Acushnet Holdings Corp.

Hello, everyone, and thank you for joining us for today's CushNet Company 4Q24 earnings call. My name is Drew, and I'll be the operator today. During today's call, after the prepared remarks, we will have a Q&A session. If you would like to ask 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 Sandra Lennon, Vice President of FP&A and Investor Relations. Please go ahead.

Good morning, everyone, thank you for joining us today for a Christian holding corpse fourth quarter and full year 2024 earnings conference call. Joining me this morning are 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 make forward looking statements on the call today. These forward looking statements are based on a Christian its 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 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 GAAP 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 or full-year results or comparisons, we are referring to the 12-month period ended December 31, 2024, and the comparable 12-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 Accushnet and look forward to sharing our 2024 results and future outlook today. Starting on slide four, the company delivered fourth quarter sales of $445 million, up 8% for the period, and adjusted EBITDA of $12.4 million. Strong golf equipment sales led by Titleist GT Metals and double-digit gains in gear drove this growth. And our team did good work balancing healthy at-once demand while also preparing for several first quarter product launches. Now to full year results, Acushnet achieved sales of $2.46 billion in 2024, a 4% constant currency gain. and adjusted EBITDA of $404 million, a 7.5% increase for the year. These results were made possible thanks to the talented and dedicated associates who make up Acushnet, including our longest-serving teammate who works in golf ball operations and next week celebrates his 55th anniversary with the company. To underscore key themes of 2024, our team generated terrific momentum in Titleist Golf Equipment, which increased net sales 7% for the year. Titleist golf ball sales in 2024 grew 4%, which is noteworthy given this followed the 2023 Pro V1 launch year when ball sales increased double digits. We generally expect second year sales to be down slightly due to the timing associated with our two-year product cycles. Our strong golf ball performance in 2024 was fueled by balanced growth across our Pro V1 and performance models and strong adoption throughout the pyramid of influence. Titleist Golf Clubs also posted strong results in 2024 with overall sales up double digits and growth in all regions led by the U.S. and Japan. Our SM10 wedge launch in Q1 and GT Metals launch in Q3 were well received, and these franchises are in great shape as we start the 2025 season and also plan for the new putter and iron launches. Our gear segment posted 5% growth for the year, led by gains in our travel category. Again, growth was led by the US market, which was up double digits. FJ sales were off 2% for the year, with gains in the US more than offset by declines in international markets. Footjoy has done good work navigating what has been a correcting footwear and apparel market, effectively managing inventories, and leaning into high-performance offerings across footwear, apparel, and gloves. In doing so, Footjoy delivered improved bottom-line performance in 2024, despite a top-line decline. And in our other category, which is comprised of Titleist Apparel and Shoes, The key 2024 themes are continued growth of Schuss Golf in the U.S. and U.K. and softness in the Asia-specific Titleist apparel market. Acushnet's strong financial performance in 2024 supported ongoing investment across our business and the company's commitment to returning capital to shareholders. For the year, dividend and share repurchases totaled $227 million, bringing our total return over the past three years to more than $850 million. And furthering this commitment to shareholders, I am pleased to announce that Acushnet's directors have approved a 9% increase to our quarterly dividend payout in 2025 to 23.5 cents per share. This marks the eighth consecutive annual dividend increase since the program was initiated in 2017. As Sean will discuss, we have also increased our share repurchase authorization. These actions reflect the Board's confidence in Acushnet's ability to execute and generate cash flow and their positive outlook towards the company's leading position within the golf industry. As you will continue to see, we are focused on investing to position the company for future growth while also returning capital to shareholders as appropriate. Now looking ahead to 2025 starting with a few industry data points that inform our planning and outlook. In the US market rounds increased 2% in 2024 to a record 543 million noteworthy is that these rounds were played across some 16,000 golf courses, a supply that is down about 1500 courses since 2000. Driving this participation growth is a golfer base that increased 6% in 2024 to 28.1 million golfers. This 1.5 million net gain represents the largest single year increase since 2000, and the number of beginners top 3 million for the fifth consecutive year in a row. Given these metrics, it is not surprising that 70% of public facilities rate their financial health as good or excellent, versus 23% in 2016, and 80% of private golf courses report good or excellent financial health versus 46% in 2016. Annual US rounds are up over 20% since 2019, as is participation in the UK, Canada, Korea, and Australia. Japan play has grown 10% during the same period. healthy golfer participation and, in particular, the strength of the dedicated golfer are the foundation for our perspective on the state of the global game and particularly in the US. Looking outside the US, we are planning for growth, however, continue to take a measured approach for while golf participation has been resilient the macro economic backdrop in key regions continues to be more challenging. And while FX headwinds and tariff uncertainty are inevitable pieces of the planning process, we remain confident in our ability to execute against our priorities and what we can control. Starting with our growth plans for golf equipment, we are excited about new Pro V1 and Pro V1X golf ball models and expect increases across all regions. The first Pro V1 was launched 25 years ago. and the past quarter century has been defined by innovation and our team's commitment to continuous improvement. While early in the season, Pro V1 usage on worldwide tours is up to 77%, more than nine times the nearest competitor. We are enthused about our opportunity and our team has developed some great campaigns to tell our story in 2025. For Titleist Golf Clubs, we carry healthy momentum into the year and expect to benefit from recent investments to our product development engine and expand in fitting networks across the globe. While our first quarter launch calendar is smaller than last year's, as is the case in odd-numbered years, we look forward to launching new Titleist GT hybrids, GT1 metals, and a new lineup of Cameron Studio style putters to start the season, following the new irons later this year. We also expect growth from our gear segment, led by new Titleist products and the continued development of our Club Glove travel franchise in 2025. We are confident in our outlook for foot joy, which anticipates a strong product pipeline and higher concentration of premium performance footwear products like Premier, Hyperflex, and Quantum golf shoes, leading to improved profitability. We expect FJ sales to be roughly flat for the year with organic growth offset by reduced closeout sales and strategic product line rationalization. After recent period of correction in global golf footwear, we see a healthier environment in 2025. In support of these priorities and longer term growth opportunities, we plan to make several strategic investments in 2025 to build out our global fitting network for golf equipment and footwear, expand the reach of our B2B and D2C capabilities to new regions, and invest in the future of the Titleist Performance Institute, or TPI, where we see expansion opportunities in the coming years. And we are pleased with recent capital investments in golf equipment R&D and operations, and are confident these projects will fuel enhanced innovation, product development, and golfer connection capabilities. core attributes to the long-term success of Titleist equipment. As noted on our last call, we recently completed the transition of our footwear manufacturing from China to Vietnam and expect this will lead to greater product development capabilities and a more durable supply chain. As Sean will address, we are also in the process of implementing a new global ERP system. Collectively, we expect these investments to support our future growth plans and generate increased operating leverage over the long term. And in summary, we are optimistic about the structural health of the golf industry and are focused on expanding our momentum in the Titleist golf equipment segment, strengthening our gear and FJ wearables businesses, and investing in key initiatives that will pay dividends over the next several years. I have confidence in the Accushnet team and their ability to provide dedicated golfers with leading products and services as we seek to build long-term value for our shareholders. Thanks for your attention this morning. I will now pass the call over to Sean.