Acushnet Holdings Corp.

Good morning, everyone.

Thank you for joining us today for Krishna Holding Corp Second Quarter 2024 Earnings Conference Call. Joining me this morning are David Marr, our President and Chief Executive Officer, and Sean Sullivan, 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 a Christian'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 accompanying 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 GAAP metrics can be found in the schedule 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 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 and to June 30th, 2024, and then the comparable six-month period in 2024. With that, I'll turn the call over to David.

Thanks, Sandra, and good morning, everyone. As always, we appreciate your interest in the Christian Company. We continue to be enthused about the overall state of the golf industry, and I am especially appreciative of my teammates for their great work and commitment to excellence, which fueled the company's first-half success. Getting right to our comments here on slide four, you see our second quarter and first half results. For the quarter, Cush has delivered net sales of $684 million, a 1% year-over-year increase primarily related to gains in title golf balls. This has contributed to adjusted EBITDA of $131 million in the quarter, down $1.1 million from last year's second quarter. And for the half, net sales of $1.39 billion were up 2%, while adjusted EBITDA of $285 million also increased 2% compared to last year's first half. There are several contributors to these results, which reflect the differences across segments and regions that we have experienced through the first half. First is the global momentum behind Title X golf balls and golf clubs. which grew 7% and 5%, respectively, in the half. Our Titleist golf ball business performed especially well in the half against a challenging comp with last year's Pro Bowl I launch, and in a year where we have seen a wide range of competitive golf ball introductions. Double-digit Titleist golf ball gains in the U.S. and growth in Korea are setting the first half pace, and we enter the back half of the year with nice momentum. To meet healthy demand in all regions, we continue to operate our three golf ball production facilities at full capacity. Additionally, we are seeing the initial benefits from our recent capital investment program in the form of expanded urethane capacity and improved throughput efficiency and capabilities across our ball plants and custom imprint facilities. It has also been a terrific first half for Titleist Golf Balls across the Pyramid of Influence with Pro V1, and Pro V1X, notching 26 PGA Tour wins year-to-date, as compared to four for the nearest competitor. Titleist golf club growth in the half was fueled by steady demand for our new Vokey SM10 wedges, Scotty Cameron Phantom putters, and T-Series irons. Japan led the way with sales up double digits, followed by growth in EMEA and the U.S. as well. While clubs in the first half were up 5% over last year, a more relevant comp is against two years ago, given our extended product life cycles. Compared to the first half of 2022, Titleist Club sales increased 22% with growth coming from wedges, putters, and irons. And our club team has been especially busy over the past few months preparing for the upcoming launch of new Titleist GT medals. We are pleased with early player response as the new GT has been the most played driver at recent events on both the PGA and NDP World Tours. As you would expect, we see this as powerful validation as we build interest and demand prior to our global market launch later this month. In addition to this momentum in golf balls and clubs, another contributor to our first half performance was our strong, across-the-board success in the U.S. market, which grew 7% in the half. This was led by double-digit growth from golf balls and FJ apparel, along with gains from shoes, Titleist gear, clubs, and FJ footwear. Our US business continues to benefit from healthy participation, with rounds up 2% in the first half, with this growth achieved despite poor weather comps across much of the East Coast. These tailwinds from balls, clubs, and our US region helped to offset a slow start in Europe, where rounds were off high single digits as the region has endured an unusually cold and wet spring and summer. This slow start impacted each of our businesses, and especially Footjoy Footwear and Apparel. Our teams are closely monitoring channel inventories and promotional activity as this region reacts to the inevitable effects of poor weather and reduced early season traffic. First half rounds of play in Korea and Japan are projected to be up 2% and down 1%, respectively, as both markets made up ground in Q2 after slow weather-related starts in Q1. And while we are pleased with our golf ball and club momentum across Asia, the region continues to work through excess footwear and apparel inventories, which has negatively impacted our results in these regions. As we said in our last call, we expect that Korea's premium apparel market will remain soft for the near term as the market corrects following a period of accelerated growth which brought in many new competitors and a significant amount of inventory in recent years. And while we are comfortable that footwear inventories have normalized in the U.S. market, we are still seeing elevated channel inventory levels in Europe and Asia. Looking forward, we are enthused by our brand momentum, the overall health of the golf market, and the resilience and engagement of a Kushnitz core consumer, the game's dedicated golfer. From a product development and supply chain readiness standpoint, our team has done good work, and we expect healthy growth from Titleist Clubs and Gear, FJ, and Schuss in the second half. golf balls are projected to be down slightly for the half, but up compared with their 2022 comp as we balance our production schedule to satisfy at once demand with the need to build inventory to support new products scheduled for launch in early 2025. Key product launches in the coming months include new Titleist GT metals and new seasonal collections for FJ & Schuss and Titleist apparel in Korea, Japan, and China. FJ also launches Quantum, a new athletic-inspired golf shoe for men and women that strives for maximum comfort and performance. We look for Quantum to complement the great momentum of our FJ Classics franchise, which is fueled by our popular and timeless Premier and Traditions lines. And consistent with past practices, we continue to leverage the company's strong balance sheet and execute a disciplined approach to capital allocation for the long-term benefit of Acushnet, our brands, and our shareholders. In summary, the company is well positioned heading into the back half of the year, and we are confident in our ability to successfully execute against Acushnet's long-range goals. Thanks for your attention this morning. I will now pass the call over to Sean.