Acushnet's Solid Swing: Earnings Show Some Challenges, Lots of Strengths

While their main rival in golf's public company stakes face serious headwinds, Acushnet, the company of Titleist and FootJoy, appears to be swimming in calmer waters.

Last week we went through the latest earnings release from Callaway (or Topgolf Callaway Brands to give it its full title) and saw how the company faced significant headwinds, including a $1.45 billion impairment charge on its Topgolf acquisition.

In contrast, the other major publicly-traded golf company, Acushnet Holdings Corp (NYSE: GOLF) — by a wide margin the world’s largest golf business by almost any measure — delivered a much more positive earnings report for 2024.

The parent company of Titleist, FootJoy, and other premium golf brands such as Scotty Cameron and Vokey Design, Acushnet posted full-year net sales of $2.46 billion, up 3.2% year-on-year (or a 3.9% jump when accounting for currency fluctuations).

More importantly, the company's bottom line showed solid growth, with net income increasing 8.0% to $214 million and Adjusted EBITDA rising 7.5% to $404 million.

The company finished the year strong with 7.8% net sales growth in Q4, a significant improvement over the same period in 2023 and reducing its typical seasonal Q4 loss from $26.8 million in 2023 to just $1.1 million in 2024 (although a staff paid time off policy accounted for a majority of this figure; more on that below).

Underlining the healthy position of the company, its board of directors authorized a further $250 million in stock buybacks in 2024 and increased its shareholder dividend by 9.3% to $0.235 per share.

The 2024 year brought the company’s total buyback authorization to $1.25 billion since 2018, while during Q4 alone, it repurchased nearly 443,000 shares for approximately $30 million — all a signal of the healthy financial position of the company, and its confidence that its shares still represent significant value.

Healthy US Market, Titleist Equipment Drive Growth

The standout performance came from the US market, where Acushnet saw a 7.2% increase in full-year sales to more than $1.44 billion, an increase of almost $100 million year-on-year.

This North American strength was primarily fueled by the company's core Titleist golf equipment segment, which grew 6.2% globally for the year (6.9% in constant currency).

Within Titleist equipment, the golf clubs category was particularly impressive with 9.5% annual growth, and the company’s management, led by President and Chief Executive Officer David Maher, highlighted the success of SM10 wedges and GT drivers and fairways, which helped offset lower sales volumes of hybrids in their second model year.

The golf ball business also performed well, growing 3.3% globally despite not being a new Pro V1 launch year. (A new launch is scheduled for the first half of 2025, which also marks a significant milestone for the product line.)

The company's Golf gear segment (including bags and travel accessories) also contributed to growth with a 4.3% sales increase, driven by higher sales volumes in travel products and higher average selling prices across all product categories.

Challenges in FootJoy, International Markets

Despite the overall strong performance, Acushnet faced some challenges, with its key FootJoy brand tapering and its two primary Asian markets flat or falling.

For FootJoy, net sales for 2024 were $574 million, down from $590 million in 2023, a 2.6% drop, which was in turn down from the $618 million in sales posted by FootJoy in 2022.

The 2024 dip was offset by higher selling prices across FootJoy products, indicating that while FootJoy products are going for a slightly higher price, a significantly fewer number of units are moving, and that appears to be across most markets. While FootJoy net sales were up in the US, its growth trails Titleist clubs, balls and gear, and that is a pattern that has now been seen several years in a row.

Internationally, Japan saw a 10.3% sales decline for the full year, and while that looks worse because of currency fluctuations — the full year decline for the Japanese market in constant currency terms was slated at 3.5% — the Q4 numbers do look particularly bleak. Sales in Japan in the final quarter of 2024 were down almost $6 million, or 18.9%.

Korea also experienced a drop in sales for the full year (3.6%), although factoring in currency fluctuations that was listed as effectively flat (0.1% up) and the Q4 performance in Korea was better, where performance was up 7.1% year-on-year and more than 11% in constant currency terms.

This is not to be sniffed at. By the numbers, Japan and Korea is by some margin Acushnet’s second biggest market — its total net sales for 2024 tallied $425 million, ahead of Europe ($321 million) and Rest of World ($264 million).

On the earnings call after the release of the data, CEO Maher addressed these regional challenges, and expected more of the same for this year.

He noted that while the US golf market remains robust,

“In terms of rest of world, the dedicated golfer behavior is similar [to the US], but macroeconomic conditions have not been as robust. They were softer in ‘23 and ‘24, and we expect similar conditions in ‘25.

“That said, we are planning for growth outside the U.S. in our business. Part of that's new products, part of that's share … High level, we like what we see from a golfer perspective. We like what we see from a participation perspective [but] there's always an element of caution baked into our planning, whether it's US and tariffs and inflation, or ex-U.S., particularly in Japan and Korea.”

For Korea specifically, Maher pointed to challenges primarily in the premium apparel segment after years of exponential growth, while noting that equipment sales remain stronger. He acknowledged that consumers in Korea were under some duress and that some political unrest in the region was also a factor.

Management is taking a strategic approach to this business, focusing on product line rationalization and an emphasis on profitability rather than sales growth, with a shift toward more premium offerings.

Details of that rationalization appear to be scant in the documentation, but there was a footnote at the very bottom of the release which seemed to be related to changes at FootJoy, noting that the Q4 net loss of $1.1 million (emphasis mine):

“includes $11.0 million and $18.0 million, respectively related to restructuring costs associated with the closure of all production lines at our footwear manufacturing joint venture, as we shift footwear and production volume to a third-party supplier.”

That move, to close existing production lines and shift that to a third-party supplier, feels like a significant one and it will be interesting to see if there are positive (or negative) effects on FootJoy performance and profitability in future quarters.

Paid Time Off Correct Boosts Balance Sheet

One other footnote that hinted at interesting decisions internally was also apparent in the earnings release.

Annotated against the table item “Other extraordinary, unusual or non-recurring items, net”, it was revealed that the company had accrued a non-cash benefit of benefit of $17.7 million which was associated with a change in its paid time off (PTO) policy.

While details on this were scant — a stock exchange filing contained the line “we modified our U.S. employee PTO policy during the fourth quarter of 2024 to more closely align with industry benchmarks” — it may be that Acushnet has capped staff holiday accruals or, less likely, has introduced the type of “unlimited PTO” policy that is becoming increasingly common, especially in technology companies, which typically has the reverse effect of reducing number of staff days off and wipes out accrued days from the balance sheet.

Looking Ahead to 2025

For 2025, Acushnet provided a generally optimistic outlook, projecting net sales of $2.485-$2.535 billion (up 2.2% at the midpoint) and Adjusted EBITDA of $405-$420 million. The company expects sales growth for the year to be between 2.6% and 4.6% (on a constant currency basis).

Highlights in this forward focus include the Pro V1 franchise, which will get a major focus in 2025 as this year marks the 25th anniversary of the iconic ball — it’s been “a journey of innovation and continuous improvement”, said management in their investor Q&A, where they also pointed to Pro V1's share on worldwide pro tours, which has reached a staggering 77%. Adding to the sense of celebration and optimism is that a new Pro V1 launch is also slated for the first half of the year.

Other new product launches slated for 2025 include Cameron putters, GT1 and GT Hybrid clubs, and new iron models later in the year. FootJoy will introduce several new premium offerings in 2025, including Quantum (recently), Hyperflex (expected imminently), and Premier models, which the company hopes will reinvigorate this segment.

The company is also making significant investments in its future, including implementing a global ERP system, expanding its fitting network worldwide, and building out digital capabilities. Management indicated these investments will be “outsized in '25 and normalize in the out years”.

One notable risk that gets “unknown” status but is expected by almost everyone is the potential impact of new US tariffs. Acushnet explicitly excluded this from its guidance for 2025, but management admitted that it faced a potential $7 million impact from the anticipated 10% tariff on Chinese imports. On the plus side, Acushnet executives also pointed out that only 6% of their cost of goods sold is exposed to China, as footwear production has already moved to Vietnam.

Acushnet’s Bottom Line

While Topgolf Callaway confronts major challenges with its entertainment venue business, Acushnet, their big rival in the public golf company stakes, appears to be in a generally much healthier position.

The company faces real challenges in international markets, especially in Asia, and with its FootJoy brand, but the core Titleist equipment business continues to perform strongly.

While Topgolf Callaway seems to have found itself plugged in a bunker, overshot the green into the lake, Acushnet is safe and sound on the short grass.

Thanks for reading.

Shane