Supply-chain headwinds barely slow Acushnet sales ... yet

Titleist and FootJoy lead company to a strong Q3, easily exceeding expectations heading into a Q4 that could be flat

Titleist — Acushnet Earning Report
Titleist club sales were up more than 12 percent in Q3.

Acushnet Golf (NYSE: GOLF) released its earnings report Thursday, announcing double-digit sales gains in Titleist clubs (12.3%) and FootJoy golfwear (18%) in the third quarter. Titleist golf balls was the only category in the brand portfolio that was down (-1.7%) for the quarter.

This is notable because Q3 accounts for peak golf season (July-September) in most of the Northern Hemisphere when rounds played is highest during the summer months. Golf ball sales historically correlate with the industry’s rounds played. Even with headwinds for golf balls, clubs and soft goods led the way in Q3, driving company earnings over 300%, while EPS beat expectations by 40% at $1.08 per share. Over the last four quarters, the company has surpassed consensus EPS estimates four times.

At market’s close on Thursday, the stock price was up 0.92%

Year-to-date net sales and profits, though, continue to exceed even the highest expectations during the game of golf’s golden years of COVID. Acushnet’s USA net sales are up 45.5%, led by golf balls with the latest generation Pro V1 franchise launch back in January; Titleist clubs (+55.1%) with the new 2021 iron introduction; Titleist gear (+37%); and FootJoy (+47%). 

Nearly every category is up due to both increased sales volumes, but also because average selling prices are on the rise. Select opportunities are being determined on price increases especially syncing product launches with technology and performance enhancements in lines such as clubs, golf bags and golf gloves. As compared to 2019, all categories are seeing solid sales gains of 31.6% and adjusted EBITDA of 70%. Worldwide, all major regions were up 30% to 50% YTD as Japan led the way at 50% revenue increases.

Looking forward, Acushnet is not expecting any quick fixes in the supply-chain challenges on a number of fronts. And instead of looking back, the brands are shifting much of their production to the new products being launched in early 2022. This may cause Acushnet’s Q4 2021 estimates to be roughly flat, especially due to the supply chain constraints even though demand remains high.

The brand is anticipating channel inventories to remain tight well into 2022, especially in golf balls where all the golf ball manufacturers are battling for available raw material supplies, according to Tom Pacheco, Acushnet’s CFO.

The company expects to have enough product in the market to meet consumer demand next year, but retail inventories are assumed to be lean in every channel. The brand is bullish on the game with busy golf facilities, rounds up 18% versus pre-COVID 2019, this year’s favorable weather along with avid, latent and new golfers all playing and spending more.