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spk04: And good morning, everyone. As always, we appreciate your interest in the Acushta Company. As reflected in this morning's earnings release, the Acushta team continues to excel at generating momentum and developing our supply chains to meet and serve as growing demand for our Titleist, FootJoy, and Schuss product lines. I must acknowledge and thank Acushta's talented associates and our committed trade partners for their great work in this dynamic golf marketplace. While last year's record second quarter set a high bar, I am pleased to report that each of our segments posted gains this past quarter. We see this as positive reinforcement of the company's commitment to product innovation, our ability to generate demand across the entire acoustic portfolio, our strengthening supply chains, and the overall health of the golf industry and dedicated golfer. On tour, Titleist golf balls were used by each of the four men's major championship winners in 2022, with Scheffler, Thomas, Fitzpatrick, and Smith each trusting a Pro V1 or Pro V1X golf ball on their road to victory. Bokey wedges were also used by all four winners, while Titleist drivers and Scotty Cameron putters were in the bags for three of the four wins. The company aspires to develop and produce golf equipment of the highest performance and quality standards to help dedicated golfers play their very best. And these successes on golf's biggest stages validate the performance and quality promise we make to all golfers. Titleist and Footjoy Momentum Across Worldwide Tours is helping to fuel our market success and financial performance. In addition to presenting our second quarter results, this morning we will provide updates on the company's strengthening supply chain, overall health of the golf industry, and our outlook for the balance of 2022. We will also address some of the key investments we are making to prepare for tomorrow's opportunities as we position our brands for the future. And affirming the board's confidence in the company's vision and capabilities, Tom will share details of our third quarter dividend payout and expanded share repurchase plans. Now getting right to our results, which as Sandra noted, we will focus on constant currency numbers. Second quarter sales of $659 million were up 11% versus last year. Golf balls grew 3%, while clubs, gear, and foot joy all posted double-digit increases in the period. And shoes also had a strong quarter, up more than 50%. First half total Accushnet sales increased 9% to $1.26 billion, with all reportable segments posting gains led by FootJoy and Titleist Clubs, which were up 21% and 9% respectively. Adjusted EBITDA came in at $106 million for the quarter and $226 million for the first half, down versus last year and ahead of our expectations. Now looking at our business by segment, Titleist Golf Balls continue to perform very well, delivering growth for the period in spite of production limitations caused by tight raw material supply, as were noted on our prior call. The situation improved throughout the second quarter, and we are now operating our golf ball manufacturing facilities at full capacity for the first time in about a year. We are confident and expect that our plants will remain fully operational for the foreseeable future, as we benefit from both improved output from existing suppliers and the addition of new supply sources. Given these circumstances, we're very pleased with our golf ball results and market momentum. And while we were required to adjust this year's launch calendar, our team successfully introduced new TorSpeed and TorSoft models in the second quarter. Titleist golf ball retail inventories remain low and we expect to gradually return to more normal levels in the first half of 2023. As noted, Titleist Golf Balls won the Grand Slam in the men's professional game and have been used by 74% of players across the worldwide tours, including 80% usage on the LPGA Tour, which is more than 11 times the nearest competitor. Titleist Golf Clubs grew 12% in the quarter and 9% for the half, as demand remained strong and our team did good work to flex up our production levels during the peak club fitting and retail seasons. T-Series irons, Vokey wedges, and Cameron putters are all in great shape, and we look forward to launching new TSR drivers and fairways in late September. TSR Metals have been building momentum on global tours since June, and at the recent Open Championship, winner Cam Smith and runner-up Cam Young each trusted new TSR drivers during their epic final round battle at St. Andrews. Operationally, golf club component availability continues to improve, and our team has done nice work boosting output to meet ongoing healthy demand and reduce lead times. And as with golf balls, Titleist Golf Club retail inventories are also tracking below our optimal levels. Next to our gear business, you see a 12% increase in the quarter to bring this segment to flat for the first half. Within gear, we are pleased with healthy gains in gloves, headwear, and travel. However, our golf bag business in the U.S. has faced supply chain challenges, which have caused delays and tight availability. And while this situation is improving, we will be investing to expand our customization capabilities and to enhance our service level and meet growing demand for custom gear. Now moving to FootJoy, where you see a 14% increase in the quarter and 21% gain for the half. The FootJoy team continues to build momentum with their relentless focus on product performance, comfort, and design excellence, and that is evident across our footwear, glove, and apparel lines. Demand for FJ Premier, ProSL, Fuel, and Flex footwear models has been especially strong, reflecting the great work by our footwear product development group. Fochoy's leading footwear and glove businesses posted double-digit gains for the half as our shoe and glove factories excelled at meeting heightened demand. To keep pace with anticipated future growth, we are working with our long-time footwear production partner and will soon expand operations beyond our JV factory and into Vietnam to add capacity and geographic diversity to our footwear supply chain. Fochoy Apparel was up double digits in the first half. However, our U.S. business has faced the same supply chain and fulfillment challenges that have affected gear. In response, we are investing to establish a state-of-the-art apparel customization center on our Fairhaven campus. This facility will support increased volumes, provide enhanced customization and quality, and open the door for future automation and innovation as we seek to provide leading custom services and solutions to our valued trade partners. Now taking a look at regions, the company posted healthy first half gains in the U.S., EMEA, Korea, and rest of world, while sales were off 7% in Japan as foot joy growth was offset by supply chain and fulfillment constraints, which impacted our other segments in this region. Overall, global golf markets are healthy, and in most regions, our channel inventories are below 2019 levels. First half rounds of play in the U.S. have been negatively impacted by weather and are off 6% from the record pace set in 2021. And outside the United States, rounds are projected to be up 4% through June, fueled by a double-digit increase in Europe and steady gains in Japan and Korea. Overall, we are pleased with the state of the game and participation in golf's major markets is healthy and in line with our expectations for the year. Now looking forward, we are enthused by the overall health of the golf market and the resilience of the game's dedicated golfer. As noted, we are making continued progress within each of our supply chains and are optimistic about our investments to build more capacity, flexibility, and efficiencies in our custom apparel and gear operations. We're confident in our balance of year outlook and ability to serve a strong demand for Titleist Foot Joy and shoes products, and as a result, are raising our full year sales guidance in spite of expected currency headwinds of about $90 million. And we affirm our existing full-year adjusted EBITDA guidance and note that this guidance also reflects negative currency effects, increased air freight costs, and the investments we are making to bolster our global supply chains. As we head into the second half of 2022, we are pleased with our momentum and are confident that our team's track record of product innovation and operational excellence will continue to support the company's long-term growth objectives. Thanks for your attention this morning, and I will now turn the call over to Tom. Thanks, David. I would like to start by thanking all our associates for their dedication and effort in managing through continued high demand and supply chain challenges to deliver yet another very strong quarter for Acushnet. Starting on slide 10, our results for the second quarter exceeded our expectations. Consolidated net sales were $659 million, up 5%, and almost 11% on a constant currency basis compared to last year. Overall, demand remained strong, and all segments showed growth in the quarter on a constant currency basis as a result of higher sales volumes and higher average selling prices. Gross profit for the second quarter was $344 million, up 3% versus 2021. and gross margin was 52.2%, down 130 basis points. The increase in gross profit comes primarily from higher sales volumes in clubs and higher sales volumes and ASPs in foot joy footwear and in gear, partially offset by higher manufacturing costs in golf balls. Additionally, we experienced higher inbound freight costs across all segments, which negatively impacted gross profit and gross margin during the quarter. SG&A expense in Q2 was $239 million, up 14% from the prior year. The increase comes from higher selling expenses as a result of higher sales volumes, higher distribution costs primarily in foot joy and gear as we invest in expanding our distribution and custom fulfillment capabilities higher it related consulting expense and higher advertising and promotional expense r d expense was 14 million up seven percent compared to 2021 income from operations was 89 million for the quarter which was 19 percent lower than last year and our Q2 adjusted EBITDA was $106 million, down 17% compared to 2021, but ahead of our expectations. Moving to our results for the first half of 2022, consolidated net sales were $1.26 billion, up 5% compared to last year, and up 9% on a constant currency basis. Gross profit for the first half was $661 million, up 2% compared to the first six months of 2021. Gross margin was 52.2%, down 130 basis points from the prior year. SG&A expense for the first half was $435 million, up 12%, and R&D expense was $28 million, up 10% compared to 2021. First half income from operations was $194 million, which was 15% lower than 2021. Our effective tax rate for the first half of 2022 was 19.8%, down from the prior year, primarily because of a change in the mix of our jurisdictional earnings. And first half adjusted EBITDA was $226 million, down 14% year over year, but also ahead of our expectations. There is a reconciliation of net income to adjusted EBITDA for Q2 and the first half in our earnings release, as well as in the appendix of the slide presentation. Moving to slide 11, our balance sheet remains very strong. At the end of Q2, we had about $107 million of unrestricted cash on hand. Total debt outstanding was approximately $396 million. We had $319 million of available borrowings under our revolving credit facility, and our leverage ratio was 1.1 times. On this past Tuesday, August 2nd, we completed the refinancing of our credit facility which had consisted of a $350 million term loan A and a $400 million revolver into a $950 million all revolver facility. At the closing of this transaction, we used the new revolver to, among other things, pay in full the approximately $306 million outstanding balance on the term loan and to refinance the outstanding borrowings on the previous revolver. The terms of the new revolver are substantially similar to the previous revolver. More detailed information on the terms will be included in our 10-Q filing with the SEC later this afternoon. This new all-revolver structure gives us additional flexibility to manage the business and to continue to execute against our capital allocation priorities. Accounts receivable at the end of Q2 was $386 million, up $8 million from the prior year. DSOs improved by three days. Our consolidated inventory at the end of Q2 was 467 million, which was up 56% from Q2 of the prior year, with increases across all segments. Note that last year's inventory was below normal, and we are pleased that we are nearing our desired level of inventory, which will enable us to better service our trade partners and meet the continued high demand for our products. Day sales and inventory have increased to 139 days compared to 119 at the same time last year, but are still lower than pre-pandemic levels. Cash flow from operations for the second quarter was 73 million compared to 182 million in Q2 of last year, and first half cash flow from operations was a cash outflow of 91 million compared to a cash inflow of 152 million last year. The decreases in both periods were primarily the result of changes in our working capital, which resulted from larger increases in accounts receivable and inventory and a higher decrease in accrued expenses compared to the changes in these balances in the prior year. And we continue to make investments in the business in the form of capital expenditures. We spent about $9 million on CapEx and Q2, bringing the first half total to $20 million. We continue to expect our full-year CapEx to be approximately $60 million. Turning to slide 12, our continued strong financial results have enabled the execution of our capital allocation strategy. Our highest priority remains investing in product innovation, golfer connection, and operational excellence. We also continue to pursue acquisitions that align with our focus on premium performance products that appeal to dedicated golfers. We believe that these investments will advance our long-term strategy and drive growth at a favorable return. Generating strong free cash flow and returning capital to shareholders is also a high priority. Earlier today, our Board of Directors declared a cash dividend of 18 cents per share payable on September 16th to shareholders of record on September 2nd, 2022. This will total a payout of about $13 million for the quarter and bring our year-to-date dividend payout to approximately $40 million. During the second quarter, we repurchased 950,000 shares for a total of approximately $39 million, bringing our total for the year to 2.1 million shares for a total of approximately $98 million. At the end of Q2, we had approximately $150 million of share repurchases remaining under our current authorization, and on July 26, our Board approved an additional increase of $100 million to the share repurchase authorization. Assuming continued strong financial performance and favorable market conditions, we will continue to actively repurchase shares and would expect to complete our remaining authorization over the next year. Our capital allocation strategy remains an important element of a Cushnet's value proposition, which we continue to believe creates a compelling long-term total return for our shareholders. Moving to our outlook on slide 13, we are enthusiastic about the overall health of the golf industry, and demand for our products continues to be robust. Our golf ball raw material availability has improved, and we have made progress in each of our supply chains. We will, however, continue to face some challenges in the second half, including expected currency headwinds as a result of the strong U.S. dollar and higher input costs. In addition, although we have started to see some decrease in inbound freight rates, we continue to use a significant amount of air freight to protect lead times. We also plan to incur higher costs as we invest in expanding our distribution and custom fulfillment capacity for apparel and gear to support future growth and enhance our service capabilities. Taking these factors into consideration, we are raising our full-year sales guidance and reaffirming our full-year adjusted EBITDA guidance. We now expect our full year 2022 consolidated net sales to be in the range of $2.2 billion to $2.25 billion. This sales guidance reflects over $90 million of projected negative foreign currency impact, including about $40 million in the second half. On a constant currency basis, consolidated net sales are now expected to be up between 6.8% and 9.1%. And as I mentioned, we continue to expect full-year adjusted EBITDA to be in the range of $325 million to $345 million. With the launch of our new TSR metals occurring late in September, we expect Q3 consolidated net sales to be just over 50% of total second-half sales and Q3 adjusted EBITDA to be about two-thirds of total second-half adjusted EBITDA. In conclusion, our associates and trade partners helped us manage through continued high demand and supply chain challenges to deliver strong results for Q2. While we continue to expect currency headwinds, higher freight costs, and higher costs associated with investments we are making to expand our distribution and custom fulfillment capabilities, we remain confident in our ability to meet our 2022 financial goals and to deliver a long-term total return for our shareholders. With that, I will now turn the call over to Sandra for Q&A.
spk00: Thanks, Tom. Operator, could we now open up the lines for questions?
spk01: Of course. As a reminder, if you'd like to register a question, please press star followed by one on your telephone keypad. If you change your mind, please press star followed by two, and please ensure you're unmuted when speaking. Our first question comes from Kevin Heenan of J.P. Morgan. Kevin, the line is yours.
spk02: Hi. Good morning, guys, and thanks for taking my question. Good morning, Kevin. Good morning. Good morning. I guess given, you know, the more challenging macro backdrop today, I mean, what do you see as the key factors driving the strength in your top line today and maybe higher level growth? How do you see the health of the golf industry and participation structurally today relative to pre-pandemic? Thanks.
spk04: Yeah, Kevin. So I'll start with, you know, we've always pointed to our dedicated golfer as being a very resilient and committed consumer of the game and of equipment. And I think we're seeing that. Today, a couple other factors I'd add in. You look at all the data coming out over the last couple of years, and you see new participants, and we're now getting a sense for what they look like in year two and year three and year four. There were 3 million beginners last year, I think, in 2020, I think 3.2 million beginners in 2021. So the mix of participation has changed, which is obviously favorable and a positive as you bring more participants into the game, into the industry. I commented on the strength of the dedicated player. As we think about what's happening with our business, it's really a two-part story. First and foremost, we've said all along that 2022 is going to be largely dependent on what we get out of our supply chain. And more than ever, the supply chain is start to finish. It's what are we, you know, what kind of inputs do we get from our raw material suppliers and our component suppliers? What can we produce? What can we get through our distribution centers globally? What can we customize, et cetera, et cetera? So every area of our supply chain has been under pressure, and when we look at results like we just posted, to me that's indicative of the supply chain at all levels is performing well. Maybe taking that logic further, as we look out, it speaks to golf's place in this developing, emerging new normal, right? And not that anybody's going to say we've landed on a new normal, but It's clear people are prioritizing the game more today than they did, say, pre-pandemic. If you look at rounds data, we said all the while for 2022, we'd be real pleased if 22 rounds came in somewhere between 2020 and 2021. They are, in fact, they're doing a little bit better than that. even in the face of poor weather. So I think structurally, the industry's in a very good place. Add to that, our retailers are doing great jobs. Facilities are investing. They're healthy, and they're investing in their futures to be more relevant to tomorrow's consumers. So we're just seeing a golf industry that has been healthy and remains healthy today.
spk02: Great. And if I could just ask a quick follow-up on the foot joy business, a strong result in the quarter. Can you maybe talk about how you see kind of the market share on the footwear side evolving for that business and then maybe higher level what's driving the strength between footwear and apparel more broadly? Thanks very much.
spk04: Yeah, I will say that the FootChoy team has been excelling in the last couple of years, and you see it in our numbers, and that's commentary on footwear, commentary on gloves and apparel, and it absolutely starts with product, and I think our team is really hitting the mark from a performance standpoint, from a design standpoint, from a comfort standpoint. So it starts with the very good work coming out of our product development teams. To add to that... We've got full control over our supply chain. We own a joint venture shoe factory. It's a factory that makes one brand of footwear, foot joy. I mentioned earlier we're expanding. We're expanding into Vietnam, which gives us more capacity and a better bit of geographic diversity. We own a glove factory that makes foot joy and Titleist gloves. That's a rarity in this industry. And I would say the team continues to cultivate and develop our messaging to be complementary to the product story and the operational story and the quality story. So it starts with product. It obviously involves a lot of very talented people. But if you track the FootJoy business over the last couple of years, it's really on a nice run. Now, to what's playing out this year, I said earlier – Footwear, off to a great start. Gloves, terrific in a market that's in need of supply. Apparel's doing fine, but we're having some challenges in the U.S. that I talked about with embroidery, and that's part of a broader... supply chain pressure that we're seeing in our business when it comes to importing product into the United States, getting it through our distribution centers, getting it to our embroidery facilities, and then getting it out to our trade partners. There's been a real bottleneck there. I talked about it in gear. I talked about it in apparel. So we're working on that. But more than anything, Kevin, this is a product story first and foremost, and I point to our teams for really doing exceptional work.
spk02: Great. Thanks very much, guys.
spk00: Thanks, Kevin. Next question, please.
spk01: Our next question comes from Daniel Imbrow of Stevens Inc. Daniel, please go ahead.
spk07: Yes. Hey, good morning, you guys, and thanks for taking our questions. David, I wanted to start on something you mentioned. You mentioned inventories, I think, are below 2019 levels across the industry. So I guess that should be supportive of pricing. But, you know, is there any risk that customers are going to overorder either on the equipment or the apparel side? What does your pipeline or forward orders look like? And then just on that pricing topic, you know, as you think about TSR launch coming up, you know, how do you view your customer today and the ability to handle more price increases given the broader macro backdrop?
spk04: Yeah, okay, Daniel. First off, retail inventories, my commentary and my earlier remarks were about our inventories, not the total. But when we look at the total, we see similar trends. It's an industry that's That's grown nicely over the last several years, and you've got supply chains working hard to keep up. So I think our inventories tend to be a little bit lower than the totals, but the totals are in pretty good shape. So I think we saw that this year. Even if the appetite from the trade is more than it needs to be or more than it should be, it's going to be difficult for OEMs to meet all of that demand. So net-net, there's a bit of a governor in place. And as a result, we're seeing a marketplace that's from a supply-demand standpoint in a pretty good state of balance. It's something we certainly watch, right? And what you don't want to do is get into a cycle of overbuying, and we all know what can come of that. But today, we like the status of the industry, the health of the industry from a retail standpoint. Pricing, we talk about this a lot. We try to be very thoughtful and take a long-term approach to pricing. We generally address it when we introduce new products, and we do our very best to deliver added value when we take price increases, and I think our team's done a real good job of that. Add to that our two-year product lifecycle, and that tends to provide consumers with a more gradual pricing slope, which we think is beneficial. Now, given rising input and freight costs, we have taken price increases with the majority of our products over the past 18 months. And to date, consumers have been understanding and accepting of those price changes. I think, again, in large part, they're attached to improved products. They're attached to added value. And then finally, as it relates to our new TSR driver launch, I think pricing's up there, 8% or 9%. Again, our team's going to go out and work hard and show golfers why it's worth it and why we think we're bringing them something. That's better and is worth more. And the final point I'll make, Daniel, is we are seeing consumers' understanding of price increases throughout the Gulf landscape, right? They're seeing it elsewhere, and they understand what's happening with input costs, what's happening with transportation costs as well. So we haven't seen any pushback, but, again, I'll add we try to be very thoughtful about how we manage pricing and take a very long-term approach.
spk07: That was great. I appreciate all that color. And then, Tom, maybe a little bit on the guidance. I think in the release in your comments, you said you're assuming higher freight costs. In recent months, we've seen ocean freight moving down, ground freight maybe improving a bit. Is it just that you guys are under contract at higher costs, or how should we think about the cost backdrop that you've embedded into the guidance?
spk04: Yeah, you know, we are starting to see some decreases in inbound freight rates in certain markets, but certainly not everywhere. And despite this, the freight rates obviously remain significantly elevated compared to previous levels. And we are utilizing even more air freight than we had anticipated. And we're really doing that to protect our lead times and to get product where it needs to be. I think what's mostly driving our increased freight is the use of air freight. And, you know, we expect to see that continue through the end of the year. We did have higher freight costs in Q2 and in the first half than we anticipated, and our forecast for the balance of the year has also gone up. We're hoping that this will start to – oh, go ahead.
spk07: Just to clarify, were any launch timing changes, anything from 4Q being pushed to next year, or no real changes on timing in the guidance as well?
spk04: I'll hit on that one. So, you know, just as it relates to second half, we've got a lot of new products ready to go, and we're enthused about the fall season. Not a lot of shifts due to supply chain changes. At TSR, we mentioned late September with stock product. We'll start shipping custom probably early October. We've got some colored golf balls in Japan, which is a big deal in Japan. They're popular there. We push these back from the first half of the year into the second half. We've got a full plate of FootJoy products, new Flex XP, new Stratos, new women's footwear lines. A lot happening on the FootJoy side. We're targeting October 1. We're going to hedge that a bit because of just supply chain and getting it in and through to our trade partners. My guess is half will happen in Q3, half will happen in Q4. And then our typical seasonal fall apparel collections, both Titleist Fort Julia and Titleist Apparel in Asia, will happen on schedule. So, Daniel, really we're back on what I would say is a normalized schedule after a couple years of being required to move things around.
spk07: Great. I really appreciate all the color this morning and best of luck going forward. Thanks, Daniel.
spk00: Thanks, Daniel. Operator, next question, please.
spk01: Our next question comes from Casey Alexander of CompassPoint. Casey, please go ahead.
spk03: Yeah, good morning. First, Tom, you threw me off a little bit about the way that you presented the remaining balance of the share repurchase program. Is it 150 plus 100, which makes 250 remaining in total, or is it 150 remaining in total right now?
spk04: It is now 250 million. At the end of the quarter, it was 150, and then subsequent to the end of the quarter, our board approved an increase to that by 100. So the total now is 250.
spk03: And the 250 you hope to satisfy over the course of the next year? Correct. Okay, great. Secondly, David, this is for you. You know, rounds played down 6%, but weather was actually considerably worse than that. So rounds played appear to be outperforming the weather. I'm curious if the weather had been relatively normal, which would have suggested that rounds played would have been up, would you have been challenged to meet that demand, particularly on the golf ball side?
spk04: Yeah, Casey, you're right. And, right, Pell, you said you're looking at the same info. They say playable hours were off 9%, but rounds were down 6%. That says utilization was favorable. I'll say we were fairly challenged to meet existing participation in rounds. So a further spike in play or increase in play would have further stressed our supply chain, notably in consumables, right? I've said all the while for the last year we haven't. run our plants at full capacity, we're finally up to doing that. If we had been running them at full capacity for the last year, my answer would be different. But point being, it's been a challenge for us in the first half to meet existing demand. And you see that reflected in our relatively lean inventory position in golf balls. Yeah. OK. All right. That's helpful. Thank you.
spk00: Thanks, Casey. Thanks, Casey. Thank you, Casey. Next question.
spk01: Our next question comes from Brian Harbour of Morgan Stanley. Brian, the line is yours.
spk06: Hey, good morning, guys. Maybe just to follow up on that, is golf balls certainly kind of component availability, raw material availability, plant utilization has improved. Is golf balls still the area where you think there's the most unmet demand? Or maybe comment on that by some of the other product lines, perhaps?
spk04: Yeah, so as we move around sort of our portfolio and think about inventories, you know, the balls and clubs are both below pre-pandemic levels. Footwear and gear are slightly better, but still lean. We're probably tightest in apparel in the U.S. and golf bags in the U.S., and that ties to the supply chain challenge I noted earlier. But globally, our first priority is to get golf ball inventories production back to, I won't say normal, but I'll say an optimal level. And that optimal level is ahead of where it was in 2019. Okay, great.
spk06: Thanks. One other, you know, I think you guys have been in this business a long time, and in past periods where consumers have cut back or been under pressure. I'm curious what you see across different product categories, across your different customer types. I think certainly we would expect that a dedicated golfer doesn't cut back as much and that's a higher income customer anyway. But what are some of the things that you've observed if you think about customer types in different products?
spk04: Yeah, no, you're You're right. Dedicated golfers are passionate, and they have the means to continue to play, and they do continue to play during down times. They may extend their purchasing cycles on bigger ticket items, but we certainly see, from a product perspective, consumables hold up well. This demographic has... you know, a solid income profile, and that works in our favor as well. And as we've said before, you know, back in the 08, 09 recession, you know, we did see our business pull back, but if you look at our business excluding Cobra, which was really not focused on the dedicated golfer and which we subsequently sold, The rest of our business was down about 8%, while a broad set of leisure and recreation product companies within the consumer discretionary sector were down more than 15%. So we fared better than that group.
spk06: Okay, thank you.
spk00: Thank you, Brian. Operator, next question, please.
spk01: Our next question comes from George Kelly of Roth Capital Partners. George, please go ahead.
spk05: Hi, everybody. Thanks for taking my questions. So a first one, I was trying to keep up, but just couldn't quite catch it all. What was the, you gave some detail about the, within your guidance, the split between third quarter and fourth quarter for revenue and EBITDA. Can you walk through that again? Sure.
spk04: So in terms of sales, with the timing of the TSR metals occurring later in September, we're expecting consolidated net sales for Q3 to be just over 50% of the total second half sales. And then in terms of Q3 adjusted EBITDA, we're expecting that to be about two-thirds of total second half adjusted EBITDA.
spk05: Okay, great. And then second question for you on the Shuri purchase. Should we, going forward, I mean, is it safe to assume that share repurchases will be sort of a heavy component of your discretionary free cash flow usage? And the reason I'm asking is if we go pre-COVID, I know you started repurchasing stock, I think it was in 2019, but just trying to get a feel for if it's really much more of a priority now And with the new scale that you have, you have so much free cash flow. Is it something we should just kind of bank on going forward beyond one year?
spk04: Yeah, you know, you're always cautious about giving guidance, if you will, out a year or more. But you can certainly see that. You're right. We started purchasing shares in 2019. We bought about $29 million worth of shares that year. We did take a pause in 2020. in 2021 we bought about 65 million dollars worth of shares and and so far in the first half of 22 we've we've bought 98 million so you know that number has increased over time um it it certainly corresponds with the increase in scale of our business and the increase in in free cash flow um you know it will our expectation is that Assuming conditions stay the same, our expectation is that it will continue to be a prominent, important part of our capital allocation strategy. But we do have flexibility, particularly with our new all-revolver. We have flexibility to do other things in our capital allocation strategy. strategy as well. But I think it's pretty safe to say, all things being equal, that share repurchases will continue to be a very important part of our strategy. George, I'll just add a bit of color. Going back to the IPO in 2016, this was our story, right? We started on that path and it was predicated on us getting our debt situation down below 2x, which we have. So we started on that journey. We took a bit of a hiatus during 2020. But as Tom said, right, it's an important piece along with dividend, along with investing in the business, which we're doing a whole lot of, and finally M&A. So I view this as a reflection of the story we painted in 2016. Six years later, it's maybe just a bigger story, and that's as much commentary on our strong balance sheet.
spk05: Okay, great. And then last question for me. Another one on the state of the consumer. There's been a few questions before, but I'm going to maybe ask it a slightly different way. You know, there's so much noise in the market these days, or fear about, you know, budgets coming in and people's, you know, balance sheets and inflation, et cetera, and concern over the sort of spending patterns and trends. And so just a real simple question. Have you seen any evidence of people kind of trading down or maybe having, you know, being more timid as far as consumer spending?
spk04: George, the short answer is no. We're certainly sensitive to it and aware of it for all the reasons you just mentioned. But I'll go back to, you know, number one, our results. Number two, what we're seeing and hearing from our trade partners, we get that there was a big stimulus input last year that went away and that affected retail. So we're certainly sensitized to the macro forces you just talked about. We're pretty confident that we're marching through it. Are we entirely immune to it? Probably not. I don't know that anybody is, but we like where we are today. And, again, as indicated by our first half results and our confidence in the second half, we're saying that, hey, what we see is pretty favorable from our end. That's great. Thank you so much.
spk00: Thank you, George. Operator, next question, please.
spk01: Our next question comes from Joe Altabello of Raymond James. Joe, please go ahead.
spk08: Thank you. This is Martin McCullough for Joe Altabello. Quick question about demand. When it comes to industry data, it looks like, you know, it's held up very well. Have you seen a shift in consumer purchasing patterns, either deferring club purchases or turning down of all purchases?
spk04: We haven't seen a lot of that. And, you know, clubs for us, we've been chasing it For a while, our lead times have been longer than we'd like. I'm pleased to say they've, in the last month, come back in line as we've seen component availability improve and our team's doing a better job getting product through our system. Here we are in the peak of golf season. You're going to see a seasonal slowdown here in the next couple of months. regional slowdown in the next couple of months. That's part of golf's annual cycle. But where we stand today, again, we like our situation. Your question, not dissimilar from George's. Again, of course, we're very, very aware of it. And we're very attentive to what some of the macro pressures might be. And we watch it very, very carefully. But as we sit here today, things are moving along very much in line with our expectations. And I'll go again back to our ability to raise guidance. It's just indicative of two things, really, a stable consumer and our ability to get more out of our supply chain.
spk08: Thank you. Another follow-up, can you talk a little bit about recent market share trends in Gulf Falls? It seems you've lost a bit of share. Is that due to lack of availability, and has it improved since you've returned to full production levels?
spk04: Yeah, you know, I'll say our golf ball business is in, we view it, it's in great shape, with the key exception being that our retail inventories are lower than we'd like, which is a function of tight, you know, raw material availability. So I think we were up, I think we were up 30% last year for the year in golf balls, and to be flat through the first half for us in a non-Pro-V one year and given our supply constraints, we're very pleased with these results, again, with the caveat being, We accept that channel inventories, retail inventories are very lean, and there are consequences that come with that. I will add, and it's always a bit of an odd year, even year discussion, but in the U.S. and around the globe, we're copping this year against last year's sell-off of prior generation inventory, which always comes with a bump. And our loyalty rewarded program was in full flight last year, and we didn't offer it in 2022. So it's a very different dynamic when we compare 22 to 21. I think as a result of that, our retail ASPs are up about 10%. And the final point would be added to that. We had to delay our Tor speed and Tor soft launches, which led to excessive inventory outages for much of the first half. So a lot of moving parts in the ball business, but I take a step back and say very pleased with where we are, very pleased with our performance at the top of the pyramid and our performance in the marketplace. And as we said, we're finally at a position where we can start producing full capacity, which we think is very important. So, again, a lot of puts and takes on the ball business. Final I'll add is we're You know, we've had to slow down our corporate business just because of availability. We look forward to picking that back up here in the near term. So, again, where we are today, we're very pleased with the state of the Titleist golf ball business.
spk08: Sounds good. Thank you.
spk04: Thank you. Thanks, everybody. As always, we appreciate your time and interest in Acushnet. Hope you all have a great rest of summer and look forward to catching back up on our next call.
spk01: This concludes today's call. Thank you for joining. You may now disconnect.
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