Q2 2020 Acushnet Holdings Corp Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the acute holdings Corp. Q2, 2020 earnings conference call.
At this time, all participants are in listen only mode.
Speakers presentations will be a question and answer session to ask a question. During the session you only depressed star one on your telephone if you require any further assistance. Please press star zero.
I'd now like to hand, the conference over to your speaker today.
Saundra, Atlanta, Vice President of F PNM and Investor Relations. Please go ahead.
Good morning, everyone. Thank you for joining us today for cushion at Holdings second quarter 2020 earnings Conference call.
Joining me this morning, our David Moore, our President and Chief Executive Officer, and Tom for Chico, Our Chief Financial Officer.
Before I turn the call over to David I would like to remind everyone that we will be making forward looking statement on the call today.
These forward looking statements are based on a cushion its current expectations and are subject to uncertainty and changes in circumstances.
Actual results may differ much.
In particular, the covert 19 pandemic has had significant impact on the company's business and results of operations and will likely continue to impact our business in the near future.
The ultimate duration scope and impact of this pandemic are uncertain.
Due to the dynamic nature of these circumstances, our plans could change and our actual results could differ materially from those contemplated by our forward looking statement.
The company undertakes no obligation to update or revise publicly any forward looking statements, whether because of new information future events or other factors except as required.
Reported results should not be considered as an indication of future performance for a list of factors that could cause actual results to differ. Please see today's press release, the slides that accompany our presentation in our filings with the U.S. Securities and Exchange Commission.
Throughout this discussion we will also be making reference to non-GAAP financial metrics, including items, such as revenues at constant currency and adjusted EBITDA.
Explanations of how and why we use these metrics and reconciliation of these items to GAAP basis 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 when referring to segment and regional year on year sales increases and decreases were referring to sales and constant currency.
And please also note that when referring to year to date results or comparisons were referring to the six month period ended June Thirtyth 2020, and the comparable six month period with that I'll turn the call over to David.
Thank you saundra and good morning, everyone I hope that you were all staying well during these trying times.
As always we appreciate your interest in a cushion holdings and look forward to providing you with an overview of our second quarter results along with insights into how a cushion that going to golf industry or adapting and evolving as we enter the back half of 2020.
On our previous calls in early May we were in the middle of government impose shutdowns impacting our golf ball and club plants embroidery operations.
And distribution centers in the U.S. and across Europe.
Most golf courses and golf retailers were effectively closed as the golf industry was shut down during the early days of the pandemic.
[laughter] towards the end of May after nine weeks before shutdown, we were given approval to restart operations with new and expanded safety and social distancing protocols.
And I'm pleased to report that since that time, our production has steadily increased and is now running at or above normalized levels and nearly all of our furloughed associates have returned to work.
And while our associates were safely resuming operations golfers, we're making a full return to the sport taking advantage of golfs outdoor field of play and embedded ease of social distancing.
In recent months, we've seen strong demand fuel U.S. rounds, and play increases of 6% in may and 14% in June.
The Gulf community PJ professionals golf retailers course owners and superintendents have excelled and safely welcoming golfers back to the game and accommodating increased interest and the sport.
The successful return of the PJ Tour in June has also contributed to golfs energy and this past week, the LPG, a European and champions tours restarted as well.
Well when we get to the other side of this global pandemic remains uncertain and the initial and most difficult months cushion that has benefited greatly from the resilience of our committed and skilled associates healthy product momentum and strong balance sheet as we entered the shutdown period.
[noise] affirming this resilience and financial stability I am pleased to announce the approval of cushion at second quarter cash dividend equal to 15, and a half cents per share or $12 million in aggregate.
Now turning to slide four and our results for the period second quarter sales of $300 million were 34% below last year and first half sales of $709 million were off 20% versus 2019.
Second quarter, adjusted EBITDA was $33 million down 56% versus last year.
These results reflect a 27% reduction in planned opex spending for the period as our team aggressively managed expenses during the shutdown period.
For the half adjusted EBITDA of $86 million was down 39% versus last year.
Here on slide five.
You see the effects of near shutdown early in the quarter, which were followed by recovery, which began in late may.
April sales were down 68% may improve to down 52% as our facilities reopened and June sales indexed 25% ahead of last year.
June's momentum and growth continued into July as a healthy order backlog strong at once demand lean channel inventories and gradually increasing output levels contributed to a fast start to the third quarter for each of our reportable segments.
Now turning to slide six and our regional performance you see that the U.S. EMEA in Japan, where as you would expect down for the period.
Korea's resilience and momentum are noteworthy as our team posted a solid 12% increase in the first half.
This gain is the result of strong brand momentum and sound execution by our Korea team and reflects the country's effectiveness in fighting co bid with less economic disruption than we have seen elsewhere.
Korea is one of the few markets to post increase rounds of play in both the first and second quarters.
Looking ahead, we see the game as well positioned in the U.S. any M&A with EMEA is recovery starting about one month after the U.S., which is consistent with their later golf course reopenings.
Our outlook for Japan remains conservative and we expect that stay at home guidelines will continue to prompt Japan's older golfer population to be less inclined to venture out to play golf or go to the driving range.
And we anticipate that Korea, while not without disruption will remain one of the steadier and more resilient Gulf regions.
Now turning to slide seven and the second half.
As I mentioned July was a strong month and we expect this momentum to continue into August.
Our supply chain has recovered well and for the most part our inventories are in line with anticipated demand.
Probably one availability however has been under the most pressure with strong demand requiring the allocation of are available supply over the next several weeks.
You asked channel inventories at the end of June were down versus a year ago, which we see as a positive sign.
Golf balls and club inventory levels are down about 20% from 2019.
And Gulf bag in footwear inventories down 12%.
Most global markets are also reporting modest inventory declines versus last year.
This inventory environment reflect strong consumer demand over the past 10 to 12 weeks, which has contributed to lower than anticipated promotional activity. Following the extended period of retail closure earlier this year.
As we noted on our previous call. We continue to prioritize all product development efforts with the intention of ensuring our readiness to introduce new products when market conditions are most conducive.
And thanks to the great work of our R&D and ops teams, we plan to launch several exciting new products in the coming months.
Our new multi layer thermoplastic urethane tour speed golf ball launches this week in North America and in all other markets next month.
Tore speed delivers a great combination of long game speed and short came spending control and will be position between our existing serlin covered performance models and probably wanted adx franchises and we'll retail for around $40 per doesn't.
You may recall that version of this product was successfully test marketed last fall as tight list XP Irwin.
We have finalized design plans for new title as drivers and fairway metals, which we now intend to launch in mid November.
Sure fittings are underway and we expect new product to debut on worldwide tours in September.
We will provide more details about this launch on our third quarter call.
And our club team is also excited to launch a new family of concept irons in September.
Concept does not represent large volumes. It does reflect our most advanced iron technology platform and sets the standard in the Super premium segment.
Concept is also a valuable proving ground for materials and new constructions that may someday be used in our core product franchises.
In summary, I will affirm that the game and business of golf have been incredibly resilient over the past months.
Our team has done a great job navigating a challenging second quarter and we're confident in a cushion its positioning and readiness as we look to the future.
As you would expect we continue to exercise caution in our planning given cobot related uncertainties, while at the same time, our teams are preparing to capitalize on the high levels of participation and consumer demand we have seen over the past two to three months.
I will conclude my prepared remarks by a firming a cushion its commitment to the safety and well being of our associates and trade partners and our unwavering focus on building upon our proven track record of providing shareholders with a compelling long term total return investment opportunity.
Ill now pass the call over to Tom.
Thanks, David and good morning to everyone on the call.
I would like to recognize the resiliency that our associates their families. Our trade partners and communities have shown in the face of the pandemic and the truly amazing effort our team put forth to get our business back up and running in a safe and healthy manner.
Starting on slide nine.
As David mentioned, our Q2 results were severely impacted by Cobot 19.
Q2, consolidated net sales were 300 million down 35% versus Q2 of last year and down 34% on a constant currency basis.
Q2, gross profit was 157 million down 90 million or 36% versus last year and gross margin was 52.2% down 100 basis points.
The decreases in gross profit and gross margin were driven primarily by the overall decrease in sales and production volumes.
SGN a expense in Q2 was 131 million down 40 million or 23% compared to Q2, 2019, and R&D expense was 11 million down 2 million or 14%.
Overall, our operating expenses for Q2 were down 27% from our planned levels coming into the year as a result of our cost reduction actions taken during the quarter.
During Q2, we had a little over $1 million of restructuring charges, which carried over from our Q1 program.
Operating income in Q2 was 12 million down 49 million from 2019.
Interest expense was 4 million down slightly from the prior year and income tax expense was a benefit of $600000 driven by the shift in our jurisdictional mix of earnings offset by a one time discrete benefit related to a change in our international structure.
Q2, net income attributable to a cushion at holdings was 2 million and adjusted EBITDA was 33 million down 43 million from the prior year period.
Moving to our results for the first half of 2020 consolidated net sales were 709 million down 21% from last year and down 20% in constant currency.
Gross profit for the first half was 357 million down $111 million versus last year and gross margins were 50.4% down 190 basis points from the prior year.
[noise] first half SGN expense was 283 million down 42 million or 13% over the first six months of 2019.
R&D expense was 24 million down 1 million or 5%.
First half income from operations was 33 million down 80 million from 2019.
Interest expense was 9 million down 2 million from last year.
And our year to date effective tax rate was 35.6%, which has increased compared to 2019, driven primarily by the shift in our jurisdictional mix of earnings.
First half net income attributable to a cushion holdings was $11 million and adjusted EBITDA was 86 million down $54 million from the same period last year.
On slide 10, we have provided a reconciliation of net income to adjusted EBITDA for Q2, and the first half.
There are two items to highlight here.
The first is the add back of Cobot 19 related expenses of $6 million in the second quarter, which is included in the line item other extraordinary unusual or nonrecurring items net.
As in Q1, the AD that includes salaries and benefits paid for associates, who could not work due to government mandated shutdowns.
Benefits paid for furloughed associates incremental costs to support remote work and the cost of additional health and safety equipment.
The second item to note is $3.9 million of pension settlement charges in the second quarter, which are also included in the line item other extraordinary unusual or nonrecurring items net.
These charges were added back because they are directly related to our Q1 restructuring program.
As you can see on slide 11, net sales in all of our segments were negatively impacted by cobot 19.
Total us golf balls were down 40% in Q2, and 30% year to date.
Total us golf clubs were down 32% in Q2, and 16% year to date.
Title Us Gulf gear was down 30% in Q2, and 16% year to year to date.
And foot joint golf, where was down 39% in Q2 and 21% year to date.
Moving to slide 12, we had about 109 million of unrestricted cash on hand, our total debt outstanding was approximately 522 million and our leverage ratio was 2.28 times at the end of Q2.
On June Thirtyth, we repaid the 200 million that we had drawn down on our revolving credit facility earlier in the quarter.
And on July 3rd we closed on an amendment to our credit facility, which among other things gives us relief on our net liquidity ratio covenant for five quarters.
At the end of Q2, we had cash on hand and available borrowings under our revolving credit facility of about 329 million.
At this time, we believe that our cash on hand, and available borrowings will be sufficient to meet our liquidity requirements for at least the next 12 months.
Consolidated accounts receivable at June 30 was 272 million down 11% from the prior year as a result of the lower Q2 Twentytwenty sales.
Our dsos were up four days compared to the prior year as we gave some customers extended payment terms. However, our aging remains healthy.
Consolidated inventory was 364 million up about $40 million or 12% from the prior year.
About half of this increase comes from shoes, which we did not acquire until July onest last year.
Increases in foot Joy apparel, and footwear and in all categories in gear make up most of the remainder of the increase as both businesses were impacted by unfulfilled demand at the end of the quarter.
And by canceled tournaments and corporate outings.
Golf ball and golf club the inventories both showed year over year decreases.
Overall, we are comfortable with the quality of our accounts receivable and the amount and composition of our inventory at this time.
[noise] cash flow from operations for the second quarter of 2020 was 72 million, making first half cash flow from operations essentially zero compared to $40 million for the first half of 2019.
Capex was 5 million for Q2 and $10 million for the first half.
We are continuing to closely monitor our capex for the balance of the year and still expect 2020 full year capex to be lower than in 2019.
Turning to capital allocation on slide 13.
Although our long term priorities remain the same we remain cautious as it relates to our capital allocation actions.
As I just mentioned, we continue to expect 2020 full year capex to be lower than 2019.
Our share repurchase program continues to be suspended and we did not repurchased any shares in Q2.
We did pay our previously announced Q2 dividend in June and as David mentioned, our board of directors today declared a Q3 cash dividend of 15, and a half sense a share payable on September 18th to shareholders of record on September 4th.
This represents a return of approximately $12 million to shareholders.
Finally, as you know we suspended our guidance in April and did not issue new guidance on our Q1 earnings call.
We are encouraged with the increase in rounds of play and consumer demand around the world and the related positive impact on our sales in June and even greater impact in July.
We currently expect demand to continue to be strong in August and September and for our Q3 sales to be significantly higher than Q2. However, we do expect our Q3 sales to be lower than Q3 2019, primarily as a result of the shifting of our upcoming driver launch into mid Q4.
Sure.
While we continue to manage our discretionary spending we currently expect Q3 operating expenses to be down slightly from our originally planned levels.
Given the continued uncertainty regarding the future impact of covert 19, we will not be issuing detailed guidance at this time.
In conclusion, our business was severely impacted in Q2 by Cobot 19, However, we were able to get up and running quickly to begin to meet the strong consumer demand that was pent up after the government imposed shutdowns were lifted in mid may.
We believe this strong consumer demand will continue through the third quarter. However, there continues to be a high degree of uncertainty.
We are confident we have taken the appropriate steps to protect the company's liquidity and financial position and to enable us to maintain our market leadership positions into the future.
With that I will now turn the call over to Sondra for QNX.
Thanks, Tom Marcella could we now open up the lines for questions.
At this time I'd like to remind everyone in order to ask a question. Please press star number one on your telephone keypad.
Your first question comes from the line of Tim Conder from Wells Fargo. Your line is open.
Thank you gentlemen, congrats just on the execution difficult environment.
A couple of items here.
I'd like to do you look at factor in the change of your cadence and new product introductions and kind of where your commentary on the channel inventory.
When do you anticipate the channel sort of being back to normal your ability to supply and get it back to normal here.
Tim a I would say it'll as we as we work our way through this through the summer months and you get some seasonally adjusted play and consumption in the marketplace.
Fair to assume that come September October we should begin to see channel inventories broad channel inventories make their way back to normalized levels.
Okay, and any difference versus North America versus the Europe as far as channel inventories.
I think it's North America started.
The game resumed earlier than what we saw in Europe. So.
North America is running a little bit leaner than than the rest of the world.
But most markets around the world. There are also in somewhere in the range of healthy to down.
The down modestly, but again the key differential there is rounds of play really picked up in the US early may and that happened that happened later in Europe.
Okay, great. Thank you.
Thanks, Tim.
Thank you Kim next question please.
Your next question comes on line of Daniel Ambrose from Stephens. Your line is open.
Yes, Hey, good morning, everybody congrats on that second quarter.
Thanks, David I wanted to start maybe on the our broader industry you know the industrys recovering nicely probably faster than we already and we hope would can you talk about maybe what you learned last few months about the core golfer or there's resilient as you thought there would be are they.
While making up the majority of spending and then related to that you know receiving new gulpers.
In scale really drive spending or they decide in participation today.
Yes, Daniel so certainly things of.
Things in Gulf of picked up at a faster pace than them.
Anybody I think would have anticipated going back to to March or April.
One commentary I will add that at the rounds played data we're seeing.
Also reflects the cancellation of so many corporate outings in charitable event. So when you look at the numbers really driven by recreational play offsetting some of those cancellations. So.
I think a strong rebound in May and then into June and we expect to continue into the into the July and August months from our from what we're seeing and what we're hearing from a lot of our trade partners. The play is coming from all angles and that is certainly in a dedicated golfers are playing more and you.
Got up you've got a strong influx of interest from new players whether its.
Juniors or folks who simply never played the game or folks who played years ago and of jump back in.
111 element, we're seeing too is that.
The more folks play the more they think about equipment. So I think that's been an accelerant to the strong equipment sales we've seen over the last over the last couple of months, but.
Fair to say that that this participation we're seeing is coming from from all angles.
And it only affirms again that the correlation between rounds of play and the commercial element of the game and the spending component of the game that was that was one area that was in certain as far back as soon as recently as April and May.
And we've seen that we've seen that connection resume nicely and that is.
The typical spend profile per round of golf.
That's helpful. And then just during maybe the two most of downs are we saw within your broad maybe golf ball or any selection did you see any trade down during the consumer.
Maybe lower a if the options are that based financial pressure and then more broadly do you as we think about upcoming launches do you think to consumers in a place to deal with.
Continued price increases like we've seen last few years or how do you think that shapes up today.
Yes, so as it relates to trade that we didn't we didnt see that again, our situation was focused on.
Resuming operations resuming shipments and.
Putting product into the into the channels.
As quickly as we could because of because of the strong demand, resulting in lean inventory positions. So we didnt see a lot of trade down now that said, we saw we saw healthy demand across our product lines all the way from.
Probably one down through the in through the entire lineup so.
I wouldn't say that there was a trade down component in the final piece all that is the inventory inventory pressures, we're dealing with now.
As I mentioned on my on my prepared remarks are most acute with probably one.
Secondly.
Where's the consumer as it relates to pricing you know Daniel on that one I think it's I think it's too soon to say, they're playing a lot of golf they're engaged they are investing in their game for a lot of different reasons, but in terms of in terms of how they're thinking about price increases how we're thinking about price increases.
We haven't picked up any strong signal so one way or the other we continue to believe that if we bring new and innovative and exciting products to market.
We can capture a premium but but in terms of any any signals, we're getting from the marketplace at this point.
I think I might have a better answer for you on our next call.
Okay Woman's quick related follow up you mentioned, obviously the inventory issues is there anyway to quantify or what percentage of log sales, new what kind of headwind that was the sales growth in twoq, where maybe you couldn't meet demand in the quarter.
Yeah, I think almost exclusively you've got to remember we were we were all but shutdown in in April and most of May we couldn't produce we couldn't we couldn't ship.
We couldn't.
Custom decorate whether its golf balls or custom custom club assembly or embroidery. So I.
I think I think the markets just to them in a major period of disruption during that period and our own situation was unique.
With distribution centers in Massachusetts, and California at least in the U.S. that were shut down.
Our own situation was primarily a function of.
Of dealing with government oppose shutdowns and then ramping up as quickly as we could when things resumed in late may.
Okay. Thanks to my best of luck. Thanks, Daniel.
Thank you Daniel next question please.
Your next question comes from the line have right Andrew from Keybanc. Your line is open.
Oh, so focusing on slide five and thank you for that by the way is there any more detail that you can give us on.
The momentum that you cited from June and July.
As a percent of 2019, I mean, what would that.
July bar look like compared to June and then also just building off that I'm trying to think about the mechanics of how we get to Threeq sale down given the August commentary you also gave a.
Remember just down.
That that meaningfully on launch timing I guess I don't have the seasonality.
Sure Brian in terms of the momentum we saw in in July we said that Jim year over year, and we are expecting to July July to be up even higher than that on a year on year basis. So.
Really strong momentum.
In July.
In terms of the Q3 and the decline we did say.
That we despite the momentum we expect Q3 to be lower primarily because of the shifting of the driver.
You know, we would expect to see a similar volumes of drivers over a 12 month period, but by shifting it from the August timeframe into the November timeframe, you're probably going to see about half of that volume shift out of 2020 and into 2021.
Got it okay. That's helpful.
And then last one just encore sale to restart.
Greetings and all of your market I'm just trying to.
Feeding part of the business had been because presumably.
Course sales.
Yeah, Brett we we talked about.
Great uncertainty is how would the consumer.
Jump back into the into the World of club fitting and as I mentioned.
Our team did a real good job reengineering, the fitting process and helping our trip.
The partners do the same and as much as anything educating golfers that we've got to say.
Method to to effectively fit for golf equipment sales what I can share is in June and July of 2020, we actually did more fittings than we did last year.
We did more than we plan to do so that was a pleasant surprise for us I think it bodes well for.
The future of fitting be it on course or off course, and a lot of that a lot of that fitting that number I talked about was was really through our tech reps.
And I think we saw the same thing whether it was on course or off course through our trade partners and their fitting so one area, we're especially pleased with is the resiliency of custom fitting over the last couple of months.
Thank you.
Next question please.
Your next question comes from the line of Michael Sports on to answer Security. Your line is okay.
Then.
Yes, again, we will be the gross margin in the in the quarter earnings down 100 basis points.
But on a 35% decline I understand I guess, how did grows more.
And most of the is not all the cost savings you you discussed on the first quarter call.
Line item, so just maybe a little more.
We should maybe think about that back.
Here.
Sure in term certainly highlighted the cost savings in the opex areas, but but.
There were certainly cost savings.
And in some of our direct costs.
Certainly played a role I would also say that you know the.
Of equipment versus soft goods, you know, we've always said that equipment has have higher gross margins then soft goods and.
The.
Of both golf balls and clubs in.
Particular that mix shift.
Higher gross a lower decline in gross margins than you you might have expected.
In terms of the second half.
Although we're not getting into a great level of detail there.
However, launch and the impact of that on 20 and.
21, we were a bit of headwind to to margins from that in the <unk>.
Okay. That's very helpful. Then you just a lot of the commentary around new new golfers your lapse golfers coming back into the market I know what have you really kind of stuck to.
Marketing and really in really more of your your.
Marketing sponsorship activities really targeting that that lifelong dedicated golfer have you maybe given any thought to how you.
We go to market with our labs buyers coming in the market, where anything change going forward.
Yeah, I think the way to the best way to look at that we are we are committed and focused on the dedicated golfer we've built.
The business around the dedicated golfer the that that doesn't change certainly we pay attention.
<unk> marketplace trends, but our core vision in our core mission.
I I will say, we do have.
Some entry points with tourists from dedicated front from BNP entry level golfers, rather whether it's through our PG golf, a loss golf balls business whether through some.
Pinnacle golf balls, whether it's whether it's through a union green, a new but really the core of our of our mission and our vision remains the debt.
Thank you Michael at any other questions.
Okay.
You can take the next question. Thank you.
Matt Joe Altobello from Raymond James Your line is open.
Great. Thanks, guys good morning.
Good question I'll go back to you the commentary regarding Q3 and the momentum you guys saw in July and August.
It sounds like based on what you're saying this morning.
The reason for the year over year declines going beyond the.
On the club side, so we assume that golf ball sales will be up year over year in Q3.
Yeah, that's a fair assumption Joe.
Okay just related to that are you seeing any lingering supply chain issues on the ball side or the probably want shortages and you guys are talking about that simply due to the shutdown you had.
No.
I'm not playing catch up sounds like this call.
Yeah. So so we did continue probably one production through ball plant for in Thailand throughout the second quarter.
In the U.S., we were shut down late March all of all of April and most of May June was really a ramp up month and the team did a good job and we're now at or ahead running at or ahead of normalized levels. So.
We're making it faster than we made it a year ago, we've got three shifts running every day.
But but the fact is we've got we've got some very strong demand coupled with a lean inventory situation that I thought I talked about so I'm pleased from a production standpoint.
We're doing all we can the other component of that is customization, we had a pretty strong custom backlog.
That we had to work through we finally work through that and lead times are now at normalized levels. So the situation. We're dealing with now is very much.
It's very much demand driven more so than in our ability to produce.
Okay, great. Thank you guys <unk>.
<unk>. Thank you. Thanks so.
Could we take the next question please.
Again I'll just ask your question. Please press star and the number one on your telephone keypad. Your next question comes from the line ASCII Alexander from company. Your line is open.
Hi, good morning.
Two questions one you called out.
Some excess inventory in apparel and footwear and since I'm always looking for a good deal on golf shoes.
Just wondering if you're planning any type of promotional activity in that area to push some of that inventory through the channel.
Casey at at the moment, nothing nothing out of the ordinary or out of our typical seasonal cycles I I will note that while well channel inventories are down most notably in balls and clubs.
Channel inventory on footwear is also down in apparel is also down so while it is making up the bulk of our increase we're not compelled to take any actions that we wouldn't otherwise typically make this time of year as we enter the back the back half of the season.
Okay. Thank you and one more question as it relates to adjusted EBITDA.
Oh I'm curious why that includes salaries and benefits paid for associates, who who did work.
If you you paid them last year, you're paying them. This year, you, presumably going to pay them next year that sounds more like a business decision then a one time charge and therefore doesn't seem realistically to qualify for an add back to EBITDA.
Sure Casey and in those instances and that was primarily in Q1 and the early part of Q2. Those individuals for example were salespeople who couldn't call on accounts because the accounts were shut down or.
Couldn't carry out there duties because of other restrictions and so there was a period of time, where we were still paying those associates prior to even though they couldn't perform their duties.
Ultimately those those employees those associates were furloughed and so they came out of that bucket and into the.
<unk>.
Expenses related to benefits for furloughed employees. So it's a small pieces a number but it's really when individuals could not perform their duties and we were still there were still on the payroll.
Okay.
It does lead me to one more question did you have any difficulty getting back furloughed employees may some companies have have said that they've had difficulty getting some employees back simply because of the strength of the government unemployment benefits.
How has that gone for you.
Casey, we certainly we're aware that we anticipated some of that but as you know our associate bases.
Long long tenured in fact, our ballpoint associates have over 20 years of service on average.
Lead into your question, we had very little challenges or or trouble getting folks back to work.
Okay, great. Thanks for taking my questions I appreciate it. Thanks Casey. Thanks Casey. Thanks, Casey next question. Please.
Your next question comes from the line have Greg Andrews from Keybanc. Your line is open.
Hi, Thanks for the follow up and sorry, if I missed that but what was the reason for the mid November launch timing is that just supply chain related.
No Brett good. Good question you know you think about how we how our prelaunch activities right we like to.
We'd like to introduce product out on tour and throughout the pyramid in advance of.
Launching it in the marketplace, we simply felt the market was to disrupted in June July and August too.
To to activate some of our key prelaunch activities.
The team was ready to team is ready if you recall last time, we launched a driver we introduced it on tour in June and we ship the product in September.
We basically shifted things out a couple of months as much to to engage with our tour staff around the world and build some prelaunch demand and simply with with no professional golf until June.
With players focused on.
A whole lot of competitive play during the months of June July and August we felt it was best to just shifted out a couple of months, but lesser readiness standpoint, more us identifying what's the right window for launch and as importantly, what's the right launch window that gives us a couple of months of of our of our our pre launch.
Marketing and tour validation efforts so.
We looked at it sure through that lens and November made real good sense.
Understood. Thank you.
Thanks.
Okay. Thanks, everybody.
As always we appreciate your time and interest and look forward to catching up on the on the next call and in the meantime, please stay safe. Thanks again.
This concludes today's conference call you may now disconnect.
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