Acushnet (GOLF) Q4 2025 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Thursday, Feb. 26, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — David Maher
• Chief Financial Officer — Sean Sullivan
• Vice President, Investor Relations — Cameron Vollmer

TAKEAWAYS

• Net Sales -- $2.56 billion for the year, up 4% on a constant currency basis.
• Adjusted EBITDA -- $410 million for the full year, up 1.5%.
• Titleist Golf Equipment Segment -- Grew 6% in 2025, with investments in product development and manufacturing delivering gains in golf balls and clubs.
• Golf Ball Net Sales -- Up 4%, boosted by new Pro V1 gains across all regions, especially EMEA, Japan, and the U.S.
• Titleist Golf Clubs -- Increased over 7%, led by new T-Series irons and strong performance in metals and Scotty Cameron putters.
• Titleist Gear -- Revenue up 6%, citing strong growth in the U.S. and EMEA.
• FootJoy Sales -- Down 1%, mostly from reduced discounted sales, though margins improved due to a stronger mix of premium products and growth in gloves and apparel.
• KJUS Brand -- Sales up 9%, with double-digit growth in the U.S.
• Quarterly Net Sales (Q4) -- Rose 7% year over year, primarily from higher Titleist Golf Equipment net sales.
• Adjusted EBITDA (Q4) -- $9.8 million versus $12.4 million in Q4 2024.
• Titleist Golf Equipment (Q4) -- Up 10%, driven by T-Series irons and SM10 wedges, partly offset by lower GT driver sales from prior-year comp.
• FootJoy (Q4) -- Net sales up 4.5%, attributed to favorable price mix and higher average selling prices in footwear.
• Golf Gear (Q4) -- Net sales down 5%.
• Gross Profit -- $1.2 billion full-year, up 3%, with gross margin of 47.7%, down 60 basis points primarily due to $30 million in incremental tariff costs.
• Inventory -- Up $33 million or around 6% from the prior year-end, motivated by higher tariffs and inventory build for an accelerated metals launch.
• Free Cash Flow -- $120 million, down from $170 million, reflecting elevated inventory, ERP system spend, and a voluntary retirement program.
• Capital Return to Shareholders -- $268 million in 2025, including $56 million in cash dividends and $212 million in share repurchases (about 3.1 million shares).
• Dividend -- Board approved an 8.5% increase to the quarterly payout in 2026, now $0.255 per share.
• Net Leverage Ratio -- 2.2x at year-end.
• 2026 Net Sales Guidance -- Projected between $2.625 billion and $2.675 billion reported; constant-currency growth expected between 2.5% and 4.5% with segment and geographic breadth.
• 2026 Adjusted EBITDA Guidance -- Range of $415 million to $435 million; midpoint margin at approximately 16%, flat year over year.
• Tariffs -- Estimated at $70 million in costs for 2026 (including $40 million IEEPA-related), with guidance assuming no change despite the Supreme Court's recent ruling.
• Capital Expenditures (2026) -- Expected at $95 million for core capex and $25 million for capitalized ERP costs; $95 million seen as a near-term peak.
• SG&A Outlook -- Anticipated growth in line with sales, excluding $6 million of additional ERP-related expenses.
• First Half 2026 Outlook -- Net sales and adjusted EBITDA both forecast to grow mid to high single digits year over year, weighted to Q2 from product launches.
• Share Repurchase Authorization Remaining -- $241 million available as of February 21, 2026.
• New Product Launches (2026) -- Early-year launches of new Titleist Golf Ball models, Vokey SM11 wedges, and Scotty Cameron mallet putters; driver launch moved forward to late June from historical Q3 timing.
• Global Golf Participation -- Worldwide rounds up 2% in 2025, with increases in EMEA, the U.S., and Japan and flat performance in Korea.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Tariffs -- Sean Sullivan said, "Gross margin fell to 47.7%, down 60 basis points from last year, primarily related to incremental tariff costs of approximately $30 million," and for 2026 expects "approximately $70 million of tariff costs," with the outcome of the Supreme Court ruling still uncertain and potentially impacting future results.
• Inventory and Cash Flow -- Free cash flow dropped to $120 million from $170 million "Free cash flow, which we define as cash flow from operations less CapEx, totaled $120 million in 2025. This was down from $170 million in 2024 due to the increased inventory levels, additional spend related to the ongoing implementation of our new ERP system, and our 2025 voluntary retirement program," which could pressure liquidity if such dynamics persist.
• Soft Segments in Key Asian Markets -- David Maher said, "wearables have been soft for us in the industry" in Japan and Korea, and the company maintains a "tempered, measured, conservative outlook vis-a-vis wearables and footwear" in those regions.
• Q4 EBITDA Decline -- Adjusted EBITDA for the fourth quarter decreased to $9.8 million from $12.4 million, with tariffs cited as a key factor.

SUMMARY

Management introduced a forward-shifted 2026 product cadence, pulling forward the Titleist driver launch to late June and confirming early-year introductions across balls, wedges, and mallets. Strategic investments for 2026 focus on global capacity and fitting network expansion, ERP implementation, and enhancing B2B/D2C digital capabilities. The board approved the ninth straight annual dividend hike, reflecting confidence in the business and capital allocation priorities. Regional commentary highlighted continued equipment momentum in the U.S. and EMEA, tempered by softness in apparel and footwear in Japan and Korea. Executive commentary described the U.S. golf market as structurally sound, supported by sustained increases in golf rounds and a growing, engaged participant base.

• The company extended its revolving credit facility to 2030 and refinanced senior notes to 2033 at a more favorable rate, reinforcing balance sheet stability.
• Sean Sullivan confirmed, "incremental $40 million is the IEEPA tariff," and noted no refund filing has been made yet despite ongoing monitoring of legal outcomes.
• Management expects gross margin to remain "relatively flat to 2025," despite tariff and input cost pressures, due to offsetting effects from pricing and mix improvements.
• Fit Lab and consumer experience investments in the FootJoy franchise are positioning the segment for increased bottom-line performance over sales growth.
• Company guidance assumes tariff costs will remain through 2026, but management will update guidance depending on legal and regulatory clarity during the year.
• Global demand trends remain positive, with management noting the largest participation gains in women and juniors, and a 23% rise in global rounds since 2019.

INDUSTRY GLOSSARY

• IEEPA tariff: Tariff applied under the International Emergency Economic Powers Act, particularly impacting import costs for certain goods.
• FJ Mobile Fit Lab: FootJoy’s mobile footwear fitting initiative delivering personalized fit experiences to consumers.
• ERP system: Enterprise resource planning system, a suite of business management software for streamlining and automating core processes.
• TPI: Titleist Performance Institute, the company's golf-specific health, fitness, and swing diagnostics and training division.
• D2C / B2C: Direct-to-consumer (and business-to-consumer) channels, referring to the company’s strategy for directly serving end customers.

Full Conference Call Transcript

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 Holdings Corp.'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.

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 12-month period ended December 31, 2025, and the comparable 12-month period in 2024. With that, I will turn the call over to David.

David Maher: Good morning, everyone. Cameron has been with our team for a while, and it is my pleasure to welcome him to his first quarterly earnings call. We appreciate your interest in Acushnet Holdings Corp. and look forward to sharing our 2025 results and future outlook today. As a starting point, we are pleased with our fourth quarter performance as our teams executed our year-end plans and did good work preparing for the 2026 season and several product launches. As Sean will outline, revenues were up 7% for the period, and we generated nice momentum in our operating segments.

Turning to slide four, for the full year, Acushnet Holdings Corp. achieved net sales of $2.56 billion and adjusted EBITDA of $410 million in 2025, growth of 4% and 1.5%, respectively. These results were made possible thanks to the talented and dedicated associates who make up Acushnet Holdings Corp. and our committed trade partners who are on the front lines wherever golf is played. There are several highlights within these operating results, led by the Titleist Golf Equipment segment, which grew 6% on the year as investments in product development, precision manufacturing, and fitting paid dividends across our golf ball and golf club businesses.

As you will note from our revenue growth, the company is benefiting from recent capacity expansion projects, which will continue with a focus on cast urethane golf ball production and custom golf club assembly. In 2025, new Pro V1 posted gains across all regions, contributing to a 4% increase in golf ball net sales on the year with EMEA, Japan, and the U.S., our fastest growing markets. We are pleased with increasing demand for our AIM, or Alignment Integrated Marking, golf balls. Operationally, we continue to benefit from the expansion of our automated custom imprinting capabilities, which is driving efficiencies and reducing lead times.

Within equipment, 2025 was a strong year for Titleist Golf Clubs, which grew more than 7%, led by the successful launch of new T-Series irons and steady growth in metals and Scotty Cameron putters. Our Vokey Wedge franchise also posted strong results in year two of the SM10 product cycle. Ongoing investments in product development and our global club fitting network frame how we characterize the Titleist Golf Club opportunity. Acushnet Holdings Corp.'s gear business increased 6% on the year, with especially strong increases by Titleist Gear in EMEA and the U.S. and growing momentum for Club Glove travel products. Now moving to FootJoy, we are pleased with the direction this business is pointed.

Sales were down 1%, mainly due to reduced discounted sales versus last year. On the strength of products like Premiere and HyperFlex, we are seeing a favorable mix shift towards our premium high-performance footwear franchises, and the FJ Mobile Fit Lab program is delivering a value-added fitting experience, which helps golfers select the best footwear, performance, and comfort option for their games. Growth in gloves and apparel added to FootJoy's momentum and improved profitability for the year. Rounding out our portfolio, we continue to generate strong growth with our KJUS brand, up 9% on the year, led by double-digit gains in the U.S. Titleist Apparel also delivered a promising year, led by growth in China and our business in Korea.

As to Acushnet Holdings Corp.'s regional performances, full year 2025 results affirm our previous commentary about the Titleist equipment segment, posting gains in all major regions, led by the U.S. and EMEA, and softer conditions in Japan and Korea, where our equipment gains have been offset by declines in the correcting apparel and footwear categories. Acushnet Holdings Corp.'s strong financial performance in 2025 supported ongoing investment across our business and the company's commitment to returning capital to shareholders. For the year, dividend and share repurchases totaled $268 million, bringing our total return over the past four years to more than $1.1 billion.

Furthering Acushnet Holdings Corp.'s commitment to our shareholders, I am pleased to announce that our board of directors has approved an 8.5% increase to our quarterly dividend payout in 2026 to $0.255 per share. This marks the ninth consecutive annual dividend increase since the program was initiated in 2017. These actions reflect the board's confidence in Acushnet Holdings Corp.'s ability to execute and their positive outlook towards the company's leading positions within the structurally healthy golf industry. As you will note, the company remains focused on investing to position the company for future growth, while also returning capital to shareholders as appropriate.

Now, looking ahead, we start by pointing to the game's global momentum, with worldwide rounds projected to have increased about 2% in 2025, with growth in EMEA, the U.S., and Japan, and a flat year in Korea. In the U.S., our largest market, the number of golfers again increased, contributing to this rounds of play momentum. The global golf industry, as defined by golf courses, teaching centers, and golf retailers, continues to be healthy, with strong financials supporting ongoing investments as the industry adapts to meet ever-evolving golfer preferences. Within Acushnet Holdings Corp., we are enthused by our new product pipelines and sustaining momentum our brands carry into 2026.

As is customary in even-numbered years, we successfully launched a comprehensive lineup of new Titleist Golf Balls in this first quarter, including Pro V1x Left Dash and new AVX, Tour Soft, and Velocity models. It is also a busy year for Titleist Golf Clubs, with new Vokey SM11 wedges and a new lineup of Scotty Cameron mallet putters launching in Q1. Both products debuted on worldwide tours earlier this year, and initial responses have met our very high expectations. Plans are well underway for our new driver launch in late June, earlier than our customary Q3 timing. Titleist drivers are number one on the PGA Tour.

We are enthused by the great work from our product development and operations teams to provide added flexibility around launch timing. We will share more details about this product on our May call. One of our key narratives in recent years has been our focused investments in golf equipment R&D, operational efficiencies, and capacity expansion, and point to these investments as drivers to our recent growth and confidence in our ability to deliver enhanced innovation, product development, and best-in-class golfer experiences, core attributes to the long-term success of Titleist Golf Equipment. Acushnet Holdings Corp.'s gear business is well positioned, coming off a strong 2025. We are planning for growth led by gains in the U.S. and EMEA.

Within gear, we pursue exceptional performance and quality to differentiate our products with discerning core golfers. The FJ brand continues to move forward in 2026 as we leverage high-performance Premiere and Pro/SL franchises to strengthen our position as the number one shoe in golf. We continually evolve our outerwear and apparel offerings with a focus on our premium segments as we position FJ for the future and manage near-term tariff headwinds.

To our investments in 2026, in support of Acushnet Holdings Corp.'s priorities and our longer-term growth opportunities, we will prioritize strategic capacity expansion and the build-out of our global fitting networks for golf equipment and footwear, expand our B2B and D2C capabilities to new regions, and invest in the future of the Titleist Performance Institute, where demand for TPI's golf-specific health, fitness, and swing expertise is outpacing our available capacity. Collectively, we expect these investments will support our future growth plans and enable operating leverage over the long term.

In summary, we are optimistic about the structural health of the golf industry and are focused on expanding our momentum in the Titleist Golf Equipment segment, strengthening our gear and FJ wearables business, and investing in key initiatives that we believe will pay dividends over the next several years. I have confidence in the Acushnet Holdings Corp. team and their ability to provide dedicated golfers with leading products and services as we seek to build long-term value for shareholders. Thanks for your attention this morning. I will now pass the call over to Sean.

Sean Sullivan: Thank you, David. Good morning, everyone. Turning to our 2025 financial results, fourth quarter net sales were up 7% when compared to the fourth quarter of 2024, primarily driven by higher net sales in Titleist Golf Equipment. Adjusted EBITDA was $9.8 million, lower than last year's fourth quarter of $12.4 million. Looking at our segments, Titleist Golf Equipment was up 10% in the quarter, largely due to higher sales volumes of our T-Series irons and SM10 wedges, partially offset by lower GT driver sales, which comped against last year's launch. FootJoy net sales grew 4.5% during the fourth quarter, driven by favorable mix shift and higher average selling prices in footwear.

Golf gear net sales decreased 5% in the fourth quarter. Overall, 2025 fourth quarter gross profit of $211 million was up $3 million compared to last year's fourth quarter. As a reminder, during last year's fourth quarter, we recognized a one-time benefit related to a PTO policy change that impacted gross profit by approximately $7 million. Gross profit for the full year was $1.2 billion, up 3% or $34 million, primarily resulting from higher sales volumes, higher average selling prices, and favorable mix. Gross margin fell to 47.7%, down 60 basis points from last year, primarily related to incremental tariff costs of approximately $30 million.

SG&A expense of $206 million in the quarter increased $13 million compared to the fourth quarter of 2024. Last year's SG&A expense included a one-time PTO policy change benefit of approximately $9 million. SG&A expense of $833 million for the full year increased $32 million or 4% from 2024. Excluding the $9 million one-time PTO policy change benefit, the $23 million increase was primarily related to higher employee expenses, including the support of our fitting initiatives, higher A&P expenses related to product launches, and higher information technology-related expenses. Interest expense was up approximately $6 million for the full year due to a year-over-year increase in borrowings.

Additionally, we recognized a $17 million charge from debt extinguishment related to our fourth quarter refinancing, which I will discuss in a moment. Our full year effective tax rate was 21.9%, up from 19.2% last year. The increase in ETR was primarily driven by changes in our jurisdictional mix of earnings and a reduced income tax benefit related to the U.S. deduction of foreign-derived intangible income. Moving to our balance sheet and cash flow highlights, we continue to maintain a strong balance sheet and cash flow profile, enabling us to invest back in the business while also returning capital to shareholders.

In the fourth quarter of 2025, given attractive market conditions, we proactively strengthened our balance sheet by extending our revolving credit agreement out to 2030, and refinancing our senior notes into a 2033 maturity at a more favorable interest rate. Our net leverage ratio at the end of 2025 was 2.2x. Our inventory levels increased $33 million or about 6% from year-end 2024, primarily due to higher tariff costs, as well as increased inventory to support the accelerated metals launch in Q2. Capital expenditures in 2025 were $74 million, in line with 2024. Free cash flow, which we define as cash flow from operations less CapEx, totaled $120 million in 2025.

This was down from $170 million in 2024 due to the increased inventory levels, additional spend related to the ongoing implementation of our new ERP system, and our 2025 voluntary retirement program. During 2025, we returned $268 million to shareholders, consisting of $56 million in cash dividends and $212 million in share repurchases, or approximately 3.1 million shares. As of February 21, 2026, the remaining amount on our share repurchase authorization was approximately $241 million. Turning to our full year 2026 outlook, full year net sales are projected to be between $2.625 billion and $2.675 billion on a reported basis.

On a constant currency basis, our current expectation is that consolidated net sales will be up between 2.5% and 4.5% compared to 2025, with growth across all reportable segments, as well as growth both domestically and internationally, with strength in EMEA and rest of world markets. Turning to tariffs, as we discussed previously, we expect approximately $70 million of tariff costs in 2026, reflecting the tariff environment in place prior to the Supreme Court's February 20 ruling. While the decision impacts certain tariff programs, the timing, implementation, and durability of any changes remain uncertain. As a result, our 2026 financial guidance reflects the continued assumption of approximately $70 million of tariffs.

As we gain greater clarity on the path forward, we will update you with any material changes to our outlook. We expect our full year 2026 adjusted EBITDA to be between $415 million and $435 million. At the midpoint, our adjusted EBITDA margin would be approximately 16%, flat with 2025. As we remain focused on driving sustainable long-term growth, we continue to invest in the business through a number of strategic initiatives, including expanding our global fitting network across our Titleist Golf Equipment and FootJoy segments, strengthening our global B2B and B2C capabilities, and enhancing consumer engagement through the Titleist Performance Institute.

In 2026, we will continue the implementation of our new global cloud-based ERP system, which we expect to enhance our customer service, supply chain, and finance capabilities and support operating efficiencies across the business. As a result, we anticipate approximately $6 million of incremental operating expense in 2026 related to the implementation. Given these investments, we expect full year 2026 SG&A growth, excluding the incremental ERP expense, to be generally in line with our sales growth projections, as we believe these initiatives position the company for sustained growth and operating leverage. Looking ahead, our capital allocation strategy remains unchanged.

We continue to prioritize investing back in the business and returning capital to shareholders through our dividend and an opportunistic share repurchase program. From a financial policy standpoint, we remain focused on maintaining net leverage at or below 2.25x on average, while allowing for flexibility to account for seasonality and other business needs that may arise. We expect capital expenditures in 2026 to be approximately $95 million. This step up primarily reflects investments in golf ball manufacturing capacity and increased club production throughout the world as we scale our facilities to support the continued demand for our products. We view $95 million in 2026 as a high watermark, with capital spending expected to step down in the subsequent years.

In addition, we expect to invest approximately $25 million in capitalized costs associated with our ERP implementation in 2026. Turning to free cash flow, we expect 2026 to improve meaningfully versus 2025 and normalize back towards recent run rates. This improvement reflects the absence of several one-time cash outflows incurred in 2025, which I highlighted earlier. Moving to calendarization, we expect reported first half 2026 net sales to be up mid to high single digits compared to the first half of 2025, with growth primarily coming from Titleist Golf Equipment, driven by the launch of new SM11 Vokey wedges and the acceleration of our new metals launch to June.

We expect first half 2026 adjusted EBITDA to also increase mid to high single digits year-over-year, as increased sales resulting from new product launches more than offset the impact of higher tariff costs. From a quarterly perspective, we expect first half growth in both net sales and adjusted EBITDA to be heavily weighted towards the second quarter, again, driven by the Vokey wedge launch and the acceleration of our metals launch into June. We expect first quarter net sales to increase low single digits, primarily related to the strength in our Titleist Golf Equipment segment.

In closing, as David mentioned, the golf industry is structurally sound, our product portfolio is well positioned, our performance in 2025 reflects strong results by our entire team. We remain focused on execution in 2026, despite continued economic uncertainty with tariffs, while also making the necessary investments intended to continue to deliver long-term growth for all stakeholders. With that, I will now turn the call over to Cameron for Q&A.

Cameron Vollmer: Thanks, Sean. Operator, could we now open up the line for questions?

Operator: Certainly. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. To remove that question, please press star followed by two. If you are using the speakerphone, please pick up the handset before using the keypad. Once again, if you would like to ask a question, please press star followed by one. The first question comes from the line of Simeon Gutman with Morgan Stanley. You may proceed.

Lauren Ng: Hi, this is Lauren Ng on for Simeon. Thanks for taking our question. First, we just wanted to get more color on the 2026 product calendar. I know you guys alluded to this earlier in the call, can you comment on your innovation pipeline for the new driver and new wedge launches? Thank you. Okay, great. That is helpful. Just a quick follow-up. If you could just give us any more color on your expectations for the U.S. market, specifically in 2026, and maybe how we should think about volume versus price for these categories?

David Maher: Yeah, hi, good morning. You know, as we often do, we will point you in an even-numbered year, 2026, two years back to 2024. That is the best like for like view of our timing and product pipeline. And that holds true really in golf balls and wedges and putters for this year, also across our gear and wearables business. What is different, and we did call it out, is that we have elected to accelerate the launch of our new driver into late June. Typically, that happens in early August.

More to follow in terms of timing and product details, et cetera, but we wanted to give you that visibility to let you know that the model will be a bit different in 2026, solely because of the driver launch timing change. We have not brought that story to our trade partners. They are aware of it, but we have not brought the product story to our trade partners. Until we do that, we are going to keep that one under wraps. Thanks, Lauren. Yeah, I will start, maybe Sean can get into volume price. U.S. market, we have said for a while, has been our healthiest, and it really starts with a strong consumer base, right?

Rounds of play in the U.S. over the last five, six years are up 25% and really driven by, I think we said it seven or eight years in a row of golfer increases. From a golfer base and a participation standpoint, very, very healthy. I might add also, and I have talked about this before, you know, in the late 2016, 2017, 2018 period, the industry corrected. We saw a contraction of retailers, manufacturers, so the industry got lean and fit... at the end of the 2010s, we have seen this pandemic-led surge the last five, six years. Came in fit, went on a bit of a growth spurt.

We like the fundamentals, industry participants, whether it is golf courses or teaching centers or golf specialty retailers are financially sound. Structurally, the U.S. market is probably our healthiest around the world, part two to that, it is also benefiting from a very, very strong golfer base, consumer participation, momentum that we have seen over the last handful of years. The final point I would add is just in terms of how we think about the market today. It is February, the market is, from an inventory standpoint, where it should be. Inventories are full and vibrant in open markets, and lean and almost dormant in closed markets. That will change here in the next four to six weeks.

No, we are enthused about the U.S. market, and really led by what is happening at the golfer base, in the U.S.

Sean Sullivan: Lauren, maybe what I would add, just on a segment basis, really, the focus for you should be in the golf equipment. Again, reiterating and reinforcing the two-year product introduction cycle. 2026 is obviously not a Pro V1 launch year. Historically, we have seen, you know, flat to down volumes in the ball business. If you look at where we are at versus two years ago, we feel very good about where the golf ball business is performing and delivering. On the club side, again, you see the strong growth we experienced in 2025. If we look at volumes versus 2024, we expect, you know, good growth from the club business with the metals launch in 2026 versus 2024.

Lauren Ng: Great. Thank you.

David Maher: Thanks, Lauren. Operator, next question, please.

Operator: Thank you. The next question comes from the line of Randy Konik with Jefferies. You may proceed.

Randy Konik: Yeah, thanks a lot. I think, David, for you had a meaningfully more constructive tone around the FootJoy business. It seems like all the efforts around product architecture, the Fit Lab, are really paying off. Kind of maybe walk us through a little deeper on where we are with the FootJoy business. It seems like people are moving towards the premium products. Then, after that, can we get an update on Japan and Korea? I think you said Japan will be up this year. I think that is a change. Korea flat, so an improvement from down. That you talked about apparel and footwear still languishing a little bit in those markets.

Maybe give us an update on where we go from here with those markets and those categories. Thanks.

David Maher: Yeah, great. Thanks, Randy. Starting with FootJoy, you know, we noted a year or so ago that, you know, coming out of what was an 18, 24 month correction period in the footwear industry following the pandemic surge, right? We had a whole lot of demand, and just the way that supply chain works, we chased that demand as an industry. Demand normalized, yet supply kept running. We had an inventory correction issue that we dealt with as an industry. You know, we feel we got through it about a year or so ago.

What it meant for FootJoy, and FootJoy has got a wonderful, long history, over 100 years, been the number one shoe in golf for over 75 years. We continually lean into the high performance heritage of that brand as we think about innovation in the future. We said a while ago, we are going to be more focused on the bottom line than the top line, again, coming out of this correction period. The team has done a really nice job of that. I made the comment earlier that, you know, while sales were down slightly, it was a commentary or function of lower closeout, reduced volume sales.

I have called out a handful of our products, whether it is Premiere, whether it is Traditions, whether it is HyperFlex or Pro/SL. We are really leaning into our premium performance products, and we are rationalizing the product line down at some lower price points, and raising the floor, if you will, on some of the lower price points. Structurally, we like where we are. Have not really commented about what is happening with apparel, but it is a similar story, and the team is doing a really good job. I am pleased with the direction and trend lines of the FootJoy business. Again, moderating top line, slower top line, but a more accelerated bottom line.

The caveat to that is, of course, tariffs. That business, more than others, heavily burdened by tariffs. We are doing a good job mitigating, offsetting the best, as best we can. Then the final piece is Fit Lab, right? We have benefited as a company with ball fitting and club fitting going back into the 90s. Footwear fitting has arrived in full force with footwear, both in the U.S. and around the world. Fit Lab is just another. You know, I talk a lot about products and services. That is another service that helps optimize our products and make sure golfers have the very best experience, whether it is from a performance standpoint or a fit standpoint.

That is again, high level on FootJoy. Your comments, Randy, on Japan and Korea, maybe just some level setting. You know, both those markets, we had some nice growth in equipment in certainly balls and clubs in 2025. Gear, wearables, FootJoy, softer businesses, you know, we run a Korea, Asia-specific apparel business, Titleist Apparel over there. We have been pleased with the equipment business in Japan and Korea, but wearables have been soft for us in the industry. I will make a couple comments about Japan as we look ahead. We do expect growth, again, similar led by equipment, maybe tempered expectations in gear and wearables.

Similar to Japan, really the same similar story in Korea, where we are a little bit more bullish about equipment and are taking a tempered, measured, conservative outlook vis-a-vis wearables and footwear. But in terms of rounds of play and what is happening in those markets, you know, if I look at Japan, up slightly, rounds up slightly, that is a positive last year, up about 10% versus 2019. Korea is a little bit of a different story, similar, about flat last year, up about 20%–25% versus 2019. Healthy markets, equipment landscape, similar in Asia as it is in U.S. The key differentiator is really wearables.

Footwear and apparel has been softer for the last couple of years, which leads to our temperate expectations in those segments.

Randy Konik: Super helpful. Just last question. You know, a lot of the commentary has come through around, I guess, pricing. Is your view that we still are in a very firm pricing environment across all categories, let us say, in particular, balls and clubs? It feels pretty good, the consumers, you know, very much willing to pay higher prices for more innovation, et cetera.

David Maher: Yeah, we are careful, right? We have said this before. We are careful with pricing, but we are dealing with the realities of input cost and distribution costs and labor and all that, not to mention tariffs. As we think about pricing, we took action, more notably with FootJoy and Gear in the second half of 2025. You will see some pricing action in equipment in the first half of 2026. Yeah, our job is anytime you take price, you have to work a little bit harder to show value, and whether it is improved product or a better fitting experience.

We do not take it lightly, but so far, so good in terms of how we have both mitigated a higher cost and within that, had to pass along some of those costs. We do not take it lightly, but again, so far, so good, and again, first half of 2026, you will see some equipment price increases across our lines, really attached to new club products. And then on golf balls, it is going to be more a U.S., Canada story, around Pro V1, where rest of world, we took some pricing measures last year. You know, we are trying to be thoughtful and strategic.

We look at it case by case, we look at it market by market, but so far, so good. Again, as I said, every time we take price, it compels us to work a little bit harder on the product side and the experience side to make sure we are showing value.

Randy Konik: Very helpful. Thanks, guys.

David Maher: Thanks, Randy.

Operator: Thank you.

David Maher: Next question, please.

Operator: The next question comes the line of Joseph Altobello with Raymond James. You may proceed.

Joseph Altobello: Thanks. Hey, guys. Good morning. First question on the quarter, I was not expecting 19% club growth, and based on your guidance, I am not sure you were either. Maybe talk about what drove that upside. Was there a timing issue? Why did not we see that flow through on the EBITDA line?

Sean Sullivan: Yeah, Joe, I will take it. Yeah, no, I think we saw, you know, in the quarter top line, we saw, you know, better than expected performance across all segments, particularly in clubs, as you called out. Just really great execution by the team, continued strong demand. You know, I think David talked about the T-Series iron, just really pleased with how that played out. As it relates to the conversion rate, again, we had the impact of tariffs in Q4, as you know, it was $15 million, the largest quarter of the year, against the total of $30 million. Not particularly a surprise to us in terms of how the bottom line delivered relative to our expectations.

Joseph Altobello: Okay, that is helpful. Maybe on the subject of tariffs, I think you mentioned this morning, $70 million total, so let us call it $40 million incremental. How much of that is IEEPA?

Sean Sullivan: That is all IEEPA. The incremental $40 million is the IEEPA tariff. You know, as I said in my prepared remarks, we are going to, you know, similar to the approach we took last year, we are going to let things settle in, and we will update you as appropriate, rather than trying to follow the toing and froing on this topic. That is the current situation.

Joseph Altobello: Have you filed for a refund yet?

Sean Sullivan: No, we have not, but, you know, we are obviously monitoring the market, obviously talking daily with advisors and assessing our approach and, you know, the ability to get a refund, for sure. Still early days.

Joseph Altobello: Okay. Thank you, guys. See you next week.

David Maher: Thanks, Joe.

Operator: Thank you.

David Maher: Next question, please.

Operator: The next question comes from the line of Matthew Boss with J.P. Morgan. You may proceed.

Amanda Douglas: Great, thanks. It is Amanda Douglas on for Matt. David, with the healthy golf industry backdrop, as you cited, could you speak to your top priorities into 2026 to capture additional market share within the equipment category, and specifically, any initial feedback you have received from channel partners on your new launches as we look ahead to the core selling season?

David Maher: Yeah, hi, Amanda. Just in terms of how we think about growth and share, I will really bring it back to really what our core principles are, and that is, number one, get the product right, get it as good as we can get it. We validate it through the pyramid, and then we really invest behind our fitting experience. We are trying to bring to golfers great product and a world-class fitting experience that helps them decide that what we are bringing to market is better than what is in their bag, and that is it. No magic tricks up our sleeve beyond get the product right, get the golfer experience right.

Within that, we work real closely with our trade partners, to educate them, to partner with them, to make sure our golfer connections are effective and working. That is as much the long-standing proven playbook. Amanda, help me, part two of your question was about what? Repeat that, please.

Amanda Douglas: Just any feedback you have received from channel partners—

David Maher: Yeah.

Amanda Douglas: on your new product launches.

David Maher: I will just level set. It is February in the golf industry. Most of the industry is still under cover of snow as we are here. Early days, we like. You know, we have launched a whole series of golf balls as planned, as expected. We are pleased. Almost too early to say on wedges and putters. Those are just arriving in the market here now. I do not have a lot of great color to talk about how new products have been received. But what I can say about the market is when the weather is okay, people are playing golf, and when it is not, they are not.

We had a little bit of some ice storms across the Southeast in January, as you would expect. That slows things down, but it is January. By and large, when weather is okay, people are playing golf, and the game is alive and healthy. In terms of really getting a sense for the market and what is happening, we have always said, you know, first quarter is really about shipment in, second quarter gives you a read on what is happening in the market, how the consumer is behaving, and how they are responding to your products. We tend to reserve our commentary or assessment until a little bit later in the year.

Yeah, no, for this time of the year, we like where we are, with the exception of, again, we are under three feet of snow here in New England.

Amanda Douglas: That is helpful. Sean, just as a follow-up, maybe if you could speak to your overall expectations for gross margins in 2026, maybe relative to the 60 basis point decline in 2025, and any differences you see between front half and back half gross margin drivers?

Sean Sullivan: Yeah, just to reiterate what I said in my prepared remarks, as we look at 2026, you know, we are expecting gross margins to be relatively flat to 2025. I think in the context of higher input costs, and particularly in our golf equipment segment, as well as the incremental tariff landscape that we have talked about, and some of the pricing actions we have taken, we feel very good about the ability to deliver and hold margins flat year-over-year. As it relates to, you know, gross margin, first half, second half, again, I would guide you to what we talked about in terms of the growth.

Seemingly, given what I have talked about in terms of first half sales, and EBITDA contribution, I will leave it to you to model how that gross margin may impact. You are probably going to see slightly higher in the first half, and maybe less so in the back. Overall, on a full year basis, like I said, consistent with 2025.

Amanda Douglas: That is helpful. Thank you.

David Maher: Thanks, Amanda. Next question, please.

Operator: The next question comes the line of Noah Zatzkin with KeyBanc Capital Markets. You may proceed.

Noah Zatzkin: Hi, thanks for taking my questions. I guess, just to kind of follow up on pricing, and not only specific to you guys, but across the industry, what are you kind of seeing from competitors in terms of pricing? If you have seen it kind of broadly, like, have you, I guess, heard chatter or have a sense for how kind of retail partners are responding to that? Then kind of like within that framework, how do you think that positions you relative to some others? Meaning, are others kind of been, you know, more aggressive on pricing? Similar? Just trying to understand kind of the pricing landscape. Thanks.

David Maher: I guess, Noah, couple observations. One would be, and I said this about Acushnet Holdings Corp., I do think you could make this analogy to the total industry, and this is just from what we have seen. Again, the early pricing moves were gear and wearables, just due to the life cycles of those segments, and we saw industry-wide that play out in the second half of 2025. You did not see as much pricing action in equipment, balls, and clubs in 2025, I think you are starting to see that now. Again, I think our profile and flow is similar to what you will see in the industry.

In terms of how we think about our positioning in all this, you know, we are a premium position product, and we work hard to earn that position, and I know our competitors will as well. By and large, yeah, we are seeing price increases flow through retail. It is early, right? As I have said, it is early, it is February. We are seeing some price increases flow through retail. I do not think anybody is surprised by that. We all saw that coming in as much as the fourth quarter.

In terms of how it stacks up and how the consumer responds, it really is, it is going to take a few more months to get a read on how the consumer processes, you know, Company A versus Company B versus Company C. We do believe and feel pretty good about our position and our ability to take price, and I say that, principally because of the belief we have in our products, and the belief we have in the experience we can bring to golfers. A little bit of a more to follow in terms of how the market reacts, but that is common for this time of year.

I think that is the best we can frame it for you.

Noah Zatzkin: No, that is really helpful. You touched on this, I think, a little bit, kind of as it relates to top-line trends, across different regions. Anything to call out in terms of maybe health of the sport across international markets? Any. It is obviously early in the year, but any changes in how you are thinking about different markets? Thanks.

David Maher: Yeah, I would just, you know, hey, good year for golf in 2025, right? U.S. was up, Canada, U.K., mainland Europe, up, up, all good. That is the first thing I will point to. Many of those regions are now in their off-season. Again, I will have a different answer two, three, four months from now, but they certainly come in with favorable positive trends. You know, I will say we continue to be, you know, we see the consumer strongest in the U.S. That is not a surprise. We see durability, the most durability across equipment, balls, and clubs.

And, you know, we have called out the watch outs of Korea and Japan, notably as it relates to really apparel in those spaces. That is the regional view. Anytime I can sit here in February and say rounds were up in most regions around the world, certainly in Western markets, that is terrific. Just to round out, you know, Japan and Korea about flat last year, so did not have bad years. They just did not post the big growth in 2025 that we saw elsewhere.

Noah Zatzkin: Thank you.

David Maher: Thanks, Noah. Next question, please.

Operator: Thank you. The next question comes from the line of Douglas Lane with Water Tower Research. You may proceed.

Douglas Lane: Yes. Hi, thank you, and good morning, everybody. I am staying on the rounds of golf. The resilience is impressive, another good year in the U.S. and elsewhere. Last year, if I remember right, the U.S. started out slowly, and then it made it up, more than made it up in the back half. Why was the difference between the first half and the second half last year in U.S. rounds of golf?

David Maher: Hi, Doug. Weather. Yeah, really that simple.

Douglas Lane: Okay.

David Maher: You had some tough weather and you had some tough weather in the Southeast that slowed things down, and that is just a fact of life in the golf business. Mother Nature has her say, but that was the issue. We had a slow start due to weather, and then we saw weather normalize and nice to see the comeback in the U.S. market.

Douglas Lane: Have you talked about who is playing the more rounds of golf? Is it more retirees? Is it more people in the South? Is it more amateurs, teenagers? Really, what is driving the increased rounds of golf, the persistent increased rounds of golf over the last several years?

David Maher: Yeah, we really point to the NGF, National Golf Foundation. They do a nice job collecting data, help us understand the evolving golfer base. It is really coming from all angles, but I would say the avid is certainly playing and alive and well. The two call-outs that, again, their call-outs that I will pass along would be the fastest-growing segments over the last several years have been women and juniors. They are certainly providing outsized contribution to the growth we have seen over the last handful of years.

Just for context and just using some big round numbers, in 2019, there were about 800 million rounds of golf played worldwide, and that number is going to be just shy of 1 billion this year. It is about a 23% increase, but in real world terms, it is 180 million, 190 million more rounds of golf being played today. As I say that, I am always compelled to point to the PGAs and the PGA club professional, and the outsized role and contribution and importance of their work in taking care of the game and really growing the game. That is. Hopefully that answers your question.

Douglas Lane: No, that is very helpful. You know, thank you. Just one more, if I might. You know, we read about and hear about the bifurcated consumer these days, where, you know, the higher end continues to spend, and the lower end seems to be a little squeezed. You have got a pretty wide variety of products. You have low ticket, high ticket, consumables, durables. How are you seeing consumer behavior here in your ecosystem?

David Maher: I think we talked a lot about it in terms of how our products are performing. I will package your question to sort of point to our dedicated golfer, right. They are avid, they are passionate. They will play if you can prove to them that you have got a better product, they are inclined to purchase it, if it is going to help them play better. We like the construct and demographic that is this dedicated golfer we talk about. You know, we characterize them as middle class plus, so they are a nice demographic. We have said over time, they are, you know, they are recession resistant.

They are not, you know, they are not recession proof, but over cycles, we have seen they are committed and avid. Golf has a great consumer. You are right, we have a broad and vast portfolio of products in terms of varying price points. By and large, we focus on premium performance, and that is where the bulk of our story is. That is where the bulk of our R&D efforts reside. That is where the bulk of our product line is constructed. I think the heart of your ask is this dedicated golfer, which the company sort of uses as the sun to our solar system. They are a strong cohort, for sure.

Douglas Lane: Okay, that is helpful. Thank you.

Sean Sullivan: Thank you. Next question, please.

Operator: The next question comes in line of John-Paul Wollam with ROTH Capital Partners. You may proceed.

John-Paul Wollam: Great. Good morning, guys. Thanks for taking my questions. If we could just start first on G&A. You know, I think last time in November, we were maybe expecting to see some leverage there, just given, you know, the voluntary retirement program and kind of a good year or 18 months of prior investment. Just curious to see what kind of change there. It sounds like G&A growth is expected kind of in line with revenue. Are there incremental? What kind of changed?

Sean Sullivan: Yeah, JP, when I look at 2025 versus 2024, I think if you normalize for the PTO in 2024, you normalize for the ERP, and some of the one-time things that I talked about, I think we have effectively delivered OpEx growth at less than the rate of sale. I feel good about that in terms of 2025, and I think as I talked about for OpEx in 2026. You know, again, we have some incremental expense as well, but overall expect growth to be in line with sales. Again, we are making, you know, we are making progress and, you know, delivering incremental benefits. Again, it is not a one-time unlock that is going to happen here.

I think you are going to start to see that gradually over the coming years in terms of delivering operating leverage.

John-Paul Wollam: Okay, understood. Just one follow-up on tariffs. Understanding that it is obviously an extremely fluid situation, but if I think about kind of what we maybe discussed as sort of the four levers to offsetting, you know, pricing, vendor cost sharing, some G&A leverage, and then I think we talked about, you know, maybe being able to tighten some advertising promotional expenses. Really, the question is, you know, as you think about the 2026 guide, is there any tightening in terms of the advertising and promotional that if, you know, tariffs went away in the next three to four months, like, you actually have an opportunity to invest more there and, you know, could see some top line upside?

You know, how are you thinking about that?

Sean Sullivan: Yeah, I guess how I am thinking about it is, you know, feel really good about the guide, feel really good about the performance of the business, the ability to overcome, the incrementality of the tariff landscape, albeit obviously seemingly changing. No, we are continuing to invest in A&P. Yeah, you know, you will see it in the filings, you know, we increased A&P in 2025, not significantly, but low single digits, and you have seen that the last couple of years. We have incredible confidence in our golf equipment franchises in FootJoy, so we are going to continue to invest behind those. Certainly, given the.

As David said, it is early, it is February, but overall, no, we are not using this as an opportunity to pull back on A&P to support our long-term growth. I think it is business as usual, despite the tariff landscape, and again, we will have to see how the year goes by, but we feel good about the guide in the context of all those.

John-Paul Wollam: Great. Thanks for taking my questions, and best of luck.

Sean Sullivan: Thank you.

David Maher: Thanks, JP. Thanks, everybody. As always, we appreciate your time and interest this morning, and look forward to getting back with you in a few months to provide updates on the quarter.

Operator: Ladies and gentlemen, thank you for attending today's conference call. This now concludes the conference. Please enjoy the rest of your day.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has positions in and recommends Acushnet. The Motley Fool has a disclosure policy.