Worldwide Net Sales: $703 million, a 1% increase over last year. Adjusted EBITDA: $139 million, reflecting a decrease of $15 million. Golf Equipment Net Sales: Increased almost 4% in the quarter. Titleist Golf Ball Business: Grew 4%, with EMEA region up double digits. Titleist Golf Club Business: Grew 4% versus last year. Acushnet Gear Sales: Up almost 4% in the quarter. FootJoy Sales: Down 5% in the quarter. Gross Profit: $337 million, down $5 million compared to the first quarter of 2024. SG&A Expense: $200 million, decreased almost $1 million from 2024. R&D Expense: $18.9 million, up $0.4 million compared to last year's first quarter. Net Interest Expense: $13.8 million, up almost $1 million. Effective Tax Rate: 17.9%, down from 21.7% last year. Capital Expenditures: $11 million in the first quarter of 2025. Shareholder Returns: $51 million returned, with $36.6 million in share repurchases and $14.8 million in cash dividends. Tariff Impact: Expected gross impact of approximately $75 million for 2025.

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Release Date: May 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Acushnet Holdings Corp (NYSE:GOLF) reported a 1% increase in worldwide net sales, reaching $703 million for the first quarter of 2025. The golf equipment segment saw a net sales increase of almost 4%, driven by successful launches of new Pro V1 and Pro V1X golf ball models. Titleist gear sales grew by almost 4% in the quarter, with significant gains in the EMEA and Japan markets. The company has a diverse and flexible supply chain, which helps mitigate the impact of tariffs and supports operational flexibility. Acushnet Holdings Corp (NYSE:GOLF) returned approximately $51 million to shareholders through share repurchases and cash dividends in the first quarter of 2025.

Negative Points

Adjusted EBITDA decreased by $15 million due to increased investments in the equipment segment. FootJoy sales declined by 5% in the quarter, attributed to lower closeout footwear sales and product line rationalization. Net sales in Korea and Japan declined, primarily due to lower sales in the FootJoy golf wear segment and Titleist apparel. The company faces significant tariff exposure, with an estimated gross impact of $75 million in 2025, primarily due to China import tariffs. Gross profit decreased by $5 million compared to the first quarter of 2024, mainly due to higher manufacturing costs and lower sales in certain segments.

Q & A Highlights

Q: Is the decision to pause guidance driven by changes in consumer demand or customer ordering patterns? A: David Maher, President and CEO, explained that the decision to pause guidance is not due to changes in consumer demand but rather a typical practice at this time of year. The company is cautious due to tariff uncertainties but remains positive about consumer behavior and the structural health of the industry.

Story Continues

Q: What are the mitigating actions for the tariff impact, and when will pricing decisions be made? A: Sean Sullivan, CFO, stated that pricing is a last resort. The company is focusing on redirecting sourcing activities to markets with lower tariff rates and negotiating with suppliers for cost-sharing. They plan to source clubs in the U.S. from non-China territories and are exploring alternative sourcing for apparel.

Q: What would the $75 million tariff impact look like if China's tariff rate was reduced to 50%? A: Sean Sullivan noted that if China's tariff rate were reduced to 50%, the impact would be significantly less, potentially reducing the $75 million impact by about two-thirds, as the majority of the tariff impact is related to China.

Q: Can you elaborate on the improvement in the Asian market, particularly in apparel in Korea and Japan? A: David Maher mentioned that after a slow start due to weather, conditions improved in March and April. The company is seeing resilience in rounds of play and positive trends in equipment and gear, although apparel remains under pressure due to market corrections.

Q: How do you plan to diversify away from China, and what is the long-term outlook for tariff mitigation? A: David Maher explained that the company plans to move sourcing for U.S. markets away from China to Vietnam and Taiwan. While some components will still be sourced from China for non-U.S. markets, the goal is to mitigate 100% of the tariff impact by 2026, taking a measured long-term approach.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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