Acushnet Holdings Corp.

Second Quarter and First Half 2020 Earnings Call August 5, 2020

Sondra Lennon

Vice President, FP&A and Investor Relations

DISCLAIMERS

FORWARD-LOOKING STATEMENTS

The forward-looking statements contained in this presentation are based on management's current expectations, including our current views with respect to the impact of the novel coronavirus ("COVID-19") on our operations and financial performance, and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. Important factors that could cause or contribute to such differences include: the duration and impact of the COVID-19 pandemic, which may precipitate or exacerbate one or more of the following risks and uncertainties; a reduction in the number of rounds of golf played or in the number of golf participants; unfavorable weather conditions may impact the number of playable days and rounds played in a given year; consumer spending habits and macroeconomic factors may affect the number of rounds of golf played and related spending on golf products; demographic factors may affect the number of golf participants and related spending on our products; a significant disruption in the operations of our manufacturing, assembly or distribution facilities; our ability to procure raw materials or components of our products; a disruption in the operations of our suppliers; the cost of raw materials and components; currency transaction and translation risk; our ability to successfully manage the frequent introduction of new products or satisfy changing consumer preferences, quality and regulatory standards; our reliance on technical innovation and high-quality products; changes to the Rules of Golf with respect to equipment; our ability to adequately enforce and protect our intellectual property rights; involvement in lawsuits to protect, defend or enforce our intellectual property rights; our ability to prevent infringement of intellectual property rights by others; changes to patent laws; intense competition and our ability to maintain a competitive advantage in each of our markets; limited opportunities for future growth in sales of certain of our products, including golf balls, golf shoes and golf gloves; our customers' financial condition, their levels of business activity and their ability to pay trade obligations; a decrease in corporate spending on our custom logo golf balls; our ability to maintain and further develop our sales channels; consolidation of retailers or concentration of retail market share; our ability to maintain and enhance our brands; seasonal fluctuations of our business; fluctuations of our business based on the timing of new product introductions; risks associated with doing business globally; compliance with laws, regulations and policies, including the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation, as well as federal, state and local policies and executive orders regarding the COVID-19 pandemic; our ability to secure professional golfers to endorse or use our products; negative publicity relating to us or the golfers who use our products or the golf industry in general; our ability to accurately forecast demand for our products; a disruption in the service or a significant increase in the cost, of our primary delivery and shipping services or a significant disruption at shipping ports; our ability to maintain our information systems to adequately perform their functions; cybersecurity risks; the ability of our eCommerce systems to function effectively; impairment of goodwill and identifiable intangible assets; our ability to attract and/or retain management and other key employees and hire qualified management, technical and manufacturing personnel; our ability to prohibit sales of our products by unauthorized retailers or distributors; our ability to grow our presence in existing international markets and expand into additional international markets; tax uncertainties, including potential changes in tax laws, unanticipated tax liabilities and limitations on utilization of tax attributes after any change of control; adequate levels of coverage of our insurance policies; product liability, warranty and recall claims; litigation and other regulatory proceedings; compliance with environmental, health and safety laws and regulations; our ability to secure additional capital at all or on terms acceptable to us and potential dilution of holders of our common stock; risks associated with acquisitions and investments; our estimates or judgments relating to our critical accounting estimates; terrorist activities and international political instability; occurrence of natural disasters or pandemic diseases, including the COVID-19 pandemic; our substantial leverage, ability to service our indebtedness, ability to incur more indebtedness and restrictions in the agreements governing our indebtedness; our use of derivative financial instruments; the ability of our controlling shareholder to control significant corporate activities, and that our controlling shareholder's interests may conflict with yours; our status as a controlled company; the market price of shares of our common stock; our ability to maintain effective internal controls over financial reporting; our ability to pay dividends; our status as a holding company; dilution from future issuances or sales of our common stock; anti-takeover provisions in our organizational documents and Delaware law; reports from securities analysts; and the other factors set forth in the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission ("SEC") on February 27, 2020 as it may be updated by our periodic reports subsequently filed with the SEC, including, when available, the Quarterly Report on Form 10-Q for the period ended June 30, 2020. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

Any forward-looking statement made by us in this presentation speaks only as of the date of this presentation. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may make. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

NON-GAAP FINANCIAL MEASURES

This presentation includes certain financial measures not presented in accordance with generally accepted accounting principles ("GAAP") such as Adjusted EBITDA, Adjusted EBITDA margin and net sales in constant currency. These non-GAAP financial measures are not measures of financial performance in accordance with GAAP and may exclude items that are significant to understanding and assessing the Company's financial results. Therefore, these measures should not be considered in isolation or as an alternative to net sales, net income or other measures of profitability or performance under GAAP. You should be aware that the Company's presentation of these measures may not be comparable to similarly-titled measures used by other companies. For a reconciliation of these measures to the most comparable GAAP measures, we refer you to the appendix in this presentation or the earnings release that we have made available on our website (www.acushnetholdingscorp.com) in connection with this presentation.

For further information, please see our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 27, 2020 as it may be updated by our periodic reports subsequently filed with the SEC, including, when available, the Quarterly Report on Form 10-Q for the period ended June 30, 2020, pursuant to the Securities Exchange Act of 1934 which are available at the SEC's website (www.sec.gov). Copies of this presentation and the accompanying webcast are publicly available on our website (www.acushnetholdingscorp.com). This presentation should be read with the accompanying webcast and related earnings release.

2

Q2 and First Half 2020

Performance

David Maher

President and Chief Executive Officer

RESULTS OVERVIEW

($ in millions)

Q2 2020

Growth

Growth

1H 2020

Growth

Growth

Y/Y

Y/Y @ CC

Y/Y

Y/Y @ CC

Net Sales

$300.0

(35.1)%

(34.1)%

$708.7

(20.9)% (19.8)%

Adjusted EBITDA*

$33.1

(56.3)%

$85.9

(38.6)%

* See Appendix A for Adjusted EBITDA reconciliation

4

2nd QUARTER SALES BY MONTH

200%

150%

100%

50%

0%

2020 Sales as % of 2019

Near shutdown early in the 2nd

quarter

April sales down 68% from 2019

Improvement in May as our facilities

re-opened

Continued improvement in June

June momentum continuing into July

Healthy order backlog

Strong at-once demand

Lean channel inventories

April

May

June

Gradually increasing output levels

5

GEOGRAPHIC MARKET RESULTS*

Sales in the US, EMEA and Japan regions were down as a result of the impact of the impact of COVID-19

US

  • Q2 sales down 43% Y/Y; Down 27% YTD

EMEA

Q2 sales down 42% Y/Y; Down 15% YTD

Japan

  • Q2 sales down 44% Y/Y; Down 26% YTD

Korea

    • Q2 sales up 14% Y/Y; Up 12% YTD
    • More rapid market recovery vs. other regions
  • All year-over-year sales changes on constant currency

6

2nd HALF

  • July momentum expected to continue into August
  • Supply chain recovery and our inventories in-line with anticipated demand
  • Channel inventory environment
    • US channel inventories down at end of June
    • Most global markets reporting inventory declines versus prior year
  • Exciting new product launches in coming months
    • Tour Speed golf ball
    • Titleist drivers and fairways
    • Concept irons

7

Q2 & First Half 2020

Financial Results

Tom Pacheco

Chief Financial Officer

INCOME STATEMENT HIGHLIGHTS

($ in millions)

Q2 2020

Q2 2019

1H 2020

1H 2019

Net sales

Gross profit

$300.0 $462.2 $708.7 $895.9

$156.5 $246.0 $357.4 $468.2

GM%

52.2%

53.2%

50.4%

52.3%

SG&A

R&D

Restructuring charges

Income from operations

OM%

Interest expense, net

Other expense (income), net

Income tax (benefit) expense

Effective Tax Rate

Net income attributable to Acushnet Holdings

Adjusted EBITDA*

$130.5

$170.2

$283.3

$325.6

$11.1

$12.9

$24.4

$25.7

$1.1

$---

$12.7

$---

$11.7

$61.1

$33.2

$113.4

3.9%

13.2%

4.7%

12.7%

$4.4

$5.2

$8.5

$10.1

$4.2

$0.8

$4.9

$(0.2)

$(0.6)

$16.2

$7.0

$28.5

(19.0)%

29.4%

35.6%

27.6%

$2.3

$38.5

$11.2

$73.4

$33.1

$75.7

$85.9

$139.9

* See Appendix A for Adjusted EBITDA reconciliation

9

ADJUSTED EBITDA

($ in millions)

Q2 2020

Q2 2019

1H 2020

1H 2019

Net income attributable to Acushnet Holdings Corp

$2.3

$38.5

$11.2

$73.4

Interest expense, net

4.4

5.2

8.5

10.1

Income tax (benefit) expense

(0.6)

16.2

7.0

28.5

Depreciation and amortization

10.3

9.8

20.6

19.6

Share-based compensation

4.2

3.6

6.4

5.4

Restructuring & transformation costs (1)

1.4

---

13.1

---

Transaction fees

---

1.9

---

1.9

Other extraordinary, unusual or non-recurring items, net (2)

9.6

---

17.5

(0.6)

Net income attributable to noncontrolling interests

1.4

0.4

1.5

1.5

Adjusted EBITDA

$33.1

$75.7

$85.9

$139.9

Adjusted EBITDA margin

11.0%

16.4%

12.1%

15.6%

  1. Relates to severance and other costs associated with management's approved restructuring program to refine the Company's business model and improve operational efficiencies.
  2. Includes salaries and benefits paid for associates who could not work due to government mandated shutdowns, fringe benefits paid for furloughed associates, spoiled raw materials, incremental costs to support remote work and the cost of additional health and safety equipment of $6.0 million and $13.5 million during the three and six months ended June 30, 2020, respectively. Additionally includes $3.9 million of pension settlement costs related to lump-sum distributions to participants in our defined benefit plans as a result of the voluntary retirement plan as part of management's approved restructuring program during both the three and six months ended June 30, 2020.

10

SEGMENT RESULTS*

Net sales were down across all segments as a result of the impact of the COVID-19 pandemic

Titleist Golf Balls

Titleist Golf Gear

Q2 sales down 40% Y/Y; Down 30% YTD

Q2 sales down 30% Y/Y; Down 16% YTD

Titleist Golf Clubs

FootJoy Golf Wear

Q2 sales down 32% Y/Y; Down 16% YTD

Q2 sales down 39% Y/Y; Down 21% YTD

* All year-over-year sales changes on constant currency

11

BALANCE SHEET AND CASH FLOW HIGHLIGHTS

($ in millions)

As of 6/30/2020

Notes

Unrestricted Cash

$108.9

Total Debt Outstanding

$522.4

Leverage ratio 2.28x

Accounts Receivable, net

$271.6

Inventory

$363.8

($ in millions)

6 months ended 6/30/2020

Cash Flows from Operations

$(0.8)

Capital Expenditures

$10.4

12

CAPITAL ALLOCATION

  • Long-termpriorities have not changed
  • Adjusted capital allocation plans for the short-term
  • Reduced planned capital expenditures
  • Suspended share repurchase program
  • Declared cash dividend to be paid on September 18, 2020

13

Q&A

APPENDIX

APPENDIX A: ADJUSTED EBITDA

($ in millions)

Q2 2020

Q2 2019

1H 2020

1H 2019

Net income attributable to Acushnet Holdings Corp

$2.3

$38.5

$11.2

$73.4

Interest expense, net

4.4

5.2

8.5

10.1

Income tax (benefit) expense

(0.6)

16.2

7.0

28.5

Depreciation and amortization

10.3

9.8

20.6

19.6

Share-based compensation

4.2

3.6

6.4

5.4

Restructuring & transformation costs (1)

1.4

---

13.1

---

Transaction fees

---

1.9

---

1.9

Other extraordinary, unusual or non-recurring items, net (2)

9.6

---

17.5

(0.6)

Net income attributable to noncontrolling interests

1.4

0.4

1.5

1.5

Adjusted EBITDA

$33.1

$75.7

$85.9

$139.9

Adjusted EBITDA margin

11.0%

16.4%

12.1%

15.6%

  1. Relates to severance and other costs associated with management's approved restructuring program to refine the Company's business model and improve operational efficiencies.
  2. Includes salaries and benefits paid for associates who could not work due to government mandated shutdowns, fringe benefits paid for furloughed associates, spoiled raw materials, incremental costs to support remote work and the cost of additional health and safety equipment of $6.0 million and $13.5 million during the three and six months ended June 30, 2020, respectively. Additionally includes $3.9 million of pension settlement costs related to lump-sum distributions to participants in our defined benefit plans as a result of the voluntary retirement plan as part of management's approved restructuring program during both the three and six months ended June 30, 2020.

16

APPENDIX B: SEGMENT RESULTS

Q2 2020

Growth

Growth

Growth

Growth

($ in millions)

Y/Y @

1H 2020

Y/Y @

Y/Y

Y/Y

CC

CC

Titleist Golf Balls

$102.1

(41.1)%

(40.3)%

$218.4

(30.7)%

(29.8)%

Titleist Golf Clubs

$72.4

(32.3)%

(31.6)%

$165.6

(16.5)%

(15.7)%

Titleist Golf Gear

$32.4

(30.8)%

(29.9)%

$75.9

(17.5)%

(16.1)%

FootJoy Golf Wear

$68.3

(40.1)%

(39.2)%

$198.7

(22.1)%

(21.1)%

17

APPENDIX C: GEOGRAPHIC RESULTS

Q2 2020

Growth

Growth

Growth

Growth

($ in millions)

Y/Y @

1H 2020

Y/Y @

Y/Y

Y/Y

CC

CC

United States

$145.2

(43.3)%

(43.3)%

$356.2

(26.8)% (26.8)%

EMEA

$34.1

(43.2)%

(41.7)%

$108.8 (17.0)% (15.0)%

Japan

$22.1

(43.0)%

(44.3)%

$59.7 (24.9)% (26.4)%

Korea

$65.9

9.1%

14.4%

$116.3

6.2%

12.1%

Rest of world

$32.7

(30.0)%

(27.8)%

$67.7 (24.0)% (21.8)%

18

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Acushnet Holdings Corp. published this content on 05 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 12:11:01 UTC