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Golf equipment and apparel company Acushnet (NYSE:GOLF) reported Q1 CY2024 results topping analysts' expectations, with revenue up 3.1% year on year to $707.6 million. The company expects the full year's revenue to be around $2.48 billion, in line with analysts' estimates. It made a GAAP profit of $1.35 per share, down from its profit of $1.36 per share in the same quarter last year.
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Acushnet (GOLF) Q1 CY2024 Highlights:
- Revenue: $707.6 million vs analyst estimates of $689.1 million (2.7% beat)
- EPS: $1.35 vs analyst estimates of $1.24 (9.2% beat)
- The company reconfirmed its revenue guidance for the full year of $2.48 billion at the midpoint
- Gross Margin (GAAP): 53.4%, in line with the same quarter last year
- Free Cash Flow was -$116.8 million, down from $41.97 million in the previous quarter
- Market Capitalization: $4.00 billion
Leisure ProductsLeisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Acushnet's annualized revenue growth rate of 8.1% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Acushnet's recent history shows the business has slowed as its annualized revenue growth of 5.2% over the last two years is below its five-year trend.
We can better understand the company's revenue dynamics by analyzing its three most important segments: Titleist Balls, Titleist Clubs, and FootJoy, which are 29.4%, 28.8%, and 27.2% of revenue. Over the last two years, Acushnet's Titleist Balls (golf balls) and Titleist Clubs (golf clubs) revenues averaged year-on-year growth of 8.7% and 10.4% while FootJoy (apparel) averaged 3.2% declines.
This quarter, Acushnet reported reasonable year-on-year revenue growth of 3.1%, and its $707.6 million of revenue topped Wall Street's estimates by 2.7%. Looking ahead, Wall Street expects sales to grow 4.9% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Acushnet has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 4.8%, subpar for a consumer discretionary business.
Acushnet burned through $116.8 million of cash in Q1, equivalent to a negative 16.5% margin, reducing its cash burn by 19% year on year.
Key Takeaways from Acushnet's Q1 ResultsIt was good to see Acushnet beat analysts' revenue expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The stock is flat after reporting and currently trades at $63.65 per share.
