GOLF - Earnings call transcript Q4 2020

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to Acushnet Holdings Corp. Fourth Quarter 2020 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] I would now like to hand the conference over to your speaker today, Sondra Lennon, VP, Investor Relations. ahead. go Please

Sondra Lennon

Thank Holdings everyone. Conference joining today us Good Quarter you and Acushnet Fourth Earnings Full for morning, for Year Call. XXXX

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

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

period we and With year-to-date or full results David. in cause For press U.S. results GAAP the the twelve referring and XX, a discussion, list accompany filings of factors slides and to with the U.S. differ, turn that basis the referring I'll our today's this the could filings Exchange that see the and Throughout our that, actual with can December comparisons, year please non-GAAP how the and to of that presentation month we and be to release, making including constant comparable these also Securities Commission. a or in our we twelve note metrics, this items at revenues the metrics period. to items why of schedules that Please ended accompany and slides as when today's and presentation will adjusted Exchange XXXX release, Securities Explanations to to press are in month reconciliations currency be financial use call these EBITDA. such reference found over Commission.

David Maher

golfer morning, these remarks and challenges. we closer safe demand chain headwinds Key running difficult everyone. from to the strong good the resulting and participation today's hope I Sondra, staying as of supply you move be of through and COVID-related times. themes tailwinds end will well Thanks, are and

track this in to thank must and and annual XXX than of U.S. and momentum, development, balancing have my to XXXX, from million XXXX and navigating the As more Their in highest rounds team are the Acushnet and lows respond were the for confident the supply also shutdowns. experiences cost up increases in you to record, of and our who from company product the golf for commitment demand and operators worked we keys success. the days continued the million uncertain the hear, short-term new golf and since acknowledge teammates XXXX chain safety, their golf industry and is the positioning that is entire safe regional PGA I demand highs times XXXX. since I will care XXXX played involve tirelessly pandemic. uncertainties, on these Acushnet am rounds periodic Acushnet work dedication professionals to and of product continued success heightened as Acushnet serving course portfolio. us associate fun the the provide More earliest for benefiting XX task. quality and in well commitment total XXXX and to across than Based great customer strong

with driver year successful XX% led production supply quarter, although new in all TSi X% longer great of its we every the chain versus XX% across to Clubs most times of product coming metals as convert from a increase. our business Now FootJoy our to last is million Gear COVID-related growth delivered holding Titleist been tight sales pace launch. the quarter. with did ball results and every opportunity golf by to into EBITDA growth. once was our year the grew product categories sales million reported XXXX. pleased will turning strong Bag Titleist new million e-commerce to on than strong at is the good January X, categories Sales models up to end XX% keeping our and are brand of debut, in Titleist our $XX growth played we with VX running the were lead were posting our component has line. and work and the reflects and gain in early with good normal, into $XXX up of the are Slide modifications availability. quarter X%, the The team for brings led support their need FootJoy get by November a Golf all Pro from PGA Demand Tour very did our were $XXX global satisfy well, and TSi all up balancing Since given demand accelerated launch. Golf the production results Adjusted region. up in categories team with as the work strong right demand. segment and for brisk also club our XX% quarter gains with And business momentum an

COVID- have coming in up $XXX $X.X and for on e-commerce closures in early the on at highlights a U.S., is across-the-board and business seen double-digit These Demand pleased and note, to capabilities, to volatile you what for were we from adjusted season X, as and inventory these competencies gains posting momentum. And the Brexit-related Acushnet's Acushnet's become Korea during here quarter with Europe have the the and continue the on as regional critical reaching and gains increasingly And year quarter. on results the XX% see reflect chain stops full our Slide for we Europe recovered finished year. and EBITDA shortfalls battled billion for final golf and also modest times. to market's starts the in Slide and late sales Looking market slow of however, in the sites see the and a challenges route quarter increase shown our to resiliency the million. similar region, at in about direct-to-golfer XXXX, Japan by that in global disruptions forecasting year. X, stabilize U.S. are capabilities supply

company's financial Tom $XXX years per a our am position Directors in returned great payout has bringing to we $X.XX dividend, increase share focus has will programs. approved the has investments X.X% our to will announce and dividend dividend to future dividend targeted of I Since highlight, and continue As to our per company program ago, repurchase XXXX is and XX%. the to annual over initiating shareholders annualized our share million share. and by shape increased four in our expanding on entering making pleased the our that Board

am projects significant believe advantages returns over we X, enhance to I pleased and our to shareholders. moving the long-term will Additionally, two for positive outline Slide deliver which competitive Acushnet's

year, a $XXX this commitment is normalized in is investments, capital and million initiative golf Roughly operations remaining first our $XX the infrastructure while million investment ball precision manufacturing new sustaining The will focused two and million ball of five facility. $XX and innovations, will three and operational plants of ball be focused golf majority technologies on custom on enhancements. our The spend Bedford-based new be this capabilities.

and Ball of With capacity the Golf towards and VX, mix New shift AVX Speed operations Tour efficiency the products. speed ongoing line these we urethane-covered upgrade with investments, and Pro will consistent Titleist

help will custom stretch ball leverage capital testing capabilities new expand technologies capabilities and production and to and and golf also Acushnet's imprinting us and opportunities. new support ball our emerging industry-leading our to patent will performance intellectual quality further introduce as investments of property company's the assets. these and the We Titleist's investments solidify portfolio, ball operational years new most believe in leader come. will which represents golf excellence position We valuable and some advance technologies many to for These and

frame outlook tours early from club models for operating ball as anticipated by new balls we early area Acushnet's the fulfilled coming VX our of three new Titleist warehousing the in with with market of assumptions golf currently distribution which of you healthy approximately we around will great are expect and and most continue franchise. the of success activities cases, many new in The are along to early East hybrids TSi over of last the our Stock Slide and cost located I of third-party now and and XXXX key Against and Titleist custom behind The and, American shape. planning for functions, to the late TSi turning strong for products month, Pro development and are strong adoption golf shipped and and point high partners the and across and XXXX against up unanticipated of and look low. second To the historically all West industry their worldwide consolidation XXXX expectations year each performance, models will and initiative e-commerce launched for innovation. the time, Pro from momentum represent Coasts. some as and savings warehoused last process. shifts addition starting experience investment by end-user Indianapolis. a XX% trade Pro and are balls shutdowns some X, used launching drivers new of of will backdrop, led and for and engines fairways is relates we clubs year. this been distribution reducing new our are long-term. Pro trade engagement to hedge inventories have drivers businesses costs Golfer new our next from apparel we and in immediately West well-positioned quality, commenced and TSi-X while chapter across of success and experienced capabilities ball and capabilities our are on categories. our North TSi-X as brings also FootJoy enthused our product by and and service valuable new will to This the add generating golf then the momentum high distribution also new This center golf levels gear. times by Pro week, provide This in facility tours will in facilities. gear gear XXXX, project our golf positive XXXX. the year foundation VX lead begins balls our U.S. third see, players trade support plants our demand distribution across into months. enhance and upon we enhance both Acushnet products, the as and DC, which fulfill VX we Last is good VXx VXx game our XXXX. golf This be worldwide with intended new response. to catch are and And complementary generally Over are for in consumers, Titleist this allocation, in Coast to this expectations meet remained we to our embroidery from TSi build are and East high our of

line XXXX good Our by quarter. range is wide gear received partners shape supply launch the to we product has poised trade as in and a been first new are in models of chain our well

are anticipating confident stock while by season uncertainties. We our upcoming the quarter for chain be availability demand in QX first supply may golf challenged to and satisfy ability shops also that

We HyperFlex. our to COVID, as XXXX their The XX expect but to category and overwhelmingly roll were XX Premiere, to golf by momentum work gains, lifestyle business FJ was the apparel consumer are on FootJoy's remains was we and new offset team shoes one positive. and benefit into negatively expect footwear Stratos, great number mixed finally, in and especially and a XXXX been excited with next is ski, and posting continue at in has and these which especially good initial enough the to FJ the impacted over not about tour Masters stabilize months. Premiere shoe Europe. And from design footwear feedback models the

a exciting We call in beginning likely expect handle our of now to continue its we'll excel and Thanks that market the first that are to recovery to our confident inevitable to our and in your we confront. on products closing, the we and control bring half a by am challenges especially are XXXX. that on team I are the set anticipate year golf within growth operational on year. morning. uncertainties has pass for will experiences, I to In to range XXXX shoes of adapting in the attention ahead XXXX the trajectory are enthused Based good Tom. ski about the and stay broader circumstances we this over the at to new

Tom Pacheco

compared results XX, business they everyone. the amazing good and Starting their and get year. the and strong effort quarter in continued year-over-year consolidated our back half the our $X David, SG&A quarter, which face expense about morning, increases million to we would up million resiliency net higher exceptional or in volumes million, basis of put quarter QX margin a and was million, operations up was resulted million, costs. volumes during XX% like Acushnet's in from year $XXX with fourth on XX% shown up QX the higher SG&A profit has X%. and performance. as led up versus up second pandemic, was $XX costs the manner also were the were promotional gross $X I and up execution, in during and or the have constant about to in experienced in with points. XXXX of compared Gross in associates $XX and the the X%, Thanks, XX.X%, strong Income in million safe prior to thank forth or currency our through in for gross for the $XX quarter was were healthy and they million to end sales XXX by The $XXX expense profit demand R&D from margin average quarter last million, increases higher gross Slide up $XXX the XX% running XX%, prices. higher expenses advertising and the primarily the up selling and the year. or down sales million, sales selling $XX was

$X of the expense the during including discrete result included related for Fila Beam, as Holdings settlement $XX reconciliation our corresponding Appendix Korea, There from a The the the income audit as $X is income and our to the QX as of to the an in of Our million net was of for presentation. the quarter, from related was EBITDA release, the indemnification in of full former million, almost release the year to during QX settled Acushnet income the million quarter. expense. audit Acushnet was QX other $XX recorded XXXX. reserve attributable of adjusted Net benefit items company, tax income of reversal receivable in a period tax recorded well to a a which slide million up EBITDA which to adjusted parent was is and sale earnings

from million, down given million, down expense primarily profit both XXXX Consolidated margin basis. $XXX the from Moving for compared and expense XXXX. we was XX% mandated SG&A $XXX XX results QX, year-to-date related is $XXX primarily than from The tax million, earlier. in lower compared R&D net program. prior end million, charges Net $X of million, to $XX adjusted $XX income audit $XX the as-reported almost were expense of And points XXXX settlement was of X%, million. to was expense expense expense $XX by settlement was to at quite $XX million X% year. $XX $X.X strict improvement in earlier a down receivable Other and compared of sales $XXX expense height XXXX. attributable or to down operating Income income and was to year, last Acushnet in an or QX compared $XX $X $XXX from is gross the compared $XX million year. were million, EBITDA overall Gross of from the our XXXX. indemnification last net a was XXXX reversal million were and in pension our restructuring as gross year. less million up sales and the for operations X% year was Holdings the $XX for currency million This decreases of the the down billion, XX.X%, mentioned million down XXXX attributable before down $X was taxes lower of associated year. basis Interest prior year full $XX for on I as income the decrease constant which result caused was our which government result to driven down The lower million production million, million to the during Beam margin decrease million, to items, impact the Restructuring the XXXX. by and or pandemic. with XXXX million, and volumes was than the was discrete in shutdowns management the was to significant

and end unrestricted $XXX to facility. on of continued XXXX, million credit of $XXX million of QX. Slide sheet year improve last during was Moving the had a $XX revolving At $XXX XX, borrowings under the of end our cash our of available million Total hand. approximately million, debt we decrease outstanding from balance we had to

the down leverage at end Consolidated was the fourth down cash million ratio the Our end or million, XXXX. very collections from of $XXX the was X.X from quarter. X.X receivable XXXX of at during of the strong end accounts of end XXXX on XXXX, at $XX X%

day comparable across which outstanding end down were last year-over-year was down $XXX million increase flow of the in for Pro $XX sales to was The was the by driven $XX year, inventory down from XX% golf million up $XX of million discussed. down compared inventory compared and QX footwear, balls from XXXX. XX%, were Cash for which in levels to was launch operations from The to XX%, and new end almost in compares the which This million mainly year, were end XXXX. down from the almost Consolidated $XXX increase of for cash golf just VX. and I $XXX was in golf which comes in days the XX operations and almost clubs, QX days, flow FootJoy, but the lower the one full was million for Most balls, of million $XX the strong Our were inventories collections year million from or decrease XX%, gloves spread of periods QX. preparation the and cash of XXXX. million apparel. at QX evenly $XXX

inventory flow expect from more return XXXX. accounts and cash receivable, We operations will in to levels normal

Looking capital $X is we significantly million we the capital million during caused XXXX reduced for full and expenditures, we from year, managed through the QX our to disruptions pandemic. as which the spent expenditures $XX as by down

to driven capabilities expenditures David manufacturing precision increase expect million, earlier. investments golf For in our strategic that operations XXXX, capital to the and ball $XX about key we discussed by

remain expect several years the We this our year five initiative. support CapEx level to next this at approximately of for in

Turning changed. operational We opportunistic XX, with focus not continue during we that make be align a with on strategies were that while investments continue advance and focus golfer our innovation, golfers. our connection, premium believe to and to drive conservative favorable will on actions We these capital to and products XXXX, to the excellence Slide acquisitions more with return. business appeal expect to fully product have with that priorities dedicated at allocation growth to long-term our investments in performance our a

cash remain cash free also fourth and of generating paid returning on dividend of focused will total flow quarter We $X.XXX shareholders. per a strong during for million. capital $XX.X the to outflow XXXX We share

and per to million. X.X% represents March share $XX of $X.XXX an a on dividends cash the of of Board QX increase were our outflow XX, XXXX. dividend Directors million, full today mentioned, XX This our For in $XX payable approximately declared to of shareholders year, on as cash up expected dividend X%, a record David XXXX and total paid March compared

would open buy shares worth offset This XXXX. market the to to agreement program include, do repurchased we that in XXX,XXX and for we our $X approximately repurchase million our Fila of with activities million our $XX As expect to in had of know, XXXX. repurchase QX. in we purchases resume to share of We suspended shares, repurchase into in total you that, share dilution entered and approximately to a up XXXX. completion Prior share

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

net XX, continued on outlook be caused the sales our not by adjusted for Moving COVID-XX. to to providing will we XXXX due or EBITDA Slide guidance uncertainties

will As for David continues several discussed, healthy to exciting strong, be products of XXXX. demand we first new products inventories launching are and golf-related in golf the half and be trade

strong throughout availability and decisions a managing a the also However, remain cost a we comparisons product the periodic unusual forecasting supply outlook unpredictability degree disruptions profile in sales which different closures, XXXX, We the chain, the our we business likely our to timing. are of at market all temporary business. our product very variability global anticipate however, COVID-related momentum in global the and XXXX, of result as cadence through golf's high and operational have have increases of around made launch to will in

healthy year-over-year first lower half gains XXXX. will As and both a half to than sales XXXX result, we and that XXXX both sales as project be second and compared XXXX

point, two to at range quarter to first in almost the XX% months we increase Additionally, to of expect this sales XX%, XXXX. into the quarter, compared

by $X We half to negatively increases expense, impacted recent XXXX and first costs. $XX million from margin container global freight by higher in the expect air to be million driven gross

second higher an strategic trade Korea. was expense, compensation investments; associates half. and sales our higher six partners a the unprecedented significantly our OpEx, center to increased XXXX; full year For XXXX XXXX on compared compare with to in distribution as in shutdowns our year In in XXXX operating in is and of did North our only of and OpEx amazing due delivering American was an to managing management stock-based year. expect XXXX to an to XXXX expenses expenses associated during commissions tight We through from lower months years our shoes and expenses other primarily job recent OpEx the currently exceptional higher, compared it than be and operating retail XXXX conclusion, to better

XXXX strategies in with will continue While and cautious uncertainties we confident financial we our our we challenges and Sondra to return deliver solid to that, continue we the will full will are now ability year call to our believe execute total goals long-term over our we the face, be With long-term to I meet for be and shareholders. positioned for turn Q&A. to well to a

Sondra Lennon

open Operator, line up you, for the we please Thank questions? Tom. could

Operator

[Operator the Inc. open. is Instructions] comes Imbro Daniel your with question Daniel, Your first of line from Stephens line

Daniel Imbro

Thanks. ball thanks the multiyear and on our investment. morning, golf want Hey. taking capacity Good everybody Yes. David, start questions. for I to

in going But on of maybe And your the investments capital, some little capabilities? right expand capabilities five the Can right mentioned over just explain driven Is made the at elevated that of peers be years. their this for it's production you to but for advantage is why little increase being remains bit now bit you is I provide, you You can a on, hear a this a little right? by to competitive CapEx bit this current mentioned Tom, time next more did capacity? the investment? maybe as we think, they've should

Tom Pacheco

said capital program. yes, because golf the I five, the of So, next ball length several you investment the years infer but, of it's could

David Maher

Yes. Daniel.

plant Bedford, you a we business, – I ball in ongoing run or comprehensive and require know, investment and ball so, plant imagine of the built ball we In the ball built three. XXXXs, these three ball we sort the here XXs, well. built you would custom here In investment. got two. plant the make businesses XXXX then In So Massachusetts, a we And cadence sustaining New in as in Thailand four. two running third back in as we of look as plants, at operation we've

thought very is of And in time, areas we history given operations. our look golf in other introduce us, time-to-time, technologies been won't this be while the a It's and it's ball look into significant step how reflects, an about when and as made investment have operations back of for and around that's areas business forward new generational the continually always incredibly to the with business. allocation ball of, investment standpoint, making over hey, again, of where business. exciting right from we from our a advancements our that, time also we investments other we've something for we've the we get is to it the specifics in targeted, consistent So

to when some, Some we just you on bundle pack the together, ahead ongoing of do them comprehensive this and basis and an become more one, far stay significant. like

is So, strategy about it to earmark would in think for fits the an whereas is allowing I incredibly time what business of us for right portfolio further remarks we I say, into of important properties. again, our the the ball of our capital, want and value part don't and how long-term lose the to business I intellectual earlier to and leverage said my us patent

Daniel Imbro

back a we XXXX little think half you mentioned the XXXX in be beneath helpful. levels. versus sales that's I expand these the view headwinds played what back, a like-for-like in year? I David, do on color. today? We see step it up. just why you like taking would maybe And a your appreciate risks saw really you nice It this That's that given as seems bit rounds on would do growth biggest golf And and continuing, down year? prepared view biggest but finally cycle remarks, to were product risk participation this slides be what golfers, Can you participation as the

David Maher

Yes.

first the of on second Tom the I'll part. Daniel, that, So can take then jump part and

that external we first we brings looked against as we when first XXXX, the we the expect the So of half half. of But frankly about an – rounds engagement to in to rounds year. XX and comp of there. rounds one no don't look happened energy year. we participation out all think half expect golfer on XX million in we've the data what half, we the happened net-net, like for second XXXX, historic back gains the that in gains and will healthy It I've the game. momentum the in rounds at saw out trajectory extra surprise the those Really, million

you Pellucid as I results if X%, of, has X% compared XXXX. rounds and who projection to stick, a take they in half hey, the incremental think XXXX it's good increase a that in about

would think, We the right that projections, early it’s were in unlikely or momentum fourth too continuing. so up XX% pace I rounds saw that's this. second But the quarter. the make we be the the think frame in view but would it And U.S. clip I Rounds that way maintain half. frankly, to of play to we in

apply their healthier but we to the think environment in and again, than we're And world. realistic are is folks how that I country. to be change as in going with an be is Now XXXX how become going then, you it also around a trying we life allocate to inXXXX that's same living vaccinated time logic

a at a I'll of first XXXX to couple will from Hybrids edition worth just seeing There limited from The club we've but got things, some business of in won't what will it off and make here out that that miscellaneous be that clubs Then so change a and to XXXX on second half launching will timing be shift a there, inventory product in then we've X are had of I'll and XXXX the to I balls volume on. is I noting. to get putters normal we moved decisions made, XXXX, as repeat. an That second mentioned that occurred half I'll perhaps little result a cadence, on are more the overall They other got second with time their points half of and XXXX. turn real some We've no terms are our availability some half. in determined. prescriptive, As so our are a gear change moving within Tom. parts in FootJoy. drivers. half couple real in was same think played TSi-X event. of that to and first cadence, of

a are you I'd quarter XXXX Maybe come early Daniel, numbers, is which in the time to to XX going then limited is into Maybe going line. the a bump to not into looking quarter part half the round XX XXXX. million TBD, at million some another of is strict stuff say club half edition of on about volume. and is So first of

over that's Tom it for color. first second half I'll to So, half, framing kick how any the we're more journey.

Tom Pacheco

other said, the change add owned the in driven is, of compared of mainly Yes. second in of we I cadence The it two by, half The to the David as some XXXX. the year. only things is, XXXX, timing add I only in our piece is would shoes launch as would

their of significantly so, The their half the challenged relates as going half impact some we has of of to been decreases it the are the COVID year second and been the them because the year. because ski see And of result business on historically – there shoes. as bigger year of of business the for to full has a ski obviously,

Daniel Imbro

guys luck. of it Got it. color. best and appreciate I That’s really helpful

Tom Pacheco

Thanks.

David Maher

Thanks, Daniel.

Sondra Lennon

Daniel. you, please. Thank next Operator, question

Operator

next Your James. line open. comes Altobello from Raymond the Your Joe of with Joe, question is line

JoeAltobello

Thanks morning. guys. Good

was Obviously, sense more that So largely first in number year? increase of U.S.? the year had much if is playing increase that saw do question, the golfers last I participation we an on-course you in how clearly rounds you any the get is million there more last was for XX existing sense golf? played curious of a encouraging. golfers in Or But

David Maher

the are you there, one. But point I portion. who from I'll X had of a and portion. to there – million for golfers piece Golfers at million contributed rounds, said, X an this somewhat to the few and XX avids rounds, golfers. a to XX of are million to million accounted played of groups track couple they in One XX a okay, of another to of they came interesting give back And data capture couple. I new NGF the to and all the moved million we That’s X won't to roll-up our view. then summary any away point million saw who others model X and a of the look and extra tried reports right, game and a out million the contributed We lapsed

back that's golfers. this game. and Tour, them we well add, I America, will in brought What and can by PGA brought about Tour, LPGA to area, on some active the PGA So work lapsed in led We really it. maintain of how particular the think keep engaged good preserve them do We and new as okay. industry golfers. focused

XXXX. So for the we play we hopefully, in what and you bit that. out saw numbers a that metrics gives are encouraged some framework of behind by Joe, But of a

Joe Altobello

mean, next understand you normal in which the and wouldn't certainly hope Got does lapsed plateau off question, expect you and Or to grow those we we guess some new to rounds of of look for certainly back you it's vaccine summer year? new to XXXX. number. lose segue comp I half played all and start that I a are is you this with – it. It is would good obviously, XXXX? second that this do my to a I and But terms how the things about go thinking in golfers, expect this this of why

David Maher

a momentum, world Again, As versus tend the right? massive have transition is we in to golf the that lot game. of lot and momentum. XXXX folks And saw hopefully the we a dust half it, massive XXXX earlier, really to I what's shined look energy, When will we keep settles, work think at transition, XXXX other online. versus sooner be the XXXX, said extraordinary the to landscape a very do levels that great operators pointing transition But good so to a going golf sustain golfers. That the hey, with come had course massive of XXXX? going think I back of I the events the to was more PGA energy back and like, of year. XXXX? driving professionals be life in many game year, going the and back experiences would are more simple later, reason Okay, look maintain I in are more I for still

to go, pinpoint half. not around the I look views earlier, expectation a going energy So and general is this to at as going in tend but and going we it you see said we are are with the positive to longer-term first in momentum to see where thing game understanding, the

energy in levels saw the keep we are to up with half second standpoint. of You but play to hard-pressed the going in see XXXX from rounds a

Joe Altobello

it. Got

Okay. Thanks, David.

David Maher

Yes.

Sondra Lennon

Operator, question Joe. Thanks next please.

Operator

Yes.

question Partners. of Your ROTH the open. line final George comes line from Kelly George, Capital is with Our

George Kelly

Hey taking Thanks for questions. everyone. my

a few you. just So, for

I million gave. the will make $XX in the is kind hear incremental just said sold I side expectations right? cost First, in you related be, of of half, year? second of you understand the first the anything of about you half the in just you – goods you Did said second the half of still charges sure back Did what to say to I there shipping. your cost want the $X to think, million I guidance to first

David Maher

You me did right. hear

some airfreight So $XX said currently in into are we of quarter normalize in half. freight container million $X to begin million the the and headwinds, We the to second do in primarily we will seeing that of the first expect half. late challenges second

George Kelly

Okay.

Great. And XXXX said OpEx, I as than be then, think to as positive Okay. higher expect you far levels, all you them in?

David Maher

we correct there is or That what and four there is factors. said was three

shoes center of The North ongoing, first increased the we other is operating the year expenses expenses. with associated initiatives of initiatives have that a some some American distribution strategic and full

a for only we year. So in half owned XXXX, them

changes in on commissions as retail OpEx there So in result we said of full expense higher our grant in we've in structures. then, XXXX. higher And is compensation worth a stock-based six made a XXXX our months Korea. year And finally, some of only sales versus

under U.S. selling recall, GAAP, to have we those report as you expenses. If

increase continue up. expenses as to go those so, levels And in Korea, increase sales the – continue to

George Kelly

I next ball plants. That's investment in question still unclear Great. a the on Okay. am for little then, $XXX the And is helpful. million me just,

that of is to something that or unique? doing years, need how me, this and excuse that normal et require it every processes, something catch XX Is up you cost things is on of this more this. or the works. this maybe of XX is So years just – really business kind sort cetera There just

David Maher

a We see don't catch stretch. any up this Yes. as in

are we invest business pack. keep that We the at us to confident of the front the in regularly

time-to-time, ROI this multi-layer, I more comfortable urethane urethane, our where here how or as precision to you standpoint do in this while manufacturing are. how are a well. plus operations. it's acknowledge worked we right golf in it's ball piece, that's think evolution the TPU, you that, I too, good makes we leading it and very look shift make, run said forever So you also is then investments it's we facility custom three cetera. four that a ball thermoplastic thermoset cast make and Again, – if the competitive a worked really back over make both I years, confident sense et how is strategic with there are and meaningful sense, ongoing and XX an of of investments. and and from or And type piece, it's you standpoint from around a piece, balls whether back, two hey, whether serling is or

is So investment stay some which ahead capital that of as to of requires well. journey that this process, part

just as reiterate, I'll see by any a again, So George, stretch. this catch I don't up

how forward at always the Acushnet thought golf a fits about is that ball this think we've leap company. manufacturing into I

George Kelly

And Okay. then…

TomPacheco

investment so or million it George, the normal recurring call over of going just $XXX of just to I million years, was add, five $XX CapEx. I would

million CapEx. million $XX to spend last million of In our years, year million. we to couple a $XX So, normally in ball $X $X we golf spent

golf million of is ball. or So that million $X $X

million the incremental So $XX of the really the investment. $XX remaining million that – is million $XXX

George Kelly

Okay. about. it regarding – ecommerce? any a it. it's does about haven't kind If And around been then, talked of do big to ecommerce heavy you you that's Got to second Are you e-commerce – business change question changes? for a anything or that does your heard really able represent me strategy of of Will represent you. right, any last of the that's you in the do allow I part this this – your facility or distribution mostly kind that

David Maher

to us Carlsbad, products business There most that to It distribute California. Yes. ecommerce. we from the we and Coast. better pointed had a is FootJoy of ship We added do with out an overseas I of this regards Coast America and would a today. central Coast a cases, of focused with of balls from Fairhaven, investment characterize way those And that. to really some We or Many and at from North say center. way one. U.S. wouldn't gear ago, golf reality out moved and golf we we East a – East and this the Part today, balls. is, it I as really in Massachusetts distribution in years our West out West two is part There to better that, we and do the advantage the then East West the that. country bring gives starts fulfill away distribute

of distribution, ecommerce point better to well, many us one hey, we in lead we And have wouldn't us XXXX. this So year had the our customers shortens and we we operational, in shutdown being shortened this quicker wouldn't this as parts and cetera. allow touch a Massachusetts ecommerce-centric But, times, time, fulfillment advantage of shutdowns and lead this incurred over consolidate that did had experienced, California a ecommerce ramifications event. point center third ourselves. provide does gives cost them. for as project It's and levels, to business, I an service and of time our going really that's to et It

George Kelly

That’s Thank quarter. on a and Okay. helpful. congrats wonderful you

David Maher

Sure. Okay.

Sondra Lennon

George. Thank you,

David Maher

and speaking of you We safe to forward to first few the our months after appreciate always, Thanks. look time And interest. we quarter. well. close and as a your in everybody, Stay

Operator

this Ladies today's and gentlemen, call. Thank participating. conference you concludes for

You may now disconnect.

Acushnet (GOLF) 27 Feb 212020 Q4 Earnings call transcript