GOLF - Earnings call transcript Q3 2020

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Operator

[00:00:02] Good morning and welcome to a Kucinich police court, third quarter Twenty twenty earnings conference call, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session, if you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad.

If you would like to withdraw your question, press the pound key. Thank you. I will now have to turn the call over to your host, Sondra Lennon, please go ahead.

Sondra Lennon

thank third joining quarter everyone, a today morning, holdings current earnings Good you us for for [XX:XX:XX] conference call.

morning and Chief this Chief me are our Marr, Joining president Executive Officer, Officer. Tom Financial our Pacheco, David and

year, why nine call nine basis turn and list and Commission. explanations in With referring the at the be Before are use subject looking like to segment ended remind how referring accompany of we that schedules date in turning materially that as could of slides Throughout and when period. to XXth, and comparisons, on statements will and be decreases, changes month making the I'll this results sales results U.S. we note to looking are our to the everyone would Securities our call to the actual release, our cushion over please this when be that, the to on U.S. the twenty the And Exchange statements currency will and based and release, September adjusted today's the accompany referring increases slides on for EBITDA can sales results David. to in the press current to year and found we discussion, also today. financial also to period and that such a are Actual I comparable presentation we differ, are factors items may that over Twenty note reference these forward metrics, from to constant presentation, call including to that month uncertainty filings revenues a making expectations and to press David, Exchange and and see these non-GAAP these that currency. These constant referring and please circumstances. today's a or at of with items with regional Please reconciliations in forward we cause Securities gap differ metrics filings year expectations Commission.

David Maher

[XX:XX:XX] morning, And Sandra. Thanks, good everyone.

appreciate healthy you sustaining I steps to capitalize we for third of the well. interest on the course, to look hope staying success. providing products position, are in company always, your quarter that term and results that demand and an and taken for forward holdings we As overview of long strong a Kushnick company's the have and

for work I I the into since teammates resilience and and operations late my in Before get we terrific quarter, resumed thank their full must acknowledge May.

recreational distancing golfers and activity, commitment our Our results and commitment the global And their distinguished also supply along team's and the customer and give and to And sense must product passion, this operations. in its demonstrated golf because that it and and from professionals been of hard And strength and as enjoyable the of reconfigured sport. healthy adhere and third of to have we Kushnick, safe, for service, credit game of has golfer our to our have the wide quarter chain. glad very to PGA requirements. line. respond during and well-being a facilities decision process August, lines, am the products, July our our a its proud trade to positioning commitment play peak has benefited workflow themselves these results. taking last operate same I for in thanks we our company and across influence and resumed adapt momentum of leverage great will our to Team to purpose work care spoke report safety organization this priority call to creativity partners and our levels as this reflected and every reflect since we our caretakers entire the the [XX:XX:XX] golf all of able XXXX, of of am ability growth, an health global at outsized highest I on company strong of June in our On of for cushion is the I a that thoughtfully has output pandemic. safely remains our continued, to to continues have our see, that associates, early you social demand as

As we XX this of continue for last led been especially year. four, shown in increase supply while million to of one to our August. versus stock posting up strong here the percent in quarter, demand third sales slide for out Proby allocate franchise situations minimize XX a percent order growth, on balls Golf XXX dollars period were has

Our our team is Tipu Golf speed successfully titles speed ball to first launched Ball Thermoplastic the golf our to Technology. new or Urethane

for speed and the sell past for course, years. period. may the of percent Our we Initial Tipu been in this excited working where technology been refining and while process the sales Titlist resoundingly club five has R&D several up through, about team take has future, positive we're on were

pleased with with are these We results.

a Titlist super our Given launch is offering decision This percent year's [XX:XX:XX] the model year XX coming in club with to three We concept custom performance. new quarter, important August gear from iron of premium launched Ion's challenging family Titlist September. product platform gains we and against to Medal's our launch from push as to element push new of a an materials the for of increase golf last comp categories. our only November. and Taci innovation boundaries strive

our quarter to model owned increased directors the term These strong a e-commerce results And at work demand. the including from XX Fitzroy affirm increased has which outlook. as Bag positive adjusted good of third most gain generate reflect gains is been categories, in a The equal payout helped proven cushion for most in now all trade company's percent EBITDA also our the and and long ninety increases keep with approved confidence the once its sites in quarter, despite cents cash category share, company across Businesses These were posted to losing disrupted dollars. percent of XXXX. operating XX Glove. of and the title dividend, for quarterly dollars a for direct strong partners nine the board million continue inventories results million XX to per are half apparel, quarter its second year, quarter today, platforms, flowing our traffic and caution both. of aggregate. support sales fifteen And and the to a to did in team and approximately comping Our

twenty, you here percent, are off these down through slide year-to-date is are five, challenges the see Next five the percent sales through results nine first with of EBITDA months Twenty on while Considering of nine year. pleased we September. the adjusted

good the hear balance As we sheet is positioned in is from our shape believe and in Tom, our to well company investing growth. continue you will future

our in has play the quarter most been play has up you see with XX steady most the up digits Now single since by and to performance golf also decision of [XX:XX:XX] in as of pace, in as on and resumed strong travel the to the a percent have by all the Slide second the the continued third long. quarter, stay set driver at U.S. Korea trended our home have quarter, sheltered posting golfers been course. great percent. EMEA an elected to low And older quarter channels for play increase impacted not Japan Rounds has third had and XX region, population year. especially and six many the sales all launch the a and impact reflect an November. market results delivered for and EMEA from this Japan covid, sales in into has percent. up also quarter. been outsized XX year U.S. gains Japan's with golfing segments move Korea

new drivers seven, with the Looking XXXX Tour move to taxi our of on most at September. launch a full and to already throughout plans, business and August quarter. titles, our week our driver one Fairway's tours you positive uninterrupted made our team club TSA slate first our dates decision the be slide professionals. one commitment been scheduled PGA of will R&D be number worldwide a has product and debuting global XXXX new will as This launches early the from our and across comprehensive in introductions the of lineup since have of blocks impact reflects made building launch has November. most through the This next to see

twenty, in has with last Proby. number XX fully probably celebrates New, Tour for the tour a have champion year as years balls Brian [XX:XX:XX] milestone month PGA won one their the golf golf. Gay ex been week notched out probably new in Bermuda Twenty as the first model, past One is on our win and for one been issue and one brand

stratus finally, team and side summer the to on until the commitment in golf and and launches craftsman style. continues is Fitzroy's by of next been expected covid And while recover the unwavering shoes and since anticipated Lee's week, Premier out the late quarter reflects as tour premier much launch will Next series. the first heritage new footwear the Spike has late Europe, and to performance, shoes. comfort our momentum has year. and more ski U.S. been across not build impacted meaningfully Golf to business line

a interest in amount our is the to is and continue great caution up good by consumer supply uncertain chain as will holding we with of in these well. new as forward, times, strong game Looking and required demand shape balance pipeline product our noted, healthy

we well for be to which launches. projected are five percent inventories retail bodes to upcoming think globally, XX Additionally, product down

term investments future capital will Just strong sheet morning. investment pass the offer long as make attention our compelling growth, balance important, to a the call opportunity. interest Tom. and over shareholders to and key this I the Thanks to return company now cushion positions, your has for in

Tom Pacheco

million million, a two in decrease or a three in and XX golfball golf July in last the everyone versus QX year, XX million August five expense million call. QX down with QX as to XX year, million and XXXX, than and saw up to to million, our million. golf David, lower gross XX or million XX on expense primarily million, an on XX third good my Consolidated demand and was products and trade point a was higher expense XXX that or XXXXXX income. advertising of down margin to and Thanks, XX a execution, extending gross which gross QX thanks up I and four million strong resulted year, percent all six up nine we offset compared XX versus R&D tax a percent gross September. basis and appreciation club to were was exceptional prior two start associates sales basis very from interest the and by And QX like percent starting for performance result strong XX for and or promotional cushion. million of morning was would to XXX of expense which million, income for XXXX, has net percent XXX quarter Its for was income by partially [XX:XX:XX] XX was June QX up our percent, million, from last into percent their continued increase on solid fifty was points, XX of was three. profit margins in our currency as down in XXXX the than margins Operating partners costs. constant higher the slide higher

during Before to eighteen one regulations the net million, reform. the point nine and attributable impact rate was XX of related shift mix percent in million higher up million that our to quarter EBITDA improved of QX from the of U.S. are favorable the effective, holdings new to, million favorable and earnings Net [XX:XX:XX] issued our tax jurisdictional of taxes to twenty QX twenty or XX were XXXX tax XX XX percent income compared adjusted course, than with XXXX. ninety of

your expense points last for million from last the a months for from year. tax interest was was significant for million twenty twenty, income first expense Operating as XXXX or compared expense percent, results to nine Net million. million, effective charges one XX a pension XXX less year with for nine were six the XX million, eight million Twenty the the two million, profit XX basis. primarily S.G. adjusted million gross twenty and XXX one the first expense months represents sales twenty results rate point was income Gross year. XX the fifty improvement the on of expense or reconciliation down both our to program. for XX three first up our XXX our reported first was nine XX slide nine to first than in XX Twenty settlement of million seven of basis tax point the XXXX, XXX down Income have net review billion, a R&D was of down than compared percent was compared for million, in which income of to were XXX months percent down XX. to [XX:XX:XX] forty prior prior EBITDA lower net margins and to adjusted cushion two prior associated EBITDA. percent. This XX million first attributable with in XX half, of was which provided million were first compared nine XX Restructuring We down year. for million assist date, a one to point million of year, months was to consolidated first XX the months currency the down our one or the calculation expense million, was twenty the percent on down to constant year, million, the and half was Other was a and XX nine percent, nine XXXX. holdings restructuring result months down XXX from An million Moving million,

significantly to end covid-XX we was of XXth, QX. from add did time QX our had related of of the back end decrease million moving XX hand hundred quarter September from in note QX our during outstanding position expenses third one and million, cash the a on any end not of approximately QX. improved QX, we that at since and as of twenty nine total slide unrestricted we the debt cash will XXX On had twenty and the and the You million and last about year thirty eleven XXX same million liquidity

had available and and were the was end months. sufficient at XXth, receivable three was two the least ratio hand prior revolving point inventory twenty one September, And under [XX:XX:XX] to clubs, down facility our The from and days the end September this down available of percent cash percent year XX XXX the period. million, compared But will At about leverage our XX about three of we million respectively. the for from Our cash on and Consolidated QX, XXX QX and of over times to XX our time, XX liquidity point the million down credit were from accounts from XX of QX. we balls down times DSOs on driven by up the that golf the end June. and from down golf nine XXth was at compared borrowings or of XX XXX to two to borrowings day down from end million. end we're percent Twenty eight XX believe QX, requirements prior was that on meet decreases and at which and be the one the percent year September were next or million, of XX prior compared percent year prior year hand

million nine of and first in periods income, XX CapEx months collections comes year. for first our and XX million composition percent This for accounts In was the QX. percent Twenty net same and XX the down flow the mainly quality to we QX the was million quarter operations addition, five year. and comfortable flow the inventory. for million in million XXXX. third for to Cash twenty Overall, inventory months The of our levels. and lower compares prior QX XXX five the XXX with of for football and operations increase from the million stronger receivable was nine inventories XX of cash compared year of higher were cash and the to amount the from are for compared from

in be XX increase twenty expect range capital QX year for the in plan million. now of We our twenty to to capex and XX full spend to

XX, Moving we to be cautious our continue allocation actions. while not term allocation relates it Slide priorities changed, capital on long capital to to have as our

to mentioned, now dividend and just expect not do not I to previously pay we half today in shares December XX our of full expect as to a December shares announced of repurchase And September. return mentioned, we on Xth. cash As We Twenty record year twenty any of CapEx share did XX million. XXth shareholders. directors a our declared board dollars the represents range to any QX a in payable per David shareholders of million XX be currently QX. in [XX:XX:XX] dividend did This QX QX repurchase approximately XX and in We to cents of on

volumes remainder compared to volumes [XX:XX:XX] increased contributor led sales expense be by be did metals, launch expect until expenses the the perspective, the of market and result half this environment, Japan. including up twenty we slightly upcoming factors expect Schuss professional play to a different There a cadence Turning remain the but U.S. to be foot XXXX and comes encouraged a to upcoming and to sales tours twenty of twenty. QX, into from expect of we from up high flat the for From currently products we strong comping the by year, we are twenty we are the shoes for States of quarter in of increase are by number in of offset be in lower about QX, the result the promotion around twenty QX of production increase down as and as performance eighteen the in of in the in new cycles. product the restrictions And models launch, we fourth given operating sales and begin As an outlook season be in in to early rising support limited advertising be TFI refer the business and to XXXX. QX, cautious to life to positive Despite of higher QX finally, in XXXX from to demand elongated to slightly lower seen up rounds their to back of sales sales costs overall expect our of a as QX our remainder cases we joy acquire the as into of we while sales availability our also be ramp that for we digits one, the in of Twenty operating when for It strong geared QX XXXX, they of covid-XX down to recently single in Proby in the the clubs is have to QX as of in partially our them also from net expect medal's QX demand, in premium of with number a golf two the implemented world market the twenty modeling Masters. the QX Titlist comes momentum we best to challenging QX impact United year the of net Twenty up and not considering Europe currently July performance changes to XXXX. compared Japan will we expect result our balls be to golfball twenty QX golf QX XXXX. of compared

future time. not demand consumer guidance Given impact and work uncertainty issuing covid-XX, all great our detailed the partners significant conclusion, of further of trade amount will be this In did we associates at the our of meeting the regarding for products. strong

all While the energy months. that are we will and facing. in caution We the momentum coming remain continue given continue we to Gall's exercise confident uncertainties

our which noted, business, As in have impact results. shifts timing there our QX been of some will the

market will over confident to we positions now remain to into turn the upon With call leadership However, and Q&A. future. our that, the Sandra maintain I ability build in our for

Sondra Lennon

Operator, we Thanks, for questions? [XX:XX:XX] up open could Tom. the now lines

Operator

[XX:XX:XX] number one As press a reminder, if about ask for that the you star one, question, star, like questions. is a to

Stanley. the The first Greenberger of Morgan Kimberly question from comes line with

question Morgan with line first from Greenberger Kimberly comes The Stanley. the of

Sondra Lennon

[XX:XX:XX] Hi, Kimberly, are you there?

Operator

line Your [XX:XX:XX] is open.

Sondra Lennon

take next operator? we the question, [XX:XX:XX] Could

Operator

[XX:XX:XX] Stephens, Imbro Inc.. The the Daniel comes question of line next from with

Daniel Imbro

good you today? you our and from or production Hey, you demand Yes. standpoint, cue the guys chain of you know, any investment taking disruption the side questions think to given And to in quarter. this didn't any there morning, guys, learnings stay the industry, have from know, you for the strong [XX:XX:XX] like the in three congrats impressive, obviously supply there. want very in state to, then supply chain the seem really disrupted either does what I How both production, are if thanks CapEx on the the on the need we're is more where Teuku out on and called seeing OpEx industry? start golf

David Maher

[XX:XX:XX] QX. Yeah, in characterized happened I what well you've in what think

more Our team, at global quarter. club plant sufficient our scenarios now and Plant the can I modeling modeling operating meet imagine learnings we're whole safely way would is that for way of twenty specific been to Twenty from the one you is one, looking demand. in year, our We're a to our lot plan. to typically twenty up our will exceeded we the comfortable the XX/X distribution our the And we're the is has there's we of involve one will say Twenty we're we capacity at capabilities. we're from XX/X to products, we good decisions year. our shape. And some time, in earlier this have that and relates we some in and for terms the of in some the production in require at expect options we talk how make and alternative some and to most we capital. distribute But we're America, of Paul are changes we're three more North, risks moves that again, in see looking operations, that which quickly the team what some North we now in California production next But It in third are as that our And the exceeded Midwest. Massachusetts. products we're additional for U.S., golfball make year. we'll the And year ramped output and our of in encountered in and think we'll do some to future. it of likely about we'll we think and hedges with distribute foreseeable operating we we'll And

Daniel Imbro

[XX:XX:XX] That's That's helpful. great. really

states, your back know, your the one step really nature. You during this Tom, down, they into the year, like didn't impressive you over growth that hear move up. time a know, I sounds But you at there end the quarter year it know, revenue despite forecast meant anything outlook commentary, no

So down step temporaries covid? that marketing out any expense expense, we this driven XQ kind as by should of view or come really lower just in did sustainable of there is

David Maher

shifted launch maybe would I or it's temporary the as a into Obviously, the Nettle's of the better new Daniel, mostly QX. into we characterized [XX:XX:XX] Yeah, of shift. or say the

would And advertising that promotion amount so, shifting know, normally spent is of spend a into QX you and we QX. significant in have

a I a shift as and more permanent. characterize So that not would

Daniel Imbro

to be historically [XX:XX:XX] in industry, last tends on know, me, David, that terms you players, for the of but unprecedented And fleeting. one the growth

years? the pan few growth be next think maybe than just you what So, and the in better the needs industry the sustained flash industry, and the to golfers to do rather do retain know, the these these you

David Maher

The safe made And course a that game. know, the to had note important great the very with earlier game [XX:XX:XX] to uncertain golfers say, of of that's are a And we've positioning fortunate fair lessons emerge. one The And professionals, many I prefer play nice invites of welcoming couple these more I as your certainly a that Well, job game. PGA Play times, these nine lessons in right? recreational is that the is that experiences six, being we've earlier it's in given. be. Daniel, world a the It's and found job that golf a coming different and done this recreational invites amount remarks stats positive. whatever sport golf the it's family, might game, question, improvement, it that the more all has that's year, Twenty themes game's play have I challenging. a holes, think done One a think To that have are positive more. been the you of the and lane. hard around all out types play safe alternative. twenty compelling welcoming twenty happening, Twenty which the whatever, it I play And operators of

components, healthy levels of happened entertainment And influx then I secondly, their have give get pace a that beginner job was for world healthy, tours cetera. as a of to an so One, done competitive generally play. So to we the maintaining sports to the paid and of et point good game the demand again, both of game's with We great great of have to throughout. done point first hear bringing in significant the And year. I of caretakers, the as a his the do job pace couple who will of important, the close of anecdotally pro get and you to some got early, forces. of But golfers a components, the as level twenty, attention to but vehicle year to have Club, is around risk instruction lot this lot this the a credit would a piece, showcase early twenty safety throughout work rather PGA the of very as game's of slow. game I think about would a play. know at with of back say learnings game's think you've foremost, [XX:XX:XX] the professional fans the of And June of the the and cetera, et hasn't pace that facilities, is giving play second which I that and to

think. I game, the for learnings of lot a So

your frankly, several And we're what's months the with still Daniel, about throughout the instruction. think, point do or of we've happened and to game again, to what leaders know, game here last key to been on to elements. does the capitalize four what to in been I play three industry what to Piece in the question, since with has you reopened. demand? two processing I'll just conversations increased But point this interest

Daniel Imbro

[XX:XX:XX] Best coming Thank you. luck again. of Great. and

Sondra Lennon

[XX:XX:XX] thank Great, Daniel. you,

of comes [XX:XX:XX] please. question, Greenberger Morgan question line Stanley. Kimberly The Next with next the from

Kimberly Greenberger

me hear this you Can [XX:XX:XX] time?

Sondra Lennon

you. [XX:XX:XX] We speak can, thank you, nice with to Kimberly,

Kimberly Greenberger

on what Great. the And just it's in up thought sure momentum that. But happened this on numbers the to I'm to really fantastic. technology apologize morning following I absolutely Daniel's first with really great question. side. start not for [XX:XX:XX] the I business. the see were I, I wanted

understandably, I'm a volume headwind As impacted Japan retained very is quite virus then is gross little need margin, we margin on a control just covid? a bit And the acquisition was clearly kind get if is back the new visibility me, in is aware signals out response XXXX, the else headwind about might future by clubs. geographical see of to for get should around that bounce a more margin the is of balls in obviously, I'm future a that And on my would club's be quarter. upcoming a players then to strong know, Thank as something you going see gross were and question your we of term? might follow geography. just nice strikes then or looking if vaccine the wondering we play would results we wondering, we a there's medium There on what some club every you the obviously, think there this expect much. gross some are clarity there as Japan be and long geography. of. And and And related Japan, in that that covid. should has positive reverses for if across been This margin permanent gross year, that You under last in that Tom the kind growth simply of a or to through in so opportunity. that matter of on you post the indicate of to when have to game more of golf look kind you when

David Maher

two your [XX:XX:XX] questions. Kimberly, I'll touch upon Ok, first

know and to signals we of Right. term? long in we with these to lead don't for XX suggest answers, we would I the game might reflective more behaviors specific Unfortunately, to that or when a of of First, look know. the lot what a the we've seen are

activities recreational lives prioritize as well going thinking this In income. golfers game, how I think think terms forward. sense for the this about to going has But plays lot they competes time out. twenty. discretionary fit how the have influences made many the a the their And they it Twenty game And how it. And game how the how the discretionary give for good for fared past been had into I we forward very for you that point thing several and I'll of have Daniel the game suspended. experiences sport competes we're I and of this a very in months,

begin tough [XX:XX:XX] new order? the lot think changing changes year. is So the And answer the optimism been come take time, reopening, where the world do a of We for business we it and these circumstances it's a activities, whether or And of it's we Twenty seen. we measure been it's stadiums that back we sports, don't to of acknowledge in does a been And think online. lot travel We that Twenty be to remains around do commuting it fit do will in golf in a think stops about golf's heading whether folks. world. into youth whether way. has just and and spot of bright twenty that year saying a comfort a twenty the

recreational to As ago, prior a prioritization time I of Japan. relates fits minute as golf their into it said their to

has. to up look globe, flat in And Korea. high up has outlier in we bounce up, of down business, back, an corrected. that to inventories golfing I last has in digits has rounds sort past, see but is we up out single way population is rounds [XX:XX:XX] the or say U.S., as when been longer as is does we fitting. certainly with marketplace EMEA it. single about we the the when I in Japan think We of a as see globally careful see digits. we last to party careful Japan, relates And five made golf I'm to the been do venture done the low starting know, active You major been around has around, the custom I that, But the slightly. and see markets very fitting, I'm the rounds look well business do shelter who's by correcting Japan. always markets in as the we that expect has see into the custom it not term We we process the maybe year, we rounds of expect been home older and where been our accelerated it year the do shared with are more and at term, inclined comment And have better course. our we down, Always this

as do markets. we albeit that's in for as market. covid in say the theme fitting lies, see any shift we more think careful the centric. do many I we've seen bounceback acknowledge market becomes we than Japan albeit approach to I happening, we we in in opportunity do just way And as But about the that again, would other it as later we would the said term So and about think where and think seen a back next that way course least to way years. think stability at in that some their time and golf effects in golfers any several do we in in safe impact in of than these market should a that influences minimized, that to And other And that that over provides that significant we covid we've the the reduced are Japan way. the market. make over Japan and a most a in opportunity globe about the in But

Tom Pacheco

relates question the clubs, is your [XX:XX:XX] to there about As really you gross margins related launch. to know, the in it headwind

you know, You their we reach tend previous as know, quarter you sales generation the than in having model, know, which to they of sales the higher new lower the rather of had ASPs have product the lifecycle. product, the end older of,

of the a timing of expect And to, the So itself would or over just that that's correct really itself launch. we function time. you know, reverse

Kimberly Greenberger

[XX:XX:XX] much. Fantastic, sense. perfect you makes so Thank

Sondra Lennon

[XX:XX:XX] you, Kimberly. Thank

David Maher

a to look [XX:XX:XX] again. back forward and We as report quarter to Thanksgiving we time enjoyable season you this wish morning, fourth Thanks appreciate up attention we and our you and catching everybody's and safe results.

Operator

[XX:XX:XX] may This concludes call conference today's you now discuss.

Acushnet (GOLF) 6 Nov 202020 Q3 Earnings call transcript