Acushnet's Market Cap Hits $4 Billion
Acushnet reported a strong quarter last week - a positive for golf.
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Hey Golfers -
Acushnet shares rose 5% after they reported strong earnings last Thursday morning. I dove into the earnings slide deck and transcript over the weekend; let’s break it down.
As a refresher, Acushnet owns some of golf’s most popular brands.
Titleist
Footjoy
Vokey Design
Scotty Cameron
Pinnacle
KJUS
Acushnet Market Cap:
November 2019: $2.3 billion
November 2020: $2.7 billion
November 2021: $4.2 billion
Acushnet ($GOLF) Stock Price:
November 2019: $29.47
November 2020: $39.05
November 2021: $57.43
Acushnet continued to see staggering results in the third quarter.
Net Sales: $521.6 million (up 8% vs. 2020)
Adjusted EBITDA: $70.3 million (down 29.1% vs. 2020)
Titleist Golf Balls: $167.2 million (down 2.7% vs. 2020)
Titleist Golf Clubs: $135.6 million (up 11.5% vs. 2020)
Titleist Golf Gear: $46.6 million (up 4.1% vs. 2020)
Footjoy Golf Wear: $137.9 million (up 17.6% vs. 2020)
Titleist Golf Balls made up a whopping 32% of Acushnet’s third quarter revenue. Golf Balls were down 2.7% due to limited golf ball production and raw material shortages. Analyst on the earnings call pressed for more information regarding supply chain disruption. In summation, Acushnet expects the golf ball supply chain to be tight well into 2022.
Acushnet's gross profit for the third quarter was $269 million, a 7% increase versus 2020. The growth is driven by higher sales volumes and higher average selling prices, primarily in Titleist Golf Clubs and Footjoy Golf Wear.
Acushnet Year-To-Date financial results are impressive.
Net Sales: $1.72 billion (up 45% vs. 2020)
Adjusted EBITDA: $333.3 million (up 80% vs. 2020)
Titleist Golf Balls: $543.1 million (up 36.6% vs. 2020)
Titleist Golf Clubs: $444.3 million (up 51.5% vs. 2020)
Titleist Golf Gear: $164.7 million (up 32.9% vs. 2020)
Footjoy Golf Wear: $462 million (up 42% vs. 2020)
The financial figures noted above all compare results to 2020. How do they compare to 2019 pre-pandemic numbers? Acushnet breaks that down for us, incredibly impressive.
Acushnet Year-To-Date Net Sales by Region:
United States: $906.6 million
Korea: $251.8 million
EMEA: $246.9 million
Japan: $149.9 million
Amazingly, Korea is the overall number two market share region for Acushnet, with a population of 51 million people. If we were to pro-rate Korea’s market size against the United States population of 330 million, Korea would be a significantly larger market by revenue.
A couple of items to keep our eye on in heading into 2022.
Supply chain disruption
Increased freight costs
As you can imagine, the supply chain was a hot topic on the earnings call. Acushnet CEO, David Maher, stated the words six times in his opening statement Thursday morning. While Acushnet seems confident in its proactive approach to managing its supply chain, sporadic issues may arise in 2022. Regarding the fourth quarter, the biggest constraint will be golf balls due to raw materials and manufacturing changeover.
Freight was discussed heavily during the earnings call, and Acushnet expects to take a $9 million hit in the fourth quarter versus the fourth quarter of 2020.
David Maher went on to state the below during the earnings call.
And while we are confident in our team's ability to proactively manage supply chain complexities, we anticipate that the current environment of raw material shortages, disrupted production schedules, longer component lead times and increased freight costs will continue for the foreseeable future.
How does Acushnet’s market cap stack up against its competitors?
Callaway: $5.5 billion
TaylorMade: $2 billion
Drive Shack and Callaway report earnings this week; I am eager to see their results. Callaway has significantly diversified their portfolio with investments into Golf Entertainment over the last 12 months.
I am rooting for positive financial results across the board for all golf-related organizations - when everyone wins, we all win.
Have yourself a Monday, talk to you next week!
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