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 but not limited to those described in "Part II, Item 1A. Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q 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 wearable brands. 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 world's best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game's best players.
We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers, and favorable and marketdifferentiating mix of consumable and durable products have been the key drivers of our solid financial performance.
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. Our financial results and operations continue to be impacted by the macroeconomic environment, including the ongoing COVID-19 pandemic. Global supply chain issues and the impact of inflation have resulted in constrained raw material, component and sourced product availability and increased raw material and other input costs, including higher freight expense. These increased costs negatively impacted cost of sales for the three and six months endedJune 30, 2022 , resulting in a lower gross margin as compared to the three and six months endedJune 30, 2021 . Inflation, particularly in the form of higher raw material costs combined with higher shipping costs, is expected to remain an issue for the remainder of 2022. 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 (loss).
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 26
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accordance with generally accepted accounting principles in
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 (loss) attributable toAcushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in the 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 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 (loss) 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 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 (loss) to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. Segment operating income (loss) 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. 27
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Results of Operations
The following table sets forth, for the periods indicated, our results of
operations.
Three months ended Six months ended
June 30, June 30,
(in thousands) 2022 2021 2022 2021
Net sales $ 658,599 $ 624,850 $ 1,264,686 $ 1,205,735
Cost of goods sold 314,993 290,424 604,081 560,570
Gross profit 343,606 334,426 660,605 645,165
Operating expenses:
Selling, general and administrative 239,167 210,255 434,858 386,624
Research and development 13,938 13,021 27,914 25,350
Intangible amortization 1,954 1,970 3,917 3,942
Income from operations 88,547 109,180 193,916 229,249
Interest expense, net 2,091 1,848 3,368 5,464
Other expense, net 2,147 239 3,473 2,231
Income before income taxes 84,309 107,093 187,075 221,554
Income tax expense 16,070 24,573 36,989 52,407
Net income 68,239 82,520 150,086 169,147
Less: Net income attributable to noncontrolling
interests (1,785) (1,435) (2,587) (3,104)
Net income attributable to Acushnet
Holdings Corp. $ 66,454 $ 81,085 $ 147,499 $ 166,043
Adjusted EBITDA:
Net income attributable to Acushnet
Holdings Corp. $ 66,454 $ 81,085 $ 147,499 $ 166,043
Interest expense, net 2,091 1,848 3,368 5,464
Income tax expense 16,070 24,573 36,989 52,407
Depreciation and amortization 10,298 10,275 20,665 20,638
Share-based compensation 6,969 8,277 12,322 13,810
Other extraordinary, unusual or non-recurring
items, net 2,790 271 3,025 1,582
Net income attributable to noncontrolling
interests 1,785 1,435 2,587 3,104
Adjusted EBITDA $ 106,457 $ 127,764 $ 226,455 $ 263,048
Adjusted EBITDA margin 16.2 % 20.4 % 17.9 % 21.8 %
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Three Months Ended
Net sales by reportable segment is summarized as follows:
Three months ended Constant Currency
June 30, Increase/(Decrease) Increase/(Decrease)
(in millions) 2022 2021 $ change % change $ change % change
Titleist golf balls $ 201.3 $ 202.3 $ (1.0) (0.5) % $ 6.6 3.3 %
Titleist golf clubs 164.2 152.8 11.4 7.5 % 18.9 12.4 %
Titleist golf gear 69.1 65.0 4.1 6.3 % 8.0 12.3 %
FootJoy golf wear 177.9 164.6 13.3 8.1 % 22.5 13.7 %
Net sales information by region is summarized as follows:
Three months ended Constant Currency
June 30, Increase/(Decrease) Increase/(Decrease)(in millions) 2022 2021 $ change % change $ change % change United States$ 351.4 $ 315.3 $ 36.1 11.4 % $ 36.1 11.4 % EMEA (1) 91.9 97.4 (5.5) (5.6) % 5.1 5.2 % Japan 38.4 45.6 (7.2) (15.8) % (0.7) (1.5) % Korea 98.5 97.0 1.5 1.5 % 13.3 13.7 % Rest of world 78.4 69.6 8.8 12.6 % 12.2 17.5 % Total net sales$ 658.6 $ 624.9 $ 33.7 5.4 % $ 66.0 10.6 %
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(1)
Segment operating income by reportable segment is summarized as follows:
Three months ended
(in millions) June 30, Increase/(Decrease)
Segment operating income 2022 2021 $ change % change
Titleist golf balls $ 29.3 $ 40.5 $ (11.2) (27.7) %
Titleist golf clubs 29.1 29.4 (0.3) (1.0) %
Titleist golf gear 11.7 12.4 (0.7) (5.6) %
FootJoy golf wear 12.0 21.0 (9.0) (42.9) %
Net Sales
For the three months ended June 30, 2022 , net sales increased 5.4%, or 10.6% on
a constant currency basis, as compared to the three months ended June 30, 2021 .
The increase was driven by growth across all reportable segments primarily as a
result of higher sales volumes and higher average selling prices.
Net sales in the United States were higher across all reportable segments
primarily driven by an increase of $14.0 million in Titleist golf clubs and
$13.3 million in FootJoy golf wear. The increase in Titleist golf clubs was
primarily driven by higher sales volumes of our newly introduced SM9 wedges, T
Series irons and Phantom X putters, partially offset by lower sales volumes of
drivers, fairways and hybrids. The increase in FootJoy golf wear was primarily
due to higher average selling prices and sales volumes in footwear.
Net sales in regions outside the United States decreased 0.8% or increased 9.7%
on a constant currency basis. In Korea , the increase was primarily due to
increases in FootJoy golf wear, Titleist golf gear and Titleist golf clubs. In
EMEA and Rest of World, net sales increased across all reportable segments. In
Japan , net sales increased in all reportable segments except Titleist golf
clubs.
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Gross Profit
Gross profit increased$9.2 million for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . Gross margin decreased to 52.2% for the three months endedJune 30, 2022 compared to 53.5% for the three months endedJune 30, 2021 . The increase in gross profit primarily resulted from an increase of$5.8 million in Titleist golf clubs primarily due to higher sales volumes, an increase of$3.5 million in FootJoy golf wear due to higher sales volumes and average selling prices in footwear and an increase of$2.1 million in Titleist golf gear due to higher sales volumes and average selling prices. These increases were partially offset by a decrease of$6.4 million in Titleist golf balls due to higher manufacturing costs and increased inbound freight costs across all reportable segments.
The decrease in gross margin was primarily due to higher inbound freight costs across all reportable segments, as well as higher manufacturing costs in Titleist golf balls.
Selling, General and Administrative Expenses
SG&A expenses increased$28.9 million for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . This increase was comprised of an increase of$15.1 million in selling expense as a result of higher sales volumes and higher third party distribution expenses in FootJoy golf wear and Titleist golf gear, an increase of$7.9 million in administrative expense primarily due to higher consulting expenses driven by information technology-related project spending and employee-related costs and an increase of$3.0 million in advertising and promotional expenses.
Other Expense, net
Other expense, net increased$1.9 million for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 and was primarily due to changes in the fair value of the assets of the Rabbi trust.
Income Tax Expense
Income tax expense decreased$8.5 million for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . Our effective tax rate ("ETR") was 19.1% for the three months endedJune 30, 2022 compared to 22.9% for the three months endedJune 30, 2021 . The change in the ETR was primarily driven by changes in our jurisdictional mix of earnings.
Segment Results
Titleist Golf Balls Segment
Net sales in our Titleist golf balls segment decreased 0.5%, or increased 3.3% on a constant currency basis, for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase on a constant currency basis reflects improvement of certain raw material availability. Operating income in our Titleist golf balls segment decreased$11.2 million , or 27.7% compared to the prior year period. The decrease in operating income resulted from lower gross profit and higher operating expenses. Gross profit decreased$6.4 million primarily as a result of higher manufacturing costs. Operating expenses increased primarily as a result of increases of$2.0 million and$1.7 million in administrative and selling expenses, respectively.
Titleist Golf Clubs Segment
Net sales in our Titleist golf clubs segment increased 7.5%, or 12.4% on a constant currency basis, for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase was largely due to higher sales volumes of our newly introduced T-Series irons launched in the fourth quarter of 2021, SM9 wedges launched in the first quarter of 2022 and Phantom X putters launched in the second quarter of 2022. This increase was partially offset by lower sales volumes of drivers, fairways and hybrids which were all in their second model year and were also impacted by component shortages and delays. Operating income in our Titleist golf clubs segment decreased$0.3 million , or 1.0% compared to the prior year period. The decrease in operating income resulted from higher operating expenses, partially offset by higher gross profit. Gross profit increased$5.8 million primarily driven by higher sales volumes, partially offset by increased inbound freight costs. Higher operating expenses were primarily a result of increases of$3.1 million and$2.6 million in administrative and selling expenses, respectively. 30
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Titleist Golf Gear Segment
Net sales in our Titleist golf gear segment increased 6.3%, or 12.3% on a constant currency basis, for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase was largely due to higher sales volumes and higher average selling prices. Sales volumes were higher across all product categories except golf bags, which were impacted by supply chain and fulfillment constraints. Operating income in our Titleist golf gear segment decreased$0.7 million , or 5.6% compared to the prior year period. The decrease in operating income resulted from higher operating expenses, partially offset by higher gross profit. Gross profit increased$2.1 million primarily driven by higher sales volumes and higher average selling prices, partially offset by increased inbound freight costs. Operating expenses increased primarily as a result of an increase of$1.9 million in selling expense primarily due to higher third party distribution expenses.
FootJoy Golf Wear Segment
Net sales in our FootJoy golf wear segment increased 8.1%, or 13.7% on a constant currency basis, for the three months endedJune 30, 2022 compared to the three months endedJune 30, 2021 . The increase was due to higher net sales across all product categories, primarily in footwear due to higher sales volumes and average selling prices. Operating income in our FootJoy golf wear segment decreased$9.0 million , or 42.9% compared to the prior year period. The decrease in operating income resulted from higher operating expenses, partially offset by higher gross profit. Gross profit increased$3.5 million primarily driven by higher sales volumes, partially offset by increased inbound freight costs. Higher operating expenses were primarily as a result of increases of$8.5 million in selling expense primarily due to higher third party distribution expenses and$2.1 million and$2.0 million in advertising and promotion and administrative expenses, respectively. 31
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Six Months Ended
Net sales by reportable segment is summarized as follows:
Six months ended Constant Currency
June 30, Increase/(Decrease) Increase/(Decrease)
(in millions) 2022 2021 $ change % change $ change % change
Titleist golf balls $ 365.1 $ 375.9 $ (10.8) (2.9) % $ 0.5 0.1 %
Titleist golf clubs 325.0 308.6 16.4 5.3 % 28.4 9.2 %
Titleist golf gear 113.3 118.1 (4.8) (4.1) % 0.5 0.4 %
FootJoy golf wear 375.4 324.1 51.3 15.8 % 67.5 20.8 %
Net sales information by region is summarized as follows:
Six months ended Constant Currency
June 30, Increase/(Decrease) Increase/(Decrease)(in millions) 2022 2021 $ change % change $ change % change United States$ 646.5 $ 624.0 $ 22.5 3.6 % $ 22.5 3.6 % EMEA 204.2 177.9 26.3 14.8 % 43.4 24.4 % Japan 84.2 102.0 (17.8) (17.5) % (7.1) (7.0) % Korea 184.2 176.1 8.1 4.6 % 26.9 15.3 % Rest of world 145.6 125.7 19.9 15.8 % 24.6 19.6 % Total net sales$ 1,264.7 $ 1,205.7 $ 59.0 4.9 % $ 110.3 9.1 %
Segment operating income by reportable segment is summarized as follows:
Six months ended
(in millions) June 30, Increase/(Decrease)
Segment operating income 2022 2021 $ change % change
Titleist golf balls $ 62.6 $ 74.8 $ (12.2) (16.3) %
Titleist golf clubs 61.3 71.2 (9.9) (13.9) %
Titleist golf gear 13.8 22.1 (8.3) (37.6) %
FootJoy golf wear 43.3 49.1 (5.8) (11.8) %
Net Sales
For the six months ended June 30, 2022 , net sales increased 4.9%, or 9.1% on a
constant currency basis, compared to the six months ended June 30, 2021 . The
increase was primarily related to an increase in FootJoy golf wear driven by
higher sales volumes across all product categories and an increase in Titleist
golf clubs primarily driven by higher sales volumes of our newly introduced SM9
wedges, T-Series irons and Phantom X putters.
The increase in net sales in the United States was primarily as a result of an
increase of $15.6 million in FootJoy golf wear and an increase of $13.2 million
in Titleist golf clubs. The increase in FootJoy golf wear was primarily due to
higher average selling prices and sales volumes in footwear. The increase in
Titleist golf clubs was primarily driven by higher sales volumes of our newly
introduced SM9 wedges, T-Series irons and Phantom X putters. These increases
were partially offset by a decrease of $8.0 million in Titleist golf balls,
primarily as a result of limited availability of certain raw materials.
Net sales in regions outside the United States increased 6.3%, or 15.1% on a
constant currency basis. In EMEA, net sales increased across all reportable
segments, primarily due to the adverse impact of government-ordered shutdowns in
this region in the first quarter of 2021. In Korea , net sales increased in all
reportable segments, except Titleist golf gear, which was impacted by supply
chain constraints. In Japan , net sales decreased primarily due to supply chain
and fulfillment constraints. In Rest of world, net sales increased across all
reportable segments.
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Gross Profit
Gross profit increased$15.4 million for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . Gross margin decreased to 52.2% for the six months endedJune 30, 2022 compared to 53.5% for the six months endedJune 30, 2021 . The increase in gross profit primarily resulted from an increase of$15.2 million in FootJoy golf wear and an increase of$2.6 million in Titleist golf clubs, both primarily due to sales volume increases. These increases were partially offset by a decrease of$4.8 million and$4.2 million in Titleist golf balls and Titleist golf gear, respectively, and increased inbound freight costs across all reportable segments.
The decrease in gross margin was primarily due to increased inbound freight costs across all reportable segments, higher manufacturing costs in Titleist golf balls, as well as higher component costs in Titleist golf clubs.
Selling, General and Administrative Expenses
SG&A expenses increased$48.3 million for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . This increase was primarily due to an increase of$26.0 million in selling expense due to higher sales volumes, higher distribution expenses and higher employee related costs, an increase of$13.3 million in administrative expense primarily due to higher consulting expenses driven by information technology-related project spending and an increase of$5.1 million in advertising and promotional expenses across all reportable segments.
Research and Development
R&D expenses increased
Interest Expense, net
Interest expense, net decreased$2.1 million for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . This decrease was primarily due to a decrease in losses from interest rate swaps and a decrease in the amortization of debt issuance costs.
Other Expense, net
Other expense, net increased$1.3 million for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 and was primarily due to changes in the fair value of the assets of the Rabbi trust.
Income Tax Expense
Income tax expense decreased$15.4 million for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . Our ETR was 19.8% for the six months endedJune 30, 2022 compared to 23.7% for the six months endedJune 30, 2021 . The decrease in the ETR was primarily driven by changes in our jurisdictional mix of earnings.
Segment Results
Titleist Golf Balls Segment
Net sales in our Titleist golf balls segment decreased 2.9%, or increased 0.1% on a constant currency basis, for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . The increase on a constant currency basis reflects improvement of certain raw material availability. Operating income in our Titleist golf balls segment decreased$12.2 million , or 16.3% compared to the prior year period. The decrease in operating income resulted from higher operating expenses and lower gross profit. The lower gross profit was driven by higher manufacturing costs and by higher inbound freight costs. Operating expenses increased primarily as a result of increases of$3.7 million and$1.9 million in administrative and selling expenses, respectively.
Titleist Golf Clubs Segment
Net sales in our Titleist golf clubs segment increased 5.3%, or 9.2% on a constant currency basis, for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . The increase was largely due to higher sales volumes of our newly introduced SM9 wedges launched in the first quarter of 2022, T-Series irons launched in the fourth quarter of 2021 and Phantom X putters launched in the second quarter of 2022. This increase was partially offset by lower sales volumes of 33
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drivers, hybrids and fairways which were all in their second model year and were also impacted by component shortages and delays.
Operating income in our Titleist golf clubs segment decreased$9.9 million , or 13.9% compared to the prior year period. The decrease in operating income resulted from higher operating expenses, partially offset by higher gross profit of$2.6 million . The increase in gross profit was primarily due to higher sales volumes, partially offset by increased inbound freight and component costs. Higher operating expenses were primarily as a result of an increase of$5.0 million in selling expense primarily due to higher distribution expenses and an increase of$4.4 million in administrative expenses.
Titleist Golf Gear Segment
Net sales in our Titleist golf gear segment decreased 4.1%, or increased 0.4% on a constant currency basis, for the six months endedJune 30, 2022 compared to the six months endedJune 30, 2021 . The increase on a constant currency basis was primarily due to higher average selling prices across all product categories, partially offset by sales volume decreases in golf bags and headwear product categories due to supply chain and fulfillment constraints. Operating income in our Titleist golf gear segment decreased$8.3 million , or 37.6% compared to the prior year period. The decrease in operating income resulted from lower gross profit of$4.2 million and higher operating expenses. Gross profit decreased due to the sales volume decrease and increased inbound freight costs. Operating expenses increased primarily as a result of an increase of$2.6 million in selling expense due to higher third party distribution expenses.
FootJoy Golf Wear Segment
Net sales in our FootJoy golf wear segment increased 15.8%, or 20.8% on a
constant currency basis, for the six months ended
Operating income in our FootJoy golf wear segment decreased$5.8 million , or 11.8% compared to the prior year period. The decrease in operating income resulted from higher operating expenses partially offset by higher gross profit of$15.2 million . Gross profit increased primarily as a result of the sales volume increase and higher average selling prices, partially offset by increased inbound freight costs. Operating expenses increased primarily as a result of an increase of$15.0 million in selling expense due to higher sales volumes, higher third party distribution expenses and higher retail commission expense inKorea , as well as an increase of$3.5 million in administrative expense.
Liquidity and Capital Resources
Our primary cash needs relate to working capital, capital expenditures, servicing 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 sell-in 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 ofJune 30, 2022 , we had$107.4 million of unrestricted cash and cash equivalents (including$14.4 million attributable to our FootJoy golf shoe variable interest entity). As ofJune 30, 2022 , 86.1% of our total unrestricted cash and cash equivalents was held at our non-U.S. subsidiaries, 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 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 macroeconomic environment, including the ongoing COVID-19 pandemic, could impact our results of operations in ways we cannot currently predict. Nonetheless, 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 34
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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 current and future economic trends and conditions, demand for our products, availability and cost of our raw materials and components, 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, 2021 .
Debt and Financing Arrangements
As ofJune 30, 2022 , we had$319.2 million of availability under our revolving credit facility after giving effect to$8.6 million of outstanding letters of credit. Additionally, we had$33.7 million available under our local credit facilities. Subsequent to the end of the quarter, onAugust 2, 2022 , we amended our current credit facility to, among other things, provide a$950.0 million multi-currency revolving credit facility and amend rates per annum at which borrowings in different denominations bear interest.OnAugust 2, 2022 , proceeds from borrowings under the multi-currency revolving credit facility were used to, among other things, prepay in full our outstanding term loans and refinance our outstanding borrowings under the revolving credit facility. See "Notes to Unaudited Condensed Consolidated Financial Statements - Note 5 - Debt and Financing Arrangements," Item 1 of Part I included elsewhere in this report for a description of our amended credit agreement. 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 also 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 ofJune 30, 2022 , 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, 2021 for a description of our credit facilities and related credit agreement. Additionally, see "Risk Factors - Risks Related to Our Indebtedness" as described in our Annual Report on Form 10-K for the year endedDecember 31, 2021 for further discussion surrounding the risks and uncertainties related to our credit facilities.
Dividends and Share Repurchase Program
As ofJune 30, 2022 , our Board of Directors had authorized us to repurchase up to an aggregate of$350.0 million of our issued and outstanding common stock. During the six months endedJune 30, 2022 , we repurchased 2,114,024 shares of common stock at an average price of$46.44 for an aggregate of$98.2 million . Included in this amount were 699,819 shares of common stock repurchased fromMagnus Holdings Co., Ltd. ("Magnus"), a wholly-owned subsidiary ofFila Holdings Corp. , for an aggregate of$37.5 million onJanuary 24, 2022 , in satisfaction of our obligations pursuant to our previously disclosed Magnus share repurchase agreement. OnJune 16, 2022 , the Company entered into a new agreement with Magnus to purchase from Magnus an equal amount of its common stock as it purchases on the open market, up to an aggregate of$75.0 million at the same weighted average per share price (the "2022 Agreement"). As ofJune 30, 2022 , we had$150.0 million remaining under the current share repurchase authorization, including$75.0 million related to the 2022 Agreement. OnJuly 26, 2022 , our Board of Directors authorized us to repurchase up to an additional$100.0 million of our issued and outstanding common stock, bringing the total authorization up to$450.0 million since the share repurchase program was established in 2019. See "Notes to Unaudited Condensed Consolidated Financial Statements-Note-10-Common Stock," Item 1 of Part I included elsewhere in this report for a description of our share repurchase program and Magnus share repurchase agreements. During the six months endedJune 30, 2022 , we paid dividends on our common stock of$26.9 million to our shareholders. During the third quarter of 2022, our Board of Directors declared a dividend of$0.18 per share of common stock to shareholders of record as ofSeptember 2, 2022 and payable onSeptember 16, 2022 .
Capital Expenditures
We made$20.5 million of capital expenditures during the six months endedJune 30, 2022 . Capital expenditures for the full year are expected to be approximately$60 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 due to supply chain challenges. 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 to support our global strategic initiatives. 35
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