Acushnet Holdings Corp.

Good morning everyone and welcome to today's Akushnet Company 3Q24 earnings call. My name is Drew and I'll be the moderator for today's call. This call will have a Q&A session. If you wish to register a question, please press star followed by one on your telephone keypad. And if you wish to withdraw your question, then it is star followed by two. It's now my pleasure to hand over to Sondra Lennon, Vice President FP&A and Investor Relations to begin. Please go ahead.

Good morning, everyone, thank you for joining us today for Krishna holding corpse third quarter 2024 earnings conference call. Joining me this morning or David mar 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 a Christmas current expectations. and are subject to uncertainty and changes and 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 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 metrics 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 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 nine-month period ended September 30, 2024, and the comparable nine-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 the Akushnet Company. I will start on slide four and get right to our results. During the third quarter, Acushna delivered net sales of $621 million, a 5% year-over-year increase. This growth contributed to adjusted EBITDA of $107 million in the quarter, up 9% from the third quarter of 2023. Through September, year-to-date net sales were up 3%, surpassing $2 billion, with growth coming from Titleist clubs, Titleist golf balls, and gear. Adjusted EBITDA of $392 million was up 4% compared to the first nine months of last year. And I will pause here to thank my teammates for their dedication, which fuels this company performance. Looking at our business by segment, Titleist Golf Ball net sales were down 1% in the quarter and are up 5% year to date. This growth has been led by sustaining Pro B1 momentum, especially in the U.S. market, which is benefiting from increased rounds of play. As we said on our last call, we expect golf ball sales to be down modestly in the second half as we and our trade partners lower inventories in preparation for the launch of new Pro V1 models in January. This upcoming launch, which will mark the 25th anniversary of Pro V1, is well underway as we recently debuted new Pro V1 models across worldwide tours. Player feedback has been very positive, and we have fully transitioned production lines to new models to support the upcoming launch. Titleist Golf Clubs posted a healthy 19% increase in the third quarter, as the team did great work bringing new GT drivers and fairway medals to market. Since its debut, GT has been the number one driver on the PGA, DP World, and Korn Ferry Tours, and early consumer response is meeting our high expectations and fueling segment momentum. Year to date, Titleist Golf Clubs were up 9%, with growth in all regions led by gains in the U.S. and Japan, and an especially strong year for our Vokey Wedge franchise. Gear was up 9% in the quarter and 3% year to date, primarily related to higher sales volumes and travel with the inclusion of Club Glove in 2024. And now to Foot Joy, where you see revenues were down 2% during the third quarter and off 3% year to date. Despite the decline, FJ has executed well in what has been a soft apparel and footwear market across most regions. The FJ team also continues to make good progress in diversifying and strengthening our footwear supply chain and will soon complete the full transition of our footwear production lines to a state of the art new facility in Vietnam. We continue to work with our long standing JV production partner and are confident that over time this move will facilitate enhanced innovation and speed to market. And lastly, net sales of products not allocated to a reportable segment were down in the third quarter and year to date. This Q3 shortfall is partly related to the timing of shoe shipments, which moved from late Q3 in 2023 to early Q4 this year. Now for a brief overview by region, where you see the U.S. market continues to benefit from healthy participation and resilient consumer demand, with Q3 net sales up 6%, and year-to-date up 7% with growth coming from all segments. Despite a slow start due to poor weather, U.S. rounds of play are now up 2% year-to-date and keeping pace with the record level set in 2021. During the quarter, Japan, Korea, and rest of the world were up, partially offset by a decline in EMEA. During the first nine months, Korea, EMEA, and rest of the world declined low single digits while we posted a slight increase in Japan. Again, softness in the footwear and apparel markets have been the main contributors to these declines, while our golf clubs and ball businesses have been more resilient. Rounds outside the U.S. are projected to be off 2% year-to-date, with Korea up slightly and other regions down. Looking to Q4, we are comfortable with our inventory positions both owned and at retail, and look to build upon our momentum in golf balls, clubs, and premium FJ footwear for the holiday season and heading into 2025. And we point to the attractiveness and resilience of a Kushnitz core consumer, the game's dedicated golfer, and the company's enduring commitment to product and service excellence as pillars of the company's efforts to deliver great experiences to golfers and trade partners, and in turn, drive shareholder value. These priorities, along with the company's strong balance sheet and disciplined approach to capital allocation, remain the foundation of Kushner's proven investment thesis. Thanks for your attention this morning. I will now pass the call over to Sean.