Prepared remarks
Hello, everyone. Thank you for joining us, and welcome to the Acushnet Company 2Q '26 Earnings Call. I will now hand the conference over to Cameron Vollmuth, Director of Investor Relations. Please go ahead.
Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp.'s Second Quarter 2026 Earnings Conference Call. Joining me this morning are David Maher, our President and Chief Executive Officer; and Sean Sullivan, our Chief Financial Officer. Before turning the call over to David, I would like to remind everyone that we will make forward-looking statements on the call today. These forward-looking statements are based on Acushnet's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. For a list of factors that could cause actual results to differ, please see today's press release, the slides that accompany our presentation and our filings with the U.S. Securities and Exchange Commission. Throughout this discussion, we will make reference to non-GAAP financial measures, including items such as net sales on a constant currency basis and adjusted EBITDA. Explanations of how and why we use these measures and reconciliations of these items to the most directly comparable GAAP measures can be found in the schedules in today's press release, the slides that accompany this presentation and in our filings with the U.S. Securities and Exchange Commission. Please also note that references throughout this presentation to year-on-year net sales increases and decreases are on a constant currency basis unless otherwise stated. As we feel this measurement best provides context as to the performance and trends of our business. And when referring to year-to-date results or comparisons, we are referring to the 6-month period ended June 30, 2026, and the comparable 6-month period in 2025. With that, I'll turn the call over to David.
Thanks, Cameron, and good morning, everyone. We are pleased to report on Acushnet's strong second quarter and first half results, highlight the investments we are making to strengthen the company for the future and outline the puts and takes within our second half outlook. For the second quarter, Acushnet delivered worldwide net sales of $820 million, a 14% increase over last year, driven by strength and momentum within Titleist Golf Equipment and steady gains from FootJoy and Golf Gear. This growth contributed to a 46% increase in adjusted EBITDA, which, while healthy on its own merits, also reflects the net benefit from tariff refunds. For the first half, Acushnet net sales of $1.57 billion are up 10% over last year with growth in all reportable segments and regions. Adjusted EBITDA of $353 million represents a 25% increase in the period. Fueling these results, the Acushnet team remains focused on the game's avid dedicated golfer and enthused about healthy industry fundamentals and growing participation. First half rounds of play are projected to be up low single digits with growth in the U.S., Japan and Korea, offset by modest declines in Europe, which comped against an outsized weather-related increase in 2025. And as Sean will note, we are making strategic investments in Acushnet's future with focus on golf ball manufacturing and golf club assembly capacity, enhanced customization and automation capabilities and our global technology platforms. Getting to our segment results, you see continued momentum in our Titleist Golf Equipment business, which grew 14% in the first half. Golf Club set the pace, up 43% in the quarter and 24% for the half, led by the successful launch of our new GTS line of metals. Noteworthy is the good work by our team to accelerate product development and production timelines to move this launch from Q3 into the seasonal peak of Q2. And while GTS is the headline within golf clubs, successful new Vokey SM11 wedges and Titleist irons also contributed to our growth in the first half. Titleist golf balls also posted a strong half with revenues up 6%, led by Pro V1 growth on top of the challenging comp against last year's launch volumes. On the PGA Tour, Titleist golf balls have 22 wins to date, 18 more than the nearest competitor as this pyramid of influence validation and success helped to fuel our golf ball momentum in the marketplace. And within the Titleist Golf Equipment segment, we continue to fuel our success and momentum with our strong commitment to fittings and value-added consumer connections across regions. The Acushnet's Golf Gear segment is also in good shape, growing 6% in the half, led by double-digit gains in Titleist gloves, bags and our Club Glove travel brand. And FootJoy delivered 3% growth in the quarter, led by strong footwear sales and is up 1% for the half. FJ's underlying fundamentals continue to strengthen with increased focus on premium performance franchises, Premier, HyperFlex and Pro SL, generating a favorable product mix shift within footwear and similar trends with FJ apparel, which are helping to offset softness in Japan and Korea. And finally, net sales of products not allocated to a reportable segment were up also with continued momentum and growth from shoes in the U.S. and GB&I. Now looking at our business by region on Slide 5. You see that all regions increased on a constant currency basis in the second quarter and first half. Acushnet's U.S. sales were up 15% in the quarter, driven by growth in Titleist Golf Equipment and the benefits from healthy rounds of play and strong engagement from our core dedicated golfer base. EMEA was up 12%, reflecting growth in Titleist Golf Equipment and golf gear. Japan was up 31%, driven by Titleist Golf Equipment, notably golf clubs and continued strength in golf balls. Korea was up 7% in the quarter, also driven by Golf Equipment and the accelerated GTS metals launch and double-digit footwear gains. And Rest of World was up 15% versus last year's second quarter, led by outsized growth in Australia, New Zealand, Southeast Asia and China. And now looking forward to the second half, Acushnet is well positioned for the peak summer playing season, and we point to the overall health of the golf industry and our core consumer as baselines for our outlook. It is worth noting that second half comps will be impacted by the timing shift associated with our GTS launch into Q2 and the upcoming transition within golf balls as we prepare and build inventories to support our 2027 Pro V1 launch. This club timing makes for a meaningful change to our typical club cadence, while the Pro V1 transition is anticipated to unfold similar to prior every other year launches. In summary, golf industry fundamentals are in good shape. Participation is durable and positive trending, and we are pleased with our momentum and new product pipelines as we look to the future. As always, we appreciate the commitment and good work of our associates and supportive partners as we work together to provide golfers with leading product and service experiences. Thanks for your interest this morning. I will now pass the call over to Sean.
Thank you, David. Good morning, everyone. We had a solid second quarter and first half to start 2026, driven by continued momentum in Titleist Golf Equipment, including the successful launch of our GTS drivers and fairways. Second quarter net sales were up 14% and adjusted EBITDA was $209 million, up $66 million from last year's second quarter. These results include IEEPA tariff refunds, which represented an approximately $38 million benefit to adjusted EBITDA, net of the impact on incentive compensation. For the first half of 2026, net sales increased 9.5% and adjusted EBITDA increased 25%. Excluding the net refund benefit, adjusted EBITDA increased 12% in the first half, ahead of our expectations of high single-digit growth in both net sales and EBITDA during the first half as second quarter GTS metal shipments were greater than anticipated. Gross profit in the second quarter of $446 million was up $92 million compared to 2025. The increase reflected the portion of the net IEEPA tariff refund recognized in gross profit as well as higher sales volumes and average selling prices in Titleist Golf Equipment, partially offset by approximately $11 million of incremental tariff expense in the quarter versus prior year. Second quarter gross margin of 54.4% was up 520 basis points, while first half gross margin was 50.9%, up 230 basis points versus prior year. Excluding the net tariff refund benefit, first half gross margin was 48.1%, down 50 basis points year-over-year. It's worth noting that the first half tariff expense was approximately $29 million more than the first half of 2025. SG&A expense of $246 million in the quarter increased $24 million from 2025 as we continue to invest in our fitting network, IT systems and A&P to support new product launches and future growth as well as recognizing higher incentive compensation expense related to tariff refunds. Interest expense of $12 million in the quarter was down $3 million due to a decrease in interest rates as well as interest income on tariff refunds, partially offset by an increase in borrowings. Our effective tax rate in Q2 was 23.6%, up from 19.9% last year, primarily driven by changes in our jurisdictional mix of earnings and a reduced income tax benefit related to the U.S. deduction on foreign-derived intangible income. Moving to our balance sheet and cash flow highlights. The strength in our balance sheet and cash flow supports the continued execution of our capital allocation strategy. Our focus remains on investing in the business to support long-term growth and returning capital to shareholders. Our net leverage ratio at the end of Q2 using average trailing net debt was slightly below 2x, lower than the first quarter level of 2.3x and our stated leverage target of 2.25x. Inventories were flat when compared to last year's second quarter, and we remain comfortable with our inventory quality and position. First half cash flow from operations increased $76 million from the first half of 2025, driven in part by tariff refunds received in Q2. Capital expenditures were $37 million in the first half of 2026, up $12 million from last year as we continue to invest strategically in additional golf ball manufacturing capacity and increased club assembly to support the sustained strength of demand for our products around the world. We still expect full year free cash flow to meaningfully improve year-over-year, converting at roughly 40% to 50% of adjusted EBITDA. Through June, we returned roughly $57 million to shareholders with $31 million in cash dividends and $26 million in share repurchases. Today, our Board of Directors declared a quarterly cash dividend of $0.255 per share payable on September 18 to shareholders of record on September 4, 2026. Moving to guidance. We are raising our full year outlook to reflect our solid first half results and the one-time benefit from the net IEEPA tariff refunds. We now expect full year sales to be in the range of $2.65 billion to $2.675 billion, up 4.1% at the midpoint. On a constant currency basis, we are expecting net sales to be up between 3.4% and 4.3%. This outlook reflects continued strength in our Titleist Golf Equipment segment, partially offset by softness in wearables, specifically in Asia. We now expect full year adjusted EBITDA to be $450 million to $470 million. This outlook includes a full-year net IEEPA tariff refund benefit of approximately $30 million. We continue to work on the implementation of our new cloud-based ERP system and still expect full year SG&A growth, excluding incremental ERP expenses to be generally in line with our sales growth projections for the year. As it relates to tariffs, we now expect approximately $54 million of tariff expense in 2026, which is $16 million lower than our original estimate of $70 million. As we discussed last quarter, we expect this benefit to be largely offset by higher product costs and freight costs, primarily driven by energy-related supplier cost increases, including synthetic rubber pricing in golf ball manufacturing and tungsten costs in golf clubs. Looking at the second half, our outlook reflects continued strength throughout our business. That being said, the timing impacts of the accelerated GTS metals launch, which shifted a meaningful amount of Titleist Golf Equipment sales and earnings into the first half, creates a more challenging comparison in the back half of the year. As a result, we expect second half net sales to be down low single digits and adjusted EBITDA to decline when compared to second half of 2025 with the impact more pronounced in the fourth quarter. Overall, we're pleased with our first half execution, the performance of the accelerated GTS metals launch and the position of the business heading into the back half of the year. We remain focused on supporting the dedicated golfer, investing for long-term growth and maintaining a disciplined capital allocation approach. With that, I'll now turn the call over to Cameron for Q&A.
Thanks, Sean. Ben, could we now open up the lines for questions?
Questions and answers
Your first question comes from the line of Simeon Gutman with Morgan Stanley.
My first question is: golf clubs grew $82 million in Q2 on a constant currency basis. I don't know if you mentioned this or are willing to quantify it, but how much of that is attributable to the timing of pulled-up launches? And how do you think about the rest of the business in that regard? My follow-up is related. I missed some of the prepared remarks, so hopefully this is not redundant. If we look, Q2 was much better on sales in the second half, and it seems like a Street modeling issue because you didn't help us understand exactly what that launch would look like. Can you talk about your plan and the sequencing for the year, second half versus first half? If there are any pluses or minuses, it sounds like mostly pluses and just a timing mismatch in how the Street modeled, but that's what I'm looking to clarify.
Yes, Simeon, it's Sean. We didn't quantify it. Again, we're just highlighting as we did on the last call, the impact. Obviously, very pleased with north of 40% growth in the quarter, certainly a little better than we expected in terms of timing. And as we look into the back half, hopefully, with the guide we've provided, you can understand that at least for clubs, we'll see continued performance in Q3, but the more pronounced comp on clubs will be in Q4, given the accelerated timing if you're comping against the '24 GT launch. Yes. Just to clarify, again, last quarter, given the early performance of the launch, we had guided everybody to the high single digits in terms of revenue growth. So obviously, it delivered better than that on the top line for the company. So again, the timing was slightly better than expected. As we look at the back half of the year, again, we feel very good about the full year outlook in terms of 4.1% at the midpoint, almost 4% constant currency and how that converts. So very pleased. Again, we gave you as much as we thought we could at the time on the first quarter call relative to first half. So to your point, it's just a timing shift where I think the Street consensus had more of a club number in Q3 than what ultimately delivered in Q2 for us. Hopefully, that's helpful.
Your next question comes from the line of Joe Altobello with Raymond James.
This is Mitch Ingles on for Joe Altobello. My first question is on the $38 million of net IEEPA tariff refunds in 2Q. You're guiding $30 million for the year. So can you help bridge us between those two figures?
Sure. Happy to, Mitch. It's just a function of our updated outlook. If we take the $460 million at the midpoint in terms of EBITDA, our incentive plans are tied to adjusted EBITDA. So based on the new outlook for the year, expensing the incremental incentive comp over the 9-month period. So the $38 million reflects what was booked in Q2. The remaining $8 million that nets us to $30 million will flow through in the second half. The good news is all of the tariff refunds were submitted. They've all been received. So I don't expect any incremental refunds in the back half of the year to be material at all. And again, that's a credit to the team in terms of our ability to submit quickly and receive those refunds on a timely basis. But more than you asked, but we will ratably book that incentive comp expense over the back half of the year, which causes the net down to $30 million.
Got it. That's helpful. And then my follow-up is on the GTS launch. How would you characterize the channel inventory today? Do you still say you like where they are right now?
Yes, I'll take that, Mitch. So it's a good opportunity for us to sort of lean into our custom fitting efforts. So much of what we do in golf clubs nowadays is through custom fitting. And so the idea of channel inventories, they tend to run pretty steady state. The larger question that we think about often is our ability to meet at-once custom demand, which is in good shape. I will say lead times are a little bit longer than our typical lead times, but I think that's just a function of demand. So where we are inventory-wise in the channels, we feel very good about it. And again, part two of that is our team is doing a nice job meeting at-once demand from our global fitters.
Next question, please.
Your next question comes from the line of Randy Konik with Jefferies.
I guess on the quality over quantity theme on FootJoy, continued improvement on ASPs. Just can you give us some perspective on kind of where we are with margins in that business, just kind of where they've kind of peaked out, where they troughed out, where we are today, kind of any opportunity to continue this quality theme of improving out-the-door selling price and just managing the inventories better and better to provide a more profitable segment going forward as you've done in the last few quarters. Just curious on where we are there. And then we all know that the United States is super strong. I think I saw in the release that Korea was slightly positive. I think that area of the world had been down previously. So can you just give us a refresher on international markets, just what you see out there and what you see ahead?
Yes, Randy, maybe Sean and I will come at this two ways. First off, my comment is largely about a favorable mix shift toward premium performance, both in footwear and apparel. Fewer closeouts and an overall more premium mix within the segment are delivering healthy margin trends, with the caveat of tariffs. If you look at our business and what was hit the hardest, it would clearly be FootJoy. That's the overall theme: the structure is improving, and it is. We've got a bit of a headwind related to tariffs, but the team is doing a nice job working through that. Again, if there's a common theme within FootJoy, it's that we're seeing a continued trend and shift toward the more premium end of the line.
Yes. And just, Randy, to add to that, and you'll see it when we file the 10-Q. On a reported basis, FootJoy's operating margin improved year-over-year by, I think, 100 basis points in the first half. If you normalize for the refunds and the net tariff refund, I think it actually improved by 170 basis points. So certainly pleased with the operating income margin profile of FootJoy and its improvement.
That's great. And then we all know that the United States is super strong. I think I saw in the release that Korea was slightly positive. I think that area of the world had been down previously. So can you just give us a refresher on international markets, just what you see out there and what you see ahead?
Yes. So I would say, Korea, Japan, first off, starting with rounds of play, total rounds are up in those markets, which is obviously a positive. The theme we're seeing in '26 mirrors largely what we've seen in the last year or two. In our case, balls and clubs, the equipment segment has done quite well, where we've seen challenges are wearables, apparel, footwear and also gear. So it's a little bit of a tale of two markets in the sense that equipment, strong, healthy, growing, and we've seen some challenges across the wearables line. That's played out last year that continues to play out this year. And just by way of calling out Korea, Korea has historically had an outsized apparel market. It's one of the largest apparel markets in the world. So when it rode up, it was a great thing, and it's been correcting for the last year or so. Moving around the board, Europe and for us, you may recall a year ago, rounds of play were up dramatically in the first half and for the year. They had a very mild spring, got off to a fast start. So Europe had a very strong year last year. Rounds are down across the U.K. and the Mainland. But again, net-net, up over its normalized run rate. That said, we're pleased with our business in the region. You saw the numbers and healthy growth across segments but certainly affected by the accelerated driver launch. So yes, we're pleased with business around the world, rounds of play being a key proxy for just the health and state of the game, and we continue to confront and navigate softness in wearables across Japan and Korea.
Operator, next question, please.
Your next question comes from the line of Gregory Miller with Truist Securities.
First question, I'd like to ask you about material costs and how they've trended relative to your prior expectations. My second question, I wanted to ask for an update in terms of your CapEx spend as it relates to the plant utilization, given that your ball plants are running at very high capacity levels at this point. I'm just curious if you could provide us the latest in terms of your progress on that front.
They've moderated a bit, Greg. I think in terms of synthetic rubber, it's still slightly volatile given the oil markets. The cost of tungsten has moderated slightly compared with where it was about 90 days ago. We continue to see slightly elevated distribution freight both inbound and outbound. We're continuing to monitor and manage supply as best we can given the macro environment. So it's marginally better than about 90 days ago, but there's still a lot of uncertainty. You're right — we are running near full capacity in our plants. We've been adding capacity over the past four to five years, notably in cast urethane and by converting lines to more cast urethane capacity. We feel good about the work we've done in the last four or five years that has allowed us to deliver the results we're seeing today. Over the next year or two we expect continued expansion mainly within cast urethane at both our Massachusetts and Thailand ball plants. So I don't see capacity as a constraint today, and we're optimistic about the progress. I will add that it takes a while: when you decide to add capacity, it can take 12 to 18 months to get new lines up and running from a machinery standpoint. We're well along on Wave 1 and currently in flight on Wave 2 as we manage and adjust capacity with a shift toward more cast urethane, which for us is the broader Pro V1 lines.
Operator, next question, please.
Your next question comes from the line of Matthew Boss with JPMorgan.
So David, could you speak to larger picture health of the golf industry versus company-specific execution? Meaning on the 20% growth in total Golf Equipment, if there's a way to elaborate on underlying demand and reception to the GTS metals launches and performance on the ball side relative to initial plan, I think that, that would be helpful just to pull out any launch timing benefit. And then secondly, any changes at all to your underlying plan in the back half across segments, again, outside of any launch timing shifts?
So Matt, here we go. I’ll start with a high-level view of the game. Rounds of play are up low single digits, about 4% in the U.S., which is by far our largest market. A couple of call-outs I found interesting: the National Golf Foundation divides the country into eight regions and every region is up year-to-date, which is unusual because typically one region is affected by an outlier weather pattern. I think that speaks to the structural health of the game. They also track public and private access; public play, which is about 75% of total rounds in the U.S., is up at a greater rate than private play, another sign of broad-based health. We also pay close attention to the cost of public play, which varies widely but is up about 4% year-to-date. The NGF shows it at about $47 per round, so while prices are higher, golf remains affordable. That’s a U.S.-centric, high-level comment: the game is healthy. Turning to our business, I’m very pleased on many fronts. The highlights are in the equipment segment. Any time we can grow our ball business in the year following a Pro V1 launch, that’s positive, and this year ball sales are up 6%. I’m proud of the team for moving a launch from Q3 into Q2. On the surface that sounds simple, but it is anything but, because it affects product development timelines, supply chains, assembly, and so on, and the team did a really nice job. So we’re very pleased with balls and with the club launch and the early response. Separately, our wearables business around the world—FootJoy, Titleist apparel in Asia, shoes globally—and our gear business are steady, with some pockets of softness I mentioned. So at a high level, we’re particularly pleased with the strength and early success of balls and clubs in the first half of the year. For the back half of the year, Sean called out what we think is the outlier, and we want to be prescriptive to help with modeling. Balls, FootJoy, and gear should be fairly similar to last year in terms of modeling and growth. The outlier for us in the second half is clubs, which reflects that we moved a lot of volume that would have been in Q3 and Q4 of last year into Q2 of this year. I realize that was a lot of information. Any follow-ups to that? Did I address your question, Matt?
Yes, you did. The only follow-up is just outside of any timing launches, if we're looking at that Golf Equipment segment in the back half of the year. Just wanted to make sure there wasn't anything outside of launch timing that's changed in your plan.
No, Matt, it's largely as we described. It's a shift from Q3 into Q2 for the club business. Everything else is as expected.
There are no further questions at this time. I will now turn the call back to David Maher for closing remarks.
Thanks, everybody. As always, we appreciate your interest in Acushnet and look forward to following up in following the third quarter. Have a great rest of summer.
This concludes today's call. Thank you for attending. You may now disconnect.