Q2 2023 Acushnet Holdings Corp Earnings Call
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Hello, everybody and welcome to the Axis Holdings Corp, second quarter 23 earnings call. My name is somehow there will be quarters each njoku today.
If you would like to ask a question during the presentation you may do so by pressing star followed by one on your telephone keypad.
How do you have to your host Sondra Lennon Vice President of Investor Relations and SDN to H begin Sandra. Please go ahead.
Good morning, everyone. Thank you for joining us today for our Coos that holding Corp's second quarter 2023 earnings conference call.
Joining me. This morning are David Maher, our President and Chief Executive Officer, and Sean Sullivan, 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 statements on the call today.
These forward looking statements are based on <unk> 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 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.
Please also note that references throughout this presentation to year on year 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 and when I'm, referring to year to date results or comparisons we.
We will refer to the six month period ended June 30th 2023, and the comparable six month period with that I'll turn the call over to David.
Thanks, Sondra and good morning, everyone as always we appreciate your interest in a Kushner company.
I will begin by thanking Tom Pacheco for his contributions over the past few years and welcoming Sean Sullivan to the acoustic team as our new CFO .
Shawn has been a valued member of <unk> Board of directors since 2016, having served as audit Committee chair and on the nominating and governance Committee.
In addition to being an experienced CFO . He also brings a deep understanding of the company's vision and culture to his new role.
Sean is a great addition to our team and I'm confident that our analysts and investors will benefit from his contributions to a cushioning and insights into our business.
Now to our results Kushner delivered another strong quarter delivering sales of $689 million, a 6% year over year constant currency increase.
Gains entitled as Golf balls, and golf clubs drove this topline growth, which contributed to adjusted EBITDA of $132 million in the quarter.
24% increase for the period.
And for the first half sales of 1.3 dollars $76 billion are up almost 12%.
While adjusted EBITDA of $279 million represents a 23% gain over last year.
These financial results have been supplemented by many successes across the worldwide tours and throughout the pyramid of influence and are highlighted by title list and foot Joy Ambassadors Wyndham Clark and Brian Harmon's recent wins at the U S Open and open championships.
These achievements helped to fuel positive brand momentum and validate the company's enduring commitment to product performance and quality.
Supporting the company's first half results, we are enthused by the golf industry overall health and stability.
With participation remaining vibrant even as golfers returned to many pre COVID-19 activities. Some 250 million rounds of golf were played in the U S. During the first half of five 5% gain versus last year, and roughly 16% increase compared to 2019.
Total worldwide rounds for the first half are projected to be up low single digits as domestic gains more than covered modest weather related declines outside the U S. The sport continues to generate strong interest and is benefiting from new golfers, who have entered the game during the past few years.
Now taking a look at our business by segment title. This golf balls posted 20% increases in both the second quarter and first half as the company executed our most successful <unk> launch to date.
In addition to major wins by Clark and Harman the winners of the recent U S. Women's open a beyond championship senior U S. Open senior open U S Junior amateur and U S Girls Junior amateur all trusted titlist probie, one or probably want X golf balls on their roads to victory.
<unk> was also the most played ball at the U S. Adaptive open one of the sport's most inspiring and inclusive championships.
Operationally our team continues to optimize and expand output to meet strong global demand for title. This golf balls contributing to double digit growth in all global regions for the half as golfer response to new Probie, one and probably one X models has been positive across all markets.
Title this golf ball retail inventories are approaching normalized levels with the exception of probie, one models, which we expect to remain in tight supply into the fourth quarter.
Title of golf clubs are also accelerant with sales up over 16% in both Q2 and the first half we are seeing positive response to our entire golf club product line, which combined with our deep commitment to custom fitting are the primary catalysts to our growth and momentum.
DSR drivers are the most played models on the PGA tour and are leading our golf club gains and Scotty Cameron Putters are having another strong year fueled by great response to our new Super select models introduced earlier this year.
As you know, we stagger Titleist club launches over a two year cycle and next up our new T series Irons, which we expect to begin shipping later this month.
Initial response across worldwide tours and with trade partners is meeting our high expectations and we are confident in our team's ability to execute a successful launch campaign throughout the second half.
The title of skier business was up 3% for the quarter and 24% ahead for the first half. This outsized growth reflects the success of our product lines, notably golf bags and travel gear and also some recalibration of shipments in 2023 as compared to last year, when we face supply constraints throughout the firm.
Half.
Now to foot Joy, where you see revenues were up 9% in the quarter and about flat for the half.
These results reflect declines in golf footwear sales as we confront elevated marketplace inventory levels and increased promotional activity in many regions. We are confident in our ability to protect for choice premium shares in leadership position. However, expect that it will be a few quarters until retail inventories return.
Turn to healthier levels.
For added context on the footwear market, while foot choice footwear is down compared to first half 2022.
It is almost 30% larger than 2019, giving you a sense for recent category growth and providing perspective on the current market situation.
FJ apparel continues its positive trend with revenues up double digits for the half as we benefit from recently expanded design customization and fulfillment capabilities across our performance apparel and outerwear categories.
And finally, we continue to be enthused by the ongoing growth and development of our shoe business, which posted double digit gains in the half led by the U S market, which was up almost 25%.
Now for a brief overview by region, where you see the U S market, leading the pack with second quarter sales up 14% and first half sales up 19%.
Healthy participation gains across all segments, and especially strong demand for title. This balls clubs and gear are driving our U S growth and momentum.
For the half Japan was up 4% Korea was flat and EMEA finished off 2%.
These markets share similar themes with weather related headwinds and gains across our title this portfolio, helping to offset Fortunately declines.
Now looking forward, we are enthused by our brand momentum the overall health of the golf market and the resilience and engagement of our cushion its core consumer the game's dedicated golfer.
From a product development and supply chain readiness standpoint, our team has done good work preparing for the second half.
To fully support our key initiatives and capitalize on <unk> momentum and high expectations for new title of Science, We will increase our A&P investment in the back half of the year commensurate with the opportunities before us.
Longer term, we believe the infrastructure investments, we are making in golf balls and clubs, our most capital intensive businesses will position the company for sustaining growth and success.
Significant is a previously disclosed five year $120 million capital investment across golf ball operations and R&D.
And consistent with past practices, we continue to leverage the company's strong balance sheet and execute a disciplined approach to capital allocation for the long term benefit of our Cushing it and our shareholders.
As Sean will outline our recent growth has supported increased investment in our core businesses and elevated levels of shareholder returns.
In summary, the company is well positioned heading into the back half of the year and we are confident in our ability to successfully execute a cushion its long range priorities.
Thanks for your attention. This morning, I will now pass the call over to Sean.
Thank you David Good morning, everyone I'm thrilled to have joined the cushion that company fulltime on June 1st.
Forward to leveraging my experience as a board member and I'm truly excited to work with the leadership team and the talented associates here to Couche net as we build on the success enjoyed to date.
Turning to the results as David mentioned, we had a great quarter and a strong first half of 2023.
Second quarter net sales increased six 4% driven by higher sales across our title list brand portfolio, while adjusted EBITDA was $132 million, a 24% increase for.
For the first half of 2023 net sales and adjusted EBITDA increased 11, 6% and 23, 1% respectively.
Net sales growth in the quarter was driven by continued momentum of our title this brand with golf balls and golf clubs growing by 19, 8% and 16, 3%, respectively, while gear increased by two 9%.
<unk> sales were down nine 5% due to a slowdown in the footwear category, which was partially offset by an increase in foot joy apparel.
Quarter over quarter sales also declined in products that are not allocated to one of our four reportable segments.
Gross profit in the quarter was $369 million up seven 2% compared to 2022, primarily due to higher sales volumes entitled It's golf balls, and golf clubs lower golf club royalty expense and lower inbound freight across all reportable segments.
<unk> gross profit was down mainly due to lower sales volumes in footwear and unfavorable manufacturing overhead absorption.
Overall gross margin of 53, 5% was up 130 basis points, largely due to lower inbound freight costs across all reportable segments.
SG&A expense of $242 million in the quarter increased $2 8 million or one 2%, mainly due to higher advertising and promotion expense to support new product launches and costs related to the optimization of our distribution and customer fulfillment capabilities.
These increases were offset by lower <unk> related expenses in Q2, which has shifted to the back half of 2023.
R&D expense of $17 million was up mainly due to higher employee related expenses.
Our increase in intangible amortization was due to the acquisition of trademarks related to title this golf clubs and golf gear in the fourth quarter of 2022, and first quarter of 2023, respectively.
Interest expense of $11 million in the quarter was up $9 million due to an increase in borrowings and interest rates with a little more than half the increase coming from higher debt balances our effective tax rate in Q2 was 21, 8% up from 19, 1% last year, primarily driven by a ship.
And our mix of jurisdictional earnings.
Moving to our balance sheet and cash flow highlights.
Our balance sheet and strong free cash flow positions us well to support ongoing investments in the business manage working capital needs and support our capital allocation program.
Our net leverage ratio at the end of Q2 was one seven times.
Inventories declined from both last quarter and year end, and we're comfortable with our inventory quality and position given the current state of demand and the supply chain.
We expect inventories to decrease in Q3 before increasing in Q4 as we prepare for 2024 product launches.
First half cash flow from operations was up significantly from the prior year, mainly due to changes in working capital primarily inventory.
Capital expenditures were $27 million in the first half of 2023 and are still expected to reach approximately $75 million in fiscal year 2023, given the back half loaded plan.
Our capital allocation priorities remain consistent with those previously articulated.
Investing in the business, including product innovation golfer connection and operational excellence, returning capital to shareholders in the form of dividends and share repurchases and disciplined M&A.
Through June we returned roughly $167 million to shareholders in 2023, with approximately $140 million in share repurchases and $27 million in cash dividends today.
Today, our board of directors declared a quarterly cash dividend of $19.05 per share payable on September 15 to shareholders of record on September one 2023.
As of June 30, we had $267 million remaining under the current share repurchase authorization.
I expect our share repurchase activity to continue meaningfully into Q4, given our previously filed agreement with Magnus that is expected to settle in early November .
Moving onto our guidance for 2023.
We have increased our net sales range to 235 billion to $2 4 billion. Our revenue at constant currency remains projected to be up five to seven 2% compared to 2022.
Golf ball sales momentum is expected to continue in the back half, although we still have constraints on available supply of <unk> and probably one X balls.
With respect to golf clubs, we are enthused about our upcoming iron launch and is worth noting that the second half sales will be comping against a metals launch from last year and metals have a larger initial inventory pipeline and irons, which are more custom fit and built to order.
Titles golf gear sales are expected to be lower in the second half mainly due to outsized growth in 2022 in this segment as our supply chain and fulfillment capabilities caught up.
Finally, we have tempered our outlook in the foot Joy golf wear segment, given the elevated marketplace inventories in the footwear category.
Our adjusted EBITDA guidance has increased to $355 million to $375 million up from $345 million to $365 million.
Our updated range reflects the benefit of lower freight and reduced headwinds in currency.
The second half is expected to see promotional activity, notably in footwear and unfavorable footwear manufacturing overhead absorption.
We expect third quarter sales to be about 55% to 60% of second half sales in third quarter adjusted EBITDA to be about 80% of second half adjusted EBITDA.
Finally, our forecasted effective tax rate for fiscal 'twenty three is expected to be in line with our first half rate of approximately 20%.
In closing we are very pleased with our first half performance and remain focused on executing on our priorities for 2023 and beyond.
So with that I'll now turn the call over to Sondra for Q&A.
Thank you John operator could we now open up the line for questions.
Yes. Thank you if youre not to ask a question. Please press star one on your telephone keypad now if you change your mind stuff on it.
When preparing to ask your question. Please ensure your line is on mute it locally.
Our first question today comes from Matthew Boss with Jpmorgan. Your line is now open. Please go ahead.
Great. Thanks, It's Amanda Douglas on for Matt.
So David could you speak to the strength youre seeing across both golf ball in golf club categories. How much of this do you see as a function of strong overall industry backdrop, maybe relative to market share gains and then just across geographies could you elaborate on the bifurcation of performance Youre seeing in the U S versus international regions.
Yes, hi, good morning.
On the ball your first question on the ball side, certainly, we always correlate the ball business and golf ball demands two rounds of play which have been have been very strong I think up near near 6%, 556% in the U S and I'll qualify that a bit and that includes.
Declines in the Pacific and mountain regions really the whole west coast and even here in new England. So rounds of play in a very good shape that correlates to nice golf ball demand. It's a pro <unk> launch year for us. So we've had some some some nice success around our new <unk> models.
So that story, while while U S centric and the answer really playing out around the world as the game is healthy.
People are playing in there and there.
Golf balls, and again, where we're off to a very good start across our entire product line.
Our club business as I said in my remarks really led by by drivers are <unk> driver franchise is off to a great start we launched that end of end of last year.
Mentioned, we're having success with putters as well and then and then your two products for us would be wedges in irons is very much in line with our expectations. So we're we're very pleased with with both the ball and club categories.
The only challenge I would add right now is in golf balls were where were supply constrained while we're operating our facilities 24, seven we're still in tight supply with with probably one and probably onex.
To your second question around whats happening U S outside the U S.
Yeah, I'll touch on a couple of key markets.
A play differential we see where rounds are up slightly in the U S down slightly in key markets of Japan, Korea, and I'll add the U K I think first and foremost that's probably a weather phenomenon.
But in terms of our business. There is a similar pattern, we're seeing around the world balls healthy in all markets clubs healthy in all markets.
Gear stable, if theres any call out as we said in our prepared remarks, it would be footwear and Theres just a there was an excess supply of footwear in the global markets I will add that of the of the categories. We compete in balls clubs gear footwear footwear is relatively small so.
So I think we need to keep that into context.
So really the key differential that we're seeing is just a slight variance and rounds of play and that gives us an added push to two to the U S market.
That's helpful color. Thank you.
Thank you operator next question please.
Our next question comes from Daniel <unk> of Stephens.
Your line is now open. Please go ahead.
Hey, guys. This is Joe <unk> on for Daniel Thanks for taking the question.
It sounded like <unk> gel demand remains high.
Yes, it sounds like golf ball demand remains pretty robust, but it sounds like some supply issues are still around the <unk>.
We don't know that there is a long term fix needed we are as part of our long term capital investment plan that we've talked about over the years, we are adding capacity to our probie one lines.
And that will come on board in the next in the next couple of cycles. So we think we're in good shape longterm and we think we get out of this current situation here.
Here by the end of the third or early fourth quarter and I will just add we are putting in I made the comment in my earlier remarks.
We've put a record amount of of probably ones into the marketplace in the first half of the year. So we feel very good about our positioning and again I think in a few months time, we'll get back into a state of equilibrium as it relates to demand in our our output and supply.
Got it got it and that makes sense as a follow up could you provide any update on how you see golf inventories in the retail channel and how his cell through an an industry level. If you and maybe if you are seeing any promotions increase.
Yeah. So generally speaking with golf inventories are in pretty good shape, considering you know all the <unk> supply chain disruptions, we've we as an industry have experienced over the past couple of years.
Demand is it remains strong rather play his remains strong so as an overarching.
Characterization of the golf industry, I'd say, they're in pretty good shape.
I commented on balls, they're in line. It again, we're running a little lighter than we'd like to see that there may be a few pockets of club inventories following a significant launch activity in the first quarter, but but nothing jumps off the board.
As we've said in the past title is clubs is largely a built to order business, which makes us a little bit less susceptible to inventory corrections.
The one area, we called out was footwear right.
And golf footwear around the world is running a little heavier than we'd like we're seeing some promotional activity there.
The final point I'll make is is as it relates to overall promotional activity in the golf space. Certainly it is it is increased from where it was two three years ago, you may recall during 21 and 22.
There was virtually no promotional activity in the marketplace, we have seen a resumption of of of promotional activity.
Near historical levels, but I do think in some cases in the spring as an example.
Was intentional as opposed to reactive right. We had a hot we had a promotion with with our Probie. One franchise I think you may see some holiday promotions that are intentional more so than corrective or reactionary.
So again, we're starting to see.
An uptick in promotional activity nowhere near the levels, we saw pre Covid and I think overall in line with with where the industry, where the industry ought to be.
Got it that is all for us. Thank you guys.
Thanks, Joe Great. Thanks. So next question please.
Next question is from Casey Alexander from this point on it.
Please go ahead.
Yeah, Hi, good morning, I, just have a couple of questions one.
On the share repurchase program is there any way you can tell us how much of the 482000 was bought after June 9th and would then be subject to the repurchase agreement with magnets.
[noise] Yeah cases. This is Sean I think that you'll have when we filed a 10-Q later today, you'll have at least some information.
In terms of what our our activity has been since the end of the quarter.
Yeah, but I mean it.
482000.
In the quarter that was bought after June nine which is when the agreement with Magnus began.
Yeah apologies no I don't believe that we disclose that information I I do think there we do record a liability in the quarter I don't believe that is.
To check the queue that may be.
I don't know that that's disclosed Casey I apologize.
Okay. Thank you sorry.
Sorry, sorry to talk over you.
Probably roughly a third of that number is my estimate.
Okay.
Well, that's an approximation is just fine.
Secondly in relation to footwear I mean.
How much of it is demand driven versus.
An increase in the competitive element when we've seen a number of start ups that have come into the business.
That you know and I think we've seen this before it's almost cyclical that a bunch of startups come in with a fanfare with some capital behind them grab some market share for a period of time, but over time, they tend to sort of fade away that kind of what we're talking about here or it has been more bands driven <unk>.
Direction now Casey you're right on I think it's two parts. It's maybe three part part one as we are seeing an influx of new competitors part. Two is is there's the reality of what's happened to supply chains and forecasting maybe a bit overzealous. So you've got you've got a supply bubble too.
To an extent with which we would we would peg at about.
20% higher than US then is appropriate for the footwear category that results in price compression, there's a bit of a demand story here as well as the demand is down a little bit from from a year ago and some of that is prices have fallen a bit.
So so you're right it starts with supply it starts with a lot of new competitors I did make the point earlier.
To contextualize this our footwear business is still about 30% bigger than than it was in 2019. That's just the state of the footwear business and you have seen this before I do think we we marched through it. This is not the first time, we've seen this we've seen it function this way, but but the <unk>.
Parting point is excess supply.
Okay. Thank you.
Casey that this is Shaun just to go back and clarify it's 286000 shares of stock since two nights, so that'll be that'll be in the queue. When it's file today.
Great. Thank you very much.
[noise]. Thank you Casey operator next question please.
Our next question is from <unk> Securitas each market lines now. Please go ahead.
Hey, guys I'm. Good morning. This is Lucas on for Mike I I was wondering if you could comment on the data Tech data for for June there was some pull back and and bullshit and I was wondering if you could just give some color on that thank you.
Yeah.
We don't we don't really get too.
Focused on 30 day blocks of time, I would I would point to the year and the strong success, we're having in golf balls in particular I think your question is ball driven.
I've said, our our our shipments are up 20% in our inventories are lower than we'd like so we're very happy with the state of the golf ball business.
There was a unique component earlier in the year, where we ran our loyalty rewarded promotion, but by three get one that hit that hit mostly.
And may.
So overall, we are really pleased with with the state of our golf ball business. We do acknowledge that there are pockets out there.
Probably one inventories inventory levels are less than we would like and maybe that's contributing to what we're seeing but but overall.
Very strong year on the ball front, we think we're gaining share certainly our sales are are very strong and again leaned inventories <unk>.
Support just a robust sell through environment.
Okay. Thank you that's all I had.
Thanks, Thanks, Lucas I better next question. Please.
Next question is from <unk> from Keybanc know your lines now open. Please go ahead.
Hi, Thanks for taking my question just a high level. One for me, obviously continue to hear and see so much about a softer consumer and macro pressure elsewhere. Obviously, you guys had been resilient.
The game of golf has been resilient. So maybe just some color on what gives you confidence in raising the guide here as well as any comments on how you're feeling about the health of the core golf consumer would be helpful. Thank you.
Yeah.
Your your question really strikes to the heart of our target consumer this dedicated golfer they're passionate they are resilient there middle income and above we do acknowledge we're coming off some historical highs in terms of participation in purchasing in the last couple of years. So I think we're a bit guarded on.
On our expectations for 2023 that said here we are in in early August and rounds R rounds are terrific right.
Up 5.5% approaching record levels, I think I saw where within 1% of the record of 2021, so our consumer a cushion its targets consumer is is well engaged.
The categories for us that our strongest our balls and clubs.
And and I think they're they're responding well to our performance stories on the ball front and the club front. So we're real pleased with with the golf consumer and in particular this dedicated golfer, which is really the sweet spot for the a cushion that businesses.
Like like everybody. We're we're watching carefully in terms of in terms of purchase levels and participation levels, but but to this point what we've seen has been has been positive.
Add to that we've seen some share pickups around our portfolio, which had too which add to our story.
Thank you.
Thanks now operate our next question please.
Next question is from Randy Clinic off Jeffries your lifestyle Ethan. Please go ahead.
Yeah. Thanks, I guess, David another a follow up to the last question I guess, what what's surprising you. Most about the continued strength of the industry, where where have you because you've obviously seen this all for decades.
You've always been measured in temporary what surprises me most about the industry at this point.
Well, Randy I would say we've been you know how we operate.
I would say we've been <unk>.
Careful and conservative.
With regards to participation coming.
Coming off historic highs right there were ballpark.
150 million more rounds played in 2021, then where were and then there were in 2019, and obviously a whole lot changed in 21 as compared to 2019.
We've we've been carefully monitoring how the how the sport holds up as the as the world either returns to the old normal or finds its new normal.
And what we're very pleased with his despite a return of of of a lot of pre COVID-19 activities.
Golf is held a very strong place in People's prioritization of their time and money so the strength and vibrancy of the game.
Is is I think I think something we're all real pleased to see.
Coming off such historic high levels, we we were cautious and careful and felt that hey. This this meaningful step up was terrific, but we ought to be careful about do we hold on to all of it and we're holding onto certainly a whole lot of it which we feel good about it I think the core of it is.
People are fitting golf into their lives in a more meaningful way today than they did three four or five years ago and then the final.
Component of that would be.
You are also seeing an industry that that five years running has added golfers right. We've added participants in a decade before that we couldn't say that so I think I think near 1 million and a half in the U S alone over the last three years, so while not everybody's playing at the level. They may have played at two three years ago, that's clearly in the.
U S more than offset by incremental rounds from from new participants. So again, not the biggest surprise, but but the biggest observation is how well and strong the game is holding up as compared to our I think rightfully conservative expectations coming off the very high water Mark of 2021.
Very helpful and then just lastly.
Lastly, can you give us some perspective on where customer <unk>.
From your perspective on the industry right now and and maybe just when you look at your own business the amount of customers that you're doing or fittings I should say, what's the incremental lip that sort of thing ballparkish, let's say a P. As our gross margin or anything <unk> dollars.
I think that's another area that's been kind of a good leg for the industry in yourself and your company in particular.
Curious kind of <unk>, what are those trends, you're seeing where do they go in and obviously provides the incremental with two revenue and profitability as well.
Yeah, you are talking to clubs or anything right.
Yeah Yeah.
Yeah, Yeah. So so we we've been we've been we've been in the in the custom fitting game and it's been a very important part of our business going back 30 years in the U S a little bit.
Short of time frame and in some markets around the world I think the key themes I'll start with the consumer we know it's it's our best way to give the consumer the very best experience with our products right. We think we have great products and we think with a an expert fitting the consumer is going to have the very best experience and.
Highest satisfaction level. So that's that's the biggest win.
Closeout, rather that that's obviously very positive for us and I made the comment earlier as we think about our club business. We are just less susceptible to some of the highs and lows.
Of inventory of inventory swings.
But but but the most important piece is.
He was really the consumer experience and what we know we deliver to the consumer with with a combination of great product and an expert in expert fit.
Despite our business trending more and more custom centric overtime, because today, Japan's a bit of an outlier market, where it's still mostly.
Stock ship it into retail sell it through in a traditional fashion stock as opposed to custom built to order. So we've talked about that before but one of our longer term opportunities as to as to as to accelerate the movement of custom fitting.
With our with our Japan business.
That's great. Thanks.
Thanks, Thanks, Randy Operator next question please.
On the next question is from <unk> from Congress Financial Partners Avenue of line is now. Please go ahead.
Thank you. Thank you for taking my question congratulations on the great results.
Can you give us a little bit of detail into your marketing initiatives going forward and where do you see you make the best reaction to the people who are new to the game or an hour you're marketing to them reversed and how are you doing with existing players.
Yeah, So I've been up I'll I'll point to our our I guess our results.
And say, we're confident we're reaching our target audience.
But but the.
The core consumer of a cushion it is this dedicated golfer right.
So we tend to speak speak most regularly to them whether through our advertising or fitting efforts. That's that's sort of the sweet spot of all our our advertising efforts.
I I did make the comment in earlier that.
We are we are enthused about the back half of the year, particularly on golf balls and with our new iron launch so from a from a prioritization standpoint, we're going to put more ANP muscle behind those categories.
With the size of the opportunity, but while we're certainly pleased with with the new golfers entering the marketplace. Our focus is always on this core dedicated golfer who drives so much of of our business and it will lines, so well with our with our product line. So.
That's how we've always approached it works well for us and and we intend to stay stay on that path.
Mmk. Thank you.
Mhm thank.
Thank you I then operate our next question please.
[noise] next question is from George Kelly of Roth Capital Partners, Georgia Line is now open. Please go ahead.
Hey, everyone. Thanks for taking my questions.
So a couple of for your first one your share repurchase authorization.
I was trying to keep up with you on the call, but can you just go through that again, how much is remaining and then did you give us.
An estimate of when you expect to exhaust the current authorization.
Yeah, there's about $260 million remaining on the authorization and I did not give you a an outlook more just that we would meaningfully participate through early Q4, given the Magnus agreement, but I think as we've said previously we would expect to probably extinguished.
That plan later this year early into 2024.
Okay.
And then second question for you can you give us a breakdown.
And your ball business as such strong growth is really the first half, but just sticking with the quarter.
What was the breakdown between volume and pricing.
Just a ballpark if you have that.
Yeah, it's mostly volume George we did take price as you know on the probe you won an appropriate one X a model so but the majority is volume again speaks to what David was talking about just the momentum we have and the and the ball business.
Okay excellent and then last question for me.
Regarding your inventory and your gross margin.
Is your inventory now I mean, there was a period when the cost of your inventory.
We're dealing with all that kind of supply chain issues I'm. Just curious if your inventory now is kind of flushed through all of that and it's more of a real time sort of.
Normalized number or is there still a bunch, it's kind of higher cost inventory in your mix.
<unk>, so I think input cost across the board, giving inflationary pressures have have affected all of us. So I don't know if that answers your question or not but we are comfortable with where the inventory levels are you know I don't want to repeat what we said in our prepared remarks, but.
I'll leave it at that.
Okay.
Let me try one more time.
There was a period last year and in 2000 22021 is so long ago, now, but but late last year as well when when it was a lot more costly to bring your inventory to the U S.
And you know you were dealing with all these supply chain issues and things.
All of that higher higher price stuff is flushed and sold through is that fair or are we looking at a more normalized kind of pricing environment for your inventory balance.
Yeah, I think we're getting to a more normalized state correct.
Okay.
Mmk. Thank start thanks charge and everybody. Thanks for your attention as always and your interest in the acoustic company I Hope you have a great rest of summer and we look forward to.
This concludes today's cool. Thank you everyone for joining you may now disconnect your lines.
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Uh-huh.
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