Acushnet's Q3 2025 Earnings Call: Contradictions in Inventory Management, European Growth Narratives, and Tariff Mitigation Strategies

Business Commentary:

• Sales Growth and Market Performance:
• Acushnet Holdings Corp. reported net sales of $658 million for Q3 2025, up 5% on a constant currency basis year-on-year.

• The growth was driven by strong performance across all segments, particularly Titleist Golf Equipment and FootJoy businesses.

  

• Segment Performance and Product Launches:

• Titleist Golf Equipment saw a 5% increase in net sales in both Q3 and year-to-date, attributed to the successful launch of new Titleist T-Series irons and limited edition Vokey SM10 wedges.

• The Golf Gear segment posted a 13% gain in Q3 and is up 8% year-to-date, benefiting from a steady flow of new products and expanding custom capabilities.

• Regional Performance and Rounds of Play:

• The U.S. market grew 6%, with significant contributions from Titleist Golf Equipment, while EMEA posted a 14% gain in Q3 and is up 8% year-to-date, supported by favorable weather conditions and increased rounds of play.

• Japan and Korea saw mixed performance, with Japan down 13% in Q3 but flat year-to-date, while Korea grew 3% in Q3 and is up year-to-date.

• Financial Outlook and Tariff Mitigation:

• Acushnet expects full-year 2025 revenue to be in the range of $2.52 billion to $2.54 billion, with a projected full-year adjusted EBITDA of $405 million to $415 million.
• The company is focused on mitigating a significant portion of the anticipated $70 million in tariff impacts for 2026, through strategic initiatives and supply chain changes.

Contradiction Point 1

Inventory Levels and Management

It involves differing statements on inventory levels and management, which are crucial for understanding the company's operational efficiency and financial health.

What are current inventory levels in the channel, and have retail ordering habits changed? - Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division)

2025Q3: Channel inventories are generally low, aligning with seasonal trends. No unusual concerns, and retail partners are filling up for the upcoming season. Acushnet's own inventories are in good shape. - David Maher(CEO)

Can you discuss demand, sell-in, and sell-through performance? - Martin Mitela (Raymond James)

2025Q2: We're pleased with sell-in and sell-through. Inventory levels are normalized, and consumer engagement is strong despite uncertainties. - David Maher(CEO)

Contradiction Point 2

European Market Growth

It highlights differing perspectives on the growth and performance of the European market, which is an important region for the company's revenue.

What caused the acceleration in Europe's growth after 2023? - Douglas Lane (Water Tower Research LLC)

2025Q3: European growth is driven by favorable weather conditions and strong rounds of play, particularly in the U.K. The golf market is healthier than before, with increased demand for Acushnet's products. - David Maher(CEO)

Can you discuss demand, sell-in, and sell-through performance? - Martin Mitela (Raymond James)

2025Q2: We expect continued stabilization in Japan and Korea, particularly in equipment, while apparel and gear face corrections due to new entrants exiting the market. - David Maher(CEO)

Contradiction Point 3

Inventory Levels and Channel Management

It directly impacts expectations regarding inventory levels and channel management, which are crucial for maintaining sales momentum and financial health.

What are current inventory levels in the channel? Have retail partner ordering habits changed? - Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division)

2025Q3: Channel inventories are generally low, aligning with seasonal trends. No unusual concerns, and retail partners are filling up for the upcoming season. - David Maher(CEO)

Could Acushnet fully diversify away from China, and what are the plans for mitigation beyond this year? - Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division)

2025Q1: We expect a 20% increase in our work-in-process inventory from the prior year, primarily due to increased order volumes for metal woods in anticipation of new product introductions. - Sean Sullivan(CFO)

Contradiction Point 4

Tariff Mitigation Strategies

It involves changes in strategic responses to tariffs, which significantly impact financial planning and operational decisions.

How have inventory levels and retail partner ordering habits changed? - Noah Zatzkin (KeyBanc Capital Markets Inc., Research Division)

2025Q3: We are focused on redirecting activities to markets with lower tariffs and having conversations with suppliers to identify cost-sharing opportunities. - Sean Sullivan(CFO)

How would a 50% reduction in China's tariff rate affect the $75 million impact? - Joe Altobello (Raymond James)

2025Q1: We have calculated a $75 million tariff exposure to Acushnet with $50 million from China. If the tariff rate were to reduce to 50%, it would imply a significant opportunity to mitigate that financial impact. - Sean Sullivan(CFO)

Contradiction Point 5

Growth in Europe

It involves differing explanations for the acceleration in growth in Europe, which is crucial for understanding market dynamics and revenue projections.

What drove the growth acceleration in Europe after 2023? - Douglas Lane(Water Tower Research)

2025Q3: European growth is driven by favorable weather conditions and strong rounds of play, particularly in the U.K. The golf market is healthier than before, with increased demand for Acushnet's products. - David Maher(CEO)

What is the outlook for the golf industry in the U.S. and globally, and how will it affect rounds played in 2025? - Matthew Boss(JPMorgan)

2024Q4: The growth we saw in EMEA last year, it was a combination of good weather, increased participation and some recovery in the UK. - David Maher(CEO)