Acushnet Holdings Corp
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
GOLF$80.74-3.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001672013-24-000045
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001672013-24-000057
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 113 previous paragraphs and 118 current paragraphs.
62 unchanged; 40 reworded; 16 added; 9 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
We currently have the following reportable segments: (i) Titleist golf balls; (ii) Titleist golf clubs; (iii) Titleist golf gear; and (iv) FootJoy golf wear. In the fourth quarter of 2024, the Chief Operating Decision Maker (“CODM”) changed how they will evaluate the Company’s performance and allocate resources as a result of ongoing strategic convergence between the golf ball and golf club businesses. Concurrently, we updated our internal reporting, including the information provided to the CODM and as such, expect to update our reportable segments in our annual report on Form 10-K for the period ending December 31, 2024. Following these changes, we will have three reportable segments: (i) Titleist golf equipment, which will include the previous Titleist golf balls and Titleist golf clubs reportable segments, (ii) Golf gear and (iii) FootJoy golf wear. Our activities that do not meet the criteria to be considered a reportable segment will continue to be reported within Other.
Current report
Segment operating income (loss) by reportable segment is summarized as follows:
Current report
*Percentage change not meaningful
Current report
Net sales in our Titleist golf balls segment decreased 1.0%, or 0.8% on a constant currency basis, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to lower sales volumes of our performance models.
Current report
Operating income in our Titleist golf balls segment decreased $12.6 million, or 28.8%, compared to the prior year period. The decrease in operating income was primarily due to higher operating expenses of $10.3 million and a decrease of $2.3 million in gross profit. The decrease in gross profit was driven by the lower sales volumes discussed previously and unfavorable manufacturing overhead absorption. Higher operating expenses were the result of increases of $3.8 million, $2.9 million, $2.2 million and $1.3 million in administrative expense, selling expense, advertising and promotional expenses, and research and development expenses, respectively.
Current report
Operating income in our Titleist golf clubs segment increased $13.4 million, or 36.7% compared to the prior year period. The increase in operating income primarily resulted from an increase of $22.9 million in gross profit, partially offset by higher operating expenses of $9.5 million. The increase in gross profit was primarily driven by the higher sales volumes and favorable product mix discussed previously. Higher operating expenses were primarily a result of increases of $5.2 million, $1.7 million, $1.5 million and $1.2 million in selling expense, administrative expense, advertising and promotional expenses, and research and development expenses, respectively.
Current report
Net sales in our Titleist golf gear segment increased 8.2%, or 8.8% on a constant currency basis, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by higher sales volumes in travel and golf bags product categories.
Current report
Operating income in our Titleist golf gear segment increased $3.4 million compared to the prior year period, largely as a result of an increase of $5.2 million in gross profit primarily driven by the higher sales volumes and lower cost of customization discussed previously. An increase in operating expenses of $1.8 million partially offset the increase in gross profit.
Current report
Net sales in our FootJoy golf wear segment decreased 2.6%, or 2.3% on a constant currency basis, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was largely due to lower sales volumes, mainly in footwear and apparel, partially offset by higher average selling prices across all product categories.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
Net Sales
Current report
Research and Development
Current report
Research and development expenses increased $4.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily as a result of increases in employee-related expenses and additional costs to support product introductions.
Current report
Operating income in our Titleist golf balls segment increased $2.7 million, or 2.1% compared to the prior year period. The increase in operating income resulted from higher gross profit of $19.0 million, partially offset by higher operating expenses of $16.6 million. The increase in gross profit was primarily driven by the higher sales volumes and lower manufacturing costs discussed previously. Higher operating expenses were primarily a result of increases of $7.0 million, $6.2 million, $2.2 million and $1.2 million in administrative expense, selling expense, research and development expenses, and advertising and promotional expenses, respectively.
Current report
Operating income in our Titleist golf clubs segment increased $6.2 million, or 5.2% compared to the prior year period. The increase in operating income resulted from higher gross profit of $25.3 million, partially offset by higher operating expenses of $19.1 million. The increase in gross profit was primarily due to the higher sales volumes discussed previously. Higher operating expenses were primarily a result of increases of $9.4 million, $5.5 million, $2.5 million and $1.6 million in selling expense, advertising and promotional expenses, administrative expense, and research and development expenses, respectively.
Current report
During the nine months ended September 30, 2024, we repurchased 2,215,313 shares of common stock at an average price of $64.47 for an aggregate of $142.8 million. Included in this amount were 587,520 shares of our common stock repurchased from Magnus for an aggregate of $37.5 million, in satisfaction of our obligations pursuant to the March 2024 Agreement.
Removed paragraphs (9)
Previous report
Net sales in our Titleist golf balls segment increased 4.2%, or 5.3% on a constant currency basis, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily driven by higher sales volumes of Pro V1 and Pro V1x, and our latest generation AVX golf balls launched in the first quarter of 2024.
Previous report
Operating income in our Titleist golf balls segment increased $11.8 million, or 24.0%, compared to the prior year period. The increase in operating income was primarily due to an increase of $13.0 million in gross profit, partially offset by higher operating expenses of $1.2 million. The increase in gross profit was driven by the higher sales volumes discussed previously and lower manufacturing costs. Higher operating expenses were primarily the result of an increase of $2.1 million in administrative expenses, largely offset by a decrease of $1.8 million in advertising and promotional expenses primarily due to the timing of promotional expenses.
Previous report
Operating income in our Titleist golf clubs segment decreased $16.3 million, or 39.4% compared to the prior year period. The decrease in operating income primarily resulted from a decrease of $12.9 million in gross profit and higher operating expenses of $3.4 million. The decrease in gross profit was primarily driven by the lower sales volumes discussed previously and repositioning of products in their second year of a two-year product life cycle. Higher operating expenses were primarily a result of increases of $2.0 million and $1.3 million in advertising and promotional, and selling expenses, respectively, largely due to professional tour and new product launch expenses.
Previous report
Net sales in our Titleist golf gear segment decreased 1.4%, and were flat on a constant currency basis, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 as increased sales volumes in travel product categories and higher average selling prices across all product categories were offset by lower sales volumes in golf bags.
Previous report
Operating income in our Titleist golf gear segment increased $0.2 million, or 1.5% compared to the prior year period. The increase in operating income primarily resulted from an increase of $2.9 million in gross profit, partially offset by higher operating expenses of $2.7 million. The increase in gross profit was primarily due to higher average selling prices. Higher operating expenses were primarily a result of an increase of $1.9 million in selling primarily due to higher distribution expense.
Previous report
Net sales in our FootJoy golf wear segment decreased 0.6%, or increased 0.7% on a constant currency basis, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The increase in constant currency was largely due to higher net sales in apparel, partially offset by lower net sales in footwear.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
Operating income in our Titleist golf balls segment increased $15.4 million, or 17.5% compared to the prior year period. The increase in operating income resulted from higher gross profit of $21.3 million, partially offset by higher operating expenses of $6.3 million. The increase in gross profit was primarily driven by the higher sales volumes discussed previously and lower manufacturing costs. Higher operating expenses were primarily a result of increases of $3.3 million and $3.2 million in selling expense and administrative expenses, respectively.
Previous report
Operating income in our Titleist golf clubs segment decreased $7.2 million, or 8.8% compared to the prior year period. The decrease in operating income resulted from higher operating expenses of $9.6 million partially offset by higher gross profit of $2.4 million. The increase in gross profit was primarily due to the higher sales volumes discussed previously, partially offset by repositioning of products in their second year of a two-year product life cycle. Higher operating expenses were primarily a result of increases of $4.2 million and $4.0 million in selling expense and advertising and promotional expenses, respectively.
Reworded paragraphs (40)
Previous wording
Our net sales are diversified by both product category and mix, as well as geography. Our product categories include golf balls, golf clubs, wedges and putters, golf shoes, golf gloves, golf gear and golf outerwear and apparel. Our product portfolio contains a favorable mix of consumable products, which we consider to be golf balls and golf gloves, and more durable products, which we consider to be golf clubs, golf shoes, golf gear and golf outerwear and apparel. Our net sales are also diversified by geography with a substantial majority of our net sales generated in five countries: the United States, Japan, Korea, the United Kingdom and Canada. We have the following reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear.
Current wording
Our net sales are diversified by both product category and mix, as well as geography. Our product categories include golf balls, golf clubs, wedges and putters, golf shoes, golf gloves, golf gear and golf outerwear and apparel. Our product portfolio contains a favorable mix of consumable products, which we consider to be golf balls and golf gloves, and more durable products, which we consider to be golf clubs, golf shoes, golf gear and golf outerwear and apparel. Our net sales are also diversified by geography with a substantial majority of our net sales generated in five countries: the United States, Japan, Korea, the United Kingdom and Canada.
Previous wording
Since a significant percentage of our net sales are generated outside of the United States, we use net sales on a constant currency basis to evaluate the sales performance of our business in period over period comparisons and for forecasting our business going forward. Constant currency information allows us to estimate what our sales performance would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency net sales and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. This constant currency information should not be considered in isolation or as a substitute for any measure derived in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our presentation of constant currency information may not be consistent with the manner in which similar measures are derived or used by other companies.
Current wording
Since a significant percentage of our net sales are generated outside of the United States, we use net sales on a constant currency basis to evaluate the sales performance of our business in period over period comparisons and to forecast our business going forward. Constant currency information allows us to estimate what our sales performance would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency net sales and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. This constant currency information should not be considered in isolation or as a substitute for any measure derived in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our presentation of constant currency information may not be consistent with the manner in which similar measures are derived or used by other companies.
Previous wording
Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in our credit agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income (loss) relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to net income (loss) attributable to Acushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income attributable to Acushnet Holdings Corp., see “—Results of Operations” below.
Current wording
We primarily use Adjusted EBITDA on a consolidated basis to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding the pricing of our products, go-to-market execution and costs to incur across our business. We present Adjusted EBITDA as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. We define Adjusted EBITDA in a manner consistent with the term “Consolidated EBITDA” as it is defined in our credit agreement. Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in our credit agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income (loss) relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to net income (loss) attributable to Acushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income attributable to Acushnet Holdings Corp., see “—Results of Operations” below.
Previous wording
(1) For the six months ended June 30, 2024, relates to restructuring costs associated with the closure of certain production lines at our footwear manufacturing joint venture.
Current wording
(1) For the nine months ended September 30, 2024, includes $7.0 million related to restructuring costs associated with the closure of certain production lines at our footwear manufacturing joint venture.
Previous wording
(2) For the three and six months ended June 30, 2024, includes $2.8 million and $5.9 million, respectively, related to the optimization of our information technology systems.
Current wording
(2) For the three and nine months ended September 30, 2024, includes $2.1 million and $8.0 million, respectively, related to the optimization of our information technology systems.
Previous wording
(3) For the three and six months ended June 30, 2024 and 2023, includes costs associated with the optimization of our distribution and custom fulfillment capabilities.
Current wording
(3) For the three and nine months ended September 30, 2024 and 2023, includes costs associated with the optimization of our distribution and custom fulfillment capabilities.
Previous wording
For the three months ended June 30, 2024, net sales decreased 0.8%, or increased 0.6% on a constant currency basis, as compared to the three months ended June 30, 2023. The increase on a constant currency basis was primarily due to higher sales volumes in Titleist golf balls, partially offset by lower sales volumes in Titleist golf clubs.
Current wording
For the three months ended September 30, 2024, net sales increased 4.6%, or 5.0% on a constant currency basis, as compared to the three months ended September 30, 2023, primarily due to higher sales volumes in Titleist golf clubs.
Previous wording
The increase in net sales in the United States was primarily the result of increases in Titleist golf balls of $13.4 million and in FootJoy golf wear of $4.0 million, partially offset by a decrease in Titleist golf clubs of $10.5 million. The increase in Titleist golf balls was primarily driven by higher sales volumes of Pro V1 and Pro V1x, and our latest generation AVX golf balls. The increase in FootJoy golf wear was primarily a result of higher average selling prices in apparel and higher net sales in footwear. The decrease in Titleist golf clubs was primarily due to lower sales volumes of drivers, fairways, hybrids and Super Select putters, which were all in their second model year, partially offset by higher sales volumes of our T-Series irons, as well as SM10 wedges and Phantom putters.
Current wording
The increase in net sales in the United States was primarily the result of increases in Titleist golf clubs of $19.8 million and Titleist golf gear of $3.3 million. The increase in Titleist golf clubs was primarily due to higher sales volumes of our newly introduced GT drivers and fairways, partially offset by lower sales volumes of our T-Series irons. The increase in Titleist golf gear was primarily due to higher sales volumes in travel and golf bags product categories. FootJoy golf wear net sales were flat as lower sales volumes in apparel were largely offset by higher average selling prices in footwear.
Previous wording
Net sales in regions outside the United States decreased 4.4%, or 1.0% on a constant currency basis primarily, due to lower net sales in Rest of World partially offset by increases in Japan, EMEA and Korea. In Rest of World, the decrease in net sales was primarily due to lower net sales in FootJoy golf wear, primarily footwear.
Current wording
Net sales in regions outside the United States increased 2.2%, or 3.2% on a constant currency basis, due to higher net sales in Japan, Korea and Rest of World, partially offset by lower net sales in EMEA. In Japan, the increase was primarily due to higher net sales in Titleist golf clubs, partially offset by lower net sales in FootJoy golf wear, primarily footwear. In Korea, the increase was primarily due to higher net sales in Titleist golf clubs and Titleist golf gear, partially offset by lower net sales in Titleist golf balls. In Rest of World, the increase was primarily due to higher net sales of Titleist golf clubs partially offset by lower net sales in FootJoy golf wear, primarily footwear. In EMEA, the decrease in net sales was primarily due to lower net sales of products that are not allocated to one of our four reportable segments, partially offset by higher net sales in Titleist golf balls and Titleist golf clubs.
Previous wording
Gross profit increased $3.3 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Gross margin increased to 54.4% for the three months ended June 30, 2024 compared to 53.5% for the three months ended June 30, 2023. The increase in gross profit primarily resulted from an increase of $13.0 million in Titleist golf balls primarily due to the sales volume increase discussed previously, as well as lower manufacturing costs, an increase of $2.9 million in Titleist golf gear primarily due to higher average selling prices and an increase of $1.8 million in FootJoy golf wear primarily due to a favorable shift in product mix. The increase in gross profit was partially offset by a decrease of $12.9 million in Titleist golf clubs primarily due to the sales volume decrease discussed previously and repositioning of products in their second year of a two-year product life cycle. The increase in gross margin was primarily due to lower manufacturing costs in Titleist golf balls, partially offset by the repositioning of second model year golf clubs as discussed previously.
Current wording
Gross profit increased $28.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Gross margin increased to 54.4% for the three months ended September 30, 2024 compared to 52.0% for the three months ended September 30, 2023. The increase in gross profit primarily resulted from an increase of $22.9 million in Titleist golf clubs, primarily due to the sales volume increase discussed previously; an increase of $5.2 million in Titleist golf gear, primarily due to the sales volume increase discussed previously, as well as lower cost of customization; and an increase of $3.0 million in FootJoy golf wear, primarily due to higher average selling prices. The increase in gross profit was partially offset by a decrease of $2.3 million in Titleist golf balls, primarily due to lower sales volumes of our performance models. The increase in gross margin was primarily due to higher sales volumes and favorable product mix in Titleist golf clubs.
Previous wording
Selling, general and administrative ("SG&A") expenses increased $4.1 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was primarily a result of increases of $3.0 million in administrative expense and $2.1 million in selling expense. The increase in administrative expense was primarily due to higher information technology-related expenses. The increase in selling expense was primarily due to higher distribution expense in the United States. Additionally, SG&A includes the favorable impact of changes in foreign currency exchange rates.
Current wording
Selling, general and administrative ("SG&A") expenses increased $22.7 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This increase was primarily a result of increases of $9.4 million in selling expense, $8.1 million in administrative expense and $3.4 million in advertising and promotional expenses. The increase in selling expense and administrative expense was primarily due to higher employee-related expenses. The increase in advertising and promotional expenses was primarily related to higher professional tour expenses and new product launches, largely in Titleist golf clubs. SG&A expenses also include a decrease in gains on foreign exchange forward contracts of $2.7 million, offset in part by a decrease of $0.9 million in foreign currency transaction losses.
Previous wording
R&D expenses increased $1.6 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily as a result of increases in employee-related expenses.
Current wording
Research and development expenses increased $2.7 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily as a result of increases in employee-related expenses and additional costs to support product introductions.
Previous wording
Interest expense, net increased $3.2 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 primarily due to an increase in borrowings.
Current wording
Interest expense, net increased $3.8 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in borrowings.
Previous wording
Income tax expense increased $0.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Our effective tax rate (“ETR”) was 23.2% for the three months ended June 30, 2024 compared to 21.8% for the three months ended June 30, 2023. The change in the ETR was primarily driven by changes in our jurisdictional mix of earnings.
Current wording
Income tax expense increased $1.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Our effective tax rate (“ETR”) was 19.3% for the three months ended September 30, 2024 compared to 16.5% for the three months ended September 30, 2023. The change in the ETR was primarily driven by changes in our jurisdictional mix of earnings.
Previous wording
Net sales in our Titleist golf clubs segment decreased 5.6%, or 4.1% on a constant currency basis, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was largely due lower sales volumes of drivers, fairways, hybrids and Super Select putters, which were all in their second model year, partially offset by higher sales volumes of our T-Series irons launched in the third quarter of 2023, as well as SM10 wedges and Phantom putters, each launched in the first quarter of 2024.
Current wording
Net sales in our Titleist golf clubs segment increased 18.2%, or 18.7% on a constant currency basis, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was largely driven by higher sales volumes of our newly introduced GT drivers and fairways launched in the third quarter of 2024, partially offset by lower sales volumes of our T-Series irons.
Previous wording
Operating income in our FootJoy golf wear segment increased $4.3 million, or 119.4% compared to the prior year period. The increase in operating income primarily resulted from an increase of $1.8 million in gross profit and lower operating expenses of $2.4 million. The increase in gross profit was primarily due to a favorable shift in product mix. Operating expenses decreased primarily as a result of a decrease of $3.0 million in selling expense, largely due to lower distribution expense.
Current wording
Operating income in our FootJoy golf wear segment increased $2.0 million, or 133.3% compared to the prior year period. The increase in operating income primarily resulted from an increase of $3.0 million in gross profit, partially offset by higher operating expenses of $1.1 million. The increase in gross profit was primarily due to higher average selling prices.
Previous wording
For the six months ended June 30, 2024 net sales increased 1.1%, or 2.3% on a constant currency basis, compared to the six months ended June 30, 2023. This increase was driven primarily by higher sales volumes in Titleist golf balls and Titleist golf clubs, partially offset by lower sales volumes in FootJoy golf wear. A decline in sales volumes of products that are not allocated to one of our four reportable segments also contributed to the change in net sales.
Current wording
For the nine months ended September 30, 2024, net sales increased 2.2%, or 3.1% on a constant currency basis, compared to the nine months ended September 30, 2023, primarily driven by higher sales volumes in Titleist golf clubs, Titleist golf balls and Titleist golf gear, partially offset by lower sales volumes in FootJoy golf wear. A decline in sales volumes of products that are not allocated to one of our four reportable segments also contributed to the change in net sales.
Previous wording
The increase in net sales in the United States was due to increases across all reportable segments, as a result of increases in Titleist golf balls of $32.1 million, Titleist golf clubs of $11.1 million, FootJoy golf wear of $5.5 million and Titleist golf gear of $5.5 million. The increase in Titleist golf balls was primarily driven by higher sales volumes of Pro V1 and Pro V1x and our latest generation AVX, Tour Soft and TruFeel models. The increase in Titleist golf clubs was primarily driven by higher sales volumes of our SM10 wedges and T-Series irons. The increase in FootJoy golf wear was primarily due to higher average selling prices in apparel. The increase in Titleist golf gear was primarily due to higher sales volumes in travel product categories.
Current wording
The increase in net sales in the United States was due to increases across all reportable segments as a result of increases in Titleist golf clubs of $30.9 million, Titleist golf balls of $30.5 million, Titleist golf gear of $8.8 million and FootJoy golf wear of $5.5 million. The increase in Titleist golf clubs was primarily driven by higher sales volumes of our SM10 wedges and newly introduced GT drivers and fairways, partially offset by lower sales volumes of hybrids which are in their second model year. The increase in Titleist golf balls was primarily driven by higher sales volumes of Pro V1 and Pro V1x. The increase in Titleist golf gear was primarily due to higher sales volumes in travel product categories. The increase in FootJoy golf wear was largely due to higher average selling prices across all product categories, primarily in apparel.
Previous wording
Net sales in regions outside the United States decreased 6.6%, or 3.9% on a constant currency basis. In Korea, the decrease was primarily due to lower net sales of products that are not allocated to one of our four reportable segments and lower net sales in FootJoy golf wear, primarily apparel, and Titleist golf gear. In Rest of World, the decrease was primarily due to lower net sales in FootJoy golf wear, primarily footwear and apparel. In EMEA, the decrease was primarily due to lower net sales in FootJoy golf wear, primarily footwear and apparel, and lower net sales of products that are not allocated to one of our four reportable segments, partially offset by an increase in Titleist golf clubs. In Japan, net sales decreased primarily due to lower net sales in FootJoy golf wear, primarily footwear, lower net sales of Titleist golf gear and lower net sales of products that are not allocated to one of our four reportable segments, partially offset by higher net sales in Titleist golf clubs.
Current wording
Net sales in regions outside the United States decreased 4.1%, or 1.9% on a constant currency basis, primarily due to lower net sales in Korea, EMEA and Rest of World. In Korea, the decrease was primarily due to lower net sales of products that are not allocated to one of our four reportable segments, lower net sales in FootJoy golf wear, primarily apparel, and lower net sales in Titleist golf balls, partially offset by higher net sales in Titleist golf clubs. In EMEA, the decrease was primarily due to lower net sales in FootJoy golf wear, primarily footwear and apparel, as well as lower net sales of products that are not allocated to one of our four reportable segments, partially offset by an increase in net sales in Titleist golf clubs. In Rest of World, the decrease was primarily due to lower net sales in FootJoy golf wear, primarily footwear and apparel, partially offset by higher net sales in Titleist golf clubs.
Previous wording
Gross profit increased $15.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Gross margin increased to 53.9% for the six months ended June 30, 2024 compared to 53.4% for the six months ended June 30, 2023. The increase in gross profit was primarily the result of increases in Titleist golf balls of $21.3 million, in Titleist golf gear of $3.8 million and in Titleist golf clubs of $2.4 million largely due to the sales volume changes discussed previously and lower manufacturing costs in Titleist golf balls. These increases were partially offset by a decrease in FootJoy golf wear of $5.3 million primarily due to the sales volume change discussed previously and unfavorable manufacturing overhead absorption. A decrease in gross profit of products not allocated to one of our four reportable segments also contributed to the change in gross profit. The increase in gross margin was primarily due to lower manufacturing costs in Titleist golf balls.
Current wording
Gross profit increased $44.4 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Gross margin increased to 54.0% for the nine months ended September 30, 2024 compared to 53.0% for the nine months ended September 30, 2023. The increase in gross profit was primarily the result of increases in Titleist golf clubs of $25.3 million, Titleist golf balls of $19.0 million and Titleist golf gear of $9.0 million, largely due to the sales volume changes discussed previously and lower manufacturing costs in Titleist golf balls. These increases were partially offset by a decrease in FootJoy golf wear of $2.2 million, primarily due to the sales volume change discussed previously and unfavorable manufacturing overhead absorption. A decrease in gross profit of products not allocated to one of our four reportable segments also contributed to the change in gross profit. The increase in gross margin was primarily driven by a favorable product mix shift and lower manufacturing costs in Titleist golf balls.
Previous wording
SG&A expenses increased $18.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily a result of increases of $4.9 million in administrative expense, $3.9 million in selling expense and $3.4 million in advertising and promotional expenses, and also includes $7.0 million of restructuring costs associated with our footwear manufacturing joint venture, as well as the favorable impact of changes in foreign currency exchange rates. Administrative expense increased primarily due to higher information technology-related expenses. The increase in selling expense was primarily due to higher employee-related expenses, partially offset by lower retail commission expense in Korea. The increase in advertising and promotional expenses was primarily related to higher professional tour expenses and new product launches.
Current wording
SG&A expenses increased $40.9 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. This increase was primarily due to an increase of $13.2 million in selling expense, an increase of $13.0 million in administrative expense, $7.0 million of restructuring costs related to our footwear manufacturing joint venture, as well as an increase of $6.9 million in advertising and promotional expenses and includes the favorable impact of changes in foreign currency exchange rates. The increase in selling expense was primarily due to higher employee-related expenses, partially offset by lower retail commission expense in Korea. Administrative expense increased primarily due to higher employee and information technology-related expenses. The increase in advertising and promotional expenses was primarily related to higher professional tour expenses and new product launches, largely in Titleist golf clubs.
Previous wording
Interest expense, net increased $6.4 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 primarily due to an increase in borrowings and interest rates.
Current wording
Interest expense, net increased $10.2 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 primarily due to an increase in borrowings and interest rates.
Previous wording
Income tax expense increased $3.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. Our ETR was 22.4% for the six months ended June 30, 2024 compared to 19.8% for the six months ended June 30, 2023. The change in ETR was primarily driven by changes in our jurisdictional mix of earnings.
Current wording
Income tax expense increased $5.1 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. Our ETR was 21.6% for the nine months ended September 30, 2024 compared to 19.0% for the nine months ended September 30, 2023. The change in ETR was primarily driven by changes in our jurisdictional mix of earnings.
Previous wording
Net sales in our Titleist golf balls segment increased 6.0%, or 7.1% on a constant currency basis, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was primarily driven by higher sales volumes of Pro V1 and Pro V1x, and our latest generation AVX, Tour Soft and TruFeel models launched in the first quarter of 2024.
Current wording
Net sales in our Titleist golf balls segment increased 3.8%, or 4.7% on a constant currency basis, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily driven by higher sales volumes of Pro V1 and Pro V1x, and our latest generation AVX, Tour Soft and TruFeel models launched in the first quarter of 2024.
Previous wording
Net sales in our Titleist golf clubs segment increased 3.4%, or 4.7% on a constant currency basis, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was largely due to higher sales volumes of our SM10 wedges launched in the first quarter of 2024 and T-Series irons launched in the third quarter of 2023. This increase was partially offset by lower sales volumes of drivers, hybrids and fairways, which were all in their second model year.
Current wording
Net sales in our Titleist golf clubs segment increased 8.3%, or 9.3% on a constant currency basis, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. The increase was largely due to higher sales volumes of our SM10 wedges launched in the first quarter of 2024 and our newly introduced GT drivers and fairways launched in the third quarter of 2024. This increase was partially offset by lower sales volumes of hybrids and irons.
Previous wording
Net sales in our Titleist golf gear segment increased 0.1%, or 1.2% on a constant currency basis, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase was driven by higher sales volumes in travel product categories and higher average selling prices across all product categories, partially offset by lower sales volumes in golf bags.
Current wording
Net sales in our Titleist golf gear segment increased 2.2%, or 3.2% on a constant currency basis, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, driven by higher sales volumes in travel product categories and higher average selling prices across all product categories, partially offset by lower sales volumes in golf bags.
Previous wording
Operating income in our Titleist golf gear segment decreased $1.9 million, or 7.3% compared to the prior year period. The decrease in operating income resulted from higher operating expenses of $5.4 million, partially offset by higher gross profit of $3.8 million. The increase in gross profit was largely due to the higher net sales discussed previously and lower cost of customization. Operating expenses increased primarily due to higher selling expense of $4.0 million primarily due to higher distribution expense and employee-related expenses.
Current wording
Operating income in our Titleist golf gear segment increased $1.6 million, or 6.0% compared to the prior year period. The increase in operating income resulted from higher gross profit of $9.0 million, partially offset by higher operating expenses of $7.2 million. The increase in gross profit was largely due to the higher net sales discussed previously and lower cost of customization. Operating expenses increased primarily due to higher selling expense of $4.8 million, mainly due to an increase in distribution expense, and higher administrative expense of $1.3 million.
Previous wording
Net sales in our FootJoy golf wear segment decreased 3.8%, or 2.9% on a constant currency basis, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The decrease was primarily due to lower sales volumes across all product categories and lower average selling prices in footwear, partially offset by higher average selling prices in apparel.
Current wording
Net sales in our FootJoy golf wear segment decreased 3.5%, or 2.8% on a constant currency basis, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to lower sales volumes across all product categories, partially offset by higher average selling prices in apparel.
Previous wording
Operating income in our FootJoy golf wear segment decreased $0.1 million, or 0.3% compared to the prior year period. The decrease in operating income resulted from lower gross profit of $5.3 million, largely offset by lower operating expenses of $5.2 million. Gross profit decreased primarily as a result of the sales volume decrease discussed previously and unfavorable manufacturing overhead absorption, partially offset by higher average selling prices in apparel. Lower operating expenses were primarily a result of a decrease of $6.0 million in selling expense, largely due to lower distribution expense and lower retail commission expense in Korea.
Current wording
Operating income in our FootJoy golf wear segment increased $1.9 million, or 5.8% compared to the prior year period. The increase in operating income resulted from lower operating expenses of $4.1 million, largely offset by lower gross profit of $2.2 million. Gross profit decreased primarily as a result of the sales volume decrease and unfavorable manufacturing overhead absorption discussed previously, partially offset by higher average selling prices in apparel. Lower operating expenses were primarily a result of decreases of $5.5 million and $1.1 million in selling expense and advertising and promotional expenses, respectively, partially offset by an increase of $2.3 million in administrative expense. The decrease in selling expense was largely due to lower distribution expense and lower retail commission expense in Korea.
Previous wording
As of June 30, 2024, we had $78.7 million of unrestricted cash and cash equivalents (including $12.3 million attributable to our FootJoy golf shoe variable interest entity). As of June 30, 2024, 96.4% of our total unrestricted cash and cash equivalents was held by subsidiaries in regions outside of the United States, including our FootJoy golf shoe variable interest entity. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost-effective basis. We are not aware of any restrictions on repatriation of these funds and, subject to foreign withholding taxes, those funds could be repatriated, if necessary. We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business.
Current wording
As of September 30, 2024, we had $97.3 million of unrestricted cash and cash equivalents (including $13.0 million attributable to our FootJoy golf shoe variable interest entity). As of September 30, 2024, 95.6% of our total unrestricted cash and cash equivalents was held by subsidiaries in regions outside of the United States, including our FootJoy golf shoe variable interest entity. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost-effective basis. We are not aware of any restrictions on repatriation of these funds and, subject to foreign withholding taxes, those funds could be repatriated, if necessary. We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business.
Previous wording
As of June 30, 2024, we had $565.8 million of availability under our multi-currency revolving credit facility after giving effect to $4.5 million of outstanding letters of credit. Additionally, we had $34.6 million of availability under certain local credit facilities of our subsidiaries.
Current wording
As of September 30, 2024, we had $586.7 million of availability under our multi-currency revolving credit facility after giving effect to $3.9 million of outstanding letters of credit. Additionally, we had $41.5 million of availability under certain local credit facilities of our subsidiaries.
Previous wording
During the six months ended June 30, 2024, we paid dividends on our common stock of $28.1 million to our shareholders. During the third quarter of 2024, our Board of Directors declared a dividend of $0.215 per share of common stock to shareholders of record as of September 6, 2024 and payable on September 20, 2024.
Current wording
During the nine months ended September 30, 2024, we paid dividends on our common stock of $41.3 million to our shareholders. During the fourth quarter of 2024, our Board of Directors declared a dividend of $0.215 per share of common stock to shareholders of record as of December 6, 2024 and payable on December 20, 2024.
Previous wording
As of June 30, 2024, our Board of Directors had authorized us to repurchase up to an aggregate of $1.0 billion of our issued and outstanding common stock. During the six months ended June 30, 2024, we repurchased 1,134,753 shares of common stock at an average price of $64.16 for an aggregate of $72.8 million.
Current wording
As of September 30, 2024, our Board of Directors had authorized us to repurchase up to an aggregate of $1.0 billion of our issued and outstanding common stock.
Previous wording
On June 14, 2024, we entered into a new agreement with Magnus to purchase from Magnus an equal amount of our common stock as we purchase on the open market over the period of time from July 1, 2024 through December 31, 2024, up to an aggregate of $62.5 million, at the same weighted average per share price.
Current wording
On March 14, 2024, we entered into an agreement with Magnus Holdings Co., Ltd. ("Magnus") to purchase from Magnus an equal amount of our common stock as we purchase on the open market over the period of time from April 1, 2024 through June 28, 2024, up to an aggregate of $37.5 million, at the same weighted average per share price (the "March 2024 Agreement").
Previous wording
On March 14, 2024, we entered into an agreement with Magnus Holdings Co., Ltd. ("Magnus"), a wholly-owned subsidiary of Fila Holdings Corp., to purchase from Magnus an equal amount of our common stock as we purchase on the open market over the period of time from April 1, 2024 through June 28, 2024, up to an aggregate of $37.5 million, at the same weighted average per share price (the "March 2024 Agreement"). In relation to this agreement, we recorded a liability of $37.5 million to purchase an additional 587,520 shares of common stock from Magnus as of June 30, 2024. As a result, on July 10, 2024, we purchased 587,520 shares of our common stock from Magnus for an aggregate of $37.5 million in satisfaction of our obligation under the March 2024 Agreement.
Current wording
On June 14, 2024, we entered into an agreement with Magnus to purchase from Magnus an equal amount of our common stock as we purchase on the open market over the period of time from July 1, 2024 through December 31, 2024, up to an aggregate of $62.5 million, at the same weighted average per share price (the "June 2024 Agreement"). In relation to this agreement, we recorded a liability of $32.5 million to purchase an additional 493,040 shares of common stock from Magnus as of September 30, 2024.
Previous wording
As of June 30, 2024, we had $302.2 million remaining under the current share repurchase authorization, including $100.0 million related to outstanding Magnus share repurchase agreements.
Current wording
As of September 30, 2024, we had $232.2 million remaining under the current share repurchase authorization, including $62.5 million related to the June 2024 Agreement.
Previous wording
We made $22.1 million of capital expenditures during the six months ended June 30, 2024. Capital expenditures for the full year are expected to be approximately $80.0 million, although the actual amount may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases. Capital expenditures generally relate to investments to support the manufacturing and distribution of products, our go-to-market activities and continued investments in information technology and facilities to support our global strategic initiatives.
Current wording
We made $42.5 million of capital expenditures during the nine months ended September 30, 2024. Capital expenditures for the full year are expected to be approximately $80.0 million, although the actual amount may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases. Capital expenditures generally relate to investments to support the manufacturing and distribution of products, our go-to-market activities and continued investments in information technology and facilities to support our global strategic initiatives.
Previous wording
The decrease in cash provided by operating activities was primarily driven by a decrease in net income and a decrease in deferred income tax expense, offset in part by an increase in working capital. At any specific point in time, working capital is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.
Current wording
The decrease in cash provided by operating activities was primarily driven by decreases in net income and deferred income tax expense, as well as changes in working capital. At any specific point in time, working capital is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.
Previous wording
The decrease in cash used in investing activities was primarily driven by cash paid for the acquisition of trademarks related to our gear business during the six months ended June 30, 2023, as well as a decrease in capital expenditures for the six months ended June 30, 2024.
Current wording
The decrease in cash used in investing activities was primarily driven by cash paid for the acquisition of trademarks related to our gear business during the nine months ended September 30, 2023.
Previous wording
The change in cash used in financing activities was primarily driven by a decrease in cash paid for purchases of common stock, offset by a decrease in net proceeds from borrowings and an increase in payments of employee restricted stock tax withholdings.
Current wording
The decrease in cash used in financing activities was primarily driven by a decrease in cash paid for purchases of our common stock, offset by an increase in payments of employee restricted stock tax withholdings.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
We primarily use Adjusted EBITDA on a consolidated basis to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go to market execution and costs to incur across our business. We present Adjusted EBITDA as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. We define Adjusted EBITDA in a manner consistent with the term “Consolidated EBITDA” as it is defined in our credit agreement.
Previous report — wording carried elsewhere
Segment operating income by reportable segment is summarized as follows: