Q4 2018 Earnings Call
Operator today at this time I would like to welcome everyone to the Cushing at holding corporations fourth quarter and full year 2018 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If he would like to ask a question. During this time simply press.
Star then the number one on your telephone keypad, if he would like to withdraw your question press. The pound key. Thank you Tony you talk as our Vice President of Investor Relations You May begin your conference.
Thank you good morning, and welcome to a cushion at holdings call to discuss the financial results for Q4 and full year 2018.
This morning, we are joined by a Krista President and CEO , David Maher, David will provide commentary on the conditions in the golf industry and discuss the performance of our business in the context of our long term mission and strategy.
Next of course that CFO , Tom Pacheco will spend some time discussing the overall financial results for the year and highlights from <unk>.
We will be making forward looking statements on the call. Today. These forward looking statements are based on our kushner its current expectations and are subject to uncertainty and changes in circumstances.
<unk> results may differ materially from these expectations.
A list of factors that could cause actual results to differ please see our filings with the U S Securities and Exchange Commission.
Throughout this discussion, we will 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 reconciliations of these items to a 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.
With that it's my pleasure to introduce a cushion at CEO , David Maher, David Thanks, Tony Good morning, everyone. We appreciate your time today.
I'd like to begin by sharing some of our cushion its highlights from 2018.
Starting with golf balls, Titleist had a strong year as 73% of all worldwide tour players relied on probie, one or probably one acts as their golf ball equipment choice, including the winners of all four men's major championships and all five women's major championships in 2018.
We believe this is powerful commentary on the performance quality and consistency inherent in every Titleist golf ball produced by our World class manufacturing team.
In 2018, we also introduced our new AVX, a premium multilayer cast urethane golf ball developed for golfers, who benefit from lower spend in flight and prefer a softer feel well.
We're very pleased with this past summer's global launch and the effective and clear positioning of AVX in the marketplace.
The title is golf club business also had a terrific year driven by the resoundingly successful launch of Ts metals, a strong year in irons and robust spoke ESN seven wedge and Cameron select putters launches. We're excited about the momentum our golf club business is generating.
Our gear and foot Choi businesses were resilient in spite of some challenges inherent in their respective product categories and we believe both segments are positioned well for 2019.
Since our January acquisition of links <unk> Kings, we've made meaningful investment to improve and expand our supply chain to prepare this great brand for growth.
And in the fourth quarter, we began the process of integrating and working closely with our new partners at PG professional golf.
And while mother nature was especially unkind to the golf business in 2018, the industry held up well despite a weather induced loss of rounds in many global markets.
This backdrop, a cushion it was able to capitalize posting a 5% sales increase for the year fueled by new product innovation and some great work by our associates.
Christian its associates are known for their experience expertise and passion for their work.
I must acknowledge and thank my teammates for their commitment and effort, which are the foundation of a cushion its consistent performance and future growth.
We are also appreciative of our valued trade partners, who so effectively communicate Christians performance quality and consistency benefits to golfers.
And affirming our commitment to our supportive shareholders I am pleased to make the following two announcements.
The first is that a cushion as board of directors has voted to increase our fourth quarter dividend payout by 8% to <unk> 14 per share.
The aggregate value to approximately $10 $5 million and secondly, we are announcing an increase to our share buyback program authorization to $50 million as another means to reward and return value to our shareholders.
Both of these actions are signs of the board's confidence in <unk> ability to execute over the long term and commitment to providing a cushion of shareholders with an attractive long term total return investment opportunity.
Please now turn to page five in our topline results for the year in quarter.
For the full year 2018, a cushion at sales of $163 billion grew by 5% or 3% in constant currency.
Adjusted EBITDA for the year increased by 3% to $238 million.
Title is clubs increased 11% and were the top gainer in 2018.
This growth was driven by successful wedge and putter launches in the first half year long iron momentum led by our AP three model and our successful Ts driver and fairway launch in the second half.
Now lets golf balls also had a strong year posting growth in a non pro <unk> launch year and despite reduced rounds of play.
As you recall, even numbered years tend to present challenging comps for the ball business, given our product launch cadence.
Looking at the fourth quarter, <unk> posted sales of $343 million down 2% versus last year.
This quarterly decline was anticipated and due primarily to the seasonal drawdown of probably one field inventories in advance of the 2019, probably one launch and the timing associated with our golf club product launches in the second half specifically the Ts metals launch had a greater impact on our third quarter, whereas last year's.
Title list Irons launch was more concentrated in the fourth quarter of 2017.
Adjusted EBITDA for the fourth quarter of $36 $1 million decreased.
12% versus last year.
Now turning to page six we'll take a closer look at <unk> four business segments with results presented in constant currency.
Starting with golf balls, Titleist ball sales increased 1% for the year and were off 2% in the fourth quarter for the reasons I just mentioned.
Titleist golf ball sales in 2018 were driven by new products, notably our AVX franchise, which debuted in May and new tour soft and velocity, which launched in January .
Across the worldwide professional tours Titleist had another great year with a 73% ball count representing more than seven times the usage of the nearest competitor.
And probably one golf balls notched 180 wins across worldwide tours in the 2018 season more than six times the nearest competitor.
This past January we launched a new title is <unk>, one and <unk>, one ex golf balls at the PGA merchandise show.
These new golf balls made their debut on worldwide professional tours in the fall and have been engineered with thinner covers thicker casing layers and larger faster cores.
These enhanced designs result in more ball speed and lower spin for greater long game distance, while maintaining the preferred short came spin feel in control characteristics of both <unk>, one and <unk> X.
And we have for the first time introduced yellow models in both <unk> and <unk>, which we expect will be well received by golfers who have a preference for colored golf balls.
A question. It's continued golf ball success is rooted in our unwavering commitment to R&D manufacturing excellence and golfer engagement.
Led by the first quarter launch of the new Pro <unk> and probing onex models and our ongoing efforts to develop the nascent AVX franchise, we're excited and optimistic about 2019.
And finally in golf balls are PG professional golf acquisition is progressing as expected for 2019, we expect full year revenues to be in the range of $20 million to $25 million.
Now moving to golf clubs Titleist clubs had a terrific year delivering sales of $445 million, an 11% increase versus last year.
Sales for the quarter were up 5% for reasons I mentioned earlier.
Each of our golf club categories performed well in 2018 with growth led by Ts metals and <unk> wedges.
Titleist clubs also grew in every major golf market with the U S and EMEA posting the largest increases.
Our commitment to invest and innovate in clubs is yielding positive momentum across all categories drivers fairways hybrids irons wedges and putters.
And while it was not a feat we intentionally set out to achieve our team is rightfully proud of the recent sweeps of the ball count and all six club categories at the Sony Open in January and then again two weeks later at Torrey Pines, such an equipment sweep have never before been accomplished on the PGA tour.
We see this widespread support by the game's best players as being indicative of the momentum and energy around Titleist golf clubs.
And most notably our Ts driver franchise, which has seen the greatest usage gains since making its tour debut at last year's U S. Open.
More tour players are playing with titleist drivers than ever before and this success and growth are spanning across each of the leading global tours.
We are experiencing similar momentum with top amateurs and in the marketplace, which fuels our enthusiasm around the title of this golf club business as we soon enter the heart of the 2019 equipment season.
Next moving to slide seven entitled as gear gear posted an almost 15% increase in the quarter, bringing the full year to roughly flat with last year.
Gear achieve positive growth in the U S and EMEA in 2018, which was offset by declines in Japan and Korea.
We have leveraged our global design and supply chain to create more market specific bags and travel gear, both of which are off to a good start and should help to differentiate titleist gear products in the key markets.
And we continue to expand our custom capabilities and offerings to capitalize on increasing demand for customized and personalized products. Overall, we believe our gear business is in good shape and we look forward to a solid year ahead.
Now moving to our final segment fluctuate, which delivered full year sales of $440 million, a 1% decline versus 2017.
Fourth quarter sales comping against a 15% gain last year were down 2%.
There are three central themes, which emerged within the <unk> business this past year.
<unk> was not as competitive in the sub $100 price range, a category, which grew in 2018.
As you May recall, we decided to exit some lower margin lower price points last year and while we see this as a long term positive for the <unk> brand. This negatively impacted our 2018 results.
Going forward, we believe we are introducing the right products to be more competitive in that sub $100 space.
Second is the continued success and growth of foot Joy men's apparel women's athleisure apparel and performance outerwear.
But Chile is relatively new to the golf apparel space and the growth of our business closely parallels our expanding design customization and supply chain capabilities and.
And finally foot Joy gloves, whichever earned one of <unk>, leading share positions continue to innovate and set the standard in all markets for performance quality and consistency.
Petroleum title as clubs are made at Cushing, It's wholly owned glove factory, which we view to be a distinct competitive advantage for both brands.
Looking to 2019, our footwear team has adapted well to ever changing consumer preferences.
And has fortified our new product pipeline to capitalize on shifting market trends.
Led by pro SL and the recently introduced athletically styled Fury and flex models.
<unk> is positioned for an exciting first half.
It shows new women's footwear line is scheduled to ship in the spring and should add to this momentum.
Put jewelry outerwear as the number one outerwear in U S Green grass shops and continues to solidify its position as the best in performance outerwear.
We are excited to introduce a new innovation story in the first quarter with hydrogen at a fully waterproof shell with a specifically engineered three layer bonded knit fabrication that makes it one of which always lightest outerwear garments.
In 2018, our team successfully launched that FJ $18 57 collection of handcrafted leather footwear and luxury apparel.
$18 57 sell through met our high expectations and we anticipate its continued progress at many of the top golf shops around the U S.
While the $18 57 collection is not intended to be a sizable business for foot joy. It represents an important and classic product offering for the game's dedicated and discerning golfer.
We report links <unk> Kings under our <unk> segment in our first year integration under the cushioning umbrella has gone well.
We improved its supply chain, while managing to keep up with double digit growth for the brand.
We are confident that links <unk> kings is well positioned for future growth first in North America, and the U K and in time to key markets across Asia and Continental Europe .
Now looking at our business regionally on slide eight U.
U S sales increased 5% for the year and were off 5% in the fourth quarter.
Our U S team achieved good results driven by strong sales in golf clubs golf balls and apparel.
Looking outside the U S EMEA posted a 1% gain for the year and was roughly flat in the fourth quarter.
Outside of challenges with U K retailer American golf, our business across EMEA has been relatively stable.
<unk> was down 3% for the full year and 9% in the quarter round.
Grounds in Japan were off 5%, which contributed to market softness, particularly through the first three quarters of the year.
We did see a rebound in the fourth quarter with both weather and rounds improved.
And lastly, our team in South Korea had another strong year with sales up 7% as they finished the year with a great fourth quarter.
And now turning to page nine and our outlook for 2019, we.
We feel the global business of golf and the dedicated golfer base are structurally healthy.
As we look to 2019, we expect new product innovation will once again be the engine of revenue growth and share gains with the game's dedicated golfer. These.
These golfers represent 70% of the industry's purchasing power.
We remain an especially attractive demographic and are the focal point of the question its product development and go to market strategies.
Each of our business segments is active with new product development and a full calendar of new product introductions, which bring enthusiasm to golfers our trade partners and our associates.
We are investing in our associates and in technology to advance the performance and appeal of our products, while pursuing efficiencies throughout our organization to achieve operating leverage over the long term.
The Krista team has a proven track record of executing and we are confident in our ability to continue delivering favorable returns for our shareholders. In closing. We appreciate your continued support and I will now hand, it over to Tom to provide an overview of our financial performance.
Thanks, David and good morning to everyone on the call.
I would like to Echo David's comments and thank all of our associates and trade partners for helping us deliver solid results for the year.
I'm going to start off by discussing our results for the full year.
As you know, we manage the business with our annual goals two year product life cycles, and long term strategy in mind.
This has proven to be a successful approach as our business results can be impacted in the short term by factors such as the timing of product launches and the weather.
Looking at 2018 overall, we are pleased with our ability to execute our plan and to deliver the solid results we have achieved.
Consolidated net sales were $1.634 billion up 5% over last year and up 3% on constant currency.
Growth was primarily a result of innovation in our title as clubs business, where the newly introduced Ts drivers and fairway metals and the bulky SM seven wedges helped to drive revenue.
Gross profit was $842 million up $40 million versus last year.
The success of the Titleist Ts metals, bulky wedges and higher average selling prices in golf balls were major factors in gross profit improvement.
Full year gross margins were 51, 6% up 20 basis points versus last year.
SG&A expense was $612 million up 6% over 2017.
As has been discussed throughout the year the increase in SG&A in 2018 was primarily due to planned higher selling expenses across all segments and.
An increase in advertising and promotion.
And higher it related costs and share based compensation expenses.
I would also note that SG&A expense included an unfavorable impact of $5 million from changes in foreign currency exchange rates.
Research and development expense of $51 million was up $4 million compared to last year and about 3% of net sales.
Operating income was up slightly over 2017 and $172 million.
Interest expense increased by 3 million to $18 million for 2018, reflecting higher average interest rates compared to 2017.
Our effective tax rate was 31, 4% compared to 32% last year.
We currently expect our 2019 effective tax rate to be around 30%.
2018, net income attributable to a cushion at holdings was $100 million up 1% over last year.
And for the year, we are pleased that adjusted EBITDA was $231 million up $7 million or 3% year over year.
To assist you in your review of the calculation of adjusted EBITDA. We have provided a reconciliation in our earnings release as well as in the slide presentation.
Now I will review our Q4 results.
<unk> net sales in the quarter were $343 million down 2% year over year and down 1% on constant currency.
As David mentioned this decline was anticipated and due primarily to the drawdown of pro <unk> field inventories in advance of the 2019 Pro <unk> launch.
And the timing associated with our golf club product launches in the second half of the year.
Q4, gross profit was $175 million down $4 million on lower sales volumes of both golf balls and golf clubs.
Gross margin was basically flat at 59%.
Looking at operating expenses SG&A of $140 million was up $3 million or 2% versus last year.
The increase in SG&A was due to higher selling expenses across all segments and included continued partner readiness expenses to support the very successful Ts metals launch.
In Q4, R&D expense of $13 million increased $1 million over last year, largely attributable to higher employee related costs.
Operating income in the quarter was $20 million.
This was lower than the same quarter last year due to the combination of lower revenues and higher selling expenses that I mentioned.
Q4 interest expense of $4 million increased by 600000 year over year due to higher average interest rates on borrowings.
Our Q4 effective tax rate was 22, 2% this rate was substantially lower than the full year ETR as a result of the release of a portion of our valuation allowances on state deferred tax assets, partially offset by the impact of the new guidance related to tax reform that was issued during the quarter.
For the quarter net income attributable to a cushion at holdings was $11 million.
Q4, adjusted EBITDA was $36 million down 12% from the prior year period.
Now looking to the balance sheet.
We had about $31 million of cash on hand at December 31, 2018.
Total debt outstanding at year end was approximately $386 million.
On a rolling four quarter basis, our total debt to adjusted EBITDA ratio is now 197 times.
We are very pleased to have reached our target leverage ratio as we expected.
2018, Capex was about $33 million.
While a good portion of this spend is maintenance related as.
As we've previously stated we have also been making investments in innovation technology and infrastructure to drive continued market leadership operational efficiency and future growth.
For 2019, we expect capex to be about $36 million.
As I mentioned, we are pleased that we have reached our target leverage ratio at the end of the year as expected.
We now have the flexibility to expand our capital allocation options with regard to both return on capital and return of capital.
Investment in innovation golfer connection and operational efficiency is key to the long term success in the golf business.
As such we plan to continue to make investments in R&D.
Targeted sales and marketing programs.
And Capex, which deliver a favorable return on investment.
Examples of these investments include the innovations we delivered with last year's introduction of the Titleist AVX golf ball.
The marketing programs, which have delivered some of our most successful product launches ever in the new AP Iron series and the new Ts metals.
And the capital expenditures, we have made to improve our manufacturing capabilities better leverage information technology.
And make necessary improvements to our physical infrastructure to make it more efficient and productive.
We also plan to continue to look for targeted M&A opportunities, which would help support our long term strategies and to drive growth at a favorable return.
Our cash dividend has been an important element of our capital allocation strategy.
As a reminder, we declared our first dividend in our first full quarter as a public company two years ago.
We raised that dividend a year later.
And we are pleased that we have raised our quarterly dividend again by almost 8% to <unk> 14 a share.
And finally as we have reached our target leverage ratio share buybacks will become an increasingly important element of our capital allocation strategy.
As we announced earlier this morning, we have increased our share repurchase authorization to up to $50 million.
This will not only enable us to offset future dilution.
But will also allow us to increase the amount of capital we can return to shareholders.
This repurchase authorization as a strong indicator of the confidence our board of directors has in the strength of our strategy, our proven ability to execute and the exciting opportunities that we believe lie ahead.
Moving forward, we anticipate that our majority shareholder will maintain its current ownership percentage over time.
We are focused on being good stewards of shareholder capital and as always we will carefully evaluate the various opportunities we have to both invest in the business and to return capital to shareholders.
As to the outlook for full year 2019.
We expect reported consolidated net sales will be in the range of $1.655 billion to $1.685 billion.
This is approximately two 2% at the midpoint.
On a constant currency basis, we expect revenues to increase in a range of up two 8% to up four 7% versus last year.
And we are forecasting our adjusted EBITDA for 2019 to be 235 million to $245 million.
At the midpoint of this range this represents growth of about 4% versus 2018.
To help you with your understanding of how we expect the business to flow during the year.
I would like to remind you that in the first half of 2018, we had the benefit of four major product launches performance golf balls, <unk>, <unk> wedges, and Cameron select putters in Q1.
And the U S launch of the AVX golf ball in Q2.
We also have the benefit of the continued momentum of the Titleist AP irons over the first half of 2018.
In the first half of 2019, we expect to benefit from only two major product launches the <unk>, one and <unk> <unk> in Q1.
And the Cameron Phantom X putters in Q2.
We also expect to continue to benefit from the success of the new Ts metals.
As a result first half 2019 consolidated net sales are expected to be approximately flat compared to the first half of 2018 on a reported basis.
In summary, 2018 was a solid year driven by our focus on innovation, our ability to deliver the best performing and highest quality products.
Our continued execution of our long term strategy.
Our focus on the dedicated golfer broad and deep product portfolio.
Global distribution strong partner network and attractive financial framework are all important factors in our current and ongoing success.
We are well positioned and are looking forward to an exciting 2019.
With that I will now turn the call over to Tony for Q&A.
Thanks, Tom Christina can we now open up the lines for questions. Please certainly at this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad, we ask that you limit your time to one question. Our first question comes from Randy <unk> from Jefferies. Your line.
Is open.
Hey, thanks very much.
I guess, Dave I wanted to ask about just the general your general thoughts on the environment, you kind of alluded to.
The in your text in the press release the business of golf.
Structurally healthier in recent years, just kind of just wanted to get your pulse on the industry for the next as you see it today and over the next couple of years, just just high level.
Sure. Good morning, Randy a couple a couple of quick ways to get at that and I'll start by commenting earlier at a high level on 2018.
It was it was a challenging weather year globally. It really is challenging as we've seen in quite some time, which led to rounds being off somewhere between 3% and 5% around the world and in spite of this the market held up held up well, which is I think commentary on the overall health and resilience of the.
Good golfer and now certainly consumables were hit a bit harder than clubs, but overall for the year for the industry. It turned out a whole lot better than you would expect given the weather round realities, so with that as a backdrop up I'll peek forward to 2019, and I'll share several inputs that shape, our thinking about 19 at <unk>.
Again, the dedicated golfer is is in good shape alive, and well playing spending despite some weather and weather drags.
The second of course would really be our internal product plans, which we're excited about and confident in.
I would say third would be would be the retail channels.
And we've talked a lot about this over the years the retail channels are healthy they are as healthy as they've been in quite some time and for the most part inventory levels heading into the new year are in good shape and I would say lastly, the final piece would.
It would be the broader economic climate and consumer spending and we did see that consumer spending was a bit less robust in the second half of <unk> than it was in the first half.
And really the second half conditions are the conditions with which we built our 2019 plans around so.
Net net Randy will reiterate our position on this is this has been consistent over the last couple of years also.
Distant with this this overall healthy retail climate.
Which I did note in my opening remarks, which is that we do project the industry growth and that is our target market dedicated golfer industry growth to be in the flat to low single digit range. So those are the those are the key inputs, we think about as we as we assess as we assess golf going forward into into 2019.
Helpful and then.
If we jump off that.
Last comment around let's say the second half versus the first half from a.
The industry spend kind of perspective by the consumer how do you kind of think about that and compare that to where contrast, it with <unk>.
Some of the product acceptance you're seeing with.
Some of the new product areas like the AVX the TFS product line on even the color color way change on the <unk>, one the yellow coming up et cetera. So how do you think about that as you know.
Indication for your business being able to almost like sort of outperforming gained share.
In the upcoming year.
Yes, so certainly from a product standpoint, we're very excited about.
And I'll go sequentially RMA introduction of AVX, our our fall introduction of TS metals now we're in the midst of a first quarter launch of new <unk> and <unk>. So from a product standpoint, I think our team's done a great job controlling all their all of their variables and really bringing.
Terrific product to market.
And activating it with both the trade and consumers.
Really effective manner.
The other piece Randy that you can't overlook as what we saw in the fourth quarter around <unk> and this is more U S commentary rounds were off double digits in the fourth quarter weather was you know you look at you look at the mapping and you look at what happened from a precipitation standpoint up dramatically you look at it from a <unk>.
We're always looking at opportunities that that would work well within our company shared with you last go round that the P. G professional golf doesn't necessarily fit the two the two criteria I established but it but it fit from a vertical supply chain standpoint, so that one a bit outside the lines are are typically stated M&A approach.
We think real effective and important in longterm gonna be very successful for a cushion that.
Thanks, very very helpful. Thanks, Nice Guy please [noise].
Thanks, Randy Our next question comes from the line of Stevens, a county from J P. Morgan Your line is open.
Great. Thanks, very much good morning, guys. So currently topline guidance for 2019 and thanks for the commentary on the first half versus the second half kaden, but I was hoping you could talk a bit more detail about expectations by segment.
It seems like probably one selling into a healthier channel than the last launch and you also have the new yellow ball on so presumably golf ball sales growth will outpace the consolidated outlook.
But just could you talk a little bit more about the expectations by segment.
Sure Steven this is calm good morning.
So you know as you said, we it's it's a probie one launch here so.
You know.
A an odd number of year, we're always looking for a solid performance from from the golf ball golf.
Off ball business.
And.
As you think about the club's business.
Coming off a very successful 2018.
You've got some challenging comps there so.
Certainly looking at a strong performance.
From golf balls, and and a little more challenging performance from clubs.
We are looking for a bit of a rebound for for Footjoy as it compares to some of the challenges that had last year. So I think from a from a segment perspective, that's what we're looking at.
I'll reiterate Steve that just took two.
Again makes the point that Tom made earlier, a big theme here in 2019 is our is our launch cadence and again as Tom said you look at what we what we launched in the first half of 2018, we had we had performance models, we had wedges we had putters.
We had an AVX golf ball all in the first half that compares with the first half of 2019 really we we have probably one large which is meaningful, but but but not meaningful enough to offset some of those many of those those those high impact pipelines that took place in the first half of the year. So if there's a theme and it really rings.
True in in odd years for a cushion that is that our launch cadence differs in odd years from even years, which again, we've we've talked about in the past.
Yeah understood than just on the increase in the share purchase program could you comment on your strategy or on actually repurchasing stock would you expect to be a consistent repurchaser or maybe doing a more of an opportunistic basis. Thanks very much.
So this is Tom again, you know, we're we're not gonna get into a great amount of detail in terms of our execution plans, we do expect to purchase a relatively consistently throughout the year, we will obviously be cognizant of of the share.
Rice and be opportunistic where we can so.
So we will be strategic but we do expect to be a consistent purchaser across.
Rest of the year.
Great Best of luck in the air and hoping for for better weather. This year take care Yeah [laughter] alright. So are we thank Steve Steve next question. Please.
Our next question comes from Dan We were from Raymond James Your line is open.
[laughter]. Thanks.
So with the.
MC Coy.
Revenue guidance and that mid 2% range for 2019.
We're going to be what.
And the first half of the year that implies.
The growth is going to be back loaded and those are two seasonally smaller periods. So we're talking about four or 5% revenue growth.
Minimum I'll get the second half of the year why would we be confident about the second half rebounding at at that rate is it the data some changes in product launches for it.
An assumption that whether it gets a lot better but no no not at all not at all that it's it's not at all to do with whether it is just a function of our large cadence again odd years. This is how they this is how they flow even years tend to be very her first have driven as I as I said, but this is solely a function of our launch cadence and and it it it won't be.
You know each of the segments won't perform the same as as we mentioned the ball business takes up takes a bit of a ride in the first quarter, whereas some of the other segments more back half loaded, but really solely a function of how we think about launch timing.
Okay and the second question that there's been more speculation about the.
The economy, I guess, given the global economy slowing it's been over a decade since we've got a recession, but.
How do you think that the golf industry, how would it change and the the next inevitable recession compared to what happened back in 2089.
Yeah, and we sure you're right.
It's inevitable when nobody knows but but in terms of of how we've experienced recessions going back over the last couple of decades, all point to two O eight O nine and if you if you back out the Cobra piece of our business, which was before we sold it.
Our our business held up quite well, we certainly took a hit but we didn't take as big a hit as the broader economy and again I think it's commentary on on on just the passion and commitment and dedication to the game of our dedicated golfer.
Do they keep playing yeah. They do do they do they keep spending yes, they do albeit at a at a lesser rate. So if if we use if we used oh eight O. Nine is the benchmark again, our business took a took a took a half step backwards while the the broader economy may have may have taken a full step backwards. So there's some inherent and there's some inherent resilience ah.
That comes with Ah are dedicated golf or base around the world.
And just the last question I have that curious.
Curious as to how you are thinking about the ultra premium end of the market.
Saying that Phd taking pricing lower.
There's been some speculation that maybe tieless is gonna push that concept irons, a little bit harder.