Acushnet Holdings (GOLF) Q3 2026 Earnings Call Transcript

DATE

Wed, Nov. 4, 2026

CALL PARTICIPANTS

• Director of Investor Relations - Cameron Vollmuth
• President and Chief Executive Officer - David Maher
• Chief Financial Officer - Sean Sullivan

TAKEAWAYS

• Net Sales -- $649.2 million, a 0.6% decrease in constant currency reflecting lower sales volumes in FootJoy and Golf gear.
• Net Income -- $49.2 million, an increase of 1.4% year over year supported by lower interest expense and jurisdictional mix in the effective tax rate.
• Adjusted EBITDA -- $114.7 million, representing a 3.3% year-over-year decrease and a 17.7% margin.
• Full-Year Guidance -- $2.65 billion to $2.675 billion in net sales, reflecting constant currency growth of 3.3% to 4.2%.
• Adjusted EBITDA Outlook -- $455 million to $470 million for the full year, narrowed toward the high end of the previous range.
• Titleist Golf Balls Revenue -- $209.1 million, representing 4.0% constant currency growth driven by Pro V1 volume gains and higher average selling prices.
• Titleist Golf Clubs Revenue -- $220.7 million, a 1.2% constant currency decline reflecting the timing shift of GTS metals launches into the second quarter.
• FootJoy Net Sales -- $126.2 million, decreasing 7.1% in constant currency due to lower volumes across all product categories.
• Golf Gear Revenue -- $55.4 million, a 9.0% constant currency decrease attributed to lower volumes and temporary disruption from an ERP system cutover.
• Year-to-Date Net Sales -- $2.22 billion, up 6.3% in constant currency led by a 9.9% increase in Titleist golf equipment.
• Tariff Refund Impact -- $33.8 million, representing a year-to-date benefit from International Emergency Economic Powers Act (IEEPA) refunds.
• Adjusted EBITDA (Excluding Tariff Benefit) -- up 8% year-to-date, reflecting underlying business performance after normalizing for the $33.8 million refund impact.
• Gross Margin -- 49.6% in the quarter, an increase of 110 basis points driven by FootJoy profitability and shoe volume gains.
• Operating Cash Flow -- $319 million year-to-date, an increase of $124 million from the prior year nine-month period.
• Capital Expenditures -- $57 million year-to-date, with full-year expectations maintained at approximately $95 million.
• Share Repurchases -- $81.4 million on the open market year-to-date, plus a $52.5 million repurchase from Magnus Holdings Co., Ltd. on Oct. 15.
• Dividend -- $0.255 per share, declared for payment on Dec. 18 to shareholders of record as of Dec. 4.
• Inventory -- $572.5 million, an increase of $60 million versus the prior year to support 2027 product launches.
• ERP Implementation Costs -- $8.6 million in the quarter, related to the optimization of information technology systems following a North American go-live.
• Interest Expense -- $11.8 million, a decrease of $3 million reflecting lower interest rates.
• Effective Tax Rate -- 25.5%, down from 37.3% in the prior year quarter due to jurisdictional earnings mix.
• Net Leverage Ratio -- 1.9 times, which management reported as a sequential decrease.
• United States Net Sales -- $391.6 million, a 1.4% decrease primarily due to declines in FootJoy and Golf gear.
• Japan Net Sales -- up 11.4% in constant currency year-to-date, led by gains in Titleist balls and clubs.

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RISKS

• Sullivan warned that the company anticipates rising expenses in specific areas, stating, "incremental costs related to some of our input costs, both in terms of golf balls and golf clubs... We have got to keep an eye on labor, keep an eye on health and welfare costs, which are obviously increasing."
• Maher identified weather as a primary negative driver for recent participation, stating that "golf playable hours were down, I think, 6% to 8% in the key third quarter months," which contributed to a choppy quarter for the industry.
• Sullivan noted operational headwinds during a systems transition, stating, "we experienced some temporary disruption in our custom embroidery operations, which impacted FootJoy and golf gear" following the ERP go-live.

SUMMARY

Acushnet Holdings Corp. (NYSE:GOLF) reported consolidated net sales of $649.2 million and net income of $49.2 million for the third quarter. Management maintained its full-year revenue guidance while narrowing its Adjusted EBITDA outlook toward the high end of the $455 million to $470 million range. The company reported continued momentum in the Titleist brand, particularly in golf balls, while experiencing lower sales in FootJoy and Golf gear due to volume declines and timing related to product launches and ERP system implementation.

• CEO Maher indicated the golf industry remains structurally healthy, noting eight consecutive years of participation increases.
• Management reported that the GTS metals launch in the second quarter shifted sales and earnings earlier in the year, impacting third-quarter year-over-year comparisons for Titleist clubs.
• CFO Sullivan noted the company successfully implemented its new ERP platform in North America and Thailand manufacturing operations during the third quarter.
• The company is preparing for a significant product cycle in 2027, which includes a next-generation Pro V1 golf ball launch.
• Maher stated, "the most compelling [data point] being eight consecutive years of participation increases, affirming the game's enduring appeal."
• Regarding global pricing, Maher noted that the average cost of a public round of golf in the U.S. is $47, representing a 4% increase versus last year and a 29% increase over seven years.

INDUSTRY GLOSSARY

• GTS: The latest generation of Titleist metal woods, including drivers and fairway clubs.
• IEEPA: International Emergency Economic Powers Act, a federal law under which certain tariffs were previously paid and are currently being refunded to the company.
• Magnus Holdings Co., Ltd.: The company's controlling shareholder.
• Pro V1: The flagship golf ball model under the Titleist brand, known for high performance and professional tour usage.
• TPI: Titleist Performance Institute, the company's research and golfer development platform focused on golf-specific health and fitness.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Acushnet Company 3Q 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. Please go ahead.

Cameron Vollmuth: Good morning, everyone. Thank you for joining us today for Acushnet Holdings Corp.'s third 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-on-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 nine-month period ended September 30, 2026, and the comparable nine-month period in 2025. With that, I'll turn the call over to David.

David Maher: Thanks, Cameron, and good morning, everyone. As always, we appreciate your interest in the Acushnet Company. I am pleased to report on a solid third quarter for Acushnet, led by strength and momentum across our Titleist golf equipment segment. With many golf regions winding down their playing seasons, the golf industry is structurally healthy. This week, as Acushnet celebrates 10 years as a publicly traded company, it is noteworthy how vastly improved golf industry fundamentals are today as compared to a decade ago.

There are many data points which frame recent industry growth, with the most compelling being eight consecutive years of participation increases, affirming the game's enduring appeal, and the meaningfully improved financial health of golf courses and golf retailers, which has led to outsized investment in facilities to meet the future needs of an evolving golfer base. Acushnet's headlines remain growth and strength in our core Titleist golf equipment segment, improving profitability within FootJoy, and the durability of our golf gear franchise. On top of this, there are call-outs related to the timing of our golf club business in 2026, which we will address.

Overall, we are pleased with the strength of our brands, the company's healthy balance sheet, and Acushnet's clear future direction as we prepare for a full slate of product launches and new initiatives scheduled for 2027. Moving to our third quarter and year-to-date results on slide four. For the quarter, Acushnet delivered worldwide net sales of $649 million, a 1% constant currency decrease from last year, driven by continued strength in Titleist golf equipment and healthy demand in golf balls, offset by lower sales in FootJoy and golf gear. Adjusted EBITDA of $115 million was down 3% in the quarter.

Year-to-date, net sales of $2.22 billion were up 6% in constant currency, and Adjusted EBITDA of $468 million was up 17% year-over-year. Excluding the net tariff refund impacts, Adjusted EBITDA is up 8% year-to-date. Getting to our segment results, you see the continued global momentum of Titleist golf equipment, which was up 1% in the quarter and 10% year-to-date. We are pleased with strong demand across the Titleist golf ball lineup, which has grown in all regions, led by Pro V1, which has posted volume gains in 2026 on top of last year's record launch.

Titleist golf clubs also remain vibrant on the strength of new GTS metals, which have benefited from their Q2 launch timing and momentum in Vokey wedges and Scotty Cameron putters. Golf gear revenues were down 9% in the quarter and are up 2% year-to-date, led by growth in EMEA, rest of world, and the U.S. This third quarter decline is partly timing-related as we prepare for launches of new Titleist golf bag and club glove product offerings in Q4. Our FootJoy business was down 7% in the quarter and 2% year-to-date. As previously noted, we are focused on and making good progress towards strengthening FootJoy's underlying profitability.

FJ's performance-oriented and premium product assortment is generating positive trending ASPs, expanded margins, and historically low levels of closeout footwear sales, all of which are delivering improved year-on-year profitability in the segment. Lastly, our shoes business continues to build positive momentum, growing more than 30% in the quarter with strong gains in the EMEA and the U.S. Looking at the quarter by region on slide five, you see the U.S. market was down 1%, driven by lower net sales in FootJoy and golf gear, while the Titleist golf equipment segment continued to grow in the U.S. Year to date, the U.S. was up 6%. EMEA was up 5% in the quarter, reflecting gains in Titleist golf equipment and golf gear.

Through the first nine months, EMEA is up 8% on a constant currency basis. Japan was slightly up in the quarter, with gains across all reportable segments, and is up 11% year-to-date. Korea was down 3% in the quarter, driven by lower sales in FootJoy and golf gear. Year to date, Korea is about flat, with healthy gains from Titleist equipment. Rest of world was down 2% versus last year's third quarter across all reportable segments, and is up 8% year to date. In summary, we are pleased with Acushnet's performance, the health of the golf consumer, and the direction of the company. Product lines are in great shape.

Inventory positions, both owned and at retail, are in line for this time of the year. We are enthused about our new product pipelines as we prepare for 2027. Q4, as is often the case, will be a period of transition as we convert Pro V1 production to next-generation product and make key investments in R&D, fitting networks, and our TPI performance platform to drive future growth. Thanks for your attention this morning. I will now pass the call over to Sean.

Sean Sullivan: Thank you, David. Good morning, everyone. As highlighted, we had a solid third quarter and year-to-date performance, driven by continued momentum in Titleist golf equipment, with healthy demand for golf balls and the success of our new GTS drivers and fairways. Third quarter net sales were $649 million, and Adjusted EBITDA was $115 million, down $4 million from last year's third quarter. These results were in line with our expectations following the accelerated launch of our GTS metal woods into the second quarter. For the first nine months of 2026, net sales increased 6% and Adjusted EBITDA increased 17%, which includes an approximately $34 million benefit from net tariff refunds. Excluding that benefit, Adjusted EBITDA increased 8% year-to-date.

Third quarter gross profit of $322 million was up $3 million compared to last year, driven by improved profitability in FootJoy and higher sales volumes at shoes, partially offset by higher product costs in Titleist golf equipment. Third quarter gross margin of 49.6% was up 110 basis points, while year-to-date gross margin was 50.5%, up 190 basis points versus prior year. On a normalized basis, year-to-date gross margin was 48.6%, flat year-over-year, despite an approximately $29 million headwind from higher tariff expense. SG&A expense of $217 million in the quarter increased $12 million from 2025, primarily due to higher IT-related expenses associated with our ERP implementation project and higher incentive compensation expense.

With respect to the ERP implementation project, I am pleased to report that the company went live in the third quarter in North America and at our golf ball manufacturing operations in Thailand. While the system cutover proceeded smoothly, we experienced some temporary disruption in our custom embroidery operations, which impacted FootJoy and golf gear. From here, we will continue to advance the ERP implementation in phases across our remaining geographic regions. Interest expense of $12 million in the quarter was down $3 million due to a decrease in interest rates.

Our effective tax rate in Q3 was 25.5%, down from 37.3% last year, 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 strong balance sheet and cash flow position us well to continue executing our capital allocation strategy, with a focus on investing for long-term growth while returning capital to shareholders. Our net leverage ratio at the end of Q3, using average trailing net debt, was 1.9x, down sequentially. Inventories were up $60 million versus last year, and we remain comfortable with this position ahead of new product launches in 2027.

Year-to-date cash flow from operations of $319 million increased $124 million from the first nine months of 2025, driven in part by tariff refunds received in the second quarter and a reduction in working capital requirements. Capital expenditures were $57 million in the first nine months of 2026, reflecting our continued strategic investments in additional golf ball manufacturing capacity and increased club assembly to support the sustained demand of our products globally. We still expect full-year 2026 CapEx spend to be approximately $95 million. Through September, we returned roughly $127 million to shareholders, with $45 million in cash dividends and $81 million in share repurchases. on October 15th, 2026.

We used $52.5 million to repurchase approximately 584,000 shares of common stock from Acushnet in satisfaction of our previously disclosed obligations under our share repurchase agreement. After reflecting the October 15th settlement, we had approximately $107 million remaining under our current share repurchase authorization. Today, our board of directors declared a quarterly cash dividend of $0.255 per share, payable on December 18th, 2026 to shareholders of record on December 4th, 2026. Moving to guidance, we continue to expect full-year net sales to be in the range of $2.65 billion-$2.675 billion, up approximately 4.1% at the midpoint. on a constant currency basis, we expect net sales to increase between 3.3% and 4.2%.

We also now expect full-year Adjusted EBITDA to be $455 million-$470 million, which includes the full-year net tariff refund benefit of approximately $30 million. We still expect full-year free cash flow to meaningfully improve year-over-year, converting at roughly 40%-50% of Adjusted EBITDA. This updated full-year outlook reflects the strength of our year-to-date performance and our expectations for the fourth quarter. At the midpoint, the guidance implies fourth-quarter net sales of approximately $440 million and an Adjusted EBITDA loss of approximately $5 million.

This is consistent with our seasonally lower fourth-quarter earnings profile and reflects the timing of expected lower sales in Titleist golf equipment, including the impact of accelerating our metals launch into the second quarter, which shifted sales and earnings earlier in the year, as well as the transition to the 2027 Pro V1 launch. During the fourth quarter, we also plan to continue our strategic investments in technology and fitting, as well as preparing for our product launches in 2027. Overall, we're very pleased with the performance of the business heading into the fourth quarter. The team remains focused on finishing the year strong, supporting dedicated golfers around the world, and investing in our long-term strategic priorities.

With that, I will now turn the call over to Cameron for Q&A.

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

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question from the line of Joe Altobello of Raymond James. Your line is open. Please go ahead.

Mitchell Ingles: Hey, everyone. This is Mitchell Ingles on for Joe Altobello. To start, can you help us bridge to 2027? I am assuming we are going to back out the $30 million IEEPA refunds, but there will probably be some SG&A spending going away as well. On the other hand, you have raw material and freight pressures. So, can you help us think about the puts and takes?

Sean Sullivan: Yeah, Mitchell, happy to do that in some broad strokes. So, you have it right. At the end of this year, we will have a net benefit of $30 million due to the tariff refunds. So, we need to normalize that as we go into next year. From an input, raw material, cost of sales perspective, obviously, we have got incremental costs related to some of our input costs, both in terms of golf balls and golf clubs, due to the materials we use in those products. We have got to keep an eye on labor, keep an eye on health and welfare costs, which are obviously increasing, certainly in the U.S., in North America.

As we look at SG&A, we will continue the IT and the technology investment, the investment in A&P to support product launches, and our whole technology roadmap. I don't know that there is anything specific to call out SG&A year over year if you're already normalizing for the tariff refunds and the AIP or the incentive comp impact related to that. Those are the broad strokes. As David said, we're excited about the 2027 Pro V1 launch.

In the club category, we've got irons and we have putters coming, which certainly will not be as strong of a growth profile as we'll see here in 2026 due to the metals and the wedge launch, given that it's an odd number year. Broadly speaking, that's how 2027 sets up as we sit here today.

Mitchell Ingles: Great. That's helpful. As a follow-up, can you give an update on the GTS launch? How's demand track versus your expectations and what you're seeing in terms of sell-through and custom fitting?

David Maher: Yeah, Mitchell. We're really pleased with the launch on a variety of levels, starting with tour adoption and adoption across the pyramid of influence. As you know, we went early. The team did a nice job getting our fitting tools out in the second quarter, and I think we went live in June. As we sit here today in November, we're very pleased with, A, the product, and B, the decision to go early, both in terms of sell-through and our shipments into the market. I think as we indicated on prior calls, this idea of moving launches earlier in the year, the first example being GTS, has been a real positive experience.

We're real pleased with GTS, and we're thinking along those same lines for irons.

Cameron Vollmuth: Thanks, Mitch. Next question, please, Ben.

Operator: Your next question from the line of Simeon Gutman of Morgan Stanley. Your line is open. Please go ahead.

Simeon Gutman: Hey, guys. Good morning. First, short-term question. Rounds played looks a little, I don't know, choppy, volatile week, at least coming into September. We haven't seen October yet. Normal noise, the health of the consumer, health of the game. Where does it stand right now?

David Maher: Yeah, Simeon, I think you summed it up. It was a bit of a choppy quarter, and if you look at golf playable hours, it would show that golf playable hours were down, I think, 6%-8% in the key third quarter months. Rounds of play weren't down quite that much. The way we think about it, and really U.S. commentary first, rounds are still tracking ahead for the year. We got through periods in the third quarter of heavy rains, heavy heat. The latest we saw for October was that golf playable hours were about flat, but net-net, I think we're coming off a six, seven-year run of increases, maybe more like five, six-year run of rounds play increases.

2026 still tracking at or maybe slightly above last year, despite some choppy weather. And we saw it in our business. When weather was good, people were playing, we'd see upticks. Weather was poor, we saw rounds declines and some downticks. But I think you summed it up well. It was a bit choppy. As we look around the world, similar profile. If we've got U.S. rounds up slightly, we've got rest of world rounds down slightly, but it's a mixed bag. They're up in Korea, they're up in Australia and New Zealand, they're up in China, but they're down in some other markets, all in the low single-digit ranges.

Again, I think it's as much commentary on weather, but as we step back from that, we're enthused about the game's underlying demand. Again, I think that's reflected in our performance, that's reflected in the overall rounds of play trends, and we do accept that you're just going to see some weather swings like we saw in the third quarter.

Simeon Gutman: Got it. My follow-up is, how are you looking at replacement cycles? Are they elongating, and are there differences in uptake from green grass versus some of the big box stores?

David Maher: Yeah. We've said previously that when things slow down in the economy, we would expect consumables to hold up quite well and durables to maybe see some elongated product life cycles. We have not seen that at this stage, and it leads me to comment on the resilience and durability of our dedicated golfer, right? They're playing, they're avid, they're active, they're taking lessons, they're spending on performance equipment. The other point I would make is, we've counter to, if there's an elongated life cycle, purchase cycle, we're going a little bit the other way in part by us entering the second quarter, which was a really good move for our club business.

Again, as I noted earlier, we think that's a trend you'll see play out over the next couple years with iron launches. So, haven't seen anything yet. Consumables in very good shape, and obviously our results, our club business this year, up double digits, suggest that our golfer is staying with their preexisting conversion cycles.

Simeon Gutman: Thanks. Okay, good luck. Appreciate it.

David Maher: Thanks.

Cameron Vollmuth: Thanks, Simeon. Next question, please, Ben.

Operator: Your next question from the line of Gregory Miller of Truist Securities. Your line is open. Please go ahead.

Gregory Miller: Thank you very much. Good morning, David and Sean. First question I'd like to ask you is about green fees. They are rising, and I'm curious if you're seeing any impact to rounds played or sport interest as a result.

David Maher: Yeah, that's a great question. We talk about it often because it's a surprising number. We point to data from the NGF, average cost of a round. They normalize based on an average of peak and off-peak times. This is public golf. Average course of round is $47. It's up 4% versus last year, and it's up 29% versus, I guess, six, seven years ago. There is affordable golf out there, but on the other side of it, we all know in major markets, big cities, it's maybe a little bit of a different story. When we look at rounds of play data, public, private, there doesn't seem to be a skewing or a backlash to pricing.

The biggest influencer, as we've seen this year and talked about earlier, has been weather. It is and will and should always be a watch out for the industry, but at the moment, we have not seen pushback. Again, the pushback on rounds has been largely weather, and it is a surprising stat for a lot of people when they hear that the average cost of a round is $47.

Gregory Miller: Thanks. I do look at the national data for the U.S. as well, but I frankly don't have as much color of what's going on internationally in terms of green fees, and wondering if you could also speak to that as well.

David Maher: Yeah. Generally speaking, it's a little bit like the U.S. in that it depends. Big cities, you're going to see higher costs. Seoul, Tokyo, Japan, Korea, the cost of play is higher, always has been. Across Europe, you've got really two versions. You've got local play and you've got tourism play. Tourism play, cost of those rounds have spiked, but local play has been more normalized. It's a similar watch out, but we have not seen it reach a level where it's prompting folks to not play or play less golf.

Gregory Miller: Thanks, David. Appreciate it.

Cameron Vollmuth: Thanks. Next question, please, Ben.

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

Matthew Boss: Great. Thanks. David, any recent change in buying behavior that you have seen from customers in the U.S. versus overseas? Could you just walk through puts and takes on fourth quarter revenues, or any change relative to your initial plan? Last, just if we are taking a step back, how do you feel about your product and innovation pipeline into 2027 at this point?

David Maher: Okay, Matt. Sean and I will tackle that one together. I will start with what we have seen from the consumer. Anytime you have weather and rounds decline, you are going to see some dips. We saw that. The quarter best described as a bit choppy, but a lot of upticks within that choppiness when weather was decent. Our consumer, and again, it is this dedicated golfer. They are avid, they are resilient, they are passionate. They are alive and well.

Not to say that all of them are unaffected by whether it is interest rates or gas prices, but by and large, the first thing we are going to point to is rounds of play, and that speaks to their avidity and their commitment to the game, and then what flows from that is their spending. I would say steady state over the last several months with ups and downs as much weather-related. I am not sure I have any meaningful call-outs outside the U.S. that would counter that. Again, it really speaks to this sustainability and durability of Acushnet's core consumer. We are very sensitive to it. We are very aware of it.

We understand what is happening broadly with inflation and watch carefully and closely as to what that might do to consumers and their interest in our products. But at the moment, as we really enter, we are in a shoulder season, we are soon to enter the snowbelt season where a lot of our play really comes from a handful of open Sunbelt markets. We are pleased with the state of our consumer and the durability of our consumer. Sean is going to hit part two.

Sean Sullivan: Yeah, Matt. Just on Q4, and just stepping back the full year, I think it is playing out largely as we had expected. I think, again, strong year from golf equipment, strong performance in golf balls in a non-Pro V1 launch year. When we think about Q4 for Titleist golf equipment, we are obviously expecting to be down, given the transition to Pro V1 2027. Obviously, with the accelerated club launch, we are going to see a year-over-year decline in golf clubs. From a FootJoy perspective, as David said, the profit focus and portrait is intact, and you will see that in the Q and the full year in terms of the profitability portrait.

Golf gear, third quarter soft, but just timing. Overall, I think the full year will have a nice outcome there. I called that on my script. I think if not for some of the disruption to FootJoy and golf gear on the custom side, I think the sales, due to the ERP implementation, I think the sales profile for the year is largely in line with our expectations. Very pleased with that.

David Maher: Yeah, Matt, I'll wrap it up with commentary on our pipeline. I'll begin with, as we both stated, the inventory at retail and in our facilities is in really good shape. We like our state of readiness for the holidays, and behind that, we like our state of readiness for new product launches. It's a Pro V1 year, so that's a boost to the ball business. We've got some exciting things happening in irons and putters, so we're enthused there. We got some good momentum happening in footwear and gear. Apparel, we're just cautious about. We're always cautious about. Largely, that's an Asia comment.

We've seen softness over the last couple years in Korea and Japan, not that we expect that to persist a whole lot longer, but we're just conservative about those very large apparel markets. So real pleased with the state of our innovation pipeline. We got some exciting things happening at TPI in terms of that side of the business. So overall, we're investing. As Sean talked about, part of our Q4 guide implies that we're going to continue to make some investments. I called it out. It's in R&D, it's in our fitting networks, it's in TPI. That's really to drive future growth.

So, we are right where we want to be at this time of year and feel really good about what's to come in 2027.

Matthew Boss: Sean, just as a follow-up to that, on the drivers of gross margin expansion that you saw this year, any change or considerations we should think about for next year gross margin as we think or start to size up input costs, freight, and pricing power?

Sean Sullivan: Yeah. Again, a little early, Matt, to talk overall, but clearly we're pleased that we're on a trajectory for 2026 to, on a normalized basis, excluding the net tariff impact, that we're going to see gross margin expansion. So slightly better. I talked about it in my comments about FootJoy and some other aspects driving that. I think in one of the earlier questions, we haven't finalized the pricing grid for every product and every launch next year, so I'll leave that to the side. From a cost of goods sold perspective, I think tariff, unless there's a change, I would expect that to be effectively flat year-over-year.

We certainly are seeing rising input costs in tungsten and some of the oil-based input costs to balls and the manufacturing of balls, health and welfare, labor, et cetera. So, again, the goal here is to meet or expand the gross margin profile. There are certainly headwinds. Like I said, we haven't finalized the pricing decisions across every product launch for next year. Overall, I think those are the things. I think they're all manageable, Matt, and we'll have more to say certainly in February on the call.

Matthew Boss: That's great, [Colin]. Best of luck.

Cameron Vollmuth: Thanks, Matt. Next question, please, Ben.

Operator: Your next question from the line of Jeff Lick of Stephens. Your line is open. Please go ahead.

Connor McClanahan: Hey, guys. This is Connor McClanahan on for Jeff Lick at Stephens. Congrats on a nice quarter. First question from us, as more competitors move towards the two-year product launch cycle, how do you think that changes the overall golf equipment market, and what does that mean for your positioning?

David Maher: Yeah. We're certainly aware that our competitors are moving in a two-year direction we think is prudent. We've been there a long time and continue to stay there. What I think it means longer term is it invites a healthier marketplace. You're going to have less periods of discounted prior generation product in the market, and you're going to have more periods where it's principally about performance rather than generation new versus generation old. High level, see it as a step towards an even more rational golf marketplace. If we go back 10 years, it was going the other direction. Product life cycles were less than a year, and it was very murky and complicated and messy.

I think it results in a cleaner marketplace. I think it ultimately benefits Acushnet over the long term. I think the final piece of that is it's going to really force and require a commitment to fitting, which is one of our core strengths. High level, that's how we think about it.

Connor McClanahan: Awesome. Just follow up on the fitting comments. You invested in fitting over the last few years. Are you seeing those investments change how often golfers are buying equipment or the types of products that they are buying? How important is fitting becoming in the overall golf equipment market?

David Maher: Yeah. We jumped into fitting in the early 1990s, and we've been public for 10 years. But since the early 1990s, we've been talking about building out and expanding our fitting network. Whether it's in the U.S. or whether it's globally, it's that important to our business. We believe for golfers to get the very best out of Titleist equipment, they need to be fit. It's really a core strategy of ours. It applies principally to clubs and balls. We started talking a year or two ago about FitLab and a fitting process for footwear. Yeah, it's a core strategy of the company.

At the heart of it is we believe great product plus a great fitting is going to help golfers play their very best. We also believe for our target consumer, you need both. Key part of our business for a long, long time, and I expect for years to come, you'll continue to hear us talking about investing, strengthening, building out, and growing our fitting capabilities.

Connor McClanahan: Awesome. Thanks for the color. Best of luck in the fourth quarter.

David Maher: Thanks.

Cameron Vollmuth: Thanks, Connor. Ben, next question, please.

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

Noah Zatzkin: Hi. Thanks for taking my questions. When I look at geographic constant currency performance year-to-date, relatively stronger performance in Japan and Korea. Maybe if you could just provide a quick update on those markets and how you think about the share opportunity looking ahead internationally. Thanks.

David Maher: Yeah, Noah, I'll do a quick flyover of Japan and Korea. I am really pleased with our team's performance this year. I think we're up double digit, up 11%, really led by balls and clubs. Footwear and gloves are in pretty good shape in Japan as well. Apparel's been soft. I think I've talked about that. Rounds have maybe down slightly, but I think about rounds as being ballpark flat. I am very pleased with our momentum. As I've said on prior calls, we see Japan as our biggest market share gain growth opportunity, and that's as much commentary on where we are and the competitiveness of the market.

Also, back to my earlier comments, it's the least evolved of our fitting markets. One of our unlocks in Japan will be to continue to activate and expand our fitting capabilities. But nice year in Japan. Korea rounds played are up a little bit versus last year. We feel really good about that as just an overall sign of market health. Our business down slightly, and that warrants a comment. Nice growth in Titleist equipment, balls, and clubs, and that's a theme we've talked about across regions. Balls and clubs are having a good year in every region. Similar to Japan, footwear and gloves are in good shape.

If there's softness, it's apparel, and the apparel market in Korea is really outsized. It's a very, very large marketplace. We think it's after a couple of year period of correction, it's largely stabilizing. As we think about the future, if you're really good about our business in Korea, we're going to take a cautious view towards apparel and keep fueling our ball and club momentum.

Noah Zatzkin: Very helpful. Maybe just a housekeeping question. I think net tariff refunds were a $38 million benefit through second quarter, and I think the benefit sits at $33.8 million as of the end of 3Q. Is the delta there in timing of incentive comp hitting in 3Q, or am I thinking about that wrong? Thanks.

Sean Sullivan: No, you are thinking about it right. We will have another one in Q4, right, as we true up the net 30.

Noah Zatzkin: Perfect. Thank you.

David Maher: Thank you.

Cameron Vollmuth: Thanks, Noah. Thanks, everyone. As always, we appreciate your interest in the company and wish you all a great holiday season and look forward to reporting back when we are on our February call. Thanks again.

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

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