Full Year 2023 Acushnet Holdings Corp Earnings Call

Operator: www.youtube.com or the link in the description below. Hello everyone, and welcome to the Acushnet Holdings Corp 4Q 2023 Earnings Call. Thank you for standing by. My name is Daisy, and I'll be coordinating this call today. If you would like to submit a question, please press star followed by 1 on your telephone keypad. I would now like to hand the call over to your host. Good morning, everyone.

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Daisy: Hello, everyone and welcome to the <unk> Holdings Corp, Okay, 2023, and it's cool and thank you for standing by my name is Daisy and it'll be cool day, she must go today.

Daisy: If you would like to register a question. Please press stop it by one on your telephone keypad.

Speaker Change: Would not like to <unk>.

Speaker Change: I would now like to turn the call over to your host.

Speaker Change: Good morning, everyone. Thank you for joining us today for a Christian holding corpse fourth quarter and full year 2023 earnings conference call.

Sondra Lennon: Thank you for joining us today for Acushnet Holdings Corp.'s fourth quarter and full year 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 turning 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 Acushnet's current expectations and are subject to uncertainty and changes in circumstances. However, actual results may differ materially from these expectations.

Speaker Change: Joining me this morning, or David Marr, our President and Chief Executive Officer, and Sean Sullivan, Our Chief Financial Officer.

Before turning the call over to David I would like to remind everyone that we will be making forward looking statements on the call today. These.

Speaker Change: 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 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.

Sondra Lennon: 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.

Speaker Change: And our filings with the U S Securities and Exchange Commission.

Speaker Change: 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 gap basis can be found in the schedules and today's press release the slides that accompany this presentation.

Speaker Change: Russian and in our filings with the U S Securities and Exchange Commission. Please.

Sondra Lennon: 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 referring to year-to-date or full year results or comparisons, we will refer to the 12-month period ended December 31, 2023, and the comparable 12-month period. With that, I'll turn the call over to David. Thanks, Sondra, and good morning, everyone.

Please also note that references throughout this presentation two 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 referring to year to date or full year results or comparisons.

Speaker Change: <unk>, we will refer to the 12 month period ended December 31st 2023, and the comparable 12 month period with that I'll turn the call over to David.

David E. Maher: Fake sondra a good morning, everyone are.

David E. Maher: I am pleased to report on Acushnet's 2023 results and our outlook for 2024. As you see here on slide 4, 2023 net sales of $2.38 billion and adjusted EBITDA of $376 million represent growth of 6% and 11%, respectively. The company also generated $372 million in operating cash flow for the year. These results are made possible thanks to the talented and dedicated Acushnet team.

David E. Maher: Are you pleased to report on a cushion it's 2000 twenty-three results and our outlook for 2024.

David E. Maher: As you see here on slide 420, twenty-three net sales of $2.38 billion and adjusted EBITDA.

David E. Maher: $376 million represent growth of 6% at 11 per cent respectively.

David E. Maher: The company also generated $372 million in operating cash flow for the year. These results are made possible. Thanks to the talented and dedicated Christian team.

David E. Maher: Growth was fueled by Titleist golf balls, which increased 13 percent, led by strong demand for our new Pro V1 models. Titleist golf ball sales increased in all regions, with the U.S. and EMEA markets setting the pace. The continued strengthening of our golf ball supply chain and our team's ability to flex cast urethane production throughout the year were key contributors to these results. Titleist golf ball usage across worldwide professional tours indexed at 73 percent last year, and Titleist ball counts at the 2023 NCAA D1 Men's and Women's Championships were 88 percent and 90 percent, respectively, affirming golfers' trust in the quality, consistency, and total game performance Titleist Golf Club sales of $659 million were up 10%, fueled by healthy gains in irons, Scotty Cameron putters, and medals.

David E. Maher: Growth was fueled by titles golf balls, which increased 13% led by strong demand for a new probie one models Gulf.

David E. Maher: Golf ball sales increased in all regions with the U S and EMEA markets setting the pace the.

David E. Maher: The continued strengthening of our a golf ball supply chain and our team's ability to flex cast urethane production throughout the year, where key contributors to these results.

David E. Maher: Title is golf ball usage across worldwide professional tours index at 73% last year.

David E. Maher: And titles ball counts at the 20 twenty-three N C. A D one men's and women's championships or 88% and 90% respectively.

David E. Maher: Affirming golfers trust and the quality consistency and total game performance of titlist.

David E. Maher: Tireless golf club sales of $659 million were up 10% fueled by healthy games in irons, Scotty Cameron putters and metals.

David E. Maher: The Titleist Golf Club story is built upon our commitment to product innovation and custom fitting. And, similar to golf balls, clubs benefited from continued supply chain optimization as our team met strong demand while achieving elevated quality and service targets. Our club business has great momentum, and Titleist has been the most played driver, iron, and wedge at every PGA Tour event this year. Turning to gear, sales increased 7% with gains in all categories and steady demand for custom gear products. Growth was led by the U.S., Korea, and EMEA regions.

David E. Maher: Title is golf clubs story is built upon our commitment to product innovation and customer fitting.

And similar to golf balls clubs benefited from continued supply chain optimization as our team is strong demand, while achieving elevated quality and service targets.

David E. Maher: Our club business is great momentum and titlist has been the most played driver iron and wedge. It every P. G. A tour event this year.

David E. Maher: Turning to gear sales increased 7% with gains in all categories and steady demand for accustomed year products growth was led by the U S Korea and EMEA regions.

David E. Maher: We talked on recent calls about excess footwear inventories in the channel, and I am pleased with how Footshoy has navigated the ensuing retail correction period. Butchoy finished the year down 2% as double-digit apparel gains helped to offset a footwear decline, which shows his unwavering commitment to performance, comfort, and design innovation are the foundation for FGA's longstanding claim to be the number one shoe in golf. Acushnet's strong financial performance supported ongoing investment across our businesses and accelerated capital returns with share repurchases and dividends totaling $332 million and $52 million, respectively. Furthering our commitment to return capital to shareholders, I am pleased to announce Acushnet's directors have approved a 10% increase in our quarterly dividend to $0.215 per share and a $300 million increase to the company's share repurchase authorization, bringing this total authorization to $1 billion.

David E. Maher: We talked on recent calls about excess footwear inventories of the channel and I am pleased with Healthfood Choi has navigated the ensuing retail correction period.

David E. Maher: Butcherly finish the year down 2% is double digit apparel gains helped to offset footwear decline.

Which always unwavering commitment to performance comfort and design innovation are the foundation for Fj's longstanding claim to the number one shoe in golf.

David E. Maher: A Christian strong financial performance supported ongoing investment across our businesses and accelerated capital returns with share repurchases in dividends totaling $332 million and $52 million respectively.

David E. Maher: And furthering our commitment to return capital to shareholders I am pleased to announce a christian's directors have approved a 10% increase to our quarterly dividend to 21, and a half cents per share.

David E. Maher: And a 300 million dollar increase to the company's share repurchase authorization, bringing this total authorization to $1 billion.

David E. Maher: These actions reflect the board's confidence in Acushnet's ability to execute and generate cash flow and their positive outlook on the company's strong position within the healthy golf industry. Now moving to slide five, you see an overview of our regional results. Our U.S. business was especially robust, with all reportable segments posting growth during the year.

David E. Maher: These actions reflect the board's confidence at a Christian it's ability to execute and generate cash flow and they're positive outlook towards the company's strong position within the healthy golf industry.

David E. Maher: Now moving to slide five you see an overview of our regional results are U S business was especially robust with all reportable segments posting growth on the year.

David E. Maher: Gimme a sales were off 1% you had golf balls and clubs, where vibrant up nine and seven per cent respectively.

David E. Maher: EMEA sales were off 1%, yet golf balls and clubs were vibrant, up 9% and 7%, respectively. Given macro concerns about the region, where we grew 20% in 2022, we are pleased with golf's resilience across the MEA and especially the U.K. market, which continues to benefit from very strong tourist demand. As you can see, sales in Japan were flat for the year, with golf balls again the highlight and up double digits. Korea was down 2%, with gains in Titleist Balls, Clubs, and Gear more than offset by declines in Futchoy and Titleist Apparel.

David E. Maher: Given macro concerns about the region, where we grew 20% in 2022, we are pleased with golf's resilience across EMEA, and especially the UK market, which continues to benefit from a very strong tourist demand.

David E. Maher: As you see sales in Japan, where flat for the year with golf balls again, the highlight and up double digits.

David E. Maher: Korea was down 2% with gains entitled his balls clubs and year more than offset by declines in foot joy entitled Apparel.

David E. Maher: And lastly, our rest of world sales increased a healthy 12%, with every segment posting gains. As we now look forward and plan for 2024, we are encouraged by strong golfer participation and enthusiasm for the game, including a U.S. golfer base that grew for the sixth consecutive year and where the fastest growing cohorts are juniors and women, according to the National Golf Foundation. Global rounds of play were vibrant in 2023, up about 2%, and led by the U.S. market, which increased 4% to more than 530 million rounds. Rounds are up double digits since 2019 in almost every region, with the U.S., Korea, and UK all growing by more than 20 percent. And the only down markets during this period are China and Southeast Asia.

David E. Maher: And lastly, our rest of world sales increased a healthy 12% with every segment posting gains.

As we now look forward and plan for 2024, we are encouraged by strong golfer participation and enthusiasm for the game.

David E. Maher: Including a U S golfer base grew for the sixth consecutive year, and where the fastest growing cohorts are juniors and women. According to the National Golf Foundation.

David E. Maher: Global rounds of play where vibrant and 2000 twenty-three up about 2% and led by the U S market, which increased 4% to more than 530 million rounds.

David E. Maher: Browser up double digits since 2019 in almost every region with the U S Korea in UK, all growing by more than 20 per cent.

David E. Maher: And the only down markets during this period or China and Southeast Asia.

David E. Maher: For context, the number of golf courses and rounds played annually in China is comparable to the golf profile here in the state of Massachusetts. Market fundamentals are strong, trade partners are financially stable, and channel inventories are seasonally in line. The past few years have seen extensive investment by golf courses and retailers seeking to improve their facilities and experiences to meet the evolving preferences of tomorrow's golfers. As a result, it's a great time to be a golfer.

David E. Maher: For context, the number of golf courses in rounds played annually in China are comparable to the golf profile here in the state of Massachusetts.

David E. Maher: Market fundamentals are strong trade partners are financially stable and channel inventories are seasonally in line.

David E. Maher: The past few years have seen expansive investment by golf courses and retailers seeking to improve their facilities and experiences to meet the evolving preferences of Tomorrow's golfers as a result, it's a great time to be a golfer.

David E. Maher: Now, looking forward to our segments and starting with golf balls, we successfully launched new AVX, TORSOFT, and TruFeel models in the first quarter. Initial response has been favorable in Sunbelt markets, and we're in good shape to support our global launch over the next two months as Northern markets open up. Within Titleist Golf Clubs, we look to build upon our T-Series iron momentum and add energy with the new Vokey SM10 wedges and Scottie Cameron Phantom putters.

David E. Maher: Now looking forward at our segments and starting with golf balls, we successfully launched new AVX tore soft and true fuel models in the first quarter.

David E. Maher: Initial response has been favorable in Sun belt markets were in good shape to support our global launch over the next two months as northern markets open up.

David E. Maher: Within title is golf clubs, we look to build upon our T series iron momentum and that energy with new Vogie S. M 10, wedges and Scotty Cameron fan of Putters.

David E. Maher: We expect these new products and the expanded execution of our fitting strategies will drive our first half performance. Our gear business is well positioned for growth, both organically and from the recent inclusion of Club Glove, effective at the start of this year. We have successfully integrated Club Glove into Acushnet and are committed to enhancing supply chain, B2B, and digital platforms in 2024 to then pave the way for accelerated investment and growth expectations for golf's leading travel brand. And with Club Glove's addition to the Acushnet portfolio, we have scaled back some of our Titleist-branded travel gear offerings.

David E. Maher: We expect these new products and the expanded execution of our fitting strategies will drive our first half performance.

David E. Maher: Our gear business as well positioned for growth both organic and from the recent inclusion of club gloves effective at the start of this year.

David E. Maher: We have successfully integrated club glove into a cushion it and are committed to enhancing supply chain B B and digital platforms. In 2024, two then pave the way for accelerated investment and growth expectations for golf's, leading travel brand.

David E. Maher: And with club Gloves addition to the a cushion portfolio, we have scaled back some of our title is branded travel gear offerings. However, even with the skew reduction still expect growth from title a skier in 2024.

David E. Maher: However, even with this skew reduction, we still expect growth from Titleist gear in 2024. Footjoy is launching a wide range of new products in the first half, led by new Pro SLX and Quantum golf shoes and several style updates to our leading Premier franchise. Golfers will notice refinements to the FJ Apparel line and additions, such as our performance-oriented Thermo and Tempo series midlayers and a new golf fitness collection, as we continue to build upon Foot Joy's unmatched authenticity in the golf wearable space. And we're enthused about our opportunities to continue developing our performance outerwear business and anticipate double-digit growth in 2024, driven by our golf product lines in the U In addition to the full assortment of new products we have scheduled for the first half, our positive outlook is also shaped by several new initiatives as we adapt and invest to position the company for future success.

David E. Maher: Put joy is launching a wide range of new products in the first half led by new Pro S. L X and quantum golf shoes, and several style updates to our leading premier franchise.

David E. Maher: Golfers will notice refinements to the F. J, a pair of line and additions such as our performance oriented thermo and tempo series mid layers and a new golf fitness collection as we continue to build upon which always unmatched authenticity in the Gulf wearable space.

And we are enthused about our opportunities to continue developing our shoes performance outerwear business and anticipate double digit growth in 2024, driven by our golf product lines in the U S and UK and measured growth within ski.

David E. Maher: In addition to the full assortment of new products. We have scheduled for the first half are positive outlook is also shaped by several new initiatives as we adapt and invest to position the company for future success.

David E. Maher: First, our new Titleist Golf Ball and Vokey Wedge Selection Apps will supplement our in-person fitting efforts. We are enthused about the opportunity to connect with a wider audience of golfers to help them make the best equipment choices for their games. In the coming months, we will mobilize FootJoy's proprietary new FitLab performance footwear system to help golfers select the best performing, best fitting, and most comfortable golf footwear.

David E. Maher: First our new title is golf ball in rookie wedge selection of apps will supplement or in person fitting efforts were enthused about the opportunity to connect with a wider audience of golfers to help them make the best equipment choices for their games.

David E. Maher: In the coming months, we will mobilize for choice proprietary new fit lab performance footwear system to help golfers select the best performing best fitting and most comfortable golf footwear.

David E. Maher: We are confident that all golfers can benefit from this innovative and value-added fitting experience and are prepared to invest in this initiative, similar to our comprehensive ball and club fitting program. Our investment in technology will also support trade partners as we implement improved B2B capabilities and empower their use of Acushnet's proprietary online pro shop to support their own D2C engagements with emphasis on club logos and tournament opportunities. In 2024, we will begin operating a new state-of-the-art golf ball customization technology that our team has been developing for the past few years. This new automation will expand our throughput capabilities, resulting in greater efficiency and faster lead times for custom imprinted Titleist golf balls. Earlier this year, we started fulfilling orders from our new 500,000 square foot distribution and custom embroidery center located in nearby Lakeville, Massachusetts.

David E. Maher: We are confident that all golfers can benefit from this innovative and value added fitting experience and are prepared to invest behind this initiative similar to our comprehensive ball in clubs hitting programs.

David E. Maher: Our investment in technology will also support trade partners as we implement improved b to be capabilities and empower their use of a cushion as proprietary online pro shop to support their own DDC engagements with emphasis on club logo and tournament opportunities.

David E. Maher: In 2024, we will begin operating a new state of the art golf ball customization technology that our team has been developing for the past few years.

David E. Maher: This new automation will expand our throughput capabilities, resulting in greater efficiencies in faster lead times for custom imprinted title is golf balls.

David E. Maher: Earlier this year, we started fulfilling orders from our new 500000 square foot distribution and custom embroidery center located at a nearby Lakeville, Massachusetts.

David E. Maher: This facility is representative of the company's commitment to providing leading service and the highest quality distribution experience. Initially, we will fulfill wholesale demand for FJ footwear, Titleist gear, and club gloves, and over time, we expect to support D2C and additional product groups from this new facility. We also recently expanded our apparel customization capabilities in the U.K., bringing much of this work in-house to improve quality, reduce lead times, and meet growing demand for embroidered FJ and shoe products in this golf-rich region. And lastly, within Golf Footwear, we continue to progress towards our objective of establishing a more resilient and geographically diverse supply chain and this year, we expect to produce roughly half our footwear in Vietnam as we leverage the expanded capabilities of our long-time JV Footwear production partner to supplement our Chinese factory.

David E. Maher: This facility is representative of the company's commitment to providing leading service and the highest quality distribution experience.

David E. Maher: Initially we will fulfill wholesale demand for FJ footwear title, a skier and club glove and over time expect to support the to see an additional product groups from this new facility.

David E. Maher: We also recently expanded our apparel customization capabilities in the UK, bringing much of this work in house to improve quality reduce lead times and made growing demand for embroidered FGA and shoes products in this golf rich region.

David E. Maher: And lastly, within golf footwear, we continue to progress towards our objective of establishing a more resilient and geographically diverse supply chain.

David E. Maher: And this year expect to produce roughly half or footwear in Vietnam as we leveraged the expanded capabilities of our longtime JV footwear production partner to supplement our China factory.

David E. Maher: We are confident these investments and golfer connection technology and supply chain will benefit golfers and trade partners, while positioning the company for sustaining success.

David E. Maher: We are confident these investments in Golfer Connection, technology, and the supply chain will benefit golfers and trade partners while positioning the company for sustaining success. In summary, we are optimistic about the structural health of the golf industry, the great momentum behind our Titleist, Footshoy Shoes, and Club Glove brands, and the resilience and engagement of the game's dedicated players. Thanks for your attention this morning. I will now pass the call over to Sean. Thank you, David. Good morning, everyone.

David E. Maher: In summary, we are optimistic about the structural health of the golf industry. The great momentum behind our title list for Joy shoes, and club club brands and the resilience and engagement of the games dedicated golfer.

David E. Maher: Thanks for your attention. This morning, I will now pass the call over to Sean.

Sean S. Sullivan: Thank you David Good morning, everyone turning to the financial results for the quarter and the full year on slide eight and.

Sean S. Sullivan: Turning to the financial results for the quarter and the full year, on slide 8. In line with expectations, our fourth-quarter net sales were down 8.6% when compared to 2022, with lower net sales across all reportable segments except for golf balls. Justin Ibida had a loss of $1.5 million, approximately $27 million lower than Q4 of last year.

In line with expectations are fourth quarter net sales were down 8.6% when compared to 2022 with lower net sales across all reportable segments, except for golf balls adjusted.

Sean S. Sullivan: Adjusted EBITDA was a loss of $1.5 million, approximately 27 million lower than Q4 of last year.

Sean S. Sullivan: The net sales decline in the quarter was primarily due to golf clubs and foot joy, which were down 17 percent and 14 percent, respectively. However, golf balls partially offset these declines with a 5% increase due to higher sales volumes and average selling prices of our Pro V1 family of golf balls. In golf clubs, net sales were down as higher sales volumes of our newly introduced T-series irons were more than offset by lower sales volumes of TSR drivers and fairways, which were launched in Q3 of 2022. Lower footwear sales volumes in the quarter drove the decrease in foot joint net sales.

Sean S. Sullivan: Net sales decline in the quarter was primarily due to golf clubs and for Joy, which were down 17% and 14% respectively.

Sean S. Sullivan: Golf balls, partially offset these declines with a 5% increase on higher sales volumes and average selling prices of our probie, one family of golf balls.

Sean S. Sullivan: And golf clubs net sales were down is higher sales volumes of our newly introduced T series Irons were more than offset by lower sales volumes of T. S are drivers and fairways, which were launched in Q3 of 2022.

Sean S. Sullivan: Lower footwear sales volumes in the quarter drove the decrease in foot joined net sales.

Sean S. Sullivan: As David highlighted for the full year 2000, twenty-three net sales and adjusted EBITDA increased 6.2% and 11.1% respectively, driven by increased net sales across all reportable segments, except for foot Joy.

Sean S. Sullivan: As David highlighted, for the full year 2023, net sales and adjusted EBITDA increased 6.2% and 11.1%, respectively, driven by increased net sales across all reportable segments except for FootJoy. The net sales increase for the full year was primarily driven by higher sales volumes in golf balls, golf clubs, and Titleist gear, up 13.5%, 9.5%, and 7%, respectively. Foot Joy was down 2.1% compared to 2022 on lower sales volumes, mainly in footwear, partially offset by higher apparel volumes, which increased by a double-digit percentage.

Sean S. Sullivan: The net sales increase of the full year was primarily driven by higher sales volumes and golf balls golf clubs entitled a skier up 13.5%, 9.5% and 7% respectively for Joy was down 2.1% compared to 2022 on lower sales volumes, mainly in footwear partially.

Sean S. Sullivan: All set by higher apparel volumes, which increased by a double digit percentage.

Sean S. Sullivan: Sales volumes of products that are not allocated to one of our four reportable segments also decreased versus the prior year. Turning to results by region, in the fourth quarter, the U.S. and Japan were down mainly due to lower net sales compared to the prior year launch of TSR drivers and fairways, as previously mentioned, as well as lower footwear sales volumes in the U.S. Full year growth was led by the U.S. and rest of the world, with gains across all reportable segments in those regions. Gross profit in the quarter was $210 million, down 6.2 percent compared to 2022, primarily due to decreased sale volumes in golf clubs and foot joy. Gross margin of 50.8% was up 80 basis points, largely due to favorable manufacturing costs for golf balls and lower inbound freight costs.

Sales volumes of products that are not allocated to one of our four reportable segments also decreased versus prior year.

Sean S. Sullivan: Turning to results by region in the fourth quarter of the U S and Japan were down mainly due to lower net sales comparing to the prior year launch of T. S are drivers and fairways previously mentioned as well as lower footwear sales volumes in the U S.

Sean S. Sullivan: Full year growth was led by the U S and rest of world with gains across all reportable segments in those regions.

Gross profit in the quarter was $210 million down 6.2% compared to 2022, primarily due to decreased sales volumes and golf clubs and foot Joy.

Sean S. Sullivan: Gross margin of 50.8% was up 80 basis points, largely due to favourable manufacturing costs and golf balls and lower inbound freight costs.

Sean S. Sullivan: Gross profit for the full year was $1.3 billion, up 6.2%, primarily resulting from increased volumes and average selling prices in golf balls, golf clubs, and Titleist gear, as well as lower inbound freight across all reportable segments and lower royalty expense in golf clubs. Lower sales volumes in Foot Joy and products not allocated to one of our four reportable segments partially offset the increase. Gross margin of 52.6% was up 70 basis points, mainly due to lower inbound freight costs. SG&A expense of $213 million in the quarter increased $17 million, or 8.8 percent, across all operating expense categories, mainly due to higher employee-related expenses, partially offset by lower IT expenses.

Sean S. Sullivan: Gross profit for the full year was $1.3 billion up 6.2%, primarily resulting from increased volumes, an average selling prices and golf balls golf clubs and title a skier as well as lower inbound freak across all reportable segments, and lower royalty expense and golf clubs.

Sean S. Sullivan: Lower sales volumes and foot joy and products not allocated to one of our four reportable segments, partially offset the increase.

Sean S. Sullivan: Gross margin of 52.6% was up 70 basis points, mainly due to lower in bound freight costs.

Sean S. Sullivan: SG&A expense of $213 million in the quarter increased $17 million or 8.8% across all operating expense categories, mainly due to higher employee related expenses, partially offset by lower expenses.

Sean S. Sullivan: R&D expense of $18 million was also up, mainly due to higher employee-related expenses. SG&A expense of $888 million for the full year increased $55 million or 6.6% from 2022, primarily due to higher advertising and promotional expenses across all reportable segments to support new product launches and higher employee-related expenses in selling and administration, partially offset by lower retail commission expense in Korea and lower IT-related expenses. We also incurred about $12 million of one-time charges in 2023, of which $10 million related to the optimization of our distribution and custom fulfillment operations. R&D expense of $65 million was up to support new product introduction. Our increase in intangible amortization was due to the acquisition of trademarks related to Titleist Golf Clubs and Golf Gear in the fourth quarter of 2022 and first quarter of 2023, respectively. Interest expense was up $6 million in the quarter and $28 million for the full year due to an increase in borrowings and interest rates, with a little more than half the increase coming from higher debt.

Sean S. Sullivan: R&D expensive $18 million was also up mainly due to higher employee related expenses.

Sean S. Sullivan: SG&A expensive $888 million for the full year increased $55 million or 6.6% from 2022, primarily due to higher advertising and promotional expenses across all reportable segments to support new product launches and higher employee related expenses and selling and admin.

Sean S. Sullivan: Partially offset by lower retail commission expense in Korea, and lower related expenses.

Sean S. Sullivan: We also incurred about $12 million, one time charges in 2023 of which 10 million related to the optimization of our distribution and custom fulfillment operations.

Sean S. Sullivan: R&D expense of $65 million was up to support new product introductions are.

Sean S. Sullivan: Or increase an 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.

Sean S. Sullivan: Interest expense was up $6 million in the quarter and $28 million for the full year due to an increase in borrowings and interest rates with a little more than half the increase coming from higher debt.

Sean S. Sullivan: Are effective tax rate in Q4 was 26.9% in our full year effective tax rate was 17.8% down from 20.9 per cent last year.

Sean S. Sullivan: Our effective tax rate in Q4 was 26.9%, and our full-year effective tax rate was 17.8%, down from 20.9% last year. Decreases in both periods were primarily driven by a shift in our mix of jurisdictional earnings. Moving to our balance sheet and cash flow highlights on slide nine, our balance sheet and cash flow positions continue to be very strong, allowing us to continue to execute our capital allocation strategy with our ongoing investments in the business and return of capital to shareholders being our highest priority. Our net leverage ratio at the end of 2023 was 1.9 times.

Sean S. Sullivan: Decreases in both periods, where primarily driven by a shift in our mix of jurisdictional earnings.

Sean S. Sullivan: Moving to our balance sheet and cash flow highlights on slide nine.

Sean S. Sullivan: Our balance sheet and cash flow positions continue to be very strong, allowing us to continue to execute our capital allocation strategy with our ongoing investments in the business and return of capital to shareholders being our highest priorities.

Sean S. Sullivan: Our net leverage ratio at the end of 2023 with 1.9 times as expected inventories.

Sean S. Sullivan: Inventories increase sequentially from Q3 in support of 2024 product launches, but declined from your in 2022.

Sean S. Sullivan: As expected, inventories increased sequentially from Q3 in support of 2024 product launches but declined from year-end 2022. We're comfortable with our inventory quality and net position given the current state of demand and the supply chain as we move into 2024. Capital expenditures for 2023 were in line with expectations of $75 million and are projected to reach approximately $85 million in 2024. As David noted, in 2023, we returned roughly $384 million to shareholders, with $332 million in share repurchases and $52 million in cash dividends. The quarterly dividend announced today of 21.5 cents per share will be payable on March 22nd to shareholders of record on March 8th, 2024.

Sean S. Sullivan: We're comfortable with our inventory quality in net position given the current state of demand and the supply chain as we move into 2024.

Sean S. Sullivan: Capital expenditures for 2000 twenty-three we're in line with expectations of $75 million and are projected to reach approximately $85 million in 2024.

Sean S. Sullivan: Is David noted in 2000, twenty-three return roughly $384 million to shareholders with $332 million in share repurchases and $52 million in cash dividends.

Sean S. Sullivan: The quarterly dividend announced today of 21, and a half cents per share will be payable on March 22nd to shareholders of record on March 8th 2024.

Sean S. Sullivan: This increase in our quarterly dividend the seventh increase since the dividend was implemented in 2017, which highlights are continuing confidence in the business outlook and cash flow generation.

Sean S. Sullivan: During the fourth quarter, we repurchased approximately 2.3 million shares of our common stock for $127 million, bringing our full year repurchases to approximately 6.5 million shares for a total of $332 million.

Sean S. Sullivan: This increase in our quarterly dividend is the seventh increase since the dividend was implemented in 2017, which highlights our continuing confidence in the business outlook and cash flow generation. During the fourth quarter, we repurchased approximately 2.3 million shares of our common stock for $127 million, bringing our full-year repurchases to approximately 6.5 million shares for a total of $332 million. As mentioned, on February 15th, our board of directors increased the share repurchase authorization by an additional $300 million, bringing the total authorization to $1 billion since the share repurchase program was established in 2018. As a result, as of February 23rd, 2024, the remaining share repurchase authorization was $359 million, and the number of shares outstanding was 63.5 million.

Sean S. Sullivan: As mentioned on February 15th our board of directors increase the share repurchase authorization by an additional $300 million, bringing the total authorization to 1 billion since the share repurchase program was established in 2018.

Sean S. Sullivan: As a result as of February 23rd 2024, the remaining share repurchase authorization was $359 million and the number of shares outstanding was $63.5 million.

Sean S. Sullivan: Turning to our full year 2024 outlook on slide 10 full year revenue is projected to be between $2.45 billion and $2.5 billion up 4.3% at the mid point on a constant currency basis compared to 2000 twenty-three with growth across all reportable segments as well as <unk>.

Sean S. Sullivan: Turning to our full-year 2024 outlook on slide 10, full-year revenue is projected to be between $2.45 billion and $2.5 billion, up 4.3 percent at the midpoint on a constant currency basis compared to 2023, with growth across all reportable segments, as well as growth both domestically and internationally. Our full-year adjusted EBITDA is expected to be between $385 and $405 million. At the midpoint, our adjusted EBITDA growth would be 5%, with an EBITDA margin of approximately 16%. As we continue to invest in the business to drive sustainable long-term growth, many initiatives are underway that will continue into 2024, including expanding our distribution and customization capabilities, increasing our fitting network for both balls and clubs, and technology investments to support B2B, D2C, and enterprise systems.

Sean S. Sullivan: Both both domestically and internationally.

Sean S. Sullivan: Our full year adjusted EBITDA is expected to be between 385 and $405 million.

Sean S. Sullivan: At the midpoint, our adjusted EBITDA growth would be 5% with an EBITDA margin of approximately 16%.

Sean S. Sullivan: As we continue to invest in the business to drive sustainable longterm growth. Many initiatives underway that will continue into 2024, including expanding our distribution and customization capabilities, increasing our fitting network for both balls and clubs and technology investments to sport B B D C and enter.

Sean S. Sullivan: Price systems as.

Sean S. Sullivan: As a result full year SG&A growth will be a bit higher than our sales growth projections.

Sean S. Sullivan: And as we have mentioned, we have been diversifying our supply chain and footwear as we shift incremental production into Vietnam.

Sean S. Sullivan: As a result of these initiatives, we expect to incur transformation and restructuring charges. In 2024, we will provide more information on these charges on our first quarter call.

Sean S. Sullivan: Due to the investments and operating expenses and supported the strategic initiatives highlighted the quarterly cadence of our financial results in 2024 will differ from historical patterns.

Sean S. Sullivan: As a result, full-year SG&A growth will be a bit higher than our sales growth projection. And, as we have mentioned, we have been diversifying our supply chain and footwear as we shift incremental production into Vietnam. As a result of these initiatives, we expect to incur transformational restructuring charges in 2024. We will provide more information on these charges on our first quarter call.

Sean S. Sullivan: With respect to the first half of 2024, we expect net sales to be up low single digits compared to the first half of 2023 with growth coming from title is golf balls golf clubs and golf gear and first half EBITDA to be about flat to first half of 2023 due to increased operating expenses into.

Sean S. Sullivan: Due to the investments and operating expenses in support of the strategic initiatives highlighted, the quarterly cadence of our financial results in 2024 will differ from historical patterns. With respect to the first half of 2024, we expect net sales to be up low single digits compared to the first half of 2023, with growth coming from Titleist golf balls, golf clubs, and golf gear, and first half EBITDA to be about flat compared to the first half of 2023 due to increased operating expenses and, to a lesser degree, the unfavorable impact of changes in foreign currency exchange rates. We are also forecasting a modest impact on freight costs in the first half due to the situation in the Red Sea.

Sean S. Sullivan: A lesser degree the unfavourable impact of changes in foreign currency exchange rates.

Sean S. Sullivan: We are also forecasting a modest impact and frayed costs in the first half due to the situation in the Red Sea.

From a quarterly standpoint for the first half of 2024 as is typically the case, we expect net sales to be more waited to the second quarter, while EBITDA will be even further waited to Q2 as the first quarter will be burdened by continuing.

Sean S. Sullivan: 23, and begin the year with a positive outlook for 2024, given the state of the industry, our consumer and are leading product portfolio, all while remaining focused on executing our strategic priorities.

Sean S. Sullivan: From a quarterly standpoint for the first half of 2024, as is typically the case, we expect net sales to be more weighted to the second quarter while EBITDA will be even further weighted to Q2 as the first quarter will be burdened by continuing losses and begin the year with a positive outlook for 2024, given the state of the industry, our consumer, and our leading product portfolio, all while remaining focused on executing our strategic priorities. With that, I will now turn the call over to Sondra for Q&A. Thanks, Sean. Daisy, could we now open up the lines for questions? Of course, thank you. If you would like to register a question, please press star followed by one on your telephone keypad and ensure that you are unmuted locally. If you would like to withdraw your question, please press the star followed by two.

Sean S. Sullivan: With that I will now turn the call over to Sondra for Q&A.

Sondra: [noise], Thank Sun Daisy could we now open up the lines of questions.

Of course, thank you if you would like to register a question. Please press stop by one or no kind of thing keypad and ensure you want a muted like name.

Sondra: If you would like to withdraw your question. Please <unk>.

Speaker Change: Not stopped put it by one or no kind of thing he had to register a question.

Speaker Change: Alex asked question today comes from Meghan Alexander from Morgan Stanley, making please go ahead your line is iPhone.

Megan Christine Alexander: Hi, good morning. Thank so much I wanted to start on that sale at outlook I think I heard you're expecting growth and all segments. Maybe he can you give some color on what you're assuming for core equipment growth within that three to five per cent guide and then related to that you've talked about some changes you've made specifically.

Operator: So that's a star followed by one on your telephone keypad to register a question. Our first question today comes from Megan Alexander from Morgan Stanley. Megan, please go ahead; your line is open. Hi, good morning. Thanks so much.

Megan Christine Alexander: On your bio product.

Megan Christine Alexander: Then the guide in terms of price first units as well.

Speaker Change: Yeah, Hi, Megan I'm Gonna start with your second question about with a ball product lines. So just to walk it back odd years, we launched probie ones and even years, we generally launch the remainder of of the product line as is the case this year and for the most part.

Megan Christine Alexander: Wanted to start on the sales outlook. I think I heard you're expecting growth in all segments. Maybe you could give some color on what you're assuming for core equipment growth within that three to 5% guide. And then related to that, you've talked about some changes you've made specifically on your ball product, in the guide in terms of price versus units as well. Yeah, hi Megan.

Speaker Change: They're not equal waited a probably one launch will typically be larger than than what we would see uneven year, we did say where.

David E. Maher: I'm going to start with your second question about the Ball product line. So just to walk it back, odd years we launch Pro V1s, and even years we generally launch the remainder of the product line, as is the case this year. And for the most part, they're not equal weighted.

Speaker Change: We have in our golf ball business, so you'll see you'll see new models in and true feel in these have already been introduced and launched in the market and velocity and new AVX and to endorse off so.

David E. Maher: A Pro V1 launch will typically be larger than what we would see on the even year. We did say we have in our golf ball business. So you'll see new models in true feel, and these have already been introduced and launched in the market, Velocity, and new AVX and Toursoft. So we've got an exciting lineup of new golf balls.

Speaker Change: We've got an exciting lineup a new golf balls made the comment that they're off largely sunbelt launched in the first part of the quarter, but by March April we'll have our global launch underway.

Speaker Change: Underway and then and then is turned in terms of guidance for it for the year you know I I would say Sean was fairly prescriptive in terms of of first half in quarters, but as it relates to segments I'll just I'll reiterate we do we do anticipate growth across segments.

David E. Maher: made the comment that they're off to a largely Sunbelt launch in the first part of the quarter, but by March and April, we'll have our global launch underway. And then in terms of guidance for the year, I would say Sean was fairly prescriptive in terms of the first half and quarters, but as it relates to segments, I'll reiterate, we do anticipate growth across segments. The one difference would be within gear, where you'll see the additive component of Club Glove, which was not part of our results last year.

Speaker Change: The one the one difference would be within gear, where you'll see the additive component of of club glove, which was not part of our our results last year, but again, we're confident at this stage to leading and guiding towards a low single across the board for for each of the segments.

David E. Maher: But again, we're confident at this stage of leading and guiding towards a low single across the board for each of the segments, again, Outlier being the gear business. Okay, great. That's helpful.

Speaker Change: Again, outlier being being the gear business.

Speaker Change: Okay, Great. That's helpful. And then maybe just you know taking a step back bigger picture you know the business historically girl at Colorado, 1% to 2% annual kiger prior to Covid, you know guiding sales three to five per cent sure and we may arguably be in the first kind of normal year of post COVID-19 supplies seemingly and.

David E. Maher: And then maybe just, you know, taking a step back and looking at the bigger picture, the business historically grew at call it a one to 2% annual CAGR prior to COVID. You're now guiding sales three to 5% this year, and we may arguably be in the first kind of normal year post COVID, supply seemingly in a good spot. So I guess, how do you think about whether the industry and business have, you know, structurally changed, and does this give you confidence that maybe this 3-5% is the new normal run rate for your business? Yeah, certainly, you look at where golf is today versus where it was before COVID. The baseline would be the number of golfers, right? We've seen that number increase six years in a row, so that's certainly positive, and I'm not going to prognosticate on what is going to happen in 2024. But we feel really good about the energy and momentum around participation. In round numbers, that looks like 950 or so million rounds in 2023, as compared to call it 800 million rounds in 2019.

Speaker Change: Think I'd spot. So I guess, how do you think about whether the industry and business has you know structurally changed and.

Speaker Change: Does this give you confidence that you know maybe it is 3% to 5% is the new normal run rate for your business.

Speaker Change: Yeah, certainly you look at where golf is today versus where it was before Covid you know the the the baseline would be number of golfers right. We've seen that number increased six years in a row. So that's certainly a positive and not gonna yet prognosticate on what kind of what is going to happen in 2024, but we feel.

Speaker Change: Really good about the energy and momentum around participation in round numbers that looks like a 950 or so million rounds in 2023 as compared to call at 800 million rounds in 2019. So.

David E. Maher: So that 150 million round number additional was true in 21 and 22 and 23. So there's been a real step up in our industry. And you're right; I would say supply chains will normalize, probably in the back half of 2023. And certainly, our guide reflects our enthusiasm and confidence around dedicated golfers, right? We operate in a bit of a subset of the total golf marketplace, but they're responsible for a whole lot of purchasing activity. Having confidence in the structural health of the marketplace, our retailers are in really good shape.

Speaker Change: $150 million round number additional was true and 21 and 22 and 23, so there's been a real step up.

Speaker Change: Our industry and you're right I would say I would say supply chains have normalized probably in in the back half of 2023, and certainly our guide reflects our enthusiasm and confidence around dedicated golfer right. We we operate in a bit of a subset of the total golf marketplace.

Speaker Change: But they're responsible for a whole lot of of of purchasing activity our confidence in the structural health of the marketplace or retailers are in really good shape golf courses are investing in their products to be more relevant and appealing to tomorrow's golfer.

Sean S. Sullivan: Golf courses are investing in their products to be more relevant and appealing to tomorrow's golfer, and then certainly our own internal momentum with our products and brands. So in terms of how we're thinking long-term, we certainly are assessing the impacts of what has been a step up in our industry, and I think, by virtue of our guide for 2024, we feel a bit more positive about the outlook today than we may have five-plus years ago. And Megan, maybe I'll just add to that again, to punctuate in the club business, for example, I talked about the investments we're making in the fitting network. So I think as we expand the fitting network, we think the club business has probably outsized growth potential relative to the market as we invest in that area for dedicated golfers. David talked about obviously Club Glove and integrating that into our distribution network.

Speaker Change: And then certainly our own internal momentum with our with our products and brands. So in terms of how we're thinking long term. We certainly are assessing the impacts of what has been a step up in our industry and I think by virtue of our of our guide for 2024, we feel a bit more positive about the outlook today and then we may have five plus.

Speaker Change: Hours ago.

Speaker Change: And Megan maybe I, just add to that again to punctuate in the club business. For example, I talked about the investments, we're making the fitting network. So I think as we expand the fit fitting network. We think the club business has probably outsized gross relative potentially to the market as we invest in that area for dedicated golfers David talked to.

Speaker Change: About obviously club glove and integrating that into our distribution network and certainly as we look at 24. The hope is that the footwear market will normalized as we get into the back half of the year. So I think all of those are the puts against our outlook at least for 2024.

Sean S. Sullivan: And certainly, as we look at 24, the hope is that the footwear market will normalize as we get into the back half of the year. So I think all of those are the challenges against our outlook, at least for 2024. Great. Thank you so much.

Speaker Change: Great. Thank you so much.

Speaker Change: Thanks Man operate our next question.

Megan Christine Alexander: Thanks, Megan. Operator, next question. Of course, our next question today is from Randy Konik from Jeffreys. Randy, please go ahead; your line is open.

Speaker Change: Oh Cool next question today is from Randy connect from Jeffrey Randy. Please go ahead to your line is Nathan.

Randy: Great. Thanks, David have asked this question before but you know when you have your conversations across the.

Randal J. Konik: Great, thanks. David, I've asked this question before, but, you know, when you have your conversations with the, you know, the many golf course operators you speak to, you know, maybe give us some perspective on what those conversations are like in terms of how they feel about their business, the outlook, etc. How they, certainly we, connect with hundreds, if not thousands of golf professionals. You know, they're, let's face it.

Randy: The money on a golf course operators.

Randy: Maybe give us some perspective on.

Randy: What those conversations are like in terms of how they feel about their business the outlook et cetera, how are they.

Mmm, we're certainly we we connect with hundreds if not thousands of golf professionals.

Randy: You know there, let's face it they're looking at they're looking at the impacts of rounds up you know in the U S 20, some odd percent and they've seen an increase in their play mid week weekends were always fairly robust they've seen new participants there the number of lessons has increased.

David E. Maher: They're looking at the impact of rounds up in the U.S. by 20 some odd percent. And they've seen an increase in their play midweek, while weekends were always fairly robust.

David E. Maher: They've seen new participants there. The number of lessons has increased. The number of juniors, and women has increased. So from where they sit, they're busy, and they're optimistic about the state of the game and the energy and momentum behind the game. You know, one reality they'll always face is weather.

Randy: The number of juniors the number of women has increased so from where they sit they're busy and and they're they're optimistic about the state of the game and the energy and momentum behind the game you know one reality they'll always faces weather and that's an unavoidable influence on the golf business.

David E. Maher: And that's an unavoidable influence on the golf business. But even through some tough weather starts last year, you know, to see the U.S. market finish up 20 some odd million rounds up 4% off the prior year and even ahead of 21 was really impressive.

Randy: <unk>, but even even through some tough weather starts last year.

Randy: To see the U S market finish up 20, some odd million rounds up 4% off the prior year and even ahead of twenty-one was was really impressive. So there's a general level of enthusiasm towards just an increase in participation. We've said this it puts a lot of pressure on the supply side of game and that many many private clubs are full.

David E. Maher: So there's a general level of enthusiasm towards just an increase in participation. As we've said, this puts a lot of pressure on the supply side of the game in that many, many private clubs are full, and there are long wait lists, and that's a reality the game is contending with. On the flip side, some 75% of play in golf is at public facilities.

Randy: And there are a long wait lists and that's the reality of the game is contending with on the flip side. Some 75 per cent of playing golf is that public facilities, they're doing real well again, there challenge in their frustration maybe is moments where demand exceeds supply. So so they would all say hey, those are nice problems they have but.

David E. Maher: They're doing real well. Again, their challenge and their frustration maybe are moments where demand exceeds supply. So they would all say, hey, those are nice problems to have, but those are some of the realities they're dealing with. But generally speaking, again, and I point to the BGA show, there's a general level of optimism about the state of the game, as you would expect coming off a year like we had in 2023. 2023.

Randy: Those are some of the realities, they're dealing with but generally speaking again and I I I point to the to the Bgea show, there's a there's a general level of optimism about the state of the game as you would expect coming off of a year like we had in 2023.

Randy: The problem I guess my last question would be I think it's also asked about this in the past.

David E. Maher: Super helpful. I guess my last question would be, I think we've also asked about this in the past. You know, the concept of fittings and customization and how the industry is moving more and more towards that kind of model, maybe give us some perspective of where we are, where we've come from, and how that's kind of changed in terms of, you know, changing, you know, with the ASPs, conversion, working capital improvements, potentially in the business, the way you're running your business, but then the whole industry is being run. It just seems like a bigger opportunity for, you know, you and others, and there's only a few others, an Oligopoly or consolidated industry, that it's just a better run industry now with a lot more stability and pricing and margin. So maybe kind of comment on what you think about those thoughts. Yeah, it's so high-level, Randy.

Randy: Yeah, the concept of sitting customization and how the industry's moving more and more toward that kind of model.

Randy: Maybe give us some perspective of where we are where we've come from and and how that kind of thing in terms of you know.

Randy: Yeah, Let's say F PS converging working capital improvements essentially in the business the way you're running your business, but then the whole industry is being run it just seems like a bigger opportunity for.

You and others and there's only a few others.

Randy: Oligopoly or consolidated industry that it's just a better run industry now with a lot more stability in pricing and margins. So maybe kind of comment on what you think there are no sauce.

Speaker Change: Yeah, So high level, Randy I'm I'm going to agree with all your points, but I'll I'll dig in on a on a couple of observations on how they play out across the industry. So so we've been we've been dedicated to custom fitting for 30, some odd years, and we continue to build out and refine our <unk>.

David E. Maher: I'm going to agree with all your points, but I'll dig in on a couple of observations on how they play out across the industry. So we've been dedicated to custom fitting for 30-some-odd years, and we continue to build out and refine our fitting efforts. And as Sean said, we continue to invest more and more in fitting. It just becomes a clear place for us to invest money because it results in all the benefits you described. But most importantly, we know it's the best way for golfers to experience and ultimately select golf clubs. You know, years ago, fitting was isolated to the outdoors.

Speaker Change: Hitting efforts and is Shawn said, we continue to invest more and more and fitting it just becomes a clear place for us to invest money because it it it results in all the benefits you described but most importantly, we know it's the best way for golfers to to experience and ultimately select golf clubs you know years.

Speaker Change: [noise] ago fitting was isolated to outdoors now fitting as is happening almost everywhere with the advent of launch technology is an indoor simulators, there's a whole lot of education happening on the fitting sides. So Ah fitting continues to grow its most of all then advanced in the U S and Europe I've said this in the past it's got a long way to go in Japan, and Korea, but but we're moving we're moving forward.

David E. Maher: Now fitting is happening almost everywhere. With the advent of launch technologies and indoor simulators, there's a whole lot of education happening on the fitting side. So fitting continues to grow. It's most evolved and advanced in the U.S. and Europe.

David E. Maher: I've said this in the past. It's got a long way to go in Japan and Korea, but we're moving forward. And one of the benefits that I think this kind of fits lends itself to is just the reality that comes at end-of-product life cycles. You have less product, less stock product in the market. Therefore, you're discounting less stock product.

Speaker Change: And one of the benefits that I think fitting Ah lends itself to is is just the reality that comes at end of product life cycles, you have less product less stock product in the market. Therefore, you're discounting less stock product and as an example, right now you've seen you're seeing a lot of new driver launches from our competitors.

David E. Maher: And as an example, right now, you're seeing a lot of new driver launches from our competitors in the first quarter. And typically, when that happens, you'd see a good amount of sell-off of the prior generation. And while that's happening, it's not happening to the degree we've seen in previous years.

Speaker Change: In the first quarter and and typically when that happens you can see a good amount of sell off a prior generation.

Speaker Change: And while that's happening it's not happening to the degree we've seen in in prior years and again I think that's a positive ancillary benefit of because so much of the business Nowadays is happening through custom fitting so it's been a great transformation you've also got.

David E. Maher: And again, I think that's a positive ancillary benefit because so much of the business nowadays is happening through custom fitting. So it's been a great transformation. You've also got new channels emerging, right? You've got indoor fitters, and teachers emerging because fitting has become so prevalent across the industry. But again, as it relates to working capital, as it relates to margins, as it relates to the overall golfer experience, all positives. And I think it's a trend.

Speaker Change: New channels emerging right, you've got indoor Fitters teachers emerging because fitting has become so prevalent across the industry, but again as it as it relates to working capital as it relates to margins as it relates to the overall golfer experience all positives and and I think it's a it's a trend I made the point, where we're 30 year.

David E. Maher: I made the point, we're 30 years down the road here, and we keep building it out. And I would imagine that trend will continue. And it's compelling us to keep investing in custom fitting, which again, if nothing else, gives you confidence, gives you a sense of our confidence about the opportunity moving forward. Very helpful. Thanks, guys. Thanks, Randy. Operator, next question, please.

Speaker Change: <unk> down the road here and we keep building it out and I would imagine that trend will continue and it's it's compelling us to keep investing in custom fitting which again if nothing else gives you confidence gives you a sense for our confidence about the opportunity moving forward.

Speaker Change: Very helpful. Thank God.

Speaker Change: Thanks Randy.

Speaker Change: Operate our next question please.

Speaker Change: Thank you.

Speaker Change: Next question is from Mike tool <unk> Securities. Mike. Please go ahead to your line is Nathan.

Operator: Thank you. Our next question is from Mike Swartz from Travis Securities. Mike, please go ahead; your line is open. Hey, good morning, everyone.

Mike: Good morning, everyone, maybe maybe just as it pertains to guidance and more specifically gross margin as needed.

Michael Arlington Swartz: Maybe just as it pertains to guidance and more specifically gross margin, you know, as we typically think about a non-Pro-B1 year in even years, Gross margin, I know it's typically down year over year, but if I'm doing my math correctly based on your guidance, I think it would imply gross margin of flat to maybe up slightly. So maybe, I guess, is that correct? And then maybe walk us through some of the puts and takes around gross margin as you think about it in the year ahead. Sure, Michael.

Mike: Typically think about a nonpro V one year in even years.

Mike: Gross margin typically down year over year, but if I'm doing my math correctly based on on your guide and I think it would imply gross margin of flat and may be up slightly so maybe I guess is that correct and and maybe walk us through some of the puts in case around gross margin as you think about it in the year ahead.

Speaker Change: Sure Michael how happy too I I think that we're not guiding specifically to margin I don't think your assumptions, though are far off I think the the biggest the biggest item probably I would call out his his freight we've seen freight normalized so you know that will be.

Sean S. Sullivan: Happy to. I think that we're not guiding specifically to margin. I don't think your assumptions, though, are far off.

Sean S. Sullivan: I think the biggest item I would call out is freight. We've seen freight normalized, so that will be less of a tailwind, I guess, that it was in 23 versus 22. So we think that normalized. We think that we will get some more normalization in the supply chain. I think I've talked about raw materials.

Speaker Change: Less of a tailwind I guess the that it wasn't twenty-three versus 22. So we think that normalizes, we think that we'd get some more normalization in the supply chain I think I've talked about raw materials, we have pretty good visibility in terms of what our our cost our bypass.

Sean S. Sullivan: We have pretty good visibility in terms of what our costs are by product. So it's really a freight conversation, and again, I don't think your assumption is too far off. Okay, great. That's helpful.

Speaker Change: Product. So it's really it's really afraid conversation and you know I again I don't think your assumption is is too far off.

Speaker Change: Okay, Great. That's helpful and maybe if we just look at the you know the range of guidance.

Michael Arlington Swartz: And maybe if we just look at the, you know, the range of guidance. And I know the range really isn't too wide, but maybe it could help us understand, you know, what are the assumptions at the top end of that guide, and what are the assumptions at the bottom end of that guide? Yeah, you know, I think Michael certainly will. It's an appropriate guide for our business, certainly this time of year, right? We're late February, and so much of the golf season is in front of us, with the majority of rounds and fittings happening really in Q2 and Q3. There's a wide variety of puts and takes. I would say, unlike in past years, there's more supply chain certainty this year than we've experienced in the last couple of years.

Speaker Change: And I know the rate at the rate is really isn't too wide, but maybe help us understand you know what what what are the assumptions at the top end of that guide and what are the assumptions at the bottom into that guidance.

Speaker Change: Yeah, you know I think I think Michael certainly will you know I I. It's it's inappropriate guide for our business certainly this time of year right, where we're late February and so much of the golf season is in front of us with with the majority of rounds and fittings happening really in Q2 and Q3.

Speaker Change: There, there's a wide variety of puts and takes I would say hey, unlike past years, there's more supply chain certainty this year than we've experienced in the last couple of years, you know Sean mentioned, the the footwear category, we expect to stabilize here in in.

Michael Arlington Swartz: You know, Sean mentioned the footwear category we expect to stabilize here in the mid part of the year, so there's more marketplace. Clarity and certainty in the wild card, as it always is this time of year, Q2, Q3, weather participation, etc. We like the way we're trending, but I think you get a better insight and answer from us maybe on a subsequent call. Okay, great.

Speaker Change: In the mid part of the year, so there's more market place clarity and certainty in the wildcard is always as it always has this time of year Q2, Q3, whether participation et cetera, we liked the way we're trending but I think I think you get a better you get a better insight and answer from us maybe maybe.

Michael Arlington Swartz: Thanks. Thanks, Mike. Operator, next question, please.

Speaker Change: Be on the on a subsequent calls.

Speaker Change: Okay, great. Thanks.

Speaker Change: Thanks, Mike operate our next question please.

Operator: Thank you. Our next question is from Joe Altobello from Raymond James. Joe, please go ahead; your line is open.

Speaker Change: Thank you next question is from <unk> from Raymond James J. Please go ahead, you're Linotype then.

Joseph Nicholas Altobello: Thanks, guys, good morning. I guess the first question, a little bit of a housekeeping question here, but what's the contribution from Club Love that you're assuming in your guidance? But yeah, Joe, I think we have said it's less than $20 million in sales. It's EBITDA accretive, but again, not material.

Thanks, you guys. Good morning, I guess, the first question a little bit about housekeeping question here, what's the contribution from from club gloves that you're assuming in your guidance.

Speaker Change: Yeah, Joe I think we are.

Speaker Change: It's less than 20 million in sales, it's EBIT D E EBITDA accretive, but again not material.

Sean S. Sullivan: Okay, perfect. And then in terms of the new golfers that you've seen enter the sport in the last, you know, call it six years, how would they differ from typical golfers in respect to, you know, how often they trade up in terms of their clubs, where they buy their clubs? Are they more inclined to get fitted, etc.?

Joe: Okay, perfect and then in terms of the new golfers that you've seen enter this board over the last call at six years, how are they different from typical golfers in respect to how often they trade up in terms of their clubs, where they buy their clubs are the more inclined for fittings et cetera.

David E. Maher: The Ultimate Parody Site! Yeah, I think, I think it's, um... It's a question we have been asked often, and we're certainly trying to understand ourselves. I'll attach it to Randy's earlier question as it relates to fittings.

Speaker Change: Yeah, I think I think it's.

Speaker Change: It's a question we we have been asked often and we're certainly trying to under understand ourselves I I I'll attach it to Randy's earlier question as it relates to fittings. There's just a there's an inertia and energy around fittings, that's hard to avoid so where yesteryear as beginner golfer may not have been.

David E. Maher: There's an inertia and energy around fittings that's hard to avoid. So where yesteryear's beginner golfer may not have been as inclined to get fit, that's not the case today. You look at rounds, you look at participation; there's an avid golfer base out there. And you know our story; we're focused on the dedicated. We said then, and we say it now, they make up 15 or so percent of the golfers. They play 40 percent of the round, and are responsible for about 70 percent of the spending. We still think that's the case.

Speaker Change: Is inclined to get fit that's not the case today Hey, you look at you look at rounds, you look at participation that there's there's an avid golfer base out there and and you know our story, we're focused on the dedicated they we sat down and we say it now they they they make up 15 or so per cent of the golfers. They play 40 per cent of the round and responsible.

Speaker Change: For about 70% of the spend we still think that's the case, but I would say as it relates to these new golfers, we we sort of break them out into into two parts that the true new to the game golfers and and the late and golfers those who played at at previous points took some time off and now jump back into.

David E. Maher: But I would say as it relates to these new golfers, we sort of break them out into two parts. The true new-to-the-game golfers and the latent golfers, those who played at previous points, took some time off, and now are jumping back into the game. So, clearly, they come in with a bit more experience and a bit more understanding, maybe a step closer to becoming a dedicated player. But, you know, when you look at the overall picture and you look at channel activity, you look at overall sell-through, you see clearly that this golfer has a preference for performance equipment. And you see that in strong ASPs and balls and drivers and in every category, quite frankly. And further to that, and this goes hand-in-hand, they subscribe to the benefits of fitting. So we like what we see.

Speaker Change: The game, so clearly they come in with a bit more experiencing a bit more understanding maybe a step closer to becoming a dedicated player but you know when you look at overall and you look at channel activity you look at overall sell through you see clearly this golfer has a preference for.

Speaker Change: Performance equipment, and you see that in in strong Isps and balls and drivers and and every category quite frankly, and and further to that and they go hand in hand, they they they they subscribed to the benefits of fitting so.

Speaker Change: We like what we see it's a moving target, but we certainly like what we see in this in these in these changing times.

David E. Maher: It's a moving target, but we certainly like what we see in these changing times. Very helpful, David. Lastly, your thoughts on the January rounds played data. I know it's a small month, and I know there was some weather in there, but just curious what you thought, and what you were thinking there.

Speaker Change: Very helpful. David maybe your <unk> Lastly, your thoughts on the January around spray did I know, it's a small month and I know there was some weather in there, but just curious what you thought about what you're thinking there yeah. Yeah. So just for context January is about 5% of the U S. Total, it's probably I don't know two 3% of the global total down obviously.

David E. Maher: Yeah. So just for context, January is about 5% of the US total. It's probably, I don't know, 2%, 3% of the global total.

David E. Maher: Down, obviously, and I'll answer that question, Joe, on a three-month basis. So you look at November, and this is the US up, I think, 8%, December up 24%, and January down 16% or 17%. And when I look at January, really, I look at three markets. I look at California, Arizona, and Florida.

Speaker Change: Lee and add up I'll answer that question Joe on a three month. So you look at you look at November and this is U S. A I think 8% December up 24% and in January down 16, or 17% and when I look at January really I look at three markets I look at I look at California, Arizona and.

Speaker Change: In Florida, California, Arizona, we're up they had some favorable weather comps, even though they had a lot of rain in Florida was down so net net I think it's more than anything leather story, and where you had decent whether you're going to be fine and where you have where you have a cold and rain Ah you're gonna take the hitch. So I'm gonna I'm Gonna give mother mother nature, a lot of credit for what we saw.

David E. Maher: California and Arizona were up. They had some favorable weather comps, even though they had a lot of rain, and Florida was down. So net-net, I think it's more than anything a weather story. And where you've had decent weather, you're going to be fine.

Joseph Nicholas Altobello: And where you have cold and rain, you're going to take the hit. So I'm going to give Mother Nature a lot of credit for what we saw in January. Okay, great. Thank you. Operator, next question, please.

Speaker Change: Anywhere.

Speaker Change: Okay, great. Thank you.

Speaker Change: [noise] Stinks operator next question please.

Operator: Thank you. Our next question is from George Kelly from Roth MKM. George, please go ahead; your line is open.

Thank you next question is from George Kelly from the N. K M. George. Please go ahead your line of <unk>.

Everybody. Thanks for taking my questions and congrats on another strong quarter.

George Arthur Kelly: Hey everybody, thanks for taking my questions and congrats on another strong quarter. First, on the increased authorization, the $300 million buyback that you announced this morning. I'm curious. Should we anticipate a similar kind of cadence for your fiscal year 24 buybacks to what you did in 23? Or do you expect to slow it down like any kind of..., color there would be helpful.

George Arthur Kelly: It's first for you on the increased authorization that 300 million buy back that you announced this morning.

George Arthur Kelly: I'm curious.

We anticipate a similar kind of kittens to to your fiscal year 24 buybacks to what you did and twenty-three or do you expect me to slow it down like any kind of.

George Arthur Kelly: Color there would be helpful.

Speaker Change: Sure sure George So you know as I've talked about in the past I think we're gonna be guided by overall net leverage right. So I've talked about less than two and a quarter times for the business. You can appreciate the seasonality and and the Guy that I I really was trying to be prescriptive about what to expect in the first half of the.

Sean S. Sullivan: Sure, George. So, you know, as I've talked about in the past, I think we're going to be guided by overall net leverage, right? So, I've talked about less than two and a quarter times about the business. You can appreciate the seasonality in the guide, and I really was trying to be prescriptive about what to expect in the first half of the year. So, you can imagine there'll be some variability in leverage, first half versus second half. So, I would use leverage as, you know, one indicator of how the pace of share repurchases may or may not proceed in 2024. So, again, it's, you know, the capital allocation strategy here. I think our past practice has been well articulated. We've got significant investments we're making in the business for real long-term benefit. You know, obviously, very pleased with the dividend increase. And, you know, we'll continue to be opportunistic with the share repurchase at the end of the day, making sure we've got a strong balance sheet and the appropriate leverage profile. So... That's how we think about it for 24 hours.

Speaker Change: Here. So you can imagine there'll be some variability and leverage our first half versus second half. So I would use the leverage as you know one indicator of how the pace of share repurchases may or may not proceed in 2024.

Speaker Change: Sure. So again, it's you know the capital allocation strategy here I think are past practice has been well articulated you know we've got significant investments, we're making in the business for for real long term benefit.

Speaker Change: You know, obviously very pleased with the dividend increase and will continue to be opportunistic with the share repurchase at the end of the day, making sure. We've got a strong balance sheet and the appropriate leverage profile. So.

Speaker Change: That's how we think about it for 24.

Speaker Change: Understood. Thanks, and then second question.

George Arthur Kelly: Understood. Thanks. And then there is the second question.

George Arthur Kelly: In your prepared remarks, you talked about CapEx plans and efforts in customization in the ball and apparel businesses. So I'm just curious, how big are those businesses? And what does the growth path look like?

Speaker Change: In your prepared remarks, you talked about.

Speaker Change:

Speaker Change: Cutbacks plans and efforts in customization and the ball and apparel businesses.

Speaker Change: And so I'm just curious.

Speaker Change: How big.

Speaker Change: Are those businesses.

Speaker Change: And what is the growth path look like I'm, just curious if you could give a little more context around the investments, you're making and the opportunity you see and customization and in the fall and the girls to outside of the equipment business.

David E. Maher: I'm just curious if you could give a little more context around the investments you're making and the opportunity you see in customization and the ball and apparel stuff outside of the equipment. Yeah, George, I'll start and then Sean will jump in, but in terms of those businesses, right, I did make the point that Footshoy, as an example, while a tough year for footwear, Footshoy Apparel was up double digits, so we like the growth we're getting out of the Footshoy Apparel business. I would add shoes to that.

Speaker Change: Yeah, George all starting and then shuttled challenge up in but in terms of those businesses right I did make the point that for Joy as an example, wallet tough year for footwear.

Speaker Change: Oh Joy apparel was up double digits. So we like we like the growth we're getting out of.

Speaker Change: Joy apparel business I would add schuster that so much of what we do in the shoes line, particularly in the U S. In the UK is customized so we're seeing we're seeing nice growth in that business a lot of it as you would expect is is on course, where Ah custom logos are very important so clearly we're compelled to invest to increase.

David E. Maher: So much of what we do in the shoe line, particularly in the U.S. and the U.K., is customized, so we're seeing nice growth in that business. A lot of it, as you would expect, is on courses where custom logos are very important, so clearly we're compelled to invest to increase our capacity, and I also made the point that part of it's a function of moving from 3PL, where we used to outsource, to bring it in-house. We think it brings just better control, better quality execution, and is more cost-effective, so we like the space. Part two of that question relates to golf balls, and that's an automation capability we've been working on for a few years as part of our long-term $120 million capital campaign. We're really excited about it. It's a quality play. It's a throughput efficiency game.

Speaker Change: Our capacity and I also made the point, where it part of it's a function of moving from three P. L where we used to outsource to bring it in house, we think it brings Ah just better control better quality of execution and more more cost effective. So we like we like the the the space part two of that.

Speaker Change: Question is as it relates to golf balls and that's that's upon automation capability. We've been working on for a few years as part of our long term 120 million dollar capital campaign.

Speaker Change: We're really excited about it it it it's it's a quality play it's a throughput efficiency play Ah, it's inevitably going to be a cost effectiveness play and just to contextualize our ball business roughly one in four dozens are decorated in some way either with a corporate logo or a club logo or a golfer.

David E. Maher: It's inevitably going to be a cost-effectiveness play. And just to contextualize our ball business, roughly one in four dozens are decorated in some way, either with a corporate logo or a club logo or a golfer's personalization. So a big, meaningful part of our ball business. And George, just to clarify, I guess what I was highlighting in the script was, you know, we're going to see about $85 million of CapEx, obviously very much focused on the ball and club segments and franchises to continue to support the growth. I talked about some of the technology investments, but specifically, distribution and customization was about taking ownership and control of the quality, lead times, and delivery of our product. I think David talked about the specific segments and products that are within this Massachusetts distribution and Customization facility, primarily foot joy and gear. So, those were really the comments in my script that I was highlighting.

Speaker Change: Personalization, so so a big meaningful part of our ball business.

Speaker Change: In Georgia, just to clarify I guess, what I was highlighting and the script was you know we're going to see about $85 million of Capex, obviously very much focused on the ball and club segments and franchises to continue to support the growth I talked about some of the technology investments.

Speaker Change: But specifically distribution and customization was about taking ownership and control of the quality lead times and delivery of our product I think David talked about the specific segments and products that are within this massachusetts distribution and customization facility primarily foot Julien.

Speaker Change: Ear. So that those were those were really the comments in my script that I was highlighting GA. The final point I'll make is you know where where where a lot bigger than we were three or four or five years ago. So our our historical distribution methods have been pressured. So this is as much a commentary on building a distribution network.

Sean S. Sullivan: George, the final point I'll make is that we're a lot bigger than we were three, four, five years ago, so our historical distribution methods have been pressured. So, this is as much a commentary on building a distribution network for the future as recognizing that our past infrastructure was taxed to the point where we had to make some meaningful changes. Okay.

Speaker Change: For the future recognizing it that that our our past infrastructure was taxed to the point, where we had to make some meaningful changes.

Speaker Change: Okay that was helpful. Thank you.

George Arthur Kelly: Thank you. Thank you. Thanks, George. Operator, next question.

Speaker Change: Thank you. Thanks, George operate on next question.

Operator: Thank you. Our next question is from Noah Zatzkin from KeyBank Capital Markets. Noah, please go ahead.

Speaker Change: Thank you next question is from <unk> and Uhm Keybanc capital markets and then I pay per had your line of sight then.

Noah Seth Zatzkin: Your line is open. Hi, thanks for taking my questions. Maybe first, if you could give just an update on the competitive environment and channel, health and footwear, and maybe the unlock as you see it from FootJoy, called FootLab. And then second, any color on the differences in the markets outside of the U.S., both from an industry and strength of sport perspective that's kind of baked into the guide would be helpful as well. Yeah, you know, so specific to footwear, I'll walk it back a bit. And, you know, we saw that inventory globally spiked really in Q2 last year, and then we saw it retreat in Q3 and Q4. We like where it's trending.

Speaker Change: Thanks for taking my questions. Maybe first if you could give just an update on the competitive environment and channel elephant footwear and maybe the unlock as you see it from foot Joy foot lab, and then second any color on the differences in the markets outside of the U S.

Speaker Change: Both from an industry and strength of sport perspective, that's kind of baked into the guy that would be helpful as well. Thanks.

Speaker Change: Yeah, I know so specific to footwear or I'll walk it back a bit and we saw that we saw that inventory globally Spike really in Q2 last year and then we saw it retreat in Q3 and Q4 we like where it's trending.

David E. Maher: We think we're in the back half of a correction, maybe 60-70% downfield on the correction, but we're in a good place. If you see a situation like that and it corrects itself in less than a year, we feel pretty good about it. So as we've guided, we think we'll work our way through it, through Q2, and then return to sort of a more normal, healthy cadence within footwear and should return to more normalized growth. And you said it, part of it is a response to the after effect of COVID, where there was a time when the marketplace had an insatiable appetite for footwear, and then demand normalized.

Speaker Change: <unk>, we think we're in the back half of a correction.

Speaker Change: Maybe 60, 70% downfield on the correction, but but we're in a good place and it it if if you see a situation like that and it corrects itself in less than a year, we feel pretty good about it so.

Speaker Change: We've got it we think we think we work our way through it through Q2, and then return to sort of a more normal healthy cadence within within footwear and should return to more normalized growth and and you said that part of it is a response to you know the after effect of Covid, where there was a time when.

Speaker Change: The marketplace had an insatiable appetite for footwear, and then and then demand normalize the other part of it is you saw a lot of new competitive entries into the marketplace. I am pleased I am pleased with in particular, how footjoy share in premium positioning has held up during this time and I think that's common.

David E. Maher: The other part of it is that you saw a lot of new competitive entries into the marketplace. I am pleased with, in particular, how Footshoy's share and premium positioning has held up during this time. And I think that's commentary on a lot of the great products they've brought to market, particularly the Premier franchise. And I think we continue to build upon that with SLX and traditions in some of our newer footwear models. So, again, I think we're in the back half of that correction and after two quarters of inventory reduction. And when I say that, I'm speaking about global inventory at retail. And the final point I'll make on that is we're pleased with our inventory in-house. It's down quite a bit from a year ago. So, we think we're healthy, nimble, and agile. And we like where that positions us.

Speaker Change: Terry on a lot of the great products, they brought to market, particularly on the on the Premier franchise and I think we continue to build upon that with S. L X and traditions as some of our some of our our newer footwear models. So again.

Speaker Change: Again, I think I think we're in the back the back half of that collection and and after after two two quarters of of of inventory reduction and when I say that I'm speaking to global inventory at retail.

Speaker Change: And the final point I'll make on that is where we're pleased with our inventory in house sits down quite a bit from a year ago. So we think we're healthy and nimble and agile so we'd like where that positions us and in terms of your second question.

David E. Maher: In terms of your second question, how we feel about markets around the world, I'll start with the U.S. market was clearly the strongest in 2023, and we don't see that changing in 2024. There's a vibrancy in the U.S. market that I think everybody's in tune with. As we look around the board, I'm not sure any one market jumps out, right? We're projecting growth in EMEA and Korea and the rest of the world. So, there's not a market that stands out. I do like to call out Korea just because it's such a vibrant golf marketplace, you know, as I've said before. The average course in Korea does about 70,000 rounds a year, which is extraordinary.

Speaker Change: How we feel about markets around the world I'll I'll start with.

Speaker Change: U S market was clearly the strongest in 2023, and we we don't see that changing and in 2024, there's just a there's a vibrancy in the U S market that I think everybody's in tune with you know as as we look around the boards I'm not sure any one market jumps out.

Speaker Change: We're projecting growth in EMEA in Korea, and rest of world.

Speaker Change: So there's not a market that stands out I I do like to call out Korea, just because it's such a vibrant golf marketplace, you know I've said before.

Speaker Change: The the average course in Korea does about 70000 rounds, a year, which is which is extraordinary just a strong demand vibrant golf marketplace.

David E. Maher: Just a strong demand, vibrant golf marketplace. And then the only other comment I'd add is EMEA. We've all been cautious and careful about EMEA, certainly in 2023, whether it's inflation or energy costs or the war. I thought it held up pretty well last year, and the outlier, if you will, would be the UK, where golf remains vibrant, and, in particular, golf tourism is really at terrific levels.

Speaker Change: And then the only other comment I would add is EMEA.

Speaker Change: You know, we've all been being cautious and careful about EMEA certainly in 2023, whether it's inflation or energy costs or the war I fought it held up pretty well last year and and and the outlier. If if you will would be the UK, where golf remains vibrant and in particular golf tourism.

Speaker Change: Is is really a terrific level so.

David E. Maher: So that's a high level of our perspective as to key regions around the world. Thank you. Thanks, Noah. Okay, thanks everybody. As always, we certainly appreciate your time this morning and your interest in Acushnet. Hope you all have a great spring, and we look forward to talking to you again on our next call. Thank you everyone for joining today's call. You may now disconnect your lines and have a lovely day.

Speaker Change: That's a high level of our of our perspective is to key regions around the world.

Speaker Change: [noise]. Thank you.

Speaker Change: [noise] Thanks Noah.

Speaker Change: Okay. Thanks, everybody has always we certainly appreciate your time this morning, and your interest in a in a crushed it I hope you all have a great spring and we look forward to talking to you again on our next call.

Speaker Change: <unk> did you waiting today's call you may now disconnect your lines and have a lovely day.

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