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Hello, everyone. Thank you for joining us, and welcome to Acushnet Company's first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Cameron Vollmuth, Director of Investor Relations. Cameron, please go ahead.

Good morning, everyone. Thank you for joining us today for Acushnet Holdings Corp.'s 1st quarter 2026 earnings conference call. Joining me this morning are 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'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-over-year net sales increases and decreases are on a constant currency basis unless otherwise stated, as we feel this measurement best provides context as to the performance and trends of our business. When referring to year-to-date results or comparisons, we are referring to the three month period ended March 31st, 2026, and the comparable three month period in 2025. With that, I'll turn the call over to David.

Thanks, Cameron. Good morning, everyone. As always, we appreciate your interest in Acushnet Holdings. I am pleased to report on a positive start to the year for Acushnet, highlighted by a wide range of new product launches and early season growth in our Titleist golf equipment and golf gear segments. Acushnet delivered worldwide net sales of $753 million, a 5% constant currency increase over last year. Adjusted EBITDA was $145 million in the first quarter, an increase of $6 million year-over-year. These results reflect solid execution and synergies across our product development and supply chain teams and Acushnet's continued investment to drive future growth and operational excellence. Now getting to segment results.

You see Titleist golf equipment sales increased 7% in the quarter as our Titleist golf ball and golf club business continued to generate positive momentum. Titleist balls and clubs are helping players excel at the highest levels of the game, which affirms Titleist's 72% ball count across worldwide tours, more than seven times the nearest competitor, and number one driver positioning on the PGA and DP World Tours. In the quarter, golf ball volumes increased in all regions as our team successfully launched new Pro V1x Left Dash, AVX, Tour Soft, and Velocity models. We typically expect modest volume declines in the first quarter of even years when comping against a prior year's Pro V1 launch, and this year's volume growth is commentary on our team's ability to innovate and the overall strength of the Titleist golf ball lineup heading into Q2.

Titleist golf clubs also delivered a strong first quarter, led by the successful launch of new Vokey SM11 wedges and healthy demand for GT drivers and fairway metals in their second year. The Titleist equipment segment continues to benefit from our ongoing work at the Titleist Performance Institute. TPI, led by Dr. Greg Rose and Dave Phillips, is a powerful force within Acushnet, which informs our understanding of golfer biomechanics, is at the center of our commitment to help golfers play their best, and shapes our R&D visions across golf balls, clubs, and footwear. As we have talked about on recent calls, we continue to invest in and develop our capabilities across our TPI platform. Now to golf gear. Q1 sales were up 8%, driven by higher sales volumes in golf bags and double-digit gains in the U.S. and EMEA.

Our FootJoy segment is off to a good start as we operate an increasingly productive business with greater focus on premium franchises and fewer offerings at lower price points. FJ sales were down 1% in the quarter as our teams successfully launched new Pro/SL and Premiere golf shoes, and our spring apparel collections have been well received. FootJoy profitability, while still burdened with incremental tariffs, is on track with our internal plans. In the quarter, net sales of products not allocated to a reportable segment were up slightly, with continued momentum and growth from KJUS' U.S. golf business and modest gains from Titleist apparel in Asia. Looking at the quarter by region, you see the U.S. market was up 5% on the strength of the Titleist golf equipment and golf gear segments.

Rounds of play in the U.S. were up 5% through March, with gains in key Sun Belt states Arizona, California, Florida, and Texas. EMEA was up 8%, reflecting gains from all reportable segments led by double-digit growth from Titleist equipment and gear as we continue to generate nice momentum across the region. Japan also delivered a solid start to the year, up 6%, led by gains in golf equipment. Korea was in line with our expectations, yet off 7% as the timing of their first quarter golf club launch calendar differs from other regions, which we expect to normalize in the coming months. The rest of world region was up 9% with increased sales across all segments.

Now looking forward, and as we shared on the Q4 call, we will be launching new Titleist GTS drivers and fairway metals in the second quarter, which we see as a favorable transition from our customary Q3 launch window. New GTS metals debuted across professional tours in late March, and we are very pleased with the initial response and enthusiasm. Golfer fittings begin next week, and we are preparing for the global market launch on June eleventh. As you would expect, the shift from Q3 to Q2 will impact the cadence of our business in 2026, and Sean will share greater details during his remarks. In summary, we are pleased with our start to the year in what is best characterized as a product selling quarter.

Industry fundamentals and the overall state of the game are healthy, and we point to global rounds growth in the quarter as an indicator of golf's durability and popularity. The Acushnet team is focused on providing exceptional product fitting and service experiences to avid golfers and our trade partners as we seek to generate long-term value for our shareholders. Thanks for your attention this morning. I will now pass the call over to Sean.

Thank you, David. Good morning, everyone. As highlighted, we started 2026 with an increase in net sales of 5% over last year's first quarter. Adjusted EBITDA was $144.6 million, an increase of 4% from the first quarter of 2025. Net sales growth in the quarter was driven by continued momentum of our Titleist brand, with golf equipment growing 7% and golf gear growing 8%, while FootJoy net sales declined 1% in the quarter. Gross profit in the first quarter of $355 million was up $18 million compared to the first quarter of 2025, mainly due to higher net sales, which were partially offset by higher tariff costs of $17 million year-over-year.

Gross margin was 47.2% in the quarter, down 70 basis points from last year, primarily due to the tariff cost headwind of 220 basis points just mentioned. SG&A expense of $214 million in the quarter increased $13 million from the first quarter of 2025. This increase was due to higher selling expenses incurred in connection with the higher sales volumes, costs related to the expansion of our product fitting networks, higher IT related expenses, and additional A&P expenses to support new product launches. Net interest expense of $13.1 million in the quarter was down modestly from last year. Our effective tax rate in Q1 was 22.9%, up from 17.9% 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. Our balance sheet and cash flow positions continue to be strong, allowing us to execute our disciplined capital allocation strategy while also navigating the current macroeconomic uncertainty. Our net leverage ratio using average trailing net debt at the end of Q1 was 2.3 times. As discussed on our fourth quarter call, we remain focused on maintaining net leverage at or below 2.25 times on average, while we maintain flexibility to account for seasonality and other business needs, as evidenced by our leverage position at the end of this quarter.

With respect to inventories in the first quarter, FootJoy and golf gear inventories were down year-over-year. However, total inventories were up 7% as we built golf equipment inventory to support our accelerated GTS metals launch in the second quarter. Overall, we remain comfortable with our inventory quality and position. Capital expenditures were $19 million in the first quarter of 2026, up $8 million from last year, and we continue to expect full year spend to be approximately $95 million. Free cash flow in the first quarter was down $31 million compared to last year, in part related to the increased inventories levels associated with the upcoming GTS metals launch. We still expect free cash flow to meaningfully improve versus 2025, with the benefit mainly occurring in the second half of the year.

Through March, we returned roughly $26 million to shareholders, with $16 million in cash dividends and $10 million in share repurchases. Today, our board of directors declared a quarterly cash dividend of $0.255 per share, payable on June 22nd to shareholders of record on June 5th. As of March 31st, we had $231 million remaining under the current share repurchase authorization. Now let's turn to slide 10 and review our financial outlook for 2026. We are pleased with our strong results in the first quarter, and we note that as the golf season is just about to begin in many markets around the world, there remains uncertainty in the macroeconomic and geopolitical environment.

As is our practice at this time of year, we are maintaining our full year outlook and continue to expect full year 2026 net sales to be in the range of $2,625 million-$2,675 million and adjusted EBITDA to be in the range of $415 million-$435 million. This outlook excludes any potential IEEPA tariff refunds. On calendarization, reflecting the first quarter results, we now expect reported first half net sales and adjusted EBITDA to be closer to the high end of our previous range of up mid to high single digits. As it relates to tariffs, we previously cited a $70 million full year impact or $40 million year-over-year incremental headwind in 2026.

Since then, there have been several developments, including the recent Supreme Court ruling on IEEPA tariffs, the implementation of Section 122 tariffs, and changes to the application of Section 232 tariffs. Overall, we believe these changes to the tariff rate environment could be favorable in 2026. That said, uncertainty around the structure and duration of tariffs remains high, making it difficult to quantify the total impact at this time. In addition, we expect that the potential benefits from these tariff rate changes will be largely offset by higher product costs due to rising commodity prices and related raw material input and freight costs associated with the current geopolitical environment. We're monitoring these dynamics closely and taking actions where possible to mitigate impacts on the business.

In closing, we are pleased with where the business is positioned amid this volatile global environment and remain focused on servicing the needs of the dedicated golfer as many global golf markets open in the second quarter. With that, I'll now turn the call over to Cameron for Q&A.

Thanks, Sean. Jen, could we now open up the lines for questions?

Thank you. We will now begin the question and answer session. Your first question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open. Please go ahead.

Hey, good morning, David. Good morning, Sean. My first question, it's on the shape of the year. The 1st quarter, there was some margin headwind, which I would have said was expected, and it looks like you got through it relatively well. While there is uncertainty about tariffs, whether you probably are gonna pay less, and you could get refunds. I do think the balance of the year, there is an adjusted EBITDA margin expansion modestly. It feels like then as you push the guidance for the 1st half at the high end, it feels like there's more upward pressure here than there is downward pressure. Is that fair? I guess it would be more pronounced in the back half as you lap some of this tariff stuff.

Yes, Simeon, I think it's a reasonable view of our comments today. Again, very pleased with Q1. Obviously, we're guiding you to the higher end of the range for Q2. I did call out, obviously, that $17 million of tariff headwind in Q1. We're gonna still have the Section 122 in Q2, which will be a headwind versus prior year. Yeah, all in all, we're pleased. Again, it's early in the year, again, I do wanna be balanced and disciplined, right? We've got, you know, we've got raw material input costs that are affected by the price of oil. We have other materials in our club business. We have freight in, freight out. I don't wanna understate that there are headwinds.

You know, as I said in my comments, we hope that the tariff opportunity, whether it's lower, relative to where we had expected to be versus 70, you know, we'll see some offset from the input costs, and this doesn't factor anything related to any potential refunds. I think you've got the outlook for the year. But again, we're pleased with the consumer, and we're pleased with the demand, in spite of all of those things.

Can I follow up on product, the driver? You've done this every year. You've seen it, every year you release or every other year when you have a driver release, you have competitive release. This year, the competitive set I think was a little more forceful across most brands. Can you talk about that in the context of expectations around GTS, whether it's timing or sell-in, sell-through? You talked about early success on tour. Curious how that can translate in a more competitive release year. Thanks.

Yeah. Thanks, Simeon. New timing for us this year, GTS, right? We typically launch Q3. We're moving to Q2. We're very excited about that. Not as easy as it may sound. You go to adjust your entire supply chain to pull, to pull it all forward a few months. We're a couple months ahead of schedule from our historical Q3 timing. Really starting with the product, we're just very enthused about the product. Great, great early success across the worldwide tours, great adoption from players, which is a good indicator. As I noted in my remarks, we start fitting next week globally, and we're in market mid-June.

I think the key takeaway is separate from product is we're gonna hit the market really in a peak window, which is May, June, July, where historically we've hit the market in the third quarter, which is clearly a less than peak window. We like the timing. We really like the product. Yeah, you're right. It's a competitive market. Nothing new there.

I would say we're very excited about this launch. Again, the comments about what's happened on tour, that's as much about early adoption and validation, which is very important to us and our consumer, and that's really right on track. What we've done in the last couple of months is do a lot of training of our fitters to get them ready to go out and give golfers great experiences. We've got fitting tools in the market around the world. We're ready. Again, a key differentiator is gonna be the benefit of timing in which we're launching in a peak window versus prior years.

Thanks, Simeon. Thank you. Good luck.

Thanks.

Thanks.

Next question, please.

Your next question comes from the line of Matthew Boss with JPMorgan. Your line is open. Please go ahead.

Great. Thanks. David, could you speak to participation and engagement, maybe just elaborate on what you're seeing from your dedicated golfer today? Any impact at all from the volatile macro backdrop that you cited across regions so far to date, or any pushback on any recent pricing or price increases across categories that you would call out?

Yeah, Matt, we, of course, we watch that very carefully, and I'll maybe give you two answers of what we see. One of what we see, and two, just sort of our annual seasonal caveat that, hey, it's early in the season. But in terms of what we see, we're just very pleased with the game's durability and resilience. Right? You know, if I look at the big, the big three or four markets around the world, U.S. rounds up 5%. I said earlier, growth in California, Arizona, Texas, Florida. That's a great way to start the year. Here in New England, we're slow out of the gates, but frankly, we're always slow out of the gates given just weather realities. As you move around the board, Korea, nice start.

Again, small bases. First quarter's not a real meaningful piece of the full year. I think it's about 15% of total rounds. Rounds are up 10% in Korea, flat to down slightly in Japan. The U.K. was down pretty good in the first quarter. Again, it's their winter quarter, and they're coming off a real outlier year last year with weather. Net-net, you know, to sit here today and have global rounds be up low single digits, again, commentary on the health of the game and the durability of our consumer. Participation is, you know, metric one we watch.

Then of course, like everybody else, we're paying close attention to consumer spending and how their just their overall behavior in light of this macro uncertainty, and certainly some of the challenges vis-a-vis oil pricing pressures. The best way to frame it would be, you know, we're generally in line with where we think we ought to be for this time of year. I've said before that the golf industry, the crystal ball gets a lot clearer in Q2, as the season unfolds in the Northeast and Midwest and around the world. But here we are early May. We like the trends. We like the state of our consumer.

Of course, there's some caution, but in terms of how we're tracking versus expectations, I would say we're right where we'd like to be. Again, here we are in year, you know, five, six, seven, of growth vis-a-vis the game and number of golfers and participation, and I think everybody in the industry would feel pretty positive about that.

Great. Maybe a follow-up for Sean. With this year's bottom line outlook calling for EBITDA dollar growth roughly in line with sales, maybe could you just speak to drivers for EBITDA margin expansion multi-year or beyond this year? Or just help us to think about bottom line growth relative to your low to mid single digit top line algorithm?

Yeah. You know, as we've talked about in the past, Matt, we're making significant investments across the globe to meet the demands of our dedicated golfer, and first and foremost around golf equipment. That's capacity, that's club assembly, et cetera. That's the fitting network, along with obviously a lot of technology unlocks as well, whether it be the ERP system or other digital direct to consumer activity. You know, we're in that continued phase of investing for the long term. We think that again, we're still in the middle of that. There's no question there will be operating leverage here over the long term as it relates to the investments and the realization of those for the company.

I'm not gonna get into a multi-year outlook, but given where our EBITDA growth and EBITDA margins are, we feel they're very healthy. We're making the requisite operating and capital investments, I think, that will generate very positive long-term growth and margin.

Great. Best of luck.

Thanks, Matthew. Next question, please.

Your next question comes from the line of Joe Altobello. Your line is open. Please go ahead.

Thanks. Hey, guys. Good morning. Want to ask about the GTS launch and how we should think about this because, you know, it seems like you're implying that it's sort of a pull forward, right? Sales that normally would have happened, you know, in the third quarter get pulled into June to some degree. Is it accretive to the full year in the sense that you now have seven months of sales versus five months in a normal year?

Hey, Joe, maybe Sean and I will give you a two-part answer. Yes, we're very enthused about the timing, right, to get To get a driver launch into Q2 is meaningful for us. I would say yes, we do see You know, you're gonna get more months out of the driver in 2026 than you typically would in prior years. We think that's a real positive. In terms of modeling, you know, maybe Sean has some additional thoughts on that.

Joe, I think that, you know, you're very familiar with our two year product cadence, so I guess I would bring you back to probably Q3 of 2024, might be a good starting point, in terms of growth in the overall club business, vis-a-vis, the GT launch. Obviously we're pulling it forward. We expect it to be accretive to the full year. If you're looking at just first half or Q2, I think that, Q3 of 2024 is instructive. We've got momentum in terms of volume, price, and, we're not necessarily comping off a prior, irons launch.

A lot to unpack there, but I figure it's worthwhile, putting that out there for you as you think about the golf club and golf equipment growth rates in light of the new accelerated launch.

No, thanks for that. I appreciate it. Maybe just kind of moving on to balls. I know you touched on this earlier, you know, in your prepared remarks. If you look at, you know, growth in the first quarter, in a non-Pro V1 year, we sort of saw this as well in 2024, you know, strong first quarter growth in an even year. It sounds like, you know, that's obviously, you know, a testament to the rest of the portfolio. What are the other takeaways from that, you know, in terms of You know, is it, is it that your ball business is much more diversified and broad beyond just Pro V1 at this point?

Yeah, Joe, I'll point to a couple factors. One, there may have been a bit of catch-up in 2024. For 2026, it's a couple themes. I think generally speaking, our team did a terrific job with the launch with our performance models. Adding to it, we've talked over the years about our meaningful capital investment across golf ball operations. One of those investments was expanded customization capabilities. What you'll see in our line is a whole lot more what we call AIM alignment integrated marking. You just got a lot more, a lot more features and technology and benefits embedded into the products. That's all been additive. We did launch a new Pro V1x Left Dash, which was new to the story too.

Added up, I think it's part innovation, part momentum, and certainly rounds of play growth is contributory as well. Yeah, really like the tone and tenor and state of the Titleist golf ball business right now. Over the long haul, we do expect even years to be down slightly versus odd years in which we launch Pro V1. We've bucked that trend the last couple of years, and again, commentary on our team's ability to innovate and bring great products to market.

Okay, great. Thank you.

Thanks, Joe. Next question, please, Jen.

Your next question comes from the line of Noah Zatzkin with KeyBanc Capital Markets. Your line is open. Please go ahead.

Hi. Thanks for taking my questions. I guess first, just wondering what you're seeing in terms of year-over-year price increases from competitors, where you think you stack up there, as well as any thoughts on the current state of channel inventories. Thanks.

Yeah, I guess, as it relates, Noah, to competitors, you know, the industry, I think a fair characterization, we saw pricing upticks last year, largely in wearables across footwear and apparel. This year we're seeing more in clubs and balls. I think it's been a fairly consistent pricing scheme in 2026 from key competitors. You know, we're comfortable at a premium. Whether it's balls or clubs, we're comfortable at a premium to the pack, and that's where we are. We're either at parity or premium to the pack, number one.

Number two, you know, within our club business too, not only is it the price of the product, but we invest a whole lot in fitting, which is reflected in the pricing as well. Very comfortable with where we are in the state of premium performance products around the world. Your second question, Noah, around competitive channel inventories rather. You know, it's May, channels should be full and they are. That's sort of a shorthand answer for I think we're in a normalized state. You know, the watch outs would be, is there any carryover inventory from the prior year that's clogging up the system? We don't necessarily see that. I think generally speaking, inventories are healthy.

Again, that's code word for full, as they should be at this time of year on the eve of the golf season really taking full flight. It's a different answer three months from now, when you see, you know, who the winners and losers were and who sold, which products sold through and which maybe didn't quite sell through to expectations. Certainly here we are in early May, I would characterize channel inventories globally as healthy and in line with where they ought to be.

Great. Maybe just one on Japan. Couple quarters in a row of growth there. Obviously, this was a smaller quarter, but wondering if you could kind of give a quick update on that market and your opportunity there as you see it.

We've talked a bit about Japan over the last two years. We are pleased with the team and some of our recent investments, starting really with balls and clubs, in the equipment segment, which I think has the most momentum and is driving some of that growth. We've done some repositioning within our wearables business. We actually pulled back our Titleist apparel business in that market, so some of the offsets. I would say Japan, really at this stage, two parts. One would be growth and momentum in equipment, balls and clubs, and a cautious conservative view around wearables. I think we're being smart and taking a long-term approach there. Yeah, we're pleased with the momentum.

We've got a team there that's really making some good, sound, smart decisions and executing well. Our counts on the men's and women tours are improving. Our counts across the amateur game are improving, which is part of our affirmation and validation story. Yeah, like where we are with the direction we're heading in Japan, and the final point I'd make is, I've talked about this a lot over the years, it's a market where our percentage of fit clubs is probably the lowest in the world. We're chipping away at that's certainly benefiting balls. That's certainly benefiting golf clubs.

Thank you.

Thanks, Noah. Operator, next question, please.

Your next question comes from the line of Doug Lane with Water Tower Research. Your line is open. Please go ahead.

Yes. Hi, good morning, everybody. Noticed you reiterated your CapEx expectation for $95 million this year, which is elevated, and I'm just wondering, what are some of the things you're investing in this year that you may not be investing in in future years, and should we look for CapEx to return to maybe something in the $70 million range like it's been in the last couple of years after this year?

Yeah, Doug, thanks for the question. I do expect it to be more in line with what you articulated over the midterm. You know, as we've talked about here, it's very much focused on the golf equipment segment, our investments. We continue to add golf ball capacity both domestically and abroad. We continue to add club assembly capacity around the world as well, as you can see from the growth of the club business. Those are our primary investments to really meet the continued demand of our products, and I think very strategic and probably more than half of the money we're spending. There's certainly investments in facilities.

There's investments in technology, et cetera, that we believe are necessary and will deliver not only incremental sales but operating efficiency. You know again high watermark this year at 95 and we expect it will moderate over the near the next few years to a more reasonable run rate as you articulated.

Okay, that's helpful. Just one follow-up on working capital. It was a pretty substantial use last year. I know it's difficult to forecast, but that sort of elevated $87 million of use last year, I assume is also not going to be repeated, and that should come down as well.

Yeah. We've talked about free cash flow meaningfully improving over 2025, mostly in the back half of the year. Obviously, significant investment in working capital in Q1 due to the inventory position for golf equipment. Timing of sales was probably more end of quarter weighted versus prior years, so AR was up a bit as well. We feel very good about the full year free cash flow generation, given the seasonality of the business. Yeah, it definitely will meaningfully improve this year versus 2025.

Okay. Thank you.

Thanks, everybody. As always, we appreciate your interest in Acushnet and look forward to reporting back after Q2, in sometime this summer. Thanks again. Have a great spring.

This concludes today's call. Thank you for attending. You may now disconnect.