Earnings call transcript: Acushnet Holdings Q2 2025 sees mixed results

Acushnet Holdings Corp. (GOLF) reported its Q2 2025 earnings, revealing a mixed bag of results. The company posted earnings per share (EPS) of $1.25, falling short of the anticipated $1.32, marking a 5.3% negative surprise. However, revenue came in at $720.5 million, slightly surpassing the forecast of $717.39 million. Following these announcements, Acushnet’s stock experienced a pre-market increase of 1.44%, closing the previous day at $79.7, but still down 3.19% from its last close. According to InvestingPro data, the company maintains strong financial health with a "GOOD" overall score, supported by robust profitability metrics and solid price momentum.

Key Takeaways

• Revenue exceeded expectations with a modest increase.
• EPS fell short of forecasts, impacting investor sentiment.
• Stock price showed resilience with a pre-market uptick.
• Strong performance in the golf equipment segment.
• New product launches and strategic initiatives underway.

Company Performance

Acushnet Holdings demonstrated solid revenue growth, with worldwide net sales increasing by 5% year-over-year in Q2 2025. Despite the EPS miss, the company has shown strength in its premium golf equipment market, with notable sales increases in its Titleist brand across all regions. The company continues to benefit from a growing interest in golf, as evidenced by a 2% rise in worldwide golf rounds during the first half of the year. InvestingPro analysis reveals the company’s impressive track record, including eight consecutive years of dividend raises and a healthy 48.2% gross profit margin over the last twelve months. Want deeper insights? InvestingPro offers 12 additional investment tips for GOLF stock.

Financial Highlights

• Revenue: $720.5 million, up 5% year-over-year
• Earnings per share: $1.25, down from the forecasted $1.32
• Gross margin: 49.2%, an increase of 40 basis points
• Adjusted EBITDA: $143 million, up 12% year-over-year

Earnings vs. Forecast

Acushnet’s Q2 2025 EPS of $1.25 fell short of the forecasted $1.32, resulting in a 5.3% negative surprise. This miss contrasts with the company’s recent trend of meeting or exceeding expectations. However, revenue surpassed the forecast, with a 0.43% positive surprise, reflecting strong sales momentum.

Market Reaction

The stock price of Acushnet Holdings showed resilience despite the EPS miss, rising 1.44% in pre-market trading to $80.85. This movement indicates investor confidence in the company’s revenue performance and future prospects. The stock remains below its 52-week high of $84.4 but has shown stability in recent trading sessions.

Outlook & Guidance

Looking ahead, Acushnet expects net sales to grow by low single digits in 2025, despite facing a $30 million tariff impact in the second half. The company plans to mitigate over 50% of this impact and anticipates continued sales growth across all segments. Capital expenditures have been revised down to $70 million, reflecting a strategic focus on cost management. The company’s financial stability is evidenced by its current ratio of 2.21 and moderate debt levels, as reported by InvestingPro. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading above its intrinsic value. Discover comprehensive valuation metrics and more with InvestingPro’s detailed research report, available for over 1,400 US stocks including GOLF.

Executive Commentary

CEO David Marr emphasized the vibrancy of the golf business, stating, "The sport and business of golf continue to be vibrant and healthy." He also highlighted the company’s cautious approach to pricing amidst tariff concerns, noting, "We are careful about pricing and realize there’s got to be a performance story attached to any pricing action." CFO Sean Sullivan added, "We continue to operate with caution given tariffs and their potential impact on consumer spending."

Risks and Challenges

• Tariff impacts: Potential $30 million effect in H2 2025.
• Economic uncertainties: Could affect consumer spending on premium products.
• Supply chain flexibility: Necessary to maintain competitive edge.
• Market correction: Observed in the Asian apparel segment.
• Restructuring charges: Expected $7 million in additional costs in H2.

Q&A

During the earnings call, analysts inquired about the potential pricing impacts from tariffs and the company’s confidence in consumer demand. Executives reiterated their commitment to a performance-driven pricing strategy and acknowledged the challenges posed by macroeconomic conditions.

Full transcript - Acushnet Holdings Corp (GOLF) Q2 2025:

Operator: Welcome to the CoucheNet Holdings Corp. 2Q twenty twenty five Earnings Call. My name is Lauren, and I’ll be your operator today. There will be an opportunity for questions at the end of the presentation. I will now hand you over to your host, Saundra Lennon, Vice President, FP and A and Investor Relations to begin.

Please go ahead.

Saundra Lennon, Vice President, FP&A and Investor Relations, Acushnet Holdings Corp.: Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp. Second quarter twenty twenty five earnings conference call. Joining me this morning are David Marr, our President and Chief Executive Officer and Sean Sullivan, our Chief Financial Officer. Before turning the call over to David, I would like to remind everyone that we will be making forward looking statements on the call today.

These forward looking statements are based on Acushnet’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. For a list of factors that could cause actual results to differ, please see today’s press release, the slides that accompany our presentation, and our filings with the US Securities and Exchange Commission. Throughout this discussion, we will make reference to non GAAP financial measures, including items such as net sales on a constant currency basis and adjusted EBITDA. Explanations of how and why we use these measures and reconciliations of these items to the most directly comparable GAAP measures can be found in the schedules and today’s press release, the slides that accompany this presentation, and in our filings with the US Securities and Exchange Commission.

Please also note that references throughout this presentation to year on year net sales increases and decreases are on a constant currency basis unless otherwise stated as we feel this measurement best provides context as to the performance and trends of our business. And when referring to year to date results or comparisons, we are referring to the six month period ended 06/30/2025 and the comparable six month period in 02/2024. With that, I’ll turn the call over to David.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Thanks, Sandra, and good morning, everyone. We appreciate your interest in Acushnet Holdings. The sport and business of golf continue to be vibrant and healthy. Per the National Golf Foundation’s read on The US market, 1,500,000 new golfers entered the sport in 2024, marking the seventh consecutive year on year increase. These gains contributed to resilient participation results with worldwide rounds of play in the first half projected to be up 2% despite some of the weather related volatility we have experienced in The US.

Acushnet continues to benefit from our focus on the game’s dedicated golfer whose healthy demographic and deep commitment to the sport helped to offset some of the macro uncertainties consumers are facing. With that, I am pleased to report on a solid quarter and first half for Acushnet led by our momentum in Titleist golf equipment and steady growth in The US and EMEA regions. Moving to slide four, you see our second quarter and first half results. For the quarter, Acushnet delivered worldwide net sales of $720,000,000, a 5% increase over last year driven by the strength of our golf equipment and gear segments, which contributed to a 9% year over year increase in adjusted EBITDA. For the half, net sales of $1,420,000,000 were up 3%, while adjusted EBITDA of $282,000,000 was down 1%, in line with our expectations as we make several investments across our business with a long term focus on golf equipment innovation and our technology and golfer connection platforms.

Getting to our segment results, golf equipment sales were up mid single digits in the quarter and first half led by the success of new Pro V one golf ball models and strength within our GT metals and hybrid franchise. Titleist golf equipment sales were up in all regions for the half led by The US and EMEA. And compared with the 2023 and a similar product launch cycle, equipment revenues are up 10%. The Titleist golf ball business is well positioned for the back half of the year as our team keeps pace with healthy demand and activates our golf ball fitting initiatives in all markets. On the club side, we’re excited about our new t series irons, which were launched last month.

This innovative new product lineup delivers enhanced performance and feel. And while early, initial response is meeting our high expectations. Within our golf equipment business, we are confident in the strength and diversity across our supply chain with golf balls benefiting from our two production facilities in The US and third in Thailand. Our ability to assemble golf clubs in most major regions also provides flexibility as we navigate evolving tariff policies. Moving to gear, this business is healthy with sales increasing 7% in the second quarter and 6% for the first half.

The core Titleist bag, glove, and headwear categories grew mid single digits, while our travel brands led by Club Glove grew more than 20%. Our FootJoy business was off 2% in the quarter and 4% in the half. These results were in line with our expectations as we shift towards concentration of premium performance footwear led by Premier, HyperFlex, and Quantum golf shoes. At the same time, we have reduced discounted closeout volumes and elevated our entry level price points across the brand. We are pleased with FJ’s market positioning, product lineup and sell through trends.

And as you will see in our financials, these are positively impacting FJ’s operating results. Lastly, products not allocated to a reportable segment also posted steady growth in the half led by double digit gains from our shoes outerwear and apparel business, which continues to build nice momentum. Now looking at our regional results, you see ongoing strength from our US business despite rounds of play being down slightly due to unfavorable weather. EMEA was up 6% in the first half reflecting gains in Titleist golf equipment, primarily golf balls, as well as golf gear. The region is benefiting from outsized growth in The UK where rounds of play are up 20% through June.

Revenues in Japan and Korea are up 43% in the half respectively. As noted on our last call, we are pleased with our equipment growth in these countries, but the markets for apparel, footwear and gear have been relatively soft. We expect our business in these regions to stabilize in the back half of the year. In summary, golf industry fundamentals are in good shape, and we are pleased with our new product pipelines and the overall health of our business as we look to the future. As always, we appreciate the good work of our associates and supportive partners.

And while Acushnet is not immune to macro uncertainties, we are confident in our ability to effectively manage all that is in our control as we seek to deliver the highest quality products and services to dedicated golfers and in turn, grow, invest in our future, and return capital to shareholders. Thanks for your interest this morning. I will now pass the call over to Sean.

Sean Sullivan, Chief Financial Officer, Acushnet Holdings Corp.: Thank you, David. Good morning, everyone. We had a solid second quarter and strong first half to start 02/2025. Second quarter net sales were up 5%, and adjusted EBITDA was a 143,000,000, up 12,000,000 from last year’s second quarter. For the 2025, net sales increased 3% and adjusted EBITDA decreased one percent in line with our expectations.

Net sales growth in the second quarter was driven by continued strength in our Titleist golf equipment segment, up 6% in the quarter behind the continued momentum of our latest Pro V1 golf balls launch and GT metal success. Gross profit in the second quarter of three fifty four million dollars was up $21,000,000 compared to 2024, driven by increases in the Titleist golf equipment, golf gear, and FootJoy golfwear segments. The increase in Titleist golf equipment was primarily driven by higher sales volumes and higher average selling prices partially offset by mix. Increased sales volumes and lower distribution costs were the primary drivers in golf gear. In FootJoy golfwear, the increase was driven by lower manufacturing costs and a favorable product mix, including less closeout sales.

Also impacting gross profit in the second quarter was approximately $5,000,000 of costs related to the recently implemented tariff policies. Second quarter gross margin of 49.2% was up 40 basis points versus prior year, while first half gross margin of 48.6% was consistent with last year. SG and A expense of $222,000,000 in the quarter increased $14,000,000 from 2024 as we continue to invest in our fitting network, IT systems, and A and P to support new product launches and future growth. During the second quarter, the company initiated a voluntary bridge to retirement program to reduce operating costs and bridge long tenured eligible employees to retirement. As a result, SG and A expense includes restructuring costs of $6,400,000 related to this program.

For the second half of the year, we are expecting approximately $7,000,000 of additional charges related to this program. Interest expense of $15,000,000 in the quarter was up $1,000,000 due to increase in borrowings, partially offset by a decrease in interest rates. Our effective tax rate in Q2 was 19.9%, down from 23.2% last year, primarily driven by a shift in our jurisdictional mix of earnings. Moving to our balance sheet and cash flow highlights. The strength in our balance sheet and cash flow supports the continued execution of our capital allocation strategy.

Our focus remains on investing in the business to support long term growth and returning capital to shareholders. Our net leverage ratio at the ’2 using average trailing net debt was two times. Inventories were up 11% when compared to last year’s second quarter, reflecting the advancement of inventory ahead of tariff deadlines and the impact of our iron launch. Overall, we are comfortable with our inventory quality and position. First half cash flow from operations decreased from the 2024, primarily due to an increase in cash used to fund working capital.

Capital expenditures were $25,000,000 in the 2025, and we now expect full year 2025 CapEx spend to be approximately $70,000,000 rather than the $85,000,000 previously stated. Through June, we returned roughly $154,000,000 to shareholders with $125,000,000 in share repurchases and 29,000,000 in cash dividends. Today, our board of directors declared a quarterly cash dividend of 23 and a half cents per share payable on September 19 to shareholders of record on 09/05/2025. On July 10, we repurchased approximately 953,000 shares of our common stock from Magnus for an aggregate of 62,500,000.0 in satisfaction of our previously disclosed obligations under our share repurchase agreement. While the game of golf is healthy and dedicated golfers demand for our products is strong, we continue to operate with caution given tariffs and their potential impact on consumer spending.

For these reasons, similar to our q one call, we’re not going to formally update our full year guidance at this time, but instead provide some color around the second half of the year as we see it today. During the 2025, we expect net sales to be up low single digits, taking into account a full year FX headwind of approximately $5,000,000 as compared to last year. The second half quarterly cadence is expected to align with our historical seasonality. We anticipate net sales growth across all segments driven by the continued strength of golf equipment while FJ continues to execute on their premium performance strategy. The situation remains very fluid, and we continue to closely monitor developments in the dynamic tariff landscape and broader macroeconomic environment.

Based on the recently announced tariff rates and agreements, we expect to have an estimated impact of approximately $30,000,000 in the second half of the year in addition to the $5,000,000 impact in the 2025. Our mitigation efforts include optimizing our supply chain footprint, vendor sharing programs, selective pricing actions, and cost reduction initiatives such as the VBR program. As a result, we estimate mitigating greater than 50% of the tariff impact in the second half. Overall, we are very pleased with the first half performance and remain focused on executing our long term strategic priorities. With that, I will now turn the call over to Sandra for q and a.

Saundra Lennon, Vice President, FP&A and Investor Relations, Acushnet Holdings Corp.: Thank you, Sean. Operator, could we please open the line for questions?

Operator: Yes, of course. We will now begin the Q and A session. Our first question today comes from Simeon Gutman from Morgan Stanley. Please go ahead.

Simeon Gutman, Analyst, Morgan Stanley: Hey, good morning everyone and good quarter. My first question, it’s around inflation and pricing. So there is a certain amount of inflation driven by innovation every year in this category. Now we have tariff on top of that. Do you have a sense of where that number on a percentage basis can go for the industry, not just Acushnet for the second half given some of the tariff impacts?

And how will that compare to some of the annual rate of inflation that’s happened in the past? Thanks.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Good morning, Simeon. I’ll touch that more on a general sense than a hard number, and and tell you what we’ve seen up to this point. We we’ve certainly seen price increases in gear, footwear, and apparel across the industry, and we’ve taken select moves in in those categories, would be part one. Part two, our ball business is is, not entirely immune, but but somewhat immune to some of the tariff risks as we manufacture so much of our product in The US. So we haven’t seen as much in in balls.

Clubs has has really been all over the map depending on sourcing and and where manufacturers assemble products. So, it it’s certainly it’s certainly part of the story. It has been to this date. We saw some price increases introduced into the into the industry at late q two, some of which really flowed in q three after, pre books had shipped. But to your question, how does it compare to historical?

I would say it’s it’s almost too soon to say in part because we’re dealing with rapidly changing rates, even even today. Right? The the narrative changes. But but you have seen some you have seen some pricing action taken. And, again, that point you more so to gear, footwear, and apparel than equipment at this stage, but but we’re doing what everybody’s doing and that is, assessing what it means for balance of year and future product introductions, what it means for next year, and how much dexterity do we have within our sourcing and supply chain to to to mitigate before we take price.

So again, hopefully, some general overview of what we’re seeing in the industry is helpful as you think about inflation and how golf responds to tariffs and how it compares to some of the broader national numbers.

Simeon Gutman, Analyst, Morgan Stanley: And if I can, one follow-up. Same topic, which it’s somewhat nebulous. But given the customer profile, who you sell to and the premium product line, how much do you worry about your customers’ ability to take price, not just in the golf category, not just from Acushnet, but as they face higher prices in general in the second half and beyond?

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Yeah. We we think about it a lot. And and every time we think about price, we think about our ability to show improved performance. You know, if you look at our results, certainly, we’ve we’ve we we called it out earlier, balls. Right?

It was it was driven by premium performance pro v one. For Choi, their performance driven by premium, premier, hyperflex, clubs. We don’t really run a multi tier pricing strategy. So, we’re we’re careful. We’re we’re we’re, in many respects, premium positioned across the board.

And and we balance we balance the need to pass along tariff costs with the need to constantly show value and prove to our consumers who who yeah. I guess they are certainly higher end and more performance oriented in nature. But we’re careful about it and we realize that there’s got to be a performance story attached to any pricing action.

Simeon Gutman, Analyst, Morgan Stanley: Okay. Thanks. Good job. Good luck.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Thanks.

Saundra Lennon, Vice President, FP&A and Investor Relations, Acushnet Holdings Corp.: Thanks, Simeon. Operator, next question please.

Operator: Our next question comes from Joseph Altobello from Raymond James. Please go ahead.

Martin/Joseph Altobello, Analyst, Raymond James: Hi, good morning. This is Martin on for Joe. I was just trying to get an idea of how did demand play out as you expected and any kind of commentary you might have when it comes to sell in and sell through?

Saundra Lennon, Vice President, FP&A and Investor Relations, Acushnet Holdings Corp.: I’m sorry, Martin. Could you you cut out just a little bit in the, beginning of that question. Would you mind repeating?

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Yeah. I was wondering if we can

Martin/Joseph Altobello, Analyst, Raymond James: get any commentary regarding kind of sell in and sell through.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Yeah. Well, I think sell in, I’d I’d point to our results. We’re we’re pleased with our results in the quarter and half. I would link that to inventory levels in the market, which I would say are norm normalized, and and the bridge between selling and inventory is sell through. So we’re we’re we’re pleased.

You know, it was it was, I guess, last call would have been early May, and there was a lot of angst around the state of the consumer, certainly for the for the second quarter and and and balance of the year. And we’ve been we’ve been pleased both in terms of participation, rounds of play down slightly in The US, but but up overall worldwide. And our consumer is engaged, and and we’re pleased with we’re pleased with what we’re seeing. And, again, certainly, when you reference that against against some of the early narrative and concerns around tariffs and inflation and what it might mean to the consumer, I think we’re I think we’re in a in a pretty good spot industry wide. And, again, if we had if we had meaningful sell through concerns, you’d see it in in inventory levels on the rise, which, again, I would I would characterize inventory as seasonally normal.

You’re always gonna have some pockets around the world, and we do. But but by and large, I would characterize it as seasonal seasonally normal, which, again, links back to sell through in in pretty good shape, particularly given the backdrop of of all the tariff uncertainty. Great. And you mentioned there’s some stabilization in the Asian region. What’s going to sort of affect a return to growth?

Yeah. I I think, I’ll I’ll I’ll speak of of Japan, and it’s really Japan and Korea, and I’ll speak of them in two two parts. Part one is is equipment, balls and clubs, which have been for us steady and stable, and and we like the trends there. Part two is is is footwear and gear and apparel, and and we’ve seen, particularly in apparel, almost a bit of a bubble in the last couple of years. It’s that as that has been correcting.

It went on such a a rise during the COVID years, and it’s been correcting. But we like the way we’re approaching it. Nothing has necessarily surprised us and that we planned for it. We’re we saw a whole lot of new entrants in apparel, particularly in in Korea and in Japan jump into the market in the last handful of years. And and we expect to see some of those new entrants exit the market.

So I think it’s part of a correction. It’s part of a rationalization, most noteworthy in in apparel, and I would say Korea first. Korea is the largest apparel market across Asia. But I did call out also, I think we we see things stabilizing in the back half of the year. So I I feel like we’re okay.

And, again, I think it’s important as you think about Japan and Korea, at least on our side, to break apart what’s happening with equipment with what’s happening with footwear and apparel because, really, the the drag has been on the ladder. Thank you. Congrats on the quarter and good luck. Thanks.

Saundra Lennon, Vice President, FP&A and Investor Relations, Acushnet Holdings Corp.: Thank you. Operator, next question.

Operator: The next question comes from Matthew Boss from JPMorgan. Please go ahead.

Martin/Joseph Altobello, Analyst, Raymond James: Great, thanks. So David, could you elaborate on customer response to new launches maybe across both clubs and balls in the marketplace today? And speak to your level of visibility as we look out to the low single digit back half revenue growth forecast across segments.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Yeah. Matt, hey. We’re we’re obviously pleased with our launches. Pro v one launched in in q one. We like our we like our sell through trends.

We like our share trends, across all markets. I think we made the point that our equipment business was up in all all regions in in the half. Similarly, while not a new product, in that we we didn’t launch it in in ’25, we launched it in in the back 2024. We’re very pleased with what’s happening on the driver front. So sell through trends, pyramid usage, meeting our high expectations, I think, the best way to characterize it.

And, again, we’re we’re in a good place as we as we enter the back half of the year. Your your comment about your question about second half and how do we think about second half, you know, it starts with it starts with our new product pipeline. It starts with our order book, inventory levels, and just initial response and demand that I point to. We’ve got a new iron in the market, our t series, which is off and running. We launched it in July.

And and, again, early responses is, again, meeting our high expectations. As you’d expect, we get pretty good sell through data week to week, which just gives us a read on trends and which way the wind’s blowing and how our inventory is holding up. So all that informs what Sean said was our outlook for for the back half of the year, which we characterized as low single, I think, with growth coming from all segments. And and I’d just final point I’d add, much of my commentary was balls clubs, but but FootJoy as well continues to to generate momentum. And I I noted top line down slightly, but but really pleased with the profitability and and sort of operational results within FootJoy.

And our confidence there really driven behind some exciting new product line extensions. So lot of parts and pieces go into it, Matt, but I think that certainly fuels how we think about the half and our confidence in our outlook.

Martin/Joseph Altobello, Analyst, Raymond James: That’s great. And then maybe Sean, could you speak to gross margin considerations for the back half of the year? And maybe just how best to think about the timing of operating expense dollar growth relative to your low single digit sales forecast for the back half?

Sean Sullivan, Chief Financial Officer, Acushnet Holdings Corp.: Sure. Yeah. I mean, just to Matt, to go back to the script, obviously, I’m trying to guide you to the top line relative to some historical cadence in terms of q three versus q four. So that was helpful. You know, obviously, we’re pleased with the gross margin profile through the first half.

As I look in the back half, I’ve I’ve obviously given you some some impact as a result of the tariffs. So that certainly will spread across q three and q four. But, again, you know, we’re gonna have we’re gonna have that burden. But, you know, again, we we see growth across all segments in the back half. In terms of operating expense, don’t think, you know, there’s there’s anything more to say in terms of the the profile.

We feel very good about the the conversion from sales to adjusted EBITDA, the overall margin profile. Obviously, we’re investing for long term growth. We’ll continue to do that. You do have the impact of the VBR that we talked about in q two that will roll through in the back half as well. So I’ll you that number as well.

So all in all, I guess, absent tariffs, we’re we’re pleased with where we’re at for the year, and the outlook for the year. David’s talked at length about the demand, the dedicated golfer, and, you know, it’s really about execution at this point for us. And, you know, certainly, the the tariff and the supply chain and vendor sharing and and all those things, you know, will happen over the course of the year. So we position ourselves, for 2026.

Martin/Joseph Altobello, Analyst, Raymond James: Helpful color. Best of luck.

David Marr, President and Chief Executive Officer, Acushnet Holdings Corp.: Thanks. Thanks, everyone. Yeah. We we appreciate your interest, in the company as always. And and and now more than ever, understanding as we attempt to thoughtfully manage and navigate these tariff uncertainties and, and always stay connected to our core consumer.

So we appreciate your interest understanding and hope you have a great rest of the day. Thanks very much.

Operator: This concludes today’s call. Thank you for joining everyone. You may now disconnect your lines.

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