poised Each year, the are media game's products momentum game talented range to launch a of XXXX. Acushnet's carry affirmation businesses new strong and exciting popularity professional categories The of taking programs the the and throughout

TPU the as Tour launches, in in plan we While continue new model odd momentum Soft, late Pro quarter XXXX to golf ball the new challenging Velocity summer. present VX launches year first against comps global and our such multilayer of scheduled even ball for build golf to AVX, release and with years

even-numbered heightened our Gear we successful new our model. Titleist Footjoy Vokey a are launch build expanding a great in new the XXXX, Titleist excellent. new and enhancements to the pipeline focus new Select years, been launch products footwear TS canvas line and to continued to collection Golf this with these is the for SMX upon queued for and shape, of of Cameron Both XXXX popular toward series, caddie scheduled has plan And on Club to new apparel Metals Linksmaster a to Special in introductions QX. continue early wedges franchises a and certainly will that in are these in bag will line. has response classic of full September. adding as products momentum putters launch up and weighted our by we case add Later with summer,

golf. and their shoe will CARBON position busy Tour a strengthen help Pro|SL half X in FootJoy the New leadership one as number to for highlight models and long-standing first

KJUS continue provides rainwear to reversible with warm from both team weather making launch the the We rain a is we expect pleased future and which jacket, cold prepare Gemini and its KJUS growth. great is business, golfers positioning talent example new are capable within of protection technology. innovation lot within with are the the the technical newest we which progress benefit how our long-term the organization, for of Gemini option our of KJUS and to rapid for has KJUS, business There's golf of. is the a the a and investments for

At course, is the and offer half. this have be The global all been coronavirus a ahead busy job and the year the health first especially affected excited about about we, done and planning crisis, thoughts what for share same our Acushnet to will of by support great concerns time, an who has we team outbreak.

As expect, our are demand. projections access and is situation new the we and updating around chain regularly our information you weekly internal consumer we supply rapidly would changing, as

on effect reflect which million quarter, million latest to impact the the coronavirus adjusted estimated Our revenues an second that is EBITDA. $XX continue projections, through likely and assume on existing disruptions have $XX

reflect traceable our have our month, both on the of is And demand businesses. seen Most in in and our some rapidly traffic based days raw To escalated. and in manageable. on during there is the unfold effect where have China no our gear similarly, facilities U.S.and Japan our the disruption lesser capabilities as past past been we materials ball and availability-related up and dependence been Southeast slowing this source a ten well golf club impact supply retail to Thailand, and limited China reduction held apparel, does company-owned to golf has are level Greater date, Asia impacted production has extent. concerns ball have Korea, our chain to the while and to seven

as they positive. pleased year. and am Affirming per term, Acushnet ability share a XX% this than long that an these to resilient financial associated confidence inputs outlook, While XXXX near-term in Acushnet to the stronger changing time, our outlook Acushnet's the or sign in to responsive of long-term our and dividend execute and our team the headwinds and remains announce staying been quarterly the to $X.XX years, while, same Board's are board over we approved on as the is the at with our by strength executing plans to focused agile have And navigate the increase coronavirus. uncertainties, several per I $X.XXX

recently approved in repurchase return to authorization has board of dividend to shareholders our support share augment strategy. our to the capital and an Additionally, our increase efforts

innovation business the strategies. are partners. both segments new and represent These development dedicated product power, of and we engine remain As new Acushnet's prepared a revenue of introductions, the golfers an of purchasing and full gains remain golfers product trade with growth point go-to-market XXXX look expect game's the to and we for the XX% and golfer. beyond, industry's attractive of focal product share our demographic, bring will of calendar Each enthusiasm which to our is

We're a pursuing and as our the confident leverage will performance operating over term. now of favorable throughout to performance our appreciate time executing, investing and ability technologies achieve of and morning to we seek has an and the team record over will our long returns we to track our to both in associates efficiencies in proven and while of shareholders. to your organization delivering advance in closing, the outlook. products this Acushnet In are continue and pass financial who I Tom, our our the provide call attention benefits overview

Tom Pacheco

driven in David, associates their was with in currency, Pro XXXX. contributions and impact Slide golf sales sales up and on to $XXX primarily of shoes, the good strong over million, year our we morning, to of the like QX everyone. acquired and X% increased in Thanks, and a results would VX our July also which by what were trade year quarter balls XX. for and I of XXXX. partners constant net performance VXx thank up Consolidated Pro in Starting X%

QX share-based was up $X margins advertising profit points points. was gross prior impacted compensation Tariffs from lower gross or million, X%. and the XX million, our from by expense negatively gross year. offset was promotion expense. up Incremental QX basis million down $XX KJUS XX was partially by $XXX $XXX and basis XX.X%, SG&A SG&A million, margin and

income quarter Income $XX to slide $X and up income the QX or to adjusted our interest the full-year from million XX.X%. the was our and $XX $XX earnings as XX%. operations and EBITDA up Holdings million, in tax Acushnet reconciliation from million, well XXXX $X $X rate presentation. There a of was million adjusted is EBITDA was period. expense prior-year Net effective for net QX QX as was million, million, release in was in attributable

XXXX, positively year Pro constant $X.X results Moving growth to last by up consolidated X% of new $XX FootJoy quarter within also Golf Titleist $XXX This million and Gross sales which were billion, primarily apparel X% profit Pro and impacted all sales and we in PG the the in balls, million, up full-year by were golf acquired and from fourth VXx for KJUS the of up increase driven was sales products net Sales XXXX. from Golf, Gear. of in currency. our was in VX XXXX.

transaction SG&A higher and basis which increase odd was X%. from full all in except KJUS. Gross the up segments, $XX golf XX.X%, $XXX was expense an of across million, XX margin expected or and year. million segments, was points gross promotion growth expenses selling This was in higher came for advertising primarily the clubs, acquisition-related year versus to The profit spend, numbered all XXXX. for up fees, impact due

was our XXXX. up decrease increase was rate XXXX. compensation. was share-based The was tax from from to million, XX.X% compared offset in Full-year partially million, $XXX a income in operations $XX million Interest by expense XX.X% year and effective $XX full

XXXX up Acushnet finished Holdings $XXX income be XXXX net $XXX effective year. or EBITDA $X last rate attributable We from about and X% up at $XX was million, million, XX%. adjusted million, to our expect million tax to

facility. At and under flow had Moving some unrestricted will I of on million million borrowings million, to was we credit our $XXX of end cash Slide key XX, sheet the discuss revolving hand, had we cash and available total balance approximately outstanding $XX debt $XXX XXXX, of items.

December, we secured in our reminder, a restated As credit amended senior facility. and

new the at facility. for second-half compared $XXX both attributable significantly million of a are generally KJUS, Consolidated increase of million line our previous credit at primarily which was receivable $XXX XXXX million more terms December collections in a at favorable new to revolving to XXXX. This end XXXX, credit $XXX when end of accounts of compared timing and The XXXX. the was Our mature higher million sales compared the end to year. to credit provides facility accounts of facility and of loan of the term of the $XXX credit, the receivable our of

an were launches outstanding $XXX XX the the to XX%. of to Consolidated of The compared were inventories increase primarily and inventories addition club XXXX. support $XXX the upcoming sales at the last are KJUS. to which year driven year, higher increase day flat ball Our of and by product million million compared days, was end

down XXXX. We compared come XXXX to expect inventory to our in levels

primarily Overall, receivable of of the composition operations we and end $XXX at discussed. accounts and the amount are the million decrease our and quality Cash I inventory in comfortable from accounts just our with compared flow $XXX The from XXXX of to was receivable XXXX that is inventory. XXXX. million higher for

come accounts from to receivable to levels flow levels. more expect operations and inventory return cash both will We that down XXXX in and normal

we expenditures, golf IT lower $XX maintain was and to which than and upgrade estimate for our capital and to XXXX spending infrastructure. largest million The equipment in XXXX. area was Looking to flat XXXX, our manufacturing in million ball about $XX of spent original is and facilities

For XXXX, about spending we into be $XX capital million, as some shifted XXXX. expect projects to

Turning to XX. Slide

priorities capital not have allocation changed. Our

with make the continue at appeal golfers. to with connection, efficiency. growth innovation, a believe return. opportunistic that with We a such investments continue support performance and business on investments operational product drive focus focus acquisitions We to and align our our that favorable selective in we to dedicated long-term be strategies on will products premium that And golfer

expect We during a focused paid the shareholders. a only responsible also in of to for return being dividend not remain million. quarter cash XXXX also stewards to fourth business, per $XX.X We total on outflow to shareholder capital the and $X.XX invest of capital share of but

million. total full the dividends were paid $XX year, For

XXXX. of shareholders David declared As dividend on per a $X.XXX XX, Directors today March Board of record payable our on cash to of mentioned, March XX share

on outflow repurchased the quarter, And approximately This in a for expected approximately of total an finally, dividend million, XXX,XXX XXX,XXX represents majority or million. open $XX.X fourth including and of $XX.X $XX.X amount repurchases XX% shares and XXXX we our shares XXX,XXX million. X,XXX,XXX in cash increase QX to from increased This an of our the shares shares market shareholder. during the share

directors by expect $XXX million.We share XXXX. shares in $XX to $XX to of board worth recently of authorization Our repurchase increased up million our total a of to purchase million

capital return element a value compelling to which continue total of believe a creates believe Acushnet's long-term strategy we We foundational is shareholders. for our our proposition, allocation

that on aware our be our you for Slide that are to are two XXXX outlook to outlook need XX. Moving factors There impacting of.

David As XXXX $XX the best and mostly expected have our by from sales retail the estimate is on outlook made have our results down mentioned, accordingly declining we of of coronavirus impact our adjusted million, XXXX a demand Asia. in which

of We EBITDA outlook for we And have million consideration, XXXX full-year we to into expect million. of net $XX adjusted the corresponding adjusted have also decreased billion. tariffs. XXXX outlook by be the these lowered Taking our range impact EBITDA down $X $X.XXX $X.XXX in reported will sales billion factors our a by consolidated unmitigated

a of up expect expect $XXX On basis, EBITDA of our adjusted range and to to net for down be million. the constant X.X% XXXX we we million $XXX currency sales to compared to X.X% XXXX,

back the range midpoint add X.X% impact $XX and coronavirus tariffs, million, of million impact would the expected $XXX you EBITDA adjusted If the the versus be XXXX. of $X our up of million

the on estimate has outbreak. our of by been and business Of significantly of duration this on the course, our severity depend the guidance heavily coronavirus impact which will the influenced of

view our as during changing will our earnings adjusting We and with our situation QX updated rapidly in required and early call May. this monitoring provide will closely estimates you be

year. new SMX the As launches Special first and we Cameron year, golf several during product Velocity the Tour including of putters. product will our XXXX business and have in is major Soft, Select being AVX, even-numbered balls, impact wedges, Vokey progression launch our generally the cadence an half, case, the With quarterly

new momentum also first our The from and of T-Series the the the half, continued we will will balls. TS of which new Titleist irons, launch half XXXX. launched second thermoplastic quarter Metals In in the polyurethane-covered benefit third we

XX% and expect quarter quarter. sales timing expect larger coronavirus, estimate year. sales of current approximately half we the account to these full the be and first size the of second of XXXX the XX% the of in first our of to Taking impact in launches the slightly we to And be than into the

We expect adjusted EBITDA to pattern. follow a similar

of half even However, EBITDA we be quarter than an second first percentage to sales. larger the expect

turn In the year closing, we our XXXX well-positioned confident we that, a believe solid the some long-term financial Q&A. we strategies for our deliver to from over coronavirus meet execute for Acushnet. challenges and Despite solid, long-term are I XXXX With our to for and total to was full-year ability now shareholders. goals, are another in our return and tariffs, to Sondra call will

Sondra Lennon

we up open the could Operator, now lines Tom. for Thanks, questions?

Operator

First comes Inc. [Operator question from Daniel with Instructions] Imbro Stephens

Daniel Imbro

there maybe drivers to XX% how category. was wanted ball just in we Really impressive the I talk by fourth saw rounds fourth maybe industry quarter, that promotions, north in momentum the of or the Can golf was it about driven start you holiday the or broader much quarter? on growth. of during company-specific pickup played

David Maher

you out in Really, we at consistent. It rarely rounds nature increases start strong kind retail the a than as the or played we as from mother rounds finished started. two a And little as or my around And is saw environment season strong we of play had the And VX, and promotional any look discount year better unusual expected, is, Pro bit said remarks, activity. was in to finish. market a year all every above. I with it then it that Part world. where very without

rounds environment, and VX success strength it is nice behind healthy with throughout momentum But So, performance is function Pro the a with of we the season. VX largely consistent and retail saw entire I Pro a it year. think and

Daniel Imbro

Green. Union And ball the Maybe one maybe a on as follow-up golf side of house. the on

a you see ball golf brand. surprised Just guys DTC to launch

your forward? and how into that of or the going a the strategy Is new hear that kind to would of portfolio Acushnet love fits part thoughts. Dave, market,

David Maher

needs years complementing you ago, serve price in positioning and it to golfers Titleist I It, DXC positioning if a in products the allowed we that look meet golf points wouldn't price was a compete it of launched premium segment in our and to Pinnacle XXXX, Titleist. call value-conscious play. back stretch did in the Pinnacle evolving designed and to and it XX diminish having ultimately ball, our nice the of us brand without job golfers. would history

Union test being to consumers golf time, Green about retail. years, also to Like appeal as designed Pinnacle, fair less will balls purchase we price XX to identity do really the the shops it's think version the this available about have who U.S. I of position under and course, performance Union unique Titleist's a tend my golf, under golf of traditional And being Green market. point in It's and, a the be reflects the complements and, reason to is think, helps and this. just They brand and and XXX again, think modern for of online. overhead operational segments of in distribution, piloted market, this $XX Over at strategy. to provide and over the past efficiencies.

for emerging as a opportunity So, this we an marketplace. an much play package of DXC the as ball segment don't as interesting golf

Daniel Imbro

the for any have report, week, industry? the That's provide are out. conversations and unification, Huawei but Obviously, think the USGA helpful. on case one put USGA's and response us curious out updated with know, in And can last vocal thoughts going? you the And been for how queue. the you for think back of R&A on the I I this kind really and Company report hop came I'll historically, last me, your to Dave, then your how

David Maher

and that growth add, XXX this critically will great be years, positive and ahead. we contributor into as saying and equipment success inserted had by the responded last themes XX, We ongoing and have because we a important needed over, look game's a they're start for with attempting or a couple to innovation, USGA regulated productive I'll be undervalued I discussions do. and XX, notably, respect to of the overlooked been have to must Well, we discussion. and felt and And over the has R&A XX, not continue innovation, have the what to and

accuracy that other much also shoot believe, we why the very to is components skill distance the We and the important special was game. this driving do said and game entertaining. effectively point or decreased that the existing many last we to one and X average the governing made to working. required And We implemented, of scores our an affirmation reasons rare the requires ability it in note regulations talent. And years over all we regulations distance dynamic And in is this and equipment that professional with of XX the are that low game do believe regulations believe that on PGA response, indicator believe the fact, combine is of this past so that has we and is are, great XX athleticism a Tour the season. implemented in

see really is I would or which and of At and to outcome, the global we just amateurs this apart breaking soon. changing, away this its regardless And one this And rule's set appeal. to the performance we business followed and believe by take category mission complicate that that point, pros, the quality And of part game's and in alike, conversely, would all finally, Daniel, compete. we from and believe or is of to impact say, your game point may every circumstances the our is we how players, unification, leader consistency rules about too say be if unification in unification, magic. not understanding

work with announced and their And they've as to are an of an in to again, manufacturers and observations year certainly you this imagine, of findings. intention as closely report, But stakeholders, that, important next address outlined part which, doesn't would their change. the over

and So, too next really at inputs of year steps discussions I point, what on a at point, phase be. steps this could of those And to this soon might speculate we're the a be. what in around think

Daniel Imbro

much. helpful. Really Thanks Perfect. so

David Maher

Daniel. Thanks,

Sondra Lennon

Daniel. you, Thank

please. Next question,

Operator

from question Stanley. next comes Morgan Kimberly Your with Greenberger

Javi Garrao

on Javi is Hi. Thanks my question. Greenberger. for Garrao, taking for Kimberly This

question first would the statement? the of the expect tariffs my should So, we of hit impact be to terms income in tariffs, when

Tom Pacheco

QX, clubs in had the are tariffs business of and impacts our in we tariffs in certainly hitting so of primarily income the And The statement, an business. already our gear impact fully them in tariffs away. place, FootJoy footwear to and to in hit we those business apparel continue primarily, and footwear expect areas our right of, the and to businesses are hit

So, now. they're already impacting us

Javi Garrao

Great. to Thank you full buy $XX in XXXX, the are buybacks, like back of the you stock authorization terms you. And million did in in XXXX? planning

Tom Pacheco

we original So, million roughly XXXX, there shares left authorization. $XX our in million worth that of was out of purchased on $XX Coming 'XX, million in $XX authorization.

authorization both our and that to board increased recently David mentioned, million. I As $XXX

to And so, for up the million. purchasing $XX additional anticipate an total year, we

Javi Garrao

so you much. Thank Great.

Tom Pacheco

welcome. You're

Sondra Lennon

Thank you, Javi.

Operator

question Altobello James. with Next comes Joe Raymond from

Adam Kozek

good potential would guys a coronavirus. takes on you you and you color curious, being guys. maybe of Joe. in on on was what was morning, guys of puts outcomes, at good color possible. tariffs on be if quarter. additional the gave or also, appreciate is quite curious a there very range then Thank XX terms of on some helpful. headwind any But margin all in And it terms I But Hey, I the could, guys you. I basis-point thinking some peak is when may were this in on obviously, Adam, if color This anticipation giving and dynamic.But I for

David Maher

close is we, your paying what's to the and it answer Obviously, rapidly. and I'll our like first, happening Thanks, Tom attention is quite Okay. will to second Adam. business, hit question. changing everybody

support manageable Weeks one, And a in chain ago, this bit shape, pretty no we various at Acushnet, my look as launches. a supply initially a we're little saw business, our balls, as our two, you earlier remarks, here. this as And in situation impact for to said if golf early good admittedly, a season I was relatively disruption.

product Thailand. balance We the the United exposure limited raw to and have materials. most We in States China our make of source in

felt segment some apparel, impact modest regard, And and focused disruption There our disruptions. was supply on the isolated we So, on chain was, footwear. business in a from clubs. our really, largest of gear,

give last we've is production, And the this quarter. we've would production four of supply two, up in we initial confidence What from took a thought even anywhere chain around or supply chain. second stabilized. information In of while late hit happen our third weeks seen week seen more the some you from two quarter, as that impact early loss ramped stability there's flow have us partners to that's to And output. our terms

As driver. I of retail this or X ago, condition, more are XX to of slowdown in beyond And And run the projections Southeast seeing sort our we're really a made noted is saw assumptions in But quarter. meaningful earlier, through of assumptions activity. it this Korea, Asia we we've that no that, we've out the impact days the really when the terms started that. end second in

point premature too This in I this is point, time. beyond and, at speculate think would simply that dynamic be to

inputs followed We've key really and the again, sales extent, by notably Japan. lesser forecasts, are. adjustments Korea made to our Southeast some to So China, Asia, a

Tom Pacheco

prior XX gross compared basis they in volume by In driven against in in in terms points was were XXXX of in decline QX a down the golf to launch clubs really Japan. That which QX of comping margins, year. was a Japan, Metals

So that certainly was a contributor. significant

points. by us impact addition, negatively XX basis they about the In mentioned tariff impacted

from up nicely were but normal and seasonably year strong were Korea. in in the margins primarily up XXXX. year, ball And footwear Golf results U.S. over on margins

Adam Kozek

guys one what quarter, Japan? for stabilization you we you some of potential and discussed you for could but I that follow-up if would to stabilization some expecting on way in provide comping understand if it, Any then here, want year. challenges can next entail don't And Japan this but quantification I kind ask mentioned quantify

David Maher

Yes.

of think XXXX, the the most I main, into part, carry the over conditions XXXX. for

case year. in I think the heavy, again the typically channel this runs big Japan see regard difference inventories. that's to and we'll

a function a the saw footwear or of last of closeout did mix And of that in But were disproportionate we is, their line. of impact especially footwear we dynamic. heavy. to an part discounted channel inventories off-price the the byproduct And just because see year that's retail upsized

we Japan, again year of terms last in inventory profile. better So, felt with similar to conditions a but

that a the some layer in as impacts Obviously, coronavirus. we changes bit of of

Sondra Lennon

for Thank I we think please. Operator, question, you, Adam. more time one have

Operator

question We Fargo from with have Wells a Tim Securities. Conder

Joe Lachky

Hey, actually it's Joe Tim. on Lachky, for

you much Thank wanted there. follow more just coronavirus. clarity sounds on in like seeing obviously, I the not the Korea, in impact, for are It Japan. as you just to So, quickly up

played. e-commerce might And rounds be have visibility to caveat And, sales like mean, yet. you tell. I to channels, mean, you not broader I the like on may there of any or off maybe I too traffic the the is have retail understand quite early season, any issues. it Obviously, or impacts obviously, that been shift such? have with seen that

then impacts chain point? And Has pretty Or have to supply September. on related issues a been riding supply launch this clubs has Metals sort business, lot you your specifically? any much for chain at coming through there the cleared of club of along coronavirus, lines got the the of that the momentum and in you've the

David Maher

Thanks, Joe.

the of It ten the Korea is consumer in and We're days. So, played retail has you're shift seven in really very out off behavior working right. early. and last to

frankly, have trends, themes saw traffic. the about projecting department hearing we're We too more of cancellations. these down being the traffic you that is Rounds to some play, but that slowed. certainly points broader one out cautious I, of so mall seen activity far. than single-store store the Retail is and we're some data

a that's Again, data week. set one of

have canceled. rounds We seen

stabilize sense You early golf healthy will and goes. activity. speculate as to too that it frankly, is know, that as and healthy outdoor is to the endure where But activity, sentiment a

As closely. good change, chain, that's back-half-of-the-year subject feel again, we all carefully, launches. watching it today, we're what to pretty to again, supply we very And our know very on but about based

As we're at is a and largely, shape. various inventory ago, in good half, moment May, in regions. plans, into I first through mentioned least April our launch our That

coming good you today pretty in terms But confidence. the there. have clubs, what in of amount again, us is, to shape good question weeks. in know to we're we your So gives of we're Again, about update going a

Joe Lachky

the like there? of you about give modest we maybe launches lot maybe in one growth AVX, VX? and expect, puts specifically. so know And than the that lapping on just in offset could got Green and VX takes could which, Union I a year second coming, potentially the can the launches But the segment? you more was then segment. launch. a guidance launch curious later you've balls don't new year, question Pro those on some you're for Obviously, I Pro if your other But talk And if other best-case by of scenario,

David Maher

not size even and But late lot a not the event. say odd ball step forward, even-cadence giving years, of our do year we years see, of the guidance year. the momentum. And launch short do we will We couple this but over just segment. meaningful to product and take and everything on about and ball in in AVX are Pro Obviously, build significance like-for-like. a that's year. look of excited that's with which Soft of not early, an Tour manage that I at category Velocity a an years, start a VX new we I'll it's in realize a, launch and activity the but you'll we it's can So, We're and the early, ahead

it we're but year. hey, don't that We're meaningful going last of we continues in are to just that outside first benefit XXXX. really launch think acknowledge, just of number the into Pro VX, of a happened tough from momentum say, at had We which strong and the Pro the pipeline we're we also one. And we activities Pro year against, excited comp in leave to some creating the also XXXX, and quarter VX with years about products VX

Joe Lachky

the for Thanks detail. Great.

David Maher

Well, back this with and We couple a look morning attention our to to in updates. getting forward thank everybody. you and your you certainly appreciate months time of

again. So, thanks

Operator

This today's conference call. concludes

disconnect. now may You

Acushnet (GOLF) 29 Feb 202019 Q4 Earnings call transcript