10-Q: Acushnet Q3 2025: Sales Up, Profit Down Amid Tax, Restructuring

Acushnet Holdings Corp. reported increased net sales for Q3 and YTD 2025, driven by Titleist golf equipment, but net income declined in Q3 due to higher tax expense and restructuring costs.

Summary

• Net sales for the three months ended September 30, 2025, increased by 6.0% to $657.7 million, or 5.3% on a constant currency basis, compared to the same period in 2024.
• Net sales for the nine months ended September 30, 2025, increased by 3.5% to $2,081.5 million, or 3.6% on a constant currency basis, compared to the same period in 2024.
• Gross profit for the three months increased by $14.9 million, but gross margin decreased to 48.5% from 49.0% in the prior year.
• Gross profit for the nine months increased by $30.6 million, but gross margin slightly decreased to 48.6% from 48.7% in the prior year.
• Net income attributable to Acushnet Holdings Corp. for the three months decreased to $48.5 million from $56.2 million in the prior year.
• Net income attributable to Acushnet Holdings Corp. for the nine months increased to $223.4 million from $215.4 million in the prior year.
• Diluted earnings per share (EPS) for the three months decreased to $0.81 from $0.89, while for the nine months, it increased to $3.68 from $3.36.
• Adjusted EBITDA for the three months increased to $118.6 million from $107.4 million, with Adjusted EBITDA margin at 18.0% (up from 17.3%).
• Adjusted EBITDA for the nine months increased to $400.6 million from $392.1 million, with Adjusted EBITDA margin at 19.2% (down from 19.5%).
• Income tax expense significantly increased to $28.6 million for the three months (from $13.2 million) and to $68.8 million for the nine months (from $57.8 million), primarily due to changes in jurisdictional mix of earnings and a reduced benefit from the U.S. deduction for foreign-derived intangible income following the enactment of the One Big Beautiful Bill Act (OBBBA).
• A non-cash gain of $20.9 million was recognized during the nine months ended September 30, 2025, related to the deconsolidation of the FootJoy footwear joint venture (Lionscore).
• Restructuring costs of $2.1 million for the three months and $8.6 million for the nine months were incurred due to a Voluntary Bridge to Retirement (VBR) program.
• The company repurchased 2,842,719 shares of common stock for an aggregate of $187.5 million during the nine months ended September 30, 2025.

Sentiment

Score: 6

Explanation: While net sales and Adjusted EBITDA showed growth, net income and EPS declined for the quarter due to higher tax expenses and restructuring costs. The company is actively managing its supply chain and operational efficiency through initiatives like the VBR program and ERP implementation, and maintains strong liquidity. However, the increased tax burden and ongoing tariff impacts present headwinds.

Positives

• Overall net sales increased by 6.0% for the three months and 3.5% for the nine months ended September 30, 2025, demonstrating continued revenue growth.
• Titleist golf equipment segment showed strong performance, with net sales increasing 5.7% for the three months and 4.9% for the nine months, driven by higher average selling prices in golf clubs and increased sales volumes of 2025 Pro V1 golf ball models.
• FootJoy golf wear and Golf gear segments also contributed to sales growth for the three months, primarily due to higher average selling prices.
• Adjusted EBITDA increased for both the three months ($118.6 million vs. $107.4 million) and nine months ($400.6 million vs. $392.1 million), indicating improved operational profitability before certain non-operating items.
• A significant non-cash gain of $20.9 million was recognized from the deconsolidation of the FootJoy footwear joint venture, positively impacting other income.
• The company actively returned capital to shareholders through its share repurchase program, buying back $187.5 million worth of common stock year-to-date, with $264.7 million remaining under authorization.
• The company remains in compliance with all covenants under its Amended Credit Agreement and the Indenture governing its senior unsecured notes, reflecting sound financial management.

Negatives

• Net income attributable to Acushnet Holdings Corp. decreased by $7.7 million to $48.5 million for the three months ended September 30, 2025, compared to $56.2 million in the prior year.
• Diluted EPS decreased to $0.81 for the three months ended September 30, 2025, from $0.89 in the prior year.
• Gross margin decreased for both the three months (to 48.5% from 49.0%) and nine months (to 48.6% from 48.7%), partially due to higher tariff costs and an unfavorable product mix in Titleist golf equipment.
• Income tax expense increased substantially by $15.4 million for the three months and $11.0 million for the nine months, leading to a higher effective tax rate (37.3% for Q3 2025 vs. 19.3% for Q3 2024), primarily due to the One Big Beautiful Bill Act.
• Selling, general and administrative expenses increased by $5.2 million for the three months and $18.7 million for the nine months, driven by higher advertising, promotion, and selling expenses.
• Interest expense, net, increased by $1.3 million for the three months and $3.1 million for the nine months, primarily due to increased borrowings.
• Restructuring costs of $2.1 million for the three months and $8.6 million for the nine months were incurred related to the Voluntary Bridge to Retirement (VBR) program.
• Cash flows provided by operating activities decreased by $51.5 million to $194.7 million for the nine months ended September 30, 2025, compared to $246.2 million in the prior year, primarily due to investments in the global ERP platform and other working capital requirements.
• FootJoy golf wear segment experienced lower sales volumes in footwear for the nine months ended September 30, 2025, contributing to a 1.9% net sales decrease for the segment.
• Net sales decreased in Japan and Korea for the nine months ended September 30, 2025, impacting overall international performance.

Risks

• A reduction in the number of rounds of golf played or in the number of golf participants.
• Unfavorable weather conditions may impact the number of playable days and rounds played.
• Consumer spending habits and macroeconomic and demographic factors may affect spending on golf products.
• U.S. and foreign trade policies, including tariffs and other impositions on imported goods, may lead to incremental costs and retaliatory tariffs.
• Changes to the Rules of Golf with respect to equipment.
• Inability to successfully manage the frequent introduction of new products or satisfy changing consumer preferences and quality/regulatory standards.
• Reliance on technical innovation and high-quality products.
• Significant disruption in the operations of manufacturing, assembly, or distribution facilities.
• Ability to procure, and the cost of, raw materials and product components.
• Disruption in the operations of suppliers.
• Currency transaction and translation risk, with hedging activities potentially not fully offsetting adverse impacts.
• Ability to adequately enforce and protect intellectual property rights, and the risk of infringing others' intellectual property.
• Intense competition and the ability to maintain a competitive advantage.
• Limited opportunities for future growth in sales of certain products.
• Customers' financial conditions, levels of business activity, and ability to pay trade obligations.
• A decrease in corporate spending on custom logo golf balls.
• Ability to maintain and further develop sales channels, and consolidation of retailers.
• Ability to maintain and enhance brands.
• Fluctuations of business and results of operations due to seasonality and product launch cycles.
• Risks associated with doing business globally, including compliance with anti-bribery, anti-money laundering, and economic sanctions laws.
• Ability to secure professional golfers to endorse or use products.
• Negative publicity relating to the company, its products, or the golf industry.
• Ability to accurately forecast demand for products.
• Disruption in service, or a significant increase in cost, of primary delivery and shipping services or at shipping ports.
• Ability to successfully manage the implementation of a new enterprise resource planning (ERP) platform.
• Ability to maintain information systems to adequately perform their functions and cybersecurity risks.
• Ability to comply with data privacy and security laws.
• The ability of eCommerce systems to function effectively.
• Risks and challenges associated with the development and use of artificial intelligence.
• Impairment of goodwill and identifiable intangible assets.
• Ability to attract and/or retain management and other key employees and hire qualified personnel.
• Ability to prohibit sales of products by unauthorized retailers or distributors.
• Ability to grow presence in existing international markets and expand into additional international markets.
• Tax uncertainties, including potential changes in tax laws, unanticipated tax liabilities, and limitations on utilization of tax attributes.
• Ability to secure and maintain adequate levels of coverage under insurance policies.
• Product liability, warranty, and recall claims.
• Litigation and other regulatory proceedings.
• Compliance with environmental, health, and safety laws and regulations.
• Ability to secure additional capital at all or on terms acceptable.
• Lack of assurance of positive returns on capital investments.
• Risks associated with acquisitions and investments.
• Terrorist activities and international political instability, natural disasters, or pandemic diseases.
• A high degree of leverage, ability to service indebtedness, ability to incur more indebtedness, and restrictions in debt agreements.
• Use of derivative financial instruments.
• The interests of the controlling shareholder and its affiliates may conflict with other holders of common stock.
• Status as a controlled company.
• The execution of the share repurchase program and effects thereof.
• Ability to pay dividends.
• Dilution from future issuances or sales of common stock.
• Anti-takeover provisions in organizational documents and Delaware law.

Future Outlook

The company expects to incur an additional $5.0 million in restructuring costs associated with the Voluntary Bridge to Retirement (VBR) program in the fourth quarter of 2025, with payments continuing through early 2027. The investment in the deconsolidated FootJoy footwear joint venture (Lionscore) is expected to generate net losses in future periods. Total capital expenditures for the full year 2025 are projected to be approximately $75.0 million, and capitalized implementation costs for the global ERP platform are expected to reach approximately $35.0 million for the full year. Management believes that cash flows from operations, current cash on hand, and available borrowings under credit facilities will be sufficient to meet liquidity requirements for at least the next 12 months. A net loss of $2.3 million related to foreign exchange derivative instruments is expected to be reclassified into cost of goods sold from accumulated other comprehensive loss, net of tax, over the next 12 months.

Management Comments

• 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 continue to monitor the economic effects of these developments [tariffs] and evaluate opportunities to mitigate their related impacts.
• We believe that cash expected to be provided by operating activities, together with our cash on hand and the availability of borrowings under our multi-currency revolving credit facility and our local credit facilities (subject to customary borrowing conditions) will be sufficient to meet our liquidity requirements for at least the next 12 months.

Industry Context

The company operates as a global leader in the design, development, manufacture, and distribution of performance-driven golf products, targeting 'dedicated golfers' who prioritize performance. Its strategy emphasizes innovation, quality, and a 'pyramid of influence' marketing approach, leveraging professional player endorsements to build aspirational appeal. The broader golf industry is subject to macroeconomic and demographic factors, consumer spending habits, and potential changes to the Rules of Golf. The company's diversified product portfolio, including both consumable (golf balls, gloves) and durable (clubs, shoes, gear) products, along with its global geographic sales distribution, provides a degree of resilience against market fluctuations. The industry also faces challenges from U.S. and foreign trade policies, including tariffs, which are increasing costs and creating market volatility.

Comparison to Industry Standards

• NA

Corporate Governance

Legal Proceedings

• The Company and its subsidiaries are party to lawsuits associated with the normal conduct of their businesses and operations.
• It is not possible to predict the outcome of the pending actions, and some could be decided unfavorably.
• The Company is unable to estimate the ultimate aggregate amount of monetary loss, amounts covered by insurance, or the financial impact that will result from such matters and has not recorded a liability related to potential losses.

Related Party Transactions

• During the nine months ended September 30, 2025, the Company repurchased 1,889,313 shares of its common stock from Magnus Holdings Co., Ltd. for an aggregate of $125.0 million, in satisfaction of previously disclosed share repurchase agreements. Magnus is a controlling shareholder.

Stakeholder Impact

• Shareholders are impacted by the decrease in Q3 net income and diluted EPS, but also benefit from the declared Q4 2025 dividend of $0.235 per share and the ongoing share repurchase program, which has seen $187.5 million in repurchases year-to-date.
• Employees are affected by the Voluntary Bridge to Retirement (VBR) program, which offers severance and benefit continuation to certain long-tenured eligible employees, aiming to reduce operating costs.
• Customers may benefit from continued investments in product fitting networks and enhanced consumer engagement, as well as new product launches in Titleist golf equipment.
• Suppliers are impacted by the shift in FootJoy footwear production from a joint venture facility in China to a third-party supplier in Vietnam, reflecting supply chain optimization.
• Creditors are positively impacted by the company's continued compliance with all covenants under its credit agreement and indenture, indicating stable financial health and ability to service debt.

Next Steps

• Incur additional restructuring costs of approximately $5.0 million in the fourth quarter of 2025 related to the Voluntary Bridge to Retirement (VBR) program, with payments continuing through early 2027.
• Invest approximately $75.0 million in capital expenditures for the full year 2025.
• Invest approximately $35.0 million in capitalized implementation costs for the global cloud-based enterprise resource planning (ERP) platform for the full year 2025.
• Formally retire 2,842,719 shares of repurchased common stock in 2025.
• Reclassify a net loss of $2.3 million related to foreign exchange derivative instruments from accumulated other comprehensive loss, net of tax, into cost of goods sold during the next 12 months.
• Evaluate the impact of recently issued accounting standards: ASU 2023-09 (Income Taxes), ASU 2024-03 (Expense Disaggregation), ASU 2025-05 (Credit Losses), and ASU 2025-06 (Internal-Use Software) on consolidated financial statements and disclosures.

Key Dates

Recommendation

The company demonstrates solid revenue growth and improved Adjusted EBITDA, reflecting strong operational performance in its core golf equipment and wear segments. However, the significant increase in income tax expense and ongoing restructuring costs have negatively impacted net income and EPS for the quarter. While strategic initiatives like the ERP implementation and VBR program aim for long-term efficiency, and the share repurchase program supports shareholder value, the near-term earnings pressure and macroeconomic risks (tariffs, foreign exchange) suggest a 'hold' position until there's clearer visibility on the impact of these headwinds on bottom-line profitability.

Keywords

Golf equipment, Titleist, FootJoy, Golf balls, Golf clubs, Golf shoes, Golf apparel, SEC filing, 10-Q, Financial results, Earnings, Revenue, Profit, Share repurchase, Tariffs, Restructuring, ERP, Supply chain, Q3 2025