Acushnet Holdings Corp.

Hello everyone and thank you for standing by. Welcome to the AcoucheNet Company's first quarter 2023 earnings call. My name is Emily and I'll be coordinating your call today. After the prepared remarks there will be the opportunity for any questions which you can ask by pressing start followed by one on your telephone keypads. I will now turn the call over to our host Sandra Lennon, Vice President of Financial Planning and Analysis. Please go ahead.

Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp's first quarter 2023 earnings conference call. Joining me this morning are David Marr, our President and Chief Executive Officer, and Tom Pacheco, our Chief Financial Officer. Before I turn 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 U.S. Securities and Exchange Commission. Throughout this discussion, we will make reference to non-GAAP financial metrics, including items such as revenues at constant currency and adjusted EBITDA. Explanations of how and why we use these metrics and reconciliations of these items to a GAAP basis can be found in the schedules in today's press release, the slides that accompany this presentation, and in our filings with the U.S. Securities and Exchange Commission. Please also note that references throughout this presentation to year-on-year 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 will refer to the three-month period ended March 31, 2023, and the comparable three-month period. With that, I'll turn the call over to David.

Thanks, Sandra, and good morning, everyone. As always, we appreciate your interest in Acushnet Holdings. I am pleased to report on a strong start to the year, and as reflected by our results, the Acushna team is excelling on the product development, manufacturing, and supply chain management fronts. My talented teammates are doing great work adapting and strengthening our capabilities, adding agility and capacity to keep pace with steady demand. Showcasing the overall health and diversity of the Accushnet portfolio, each segment and region reported gains in the quarter with Titleist golf balls, clubs, and gear growing double digits, helping to fuel the company's 17% year-over-year increase to $686 million in the quarter. And bottom line results for the period grew by 22% as Accushnet delivered adjusted EBITDA of $147 million generating operating leverage and benefiting from favorable mix shifts from our full slate of new product launches. We are pleased with this start to the year and the continued momentum of our core consumer, which is translating across our businesses. Tom will share greater details in a few minutes. Shifting now to our segment overview, Titleist Golf Balls increased 21% over last year. led by the successful launch of new Pro V1 and Pro V1X in all regions. For context, we shipped roughly a half a million dozen more Pro V1s compared to last year, which is commentary on the health of the franchise and our strengthening supply chain. New Pro V1 models are quickly making their mark across the worldwide professional tours and contributing to 74% usage, more than eight times the nearest competitor. And with 70 wins through last week, Titleist Golf Balls have notched 58 more titles than the number two brand. Titleist was the most played ball at the Augusta National Women's Amateur, trusted by 74% of the competitors in one of their most prestigious events. And since switching to new Pro V1X, Lily of You has played five tournaments and won two of them, including her first major at last week's Chevron Championship. During the stretch, she is an incredible 64 under par with her new Pro V1X golf ball. On the supply side, Titleist golf ball channel inventories are in good shape to start the year, and we are steadily building our back stock to normalized levels. Our global golf ball inventories are at their healthiest levels since 2019, although we do anticipate that Pro V1 and AVX models will remain in tight supply through the summer months. Titleist golf clubs also posted a strong start to the year with sales increasing 16% to $181 million. New TSR driver and fairway momentum continues to build as this franchise enters its first spring season. And we are especially pleased with TSR's performance in light of so many competitive launches in the quarter. TSR is the most played driver on the PGA and DP World Tours. and affirming the strength of Titleist clubs across the competitive spectrum, Titleist was the number one driver, iron, and wedge at the 2023 Augusta National Women's Amateur. Our team did great work successfully launching the all-new lineup of Scottie Cameron Super Select putters in March as we continue to strengthen this leading putter franchise. Our overall golf club component availability is in good shape, and we expect lead times to be healthy throughout the upcoming season. On to Titleist Gear, which was up 57% for the quarter. This outsized growth reflects strong demand for our new Lynx Legend and Player Standbags, a favorable comp against last year's supply chain limited quarter, and the early shipment of some April custom gear demand as we prioritize service and build momentum in our custom operations. Gear was most impacted by last year's supply chain complications, and as seen with these first quarter results, Our team has done great work adapting to ensure product is available when and where it is most needed. Now to FootJoy, which posted sales of $205 million, an 8% increase for the quarter. FJ Apparel had another terrific quarter with sales up double digits as we realized the benefits from recently enhanced customization and fulfillment capabilities. Similar to Custom Gear, We ship some April custom apparel demand in March as we strive for on-time or early delivery to start the season. The FJ team fortified its position as the number one shoe in golf with new Premier, Hyperflex, and Traditions launches in the quarter. FJ golf shoes are defined by performance, style, and comfort innovation, and we are especially pleased with FJ's positive energy and momentum, which are helping the brand to stand out in this category. Not noted on this slide, but worthy of mention, is the ongoing growth and development of our Schuss business, which was up over 30% in the quarter. We are enthused about Schuss's momentum and long-term growth prospects, as our team does great work building a foundation around product and operational excellence to support the brand's continued expansion. Now, taking a look at revenues across regions, you see the U.S. market set the pace up 25% for the quarter, and with growth coming from all segments. Japan and Korea also reflect the good work of our teams to set the stage and position new Titleist and Footjoy products for the peak spring and summer period. Our business across EMEA was flat in the quarter, in line with expectations and comping against last year's outsized growth. Globally, while the first quarter is not a major driver to annual rounds of play, U.S. rounds were flat for the period in spite of declines in the West resulting from much needed rainfall. Rounds outside the U.S. are projected down low single digits for the quarter, again due to unfavorable weather comps. Overall, global golf participation remains healthy and resilient as we enter the second quarter. Before handing the call over to Tom, I will affirm our confidence in the company's product lines and operational capabilities. and the resilience and engagement of a Kushnitz target consumer, the game's dedicated golfer. Interest in the sport is in great shape. The professional game is healthy, as reflected by strong ratings, and golf courses are financially sound, with many making meaningful capital investments to enhance their long-term value proposition and appeal. The Cushnet's retail inventories are very healthy and total channel inventories have returned to normal levels and golf shops are well stocked for this time of year. As is often the case, there are pockets that have our attention, including footwear in the U.S., golf clubs in Japan, and apparel in Korea. Our teams are well conditioned to monitor these situations and will adapt if and as necessary. In summary, the golf industry is on firm footing and well positioned for the future, And while a Cushnet is not immune to macroeconomic pressures, we have over time proven to be resilient due to the avidity and favorable demographic profile of our core consumer, the game's dedicated player. Our global teams have done nice work positioning Titleist, FootJoy, and Shoes Products in golf shops, and we are confident in our ability to deliver compelling product and service experiences throughout the upcoming season. Thanks for your attention this morning. I will now pass the call over to Tom.