Acushnet Holdings Corp.

Good morning, everyone, and welcome to the Acushnet Holdings Conference. My name is Chach, and I'll be your moderator today. All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end. I'd now like to pass the conference over to your host, Sandra Lennon, Vice President of FP&A and Investor Relations. Please go ahead.

Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp's first quarter 2024 earnings conference call. Joining me this morning are David Marr, our President and Chief Executive Officer, and Shawn Sullivan, our Chief Financial Officer. Before turning the call over to David, I would like to remind everyone that we will make forward-looking statements on the call today. These forward-looking statements are based on a Cushnet'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 net sales on a constant currency basis and adjusted EBITDA, explanations of how and why we use these metrics, and reconciliations of these items to the most directly comparable gap metric 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 are referring to the three-month period ended March 31, 2024, and the comparable three-month period in 2023. 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 for Cushnet, led by our momentum in golf balls and clubs, supported by continued supply chain enhancements, and better than expected startup at our new North American distribution center. As is customary in Q1, we launched a wide range of new products across our portfolio, helping to deliver worldwide net sales of $708 million, a 4% constant currency increase over last year. This contributed to adjusted EBITDA of $154 million, a 5% gain for the quarter. Global interest in golf and rounds of play continue to be healthy. U.S. rounds were up 21% in March and 7% for the quarter. Positive trends, particularly given poor weather across the southeast. Conversely, rounds were off 9 and 12% in Korea and the UK, where elevated rainfall caused delayed starts to their seasons. These weather-related puts and takes are common for Q1 and in line with the widely held belief that the golf season, more often than not, starts with the Masters in early April. Getting to our segment results, you see golf ball sales increase 9% in the quarter. which is noteworthy given the steep comp against last year's sizable Pro V1 launch and 21% growth. This gain was led by double-digit growth in the U.S. We successfully launched new ADX, TorSoft, and TruFeel models in the quarter and also benefited from greater than expected demand and fulfillment in our Pro V1 Loyalty Rewarded Program in March. This golf ball success was supported by an especially fast start on the PGA Tour where Titleist golf balls were used by the winners of 16 of the first 18 events of the 2024 season. Titleist golf clubs also posted a strong quarter with sales up 14% led by solid gains in the U.S., Japan, and EMEA. Our new T-Series irons have been well received and we successfully launched new Vokey Design SM10 wedges and Scotty Cameron Phantom Putters in the period. Our wedge launch was especially well executed as our operations group completed our global launch in Q1 and a few weeks ahead of schedule. Titleist gear sales were up 2% in the quarter on double-digit growth in the U.S., and our foot joy business was off 6% in the quarter, in line with expectations as growth in the U.S. was more than offset by declines in international markets. We are pleased with the early response to new footwear and apparel lines and anticipate growing momentum for foot joy as the footwear market stabilizes in the back half of the year. Later this month fj will launch the new mobile fit lab performance fitting system to help golfers select the best performing best fitting and most comfortable golf footwear. This tech enabled golf footwear fitting experience will be in pilot mode in the US this summer. And longer term, we anticipate increasing our investment in FJ FitLab to support a global build-out of this value-added fitting service and golfer connection opportunity. Also in the quarter, net sales of products not allocated to a reportable segment were down, with continued momentum and growth from Schuss not enough to offset a decline in our Korean Titleist apparel business. Now looking at the quarter by region, you see the U.S. market was up 13% with gains coming from all segments and coinciding with a positive rounds of play story. EMEA was off 5%, reflecting an especially wet spring and slow start to their golf season. Japan was off 10% as gains in golf clubs were more than offset by declines in other product categories. And Korea was off 12%, mainly from Titleist apparel declines and poor weather, which delayed the start to their golf season as rounds were off 9%. In summary, we are pleased with our start to the year as the strength of golf balls and golf clubs and benefits from continued progress at our North American D.C. offset delayed starts in EMEA and Asia, where we anticipate improving results as their seasons open up. As Sean will address, the company is well-positioned as we enter Q2 with healthy inventory positions and a strong balance sheet to support our continued organic investment and shareholder return programs. The golf industry is on firm footing, and while Acushnet is not immune to macroeconomic or weather-related pressures, our business has over time proven to be resilient due to the avidity and favorable demographic profile of our core consumer, the sports-dedicated golfer. 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, fitting, and service experiences to golfers throughout the upcoming season. Thanks for your attention this morning. I will now pass the call over to Sean.