ACUSHNET HOLDINGS CORP. The following discussion contains management's discussion and analysis of our financial condition and results of operations and should be read together with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this report. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including those described in "Part II, Item 1A. Risk Factors" and elsewhere in this Quarterly Report on Form 10Q and in our other filings with theSecurities and Exchange Commission ("SEC"). Actual results may differ materially from those contained in any forward-looking statements. You should carefully read "Special Note Regarding Forward-Looking Statements" following the Table of Contents. Unless otherwise noted, the figures in the following discussion are unaudited. Overview We are the global leader in the design, development, manufacture and distribution of performance-driven golf products, which are widely recognized for their quality excellence. Today, we are the steward of two of the most revered brands in golf-Titleist, one of golf's leading performance equipment brands, and FootJoy, one of golf's leading performance wear brands. We own or control the design, sourcing, manufacturing, packaging and distribution of our products. In doing so, we are able to exercise control over every step of the manufacturing process. Our target market is dedicated golfers, who are the cornerstone of the worldwide golf industry. These dedicated golfers are avid and skill-biased, prioritize performance and commit the time, effort and money to improve their game. We believe our focus on innovation and process excellence yields golf products that represent superior performance and consistent product quality, which are the key attributes sought after by dedicated golfers. Many of the game's professional players, who represent the most dedicated golfers, prefer our products thereby validating our performance and quality promise, while also driving brand awareness. We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game's best players. 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 , theUnited Kingdom andCanada . We have the following reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear. Impact of COVID-19 on our Business InMarch 2020 , theWorld Health Organization declared a pandemic related to the novel coronavirus ("COVID-19"). To date, the COVID-19 pandemic has spread across multiple countries and resulted in government-ordered shutdowns of non-essential businesses, travel restrictions and restrictions on public gatherings. This has led to reduced consumer demand for golf-related products, the temporary closure of golf courses, including on-course retail pro shops, the temporary closure of off-course retail partner locations and the cancellation of professional golf tour events. In response to the outbreak and to mitigate the spread of the COVID-19 pandemic, we have, consistent with related orders from federal, state and local governments, temporarily closed or limited operations in our North American manufacturing facilities, distribution centers and corporate offices, with associates working remotely where possible. Outside of theU.S. , many distribution centers, including those inEurope , are operating on a limited basis. As our fiscal first quarter 2020 ended onMarch 31, 2020 , we had business disruptions to varying degrees across many regions. Our businesses inAsia were adversely impacted earlier in the quarter and are at varying stages of recovery, withKorea nearly fully recovered and other markets working their way towards recovery. Our businesses inthe United States ,Europe ,Canada andAustralia began to see the impacts of the COVID-19 pandemic later in the quarter and continue to be adversely impacted. Coinciding with the government-ordered shutdown of non-essential businesses and restrictions on public gatherings, consumer demand for our products slowed significantly in March, particularly inthe United States . As a result, the COVID-19 pandemic has materially impacted our results of operations for the first quarter of 2020 as described in more detail under "Results of Operations for the Three Months EndedMarch 31, 2020 Compared to the Three Months EndedMarch 31, 2019 " below. While it is impossible to quantify the impact of the COVID-19 pandemic, we expect business disruptions as a result of the COVID-19 pandemic to continue to have a material impact on our business, results of operations, financial position and cash flows.
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We have taken several steps to strengthen our financial position and balance sheet, bolster our liquidity position and provide additional financial flexibility, including reducing payroll costs through associate furloughs and a temporary reduction in senior management compensation, reducing discretionary spending, reducing capital expenditures, suspending our share repurchase program, temporarily suspending cash retainers of our Board of Directors and drawing down$200.0 million on our revolving credit facility onApril 1, 2020 . Given the uncertainty of the COVID-19 pandemic situation, we cannot reasonably estimate the impacts of the COVID-19 pandemic on our business, results of operations, financial position and cash flows in the future. However, we do expect that it will materially impact our operations going forward due to: • the impact of governmental orders and regulations that have been and may be imposed in response to the pandemic;
• potential changes in consumer behavior, including consumer confidence,
spending habits and rounds of golf played; and
• a slowdown in the
Key Performance Measures We use various financial metrics to measure and evaluate our business, including, among others: (i) net sales on a constant currency basis, (ii) Adjusted EBITDA on a consolidated basis, (iii) Adjusted EBITDA margin on a consolidated basis and (iv) segment operating income. Since a significant percentage of our net sales are generated outside ofthe 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 sales and translating them intoU.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 inthe 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. 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. Adjusted EBITDA represents net income attributable toAcushnet Holdings Corp. adjusted for interest expense, net, income tax expense, depreciation and amortization and other items defined in the agreement, including: share-based compensation expense; restructuring charges; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); executive pension settlement; certain other non-cash (gains) losses, net and the net income relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance underU.S. GAAP. It should not be considered an alternative to net income attributable toAcushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance withU.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 underU.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 (loss) attributable toAcushnet Holdings Corp. , see "-Results of Operations" below. We also use Adjusted EBITDA margin on a consolidated basis, which measures our Adjusted EBITDA as a percentage of net sales, because our management uses it 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 margin 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. Adjusted EBITDA margin is not a measurement of financial performance underU.S. GAAP. It should not be considered an alternative to any measure of performance derived in accordance withU.S. GAAP. In addition, Adjusted EBITDA margin 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 margin has limitations as an analytical tool, and you should not consider such measure
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either in isolation or as a substitute for analyzing our results as reported underU.S. GAAP. Our definition and calculation of Adjusted EBITDA margin is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. Lastly, we use segment operating income to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. Segment operating income includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes interest expense, net; restructuring charges; the non-service cost component of net periodic benefit cost; transaction fees and other non-operating gains and losses as we do not allocate these to the reportable segments. Results of Operations The following table sets forth, for the periods indicated, our results of operations. Three months ended March 31, (in thousands) 2020 2019 Net sales$ 408,741 $ 433,702 Cost of goods sold 207,786 211,545 Gross profit 200,955 222,157 Operating expenses: Selling, general and administrative 152,723 155,426 Research and development 13,220 12,751 Intangible amortization 1,956 1,753 Restructuring charges 11,628 - Income from operations 21,428 52,227 Interest expense, net 4,123 4,883 Other expense (income), net 690 (970 ) Income before income taxes 16,615 48,314 Income tax expense 7,640 12,275 Net income 8,975 36,039 Less: Net income attributable to noncontrolling interests (98 ) (1,113 ) Net income attributable to Acushnet Holdings Corp.$ 8,877 $
34,926
Adjusted EBITDA: Net income attributable to Acushnet Holdings Corp.$ 8,877 $ 34,926 Interest expense, net 4,123 4,883 Income tax expense 7,640 12,275 Depreciation and amortization 10,269 9,797 Share-based compensation 2,187 1,785 Restructuring charges (1) 11,628 - Other extraordinary, unusual or non-recurring items, net (2) 7,986 (554 ) Net income attributable to noncontrolling interests 98 1,113 Adjusted EBITDA$ 52,808 $ 64,225 Adjusted EBITDA margin 12.9 % 14.8 %
_______________________________________________________________________________________
(1) Relates to severance and other charges associated with management's approved
restructuring program to refine its 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
the three months ended
non-cash indemnification expense (income) related to obligations owed to us
and other non-cash (gains) losses, net that are included when calculating net
income attributable to
March 31, 2020 and 2019, respectively. 25
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Three Months Ended
Net sales by reportable segment is summarized as follows:
Three months ended Constant Currency
March 31, Increase/(Decrease) Increase/(Decrease)
(in millions) 2020 2019 $ change % change $ change % change
Titleist golf balls $ 116.2 $ 141.7 $ (25.5 ) (18.0 )% $ (24.1 ) (17.0 )%
Titleist golf clubs 93.2 91.3 1.9 2.1 % 2.7 3.0 %
Titleist golf gear 43.5 45.2 (1.7 ) (3.8 )% (0.8 ) (1.8 )%
FootJoy golf wear 130.4 141.0 (10.6 ) (7.5 )% (9.1 ) (6.5 )%
Segment operating income (loss) by reportable segment is summarized as follows:
Three months ended
(in millions) March 31, Increase/(Decrease)
Segment operating income (loss) 2020 2019 $ change % change
Titleist golf balls $ 3.2 $ 19.7 $ (16.5 ) (83.8 )%
Titleist golf clubs 4.5 (0.4 ) 4.9 1,225.0 %
Titleist golf gear 8.9 9.2 (0.3 ) (3.3 )%
FootJoy golf wear 14.3 20.1 (5.8 ) (28.9 )%
Net sales information by region is summarized as follows:
Three months ended Constant Currency
March 31, Increase/(Decrease) Increase/(Decrease)
(in millions) 2020 2019 $ change % change $ change % change
United States $ 211.0 $ 230.4 $ (19.4 ) (8.4 )% $ (19.4 ) (8.4 )%
EMEA 74.7 71.1 3.6 5.1 % 5.3 7.5 %
Japan 37.6 40.7 (3.1 ) (7.6 )% (3.8 ) (9.3 )%
Korea 50.4 49.0 1.4 2.9 % 4.5 9.2 %
Rest of world 35.0 42.5 (7.5 ) (17.6 )% (6.4 ) (15.1 )%
Total net sales $ 408.7 $ 433.7 $ (25.0 ) (5.8 )% $ (19.8 ) (4.6 )%
Net Sales
Net sales decreased by $25.0 million , or 5.8%, to $408.7 million for the three
months ended March 31, 2020 compared to $433.7 million for the three months
ended March 31, 2019 . On a constant currency basis, net sales decreased by $19.8
million , or 4.6%, to $413.9 million . The decrease in net sales on a constant
currency basis was due to a decrease of $24.1 million in Titleist golf ball
sales and a decrease of $9.1 million in FootJoy golf wear, primarily as a result
of the negative impact of the COVID-19 pandemic in the first quarter of 2020, as
previously described. The remaining change in net sales was primarily due to the
acquisition of KJUS during the third quarter of 2019. The results of KJUS have
not been allocated to any of our reportable segments.
Net sales in the United States decreased by $19.4 million , or 8.4%, to $211.0
million for the three months ended March 31, 2020 compared to $230.4 million for
the three months ended March 31, 2019 . Overall, sales in the United States were
lower as a result of the negative impact of the COVID-19 pandemic. Net sales
were lower across all reportable segments, with Titleist golf balls sales down
$17.3 million , FootJoy golf wear sales down $2.5 million and Titleist golf gear
sales down $1.9 million . The remaining change in net sales was primarily due to
the acquisition of KJUS during the third quarter of 2019.
Net sales in regions outside of the United States were also negatively impacted
by the COVID-19 pandemic. Net sales in regions outside of the United States
decreased by $5.6 million , or 2.8%, to $197.7 million for the three months ended
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March 31, 2020 compared to$203.3 million for the three months endedMarch 31, 2019 . On a constant currency basis, net sales in such regions decreased by$0.4 million , or 0.2%, to$202.9 million . In EMEA, the increase in net sales was primarily due to the acquisition of KJUS, offset by lower sales volumes of Titleist golf balls and FootJoy footwear. InJapan , the decrease in net sales was primarily due to a decrease in sales of Titleist golf balls and FootJoy golf wear. InKorea , the increase in net sales was driven by increased sales across all categories with the exception of FootJoy golf wear. Sales in the rest of the world were lower as a result of a decrease in Titleist golf balls and FootJoy golf wear. Gross Profit Gross profit decreased by$21.2 million to$201.0 million for the three months endedMarch 31, 2020 compared to$222.2 million for the three months endedMarch 31, 2019 . Gross margin decreased to 49.2% for the three months endedMarch 31, 2020 compared to 51.2% for the three months endedMarch 31, 2019 . The decrease in gross profit resulted from a decrease of$20.1 million in gross profit in Titleist golf balls and a decrease of$8.1 million in gross profit in FootJoy golf wear, each primarily due to sales volume declines discussed above. The remaining change in gross profit was primarily due to the acquisition of KJUS, acquired in the third quarter of 2019. The decrease in gross margin was primarily driven by lower gross margins in the Titleist golf ball and FootJoy golf wear segments. The Titleist golf ball segment experienced unfavorable manufacturing overhead absorption related to the temporary closure of ourU.S. based golf ball manufacturing facilities and FootJoy experienced lower footwear production volume at our footwear manufacturing facility, both as a result of the negative impact of the COVID-19 pandemic. Selling, General and Administrative Expenses SG&A expenses decreased by$2.7 million to$152.7 million for the three months endedMarch 31, 2020 compared to$155.4 million for the three months endedMarch 31, 2019 . This decrease was primarily due to a decrease of$3.6 million in advertising and promotional costs and$3.1 million in lower employee related expenses, partially offset by an increase of$3.4 million in selling expenses primarily related to our acquisition of KJUS. Overall SG&A included a$1.3 million favorable impact of changes in foreign currency exchange rates across all expense categories and segments. Research and Development R&D expenses increased by$0.4 million to$13.2 million for the three months endedMarch 31, 2020 compared to$12.8 million for the three months endedMarch 31, 2019 . R&D expenses increased as a result of the acquisition of KJUS. Intangible Amortization Intangible amortization expense increased$0.2 million to$2.0 million for the three months endedMarch 31, 2020 compared to$1.8 million for the three months endedMarch 31, 2019 , primarily due to an increase in amortizing intangible assets related to the acquisition of KJUS. Restructuring Charges During the first quarter of 2020, management approved a restructuring program to refine our business model and improve operational efficiencies. This program included both a voluntary retirement program and involuntary headcount reductions. As part of this program we recorded$11.2 million in severance and other benefits expense related to the voluntary retirement program, as well as,$0.4 million in severance and other benefits related to our involuntary program during the three months endedMarch 31, 2020 . Interest Expense, net Interest expense, net decreased by$0.8 million to$4.1 million for the three months endedMarch 31, 2020 compared to$4.9 million for the three months endedMarch 31, 2019 . Other Expense (Income), net Other expense (income), net increased by$1.7 million to other expense of$0.7 million for the three months endedMarch 31, 2020 compared to other income of$1.0 million for the three months endedMarch 31, 2019 . This increase was primarily due to an increase in non-service related pension costs.
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Income Tax Expense Income tax expense decreased by$4.7 million to$7.6 million for the three months endedMarch 31, 2020 compared to$12.3 million for the three months endedMarch 31, 2019 . Our effective tax rate ("ETR") was 46.0% for the three months endedMarch 31, 2020 compared to 25.4% for the three months endedMarch 31, 2019 . The increase in the ETR was primarily driven by the negative impact of the COVID-19 pandemic on our jurisdictional mix of earnings and the effect of foreign currency losses incurred in the quarter that cannot be benefited, as well as, a reduction in discrete tax benefits related to share-based compensation expense. Net Income Attributable toAcushnet Holdings Corp. Net income attributable toAcushnet Holdings Corp. decreased by$26.0 million to$8.9 million for the three months endedMarch 31, 2020 compared to$34.9 million for the three months endedMarch 31, 2019 , primarily as a result of a decrease in income from operations as discussed above, partially offset by a decrease in income tax expense. Adjusted EBITDA Adjusted EBITDA decreased by$11.4 million to$52.8 million for the three months endedMarch 31, 2020 compared to$64.2 million for the three months endedMarch 31, 2019 , primarily due to a decrease in income from operations. Adjusted EBITDA margin decreased to 12.9% for the three months endedMarch 31, 2020 compared to 14.8% for the three months endedMarch 31, 2019 . Segment Results Titleist Golf Balls Segment Net sales in our Titleist golf balls segment decreased by$25.5 million , or 18.0%, to$116.2 million for the three months endedMarch 31, 2020 compared to$141.7 million for the three months endedMarch 31, 2019 . On a constant currency basis, net sales in our Titleist golf balls segment decreased by$24.1 million , or 17.0%, to$117.6 million . This decrease was as a result of lower sales volumes primarily due to the negative impact of the COVID-19 pandemic inthe United States along with lower sales volumes of Pro V1 and Pro V1x golf balls, which were expected as these were in their second model year, partially offset by a sales volume increase of our newly-introduced performance models. Titleist golf balls segment operating income decreased by$16.5 million , or 83.8%, to$3.2 million for the three months endedMarch 31, 2020 compared to$19.7 million for the three months endedMarch 31, 2019 . This decrease was primarily due to a decrease in gross profit of$20.1 million , partially offset by lower operating expenses. The decrease in gross profit was primarily due to the sales decline discussed above and unfavorable manufacturing overhead absorption due to the closure of ourUnited States based golf ball manufacturing facility as a result of the COVID-19 pandemic. Operating expenses decreased as a result of a$2.4 million decrease in advertising and promotional costs and lower employee related costs. Titleist Golf Clubs Segment Net sales in our Titleist golf clubs segment increased by$1.9 million , or 2.1%, to$93.2 million for the three months endedMarch 31, 2020 compared to$91.3 million for the three months endedMarch 31, 2019 . On a constant currency basis, net sales in our Titleist golf clubs segment increased by$2.7 million , or 3.0%, to$94.0 million . The increase in net sales was due to higher sales volumes of our newly introduced SM8 wedges coupled with our Scotty Cameron Special Select putters launched in the first quarter of 2020. This increase was partially offset by the negative impact of the COVID-19 pandemic and lower sales volumes of drivers and fairways, which were in their second model year. Titleist golf clubs segment operating income increased by$4.9 million to operating income of$4.5 million for the three months endedMarch 31, 2020 compared to an operating loss of$0.4 million for the three months endedMarch 31, 2019 . The increase in operating income was primarily driven by higher gross profit of$2.8 million and lower operating expenses. The increase in gross profit primarily resulted from increased sales volumes discussed above and favorable manufacturing overhead absorption. Operating expenses decreased as a result of lower promotional costs and lower employee related costs. Titleist Golf Gear Segment Net sales in our Titleist golf gear segment decreased by$1.7 million , or 3.8%, to$43.5 million for the three months endedMarch 31, 2020 compared to$45.2 million for the three months endedMarch 31, 2019 . On a constant currency basis, net sales in our Titleist golf gear segment decreased by$0.8 million , or 1.8%, to$44.4 million . This decrease was primarily due to the negative impact of the COVID-19 pandemic on sales volumes inthe United States and EMEA.
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Titleist golf gear segment operating income decreased by$0.3 million , or 3.3%, to$8.9 million for the three months endedMarch 31, 2020 compared to$9.2 million for the three months endedMarch 31, 2019 . The decrease in operating income was primarily driven by lower gross profit as a result of the sales volume decrease discussed above partially offset by lower operating expenses as a result of lower promotional costs and lower employee related costs. FootJoy Golf Wear Segment Net sales in our FootJoy golf wear segment decreased by$10.6 million , or 7.5%, to$130.4 million for the three months endedMarch 31, 2020 compared to$141.0 million for the three months endedMarch 31, 2019 . On a constant currency basis, net sales in our FootJoy golf wear segment decreased by$9.1 million , or 6.5%, to$131.9 million . This decrease was primarily due to sales volume decreases across all markets primarily due to the negative impact of the COVID-19 pandemic. FootJoy golf wear segment operating income decreased by$5.8 million , or 28.9%, to$14.3 million for the three months endedMarch 31, 2020 compared to$20.1 million for the three months endedMarch 31, 2019 . This decrease was primarily due to lower gross profit of$8.1 million , partially offset by lower operating expenses. The decrease in gross profit was primarily driven by lower sales volume as discussed above and unfavorable manufacturing costs partially offset by lower operating expenses as a result of lower promotional costs and lower employee related costs. 29
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Liquidity and Capital Resources Our primary cash needs relate to working capital, capital expenditures, servicing of our debt, paying dividends, pension contributions and repurchasing shares of our common stock. We expect to rely on cash flows from operations and borrowings under our revolving credit facility and local credit facilities as our primary sources of liquidity. Our liquidity is impacted by our level of working capital, which is cyclical as a result of the general seasonality of our business. Our accounts receivable balance is generally at its highest starting at the end of the first quarter and continuing through the second quarter, and declines during the third and fourth quarters as a result of both an increase in cash collections and lower sales. Our inventory balance also fluctuates as a result of the seasonality of our business. Generally, our buildup of inventory starts during the fourth quarter and continues through the first quarter and into the beginning of the second quarter in order to meet demand for our initial sellin during the first quarter and reorders in the second quarter. Both accounts receivable and inventory balances are impacted by the timing of new product launches. As ofMarch 31, 2020 , we had$53.9 million of unrestricted cash (including$14.9 million attributable to our FootJoy golf shoe joint venture). OnApril 1, 2020 , we drew down$200.0 million under our revolving credit facility, thereby increasing our unrestricted cash by such amount. As ofMarch 31, 2020 , 94.1% of our total unrestricted cash was held at our nonU.S. subsidiaries. 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 tothe United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs related to debt service requirements. As noted previously, the COVID-19 pandemic has adversely impacted our results of operations for the first quarter of 2020 and we expect the related business disruptions to continue to have a material impact on our business, results of operations, financial position and cash flows. We have taken several steps to preserve our liquidity position and to manage cash flows on an ongoing basis. Subject to the length and severity of the COVID-19 pandemic, we believe that cash expected to be provided by operating activities, together with our cash on hand and the availability of borrowings under our revolving credit facility and our local credit facilities (subject to customary borrowing conditions) will be sufficient to meet our liquidity requirements for at least the next 12 months. Our ability to generate sufficient cash flows from operations is, however, subject to many risks and uncertainties, including future economic trends and conditions, including the current COVID-19 pandemic, demand for our products, foreign currency exchange rates and other risks and uncertainties applicable to our business, as described in our Annual Report on Form 10-K for the year endedDecember 31, 2019 and further updated in "Risk Factors," Item 1A of Part II included elsewhere in this report. Debt and Financing Arrangements As ofMarch 31, 2020 , we had$225.3 million of availability under our revolving credit facility after giving effect to$9.7 million of outstanding letters of credit. Additionally, we had$52.8 million available under our local credit facilities. As part of the actions we have taken relating to the COVID-19 pandemic, we drew down$200.0 million under our revolving credit facility onApril 1, 2020 . Following the draw down, we had approximately$367.5 million outstanding and$22.4 million of available borrowings under our revolving credit facility, after giving effect to$10.1 million of outstanding letters of credit. Our credit agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and interest coverage ratios. The credit agreement includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As ofMarch 31, 2020 , we were in compliance with all covenants under the credit agreement. See "Notes to Consolidated Financial Statements-Note-10-Debt and Financing Arrangements" in our Annual Report on Form 10-K for the year endedDecember 31, 2019 for a description of our credit facilities. Additionally, see "Risk Factors - Risks Related to Our Indebtedness" as described in our Annual Report on Form 10-K for the year endedDecember 31, 2019 and "Risk Factors," Item 1A of Part II included elsewhere in this report for further discussion surrounding the risks and uncertainties of our credit facilities. Capital Expenditures We made$5.7 million of capital expenditures during the three months endedMarch 31, 2020 . We plan to significantly reduce our capital expenditures until there is more clarity on the length and severity of the COVID-19 pandemic.
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Dividends and Share Repurchase Program The Board of Directors has authorized us to repurchase up to an aggregate$100.0 million of our issued and outstanding common stock. Share repurchases may be effected from time to time in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at our discretion consistent with our general working capital needs and within the constraints of our credit agreement. This program will remain in effect until completed or until terminated by the Board of Directors. In connection with this share repurchase program, we entered into an agreement withMagnus Holdings Co., Ltd. ("Magnus"), a wholly owned subsidiary ofFila Holdings Co. , to purchase from Magnus an equal amount of our common stock as we purchase on the open market, up to an aggregate of$24.9 million , at the same weighted average per share price. During the three months endedMarch 31, 2020 , we repurchased 243,894 shares of common stock on the open market at an average price of$28.60 for an aggregate of$7.0 million . As a result of these purchases, we recorded an additional liability to repurchase additional shares of common stock from Magnus of$7.0 million (243,894 shares of common stock) bringing the total liability to$8.8 million (299,894 shares of common stock) as ofMarch 31, 2020 . Excluding the impact of the share repurchase liability, as ofMarch 31, 2020 , we had$63.7 million remaining under the current share repurchase program, including the$11.1 million related to the Magnus share repurchase agreement. See "Notes to Unaudited Condensed Consolidated Financial Statements-Note 9-Common Stock," Item 1 of Part I, included elsewhere in this report, for disclosures related to the Magnus share repurchase liability. InApril 2020 , we announced that we were suspending stock repurchases in light of the COVID-19 pandemic. We have the ability to resume repurchases if we deem circumstances warrant. During the first quarter of 2020, we paid dividends on our common stock of$11.5 million to our shareholders. During the second quarter of 2020, our Board of Directors declared a dividend of$0.155 per common share to shareholders of record as ofJune 5, 2020 and payable onJune 19, 2020 . Cash Flows The following table presents the major components of net cash flows provided by (used in) operating, investing and financing activities for the periods indicated:
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