Q3 2025 Acushnet Holdings Corp Earnings Call
Speaker #1: Hello everyone , and welcome to today's Acushnet Company . Third quarter 2019 Earnings Call . My name is Seb , and I'll be the operator for your call today .
Speaker #1: If you would like to ask a question during the Q&A session , please press star One on your telephone keypad . If you would like to withdraw from the queue , please press star two .
Speaker #1: I will now hand the floor to Sondra Lennon, Vice President of Investor Relations. Please go ahead.
Speaker #2: Good morning everyone . Thank you for joining us today for Acushnet Holding . Third quarter 2020 earnings conference call . Joining me this morning are David Ma , our president and Chief Executive officer .
Speaker #2: And Sean Sullivan , our chief financial officer . Before I turn the call over to David , I would like to remind everyone that we will make forward looking statements on the call today .
Speaker #2: These forward-looking statements are based on Acushnet's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations.
Speaker #2: 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 US Securities and Exchange Commission .
Speaker #2: Throughout this discussion , we will make reference to non-GAAP financial measures , including items such as net sales on a constant currency basis and adjusted EBITDA .
Speaker #2: Explanations of how and why we use these measures and reconciliations of these items to the most directly comparable GAAP measures can be found in the schedules in today's press release .
Speaker #2: The slides that accompany this presentation and in our filings with the US Securities and Exchange Commission . Please also note that references throughout this presentation to year on year net sales increases and decreases are on a constant currency basis .
Speaker #2: 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 results or comparisons , we are referring to the nine month period ended September 30th , 2025 and the comparable nine month period in 2020 .
Speaker #2: For with that , I'll turn the call over to David .
Speaker #3: Good morning everyone , and thanks to Sandra , who last month started her 28th year with our company . As always , we appreciate your interest in Acushnet Holdings as the golf world exits peak season in many regions and begins prime time across the Sun , the sport and business of golf continue to be vibrant , with an increased number of golfers playing an increased number of rounds globally .
Speaker #3: After a weather induced slow start to the year and the U.S. rounds of play accelerated in the third quarter , which is the largest participation period of the year , and we now expect worldwide rounds in 2025 to match or exceed what was a record 2020 for acoustics .
Speaker #3: Trade partners are , by and large , healthy and investing to enhance their facilities and ultimately their value propositions to best meet the evolving preferences of tomorrow's golfers .
Speaker #3: The global golf market is structurally sound , with momentum in the U.S. and EMEA offsetting softness mainly from footwear and apparel across Japan and Korea , and within Acushnet .
Speaker #3: Our team is relentlessly focused on exceeding dedicated golfer expectations , developing great products , earning the trust and endorsement of the Pyramid of Influence and our partners and wide range of fitting and golfer connection initiatives .
Speaker #3: Tying this together is the company's unwavering commitment to product quality . Best exemplified by every Pro V1 golf ball , which passes more than 100 quality checks throughout the production process .
Speaker #3: As a result of this commitment , our return rate is one golf ball out of every 16 million pro v1's produced . This executing a operating model , Acushnet blueprint for success is continually refined and improved upon by our team as we strive to provide great products and services to golfers , execute our capital allocation strategy , and create shareholder value for our investors .
Speaker #3: With this as background , I now point to slide four and our third quarter and year to date results . First , for the quarter , Acushnet delivered worldwide net sales of $658 million , a 5% constant currency increase over last year , with gains across all segments .
Speaker #3: Adjusted EBITDA of $119 million grew by 10% year to date . Sales of $2.08 billion were up 4% , and adjusted EBITDA of $401 million was up 2% compared to last year .
Speaker #3: Getting to our segment results , you see the continued global momentum within Titleist golf equipment , which has grown 5% in both the quarter and year to date .
Speaker #3: Key drivers have been the year to date growth of our Pro v1 franchise in all regions , and the very successful launch of new Titleist T irons and limited edition VOC Sm10 wedges in Q3 , we have spoken in recent years about the investments we have made to strengthen our golf equipment , product development and enhanced manufacturing capabilities .
Speaker #3: Our growth and momentum today are byproducts of these investments . Acushnet golf Gear segment also had a strong quarter , posting a 13% gain and is up 8% year to date .
Speaker #3: As our team brings a steady flow of compelling products to market and leverages our expanding custom capabilities and strengthening supply chain within gear .
Speaker #3: The company's travel brands have increased 20% year to date , with especially strong growth from our links and Kings and Club glove brands and our business continues to build momentum and delivered another positive quarter with revenues up 3% .
Speaker #3: Footjoy is benefiting from the success of our Premier and Hyperflex footwear models . Fewer footwear Closeouts and steady glove growth . Fjs apparel business adds to the brand's story , showing resilience with quarterly and year to date gains as we have discussed throughout the year , these trends are positively affecting Fga's market momentum and financial performance in 2025 .
Speaker #3: And finally , net sales of products not allocated to a reportable segment were up nicely in the quarter , with continued momentum and double digit growth from shoes led by outsized gains across their golf business .
Speaker #3: Now , looking at our business by region on slide five , you see the US market continues to be strong , up 6% with growth across all segments led by Titleist , golf equipment EMEA posted a 14% gain in the quarter and is now up 8% year to date .
Speaker #3: Rounds of play are up high single digits as the region benefits from favorable weather comps versus last year . Korea was up 3% in the quarter with strength in Titleist golf equipment led by golf balls , while Japan was off 13% in the quarter and 7% year to date .
Speaker #3: And as you see , our revenues and rest of world were up 5% in the quarter and 3% year to date . In summary , we are pleased with Acushnet performance in the quarter and the overall health of our consumer .
Speaker #3: The company's product lines are in great shape . Inventory positions both owned and at retail , are in line for this time of the year , and we are confident in our team's ability to execute against our strategies .
Speaker #3: Thanks for your attention this morning . I will now pass the call over to Sean . Thank you David . Good morning everyone .
Speaker #3: As highlighted , we had a great third quarter and solid year to date performance . Third quarter net sales were up 5% while adjusted EBITDA was $119 million , up 11 million from last year's third quarter .
Speaker #3: For the first nine months of 2020 , net sales increased 4% and adjusted EBITDA increased 2% as compared to the same period last year .
Speaker #3: Moving to our income statement highlights . on slide eight , gross profit in the third quarter of 319 million was up 15 million compared to 2024 , driven by increases across all three reportable segments , primarily related to higher average selling prices , higher sales volumes and a favorable mix shift in Footjoy .
Speaker #3: We also had approximately $10 million in incremental tariff costs in the quarter . And year to date . Have recognized 15,000,003rd quarter gross margin of 48.5% was down 50 basis points versus prior year , primarily related to the headwind from higher tariff costs .
Speaker #3: Year to date , gross margin of 48.6% was consistent with last year . SG&A expense of $205 million in the quarter increased $5 million from the third quarter of 2024 , as we continue to invest in A&P to support new product launches and future growth initiatives , including our fitting network and it systems .
Speaker #3: SG&A also included $2 million of restructuring costs related to the voluntary Retirement program . The company initiated earlier this year . As a reminder , we expect a further charge in Q4 related to this program of approximately $5 million .
Speaker #3: Interest expense of 14.5 million in the quarter was up 1 million due to an increase in borrowings . Year to date , our effective tax rate is 23.6% , 200 basis points more than last year's rate through nine months .
Speaker #3: Our effective tax rate in Q3 was 37.3% , up from 19.3% last year , primarily driven by a shift in our jurisdictional mix of earnings and a reduced income tax benefit related to the US deduction of foreign derived intangible income resulting from the enactment of the one big beautiful Bill act .
Speaker #3: Moving to our balance sheet and cash flow highlights on slide nine , our strong balance sheet and consistent cash flow generation continue to support the disciplined execution of our capital allocation strategy .
Speaker #3: We remain focused on investing in the business to drive long term growth , while also returning capital to shareholders through dividends and share repurchases .
Speaker #3: Our net leverage ratio at the end of Q3 , using average trailing net debt , was two times . Inventories were up 3% when compared to last year's third quarter , reflecting some advancement of inventory ahead of tariff deadlines and the impact of our ion launch .
Speaker #3: Overall , we remain comfortable with our current inventory position and quality . Year to date cash flow from operations decreased from 2024 , primarily due to increased investments in strategic initiatives , including our IT systems , and increased working capital requirements .
Speaker #3: Capital expenditures were $51 million in the first nine months of 2025 , and we now expect full year CapEx spend to be approximately $75 million through September .
Speaker #3: We returned approximately $230 million to shareholders , with $188 million in share repurchases and $42 million in cash dividends . Today , our board of directors declared a quarterly cash dividend of 23.5 cents per share , payable on December 19th , to shareholders of record on December 5th , 2025 .
Speaker #3: Looking ahead to the remainder of the year , I would like to provide an update on our full year revenue and adjusted EBITDA outlook shown on slide ten .
Speaker #3: We expect full year 2025 revenue to be in the range of 2.5 2,000,000,002.54 billion on a reported basis , as discussed on our second quarter call , we are still forecasting low single digit growth in the second half , driven by contributions across all reportable segments .
Speaker #3: We now anticipate the full year FX impact to be negligible compared to last year , resulting in a reported and constant currency growth ranges .
Speaker #3: Both are projected to be between 2.6% and 3.4% for the full year , representing a midpoint growth of 3% . This midpoint implies fourth quarter revenue of approximately $448 million , representing high single digit growth over Q4 2023 , a period consistent with the cadence of our product launch cycle .
Speaker #3: Moving to adjusted EBITDA , we were projecting full year 2025 to be in the range of 405 to $415 million , incremental full year gross tariff costs are expected to be $30 million .
Speaker #3: About 5 million lower than our previous estimate , driven by timing shifts in tariff related variables . This reflects a $15 million gross tariff headwind in the fourth quarter through the Strategic mitigation efforts .
Speaker #3: We've discussed , we still anticipate offsetting a meaningful portion of the full year gross tariff headwind . Overall , we are very pleased with our year to date performance and full year outlook .
Speaker #3: The team remains focused on finishing the year strong and continuing to execute on our long term strategic priorities . With that , I'll now turn the call over to Sandra for Q&A .
Speaker #2: Thanks , Sean . Operator , could we please open the lines for questions ?
Speaker #1: Thank you . As a reminder to ask a question , please press star one on your telephone keypad . If you would like to withdraw from the queue , please press star two .
Speaker #1: Our first question comes from Joe Altobello at Raymond James . Please go ahead .
Speaker #4: Thanks . Hey guys . Good morning . I guess my first question is on US sales . If I look at it year to date , you're up almost 5% .
Speaker #4: I was wondering if you could kind of parse that out between volume and price and maybe what that looks like relative to the category .
Speaker #3: Yeah . Joe , this is Sean . I'll take it . And obviously David can can supplement as necessary when we look at US sales again , very pleased .
Speaker #3: I think it's also important to keep in mind the product cadence right of each of our categories and each of the segments . So , you know , the ball business has done incredibly well in the US .
Speaker #3: We've had a good year in clubs as well in terms of both volume and price . You know , we didn't take price in balls in 2025 .
Speaker #3: So you can see that a lot of the ball growth is coming from volume gains in that category . On the club side , we're copying against last year's metals launch , which is generally higher ASPs .
Speaker #3: So a more difficult comp , but given the momentum we have with the irons launch and the other special edition categories of hockey wedges , as David highlighted , we've we've seen good gains there as well .
Speaker #3: So as I look at clubs versus two years ago , we're seeing volume gains independent of price , which I think is the right comp for that category .
Speaker #3: You know , on the Footjoy side , in the US , you know , obviously we are focused on profitability , winnowing the portfolio and really going more premium , particularly in the footwear category and gear in the US has seen really great performance across all categories .
Speaker #3: Gloves , bags and headwear . You know , obviously the golf , you know , even even Footjoy has done great with gloves .
Speaker #3: Obviously rounds of play with that consumable product is a good comp too . So all in all , sorry I didn't answer your question directly .
Speaker #3: You know , I think we're pleased with both price and volume . I think the product cadence matters a lot . You know , we did take some selective pricing in in both Footjoy and gear midpoint of the year .
Speaker #3: So that's having some effect on those segments . So yeah . Yeah Joe I just I'd echo what Sean said really two parts equipment .
Speaker #3: Really not a pricing story . This year . And again , you really need to look at our two year cadence . But we're very pleased with the the growth and momentum within equipment .
Speaker #3: And as Sean said , the wearables gear market a little more a little more tariff impact there . And we took some selective price moves across footwear and gear , not across the line , but in key key models .
Speaker #3: Earlier the year . So I think the best way to think about it is to look at equipment . One way , and the rest of the portfolio a little bit differently .
Speaker #4: Got it . Very helpful . And maybe just to kind of pivot to tariffs , I think you mentioned earlier 30 million for this year , but you expect to mitigate a good portion of that .
Speaker #4: How does that look for for 26 in terms of what you're thinking about maybe an incremental impact for next year ?
Speaker #3: Yeah , Joe . So , you know , again , to highlight certainly this year at 30 was slightly lower than what we had anticipated in our last call .
Speaker #3: So I just want to make sure everybody has that and what the impact is in Q4 . As we fast forward to 2026 , you know , our number today , if nothing changes , is probably just north of $70 million , seven zero .
Speaker #3: You know , we've done good work in terms of , you know , our strategic initiatives around vendor sharing around certain changes within the supply chain .
Speaker #3: You know , again , I'm not going to give you a a percentage today , given where we sit in the year . But the expectation is we go in our 26 planning cycle , we're going to mitigate , again , a meaningful portion of that 70 plus million dollars in 26 .
Speaker #4: I'm sorry , Sean , is the 70 million total or is that incremental ?
Speaker #3: That is the full impact for 2026 . It's obviously 40 some odd million dollars incremental to 2025 .
Speaker #4: Okay . Super . Thank you .
Speaker #2: Thanks, Joe. Operator. Next question.
Speaker #5: Please .
Speaker #1: Thank you . Our next question comes from Matthew Boss at J.P. Morgan . Please go ahead .
Speaker #6: Great . Thanks . It's Amanda Douglas on for Matt . So David , just to start , could you speak to the health of the overall golf participation that you're seeing across regions and elaborate on reception you've seen in the marketplace to your T irons and the Pro v one franchise ?
Speaker #3: Yeah . Hi Amanda . So maybe high level , right ? We like we like , we're in the industry . Fundamentals are up .
Speaker #3: They're in very good shape . Rounds of play obviously very strong I made the point earlier . Our consumer is engaged in healthy .
Speaker #3: But but to your question , if I dig into rounds of play around the world up slightly in the US , terrific . After a strong third quarter , UK , EMEA up high single digits , great , even Japan and Korea where where we've we've called out some softness in in wearables and in footwear .
Speaker #3: We've got Japan through nine months flat versus a year ago up double digits versus 4 or 5 years ago . And we've got Korea down 1% through the first nine months .
Speaker #3: But but up 20 some odd percent versus versus 4 or 5 years ago . So structurally we like where the industry sits . Participation is the is the engine and driver to a lot of what we do , which is why we pay very close attention to it .
Speaker #3: So so that's that's really , really part one . But but I will lean into just hey fundamentals rounds play consumer all in good shape certainly for this this time of year .
Speaker #3: To your questions about about pro v one . You know this was our our 25th anniversary of of the pro v one golf ball .
Speaker #3: We leaned into that a bit early in the season . And as we've said , very pleased with our golf ball performance this year .
Speaker #3: Both in terms of of sell in and sell through and growth in all regions and behind that is the great work by our production team , right .
Speaker #3: We we produce some 70% of our golf balls in Massachusetts , the rest in our plant in in Thailand . And our team has done a great job keeping pace with strong demand .
Speaker #3: So really pleased with where Pro v one is through this time of year . And as we start gearing up for next year , similar to that across the pyramid of Influence , our counts , our wins are really strong and that just that for us provides validation and endorsement of of our performance and quality stories .
Speaker #3: So particularly strong year for for pro v one . And then your question about t series iron launches again we're we're really pleased we had high expectations .
Speaker #3: We made some meaningful changes to the product which I think the golf audience , our target consumer has has responded very well to .
Speaker #3: And I will make the point that , you know , anytime we talk about golf clubs , particularly irons , which are so custom fitting centric , you know , for us it's it's great work by the product development team on the product .
Speaker #3: And part two of that is great work by our fitting teams around the world , around the world to to tell the story , to to golfers and make sure golfers are getting fit with the right products .
Speaker #3: And the final point I'd make is we're seeing a whole lot of blended sets , which we like , which which shows the the strength and and capabilities of our fitting network and also our supply chain .
Speaker #3: But to your questions , Pro v one t series really strong out of the gates on on both fronts . And we like we like our position .
Speaker #6: That's helpful . And Sean just as a follow up as we look ahead to 2026 , in a flat or modest growth rounds played backdrop for the industry , help us to think about gross margin drivers or multi SG&A investments .
Speaker #6: Just as we're shaping the initial PNL .
Speaker #3: Yeah , when we look at , you know , gross margin , again , we we're in the midst of obviously mitigating the tariff impacts that I , that I just highlighted .
Speaker #3: So , you know , I think that we continue to see a growth story that outpaces the market even in a flat rounds of play environment .
Speaker #3: We believe that where our club business is positioned , particularly helps us drive better than market growth . As I look at the puts and takes on gross margin , again , I think tariff will be the headwind will mitigate a meaningful portion of that as we move forward .
Speaker #3: So I'm hopeful that we don't have a material impact to our gross margin portfolio . And as we've talked about on past calls , we've made a lot of investments in 24 and 25 .
Speaker #3: In OpEx , we've obviously invested in our fitting networks . As David talked about , both on balls and clubs . And , you know , the expectation is we're going to see operating leverage and and hopefully we'll see the opportunity to continue to drive better than revenue growth .
Speaker #3: EBITDA growth for the company . But , you know , still early days as we go through our 26 planning cycle . But we feel very good about where we are positioned going into 26 .
Speaker #6: That's helpful . Thank you .
Speaker #2: Thanks , Amanda . Operator . Next question please .
Speaker #1: Thank you . Our next question is from Simeon Gutman at Morgan Stanley . Please go ahead .
Speaker #7: Hi . Good morning , everyone . This is Pedro on for Simeon . Congratulations on a strong quarter . As my first question , could you give us a bit of color on the sell through trends at retail and channel inventory levels , both for the protein ball and for the club launches ?
Speaker #3: Yeah , I think I'll link . And this is as much a global commentary . I'll link our our couple of comments made .
Speaker #3: One , we like our growth and our golf ball growth year to date . We like our in-market inventory positions and what obviously connects those is sell through .
Speaker #3: So it's been a it's been a good sell through year for Titleist golf balls and especially Pro V1 . Again growth growth in all regions is no small feat .
Speaker #3: But our but our team managed to achieve that . And I would say aided by some interesting new follow ons , whether it's pro V1X left dash , some new enhanced alignment products .
Speaker #3: So we're really we're really pleased with the product itself . But but the franchise continues to get , I think more compelling and value added to to our target audience .
Speaker #3: So yeah , we don't as as you may know Pedro , we don't we don't really zero in on market share by region for a lot of different reasons .
Speaker #3: But but again , I would say if you look at our , our , our top line growth and you look at inventory levels around the world , which are in great shape , that implies where we're in really good shape and implies a very favorable positive sell through story for the , for the , for the , for the year .
Speaker #7: Okay , great . That's helpful . And as a follow up , the full year guidance implies a bit of a bit of a deceleration in sales growth relative to where you've been running the past couple of quarters on a on a year on year basis .
Speaker #7: Is there something that you're seeing specifically kind of going into the holidays , or is it just the tougher comparisons versus last year ?
Speaker #3: Yeah . I don't Pedro , I don't think it's a tougher comparison . I think the implied midpoint of the guide is about , what , $448 million of revenue .
Speaker #3: It's certainly better than last year . But if you look back to Q4 of 2023 , where I think we did about 413 million , that's , you know , a high almost double digit growth rate over 23 .
Speaker #3: So given the product cadence , given the two year product life cycle , I think we're very pleased with the Q4 . And again , I'll reiterate what I said in my comments that we had a second half where we expected low single digit revenue growth and growth across all segments , and I think this guide at the midpoint delivers that .
Speaker #3: So we feel very good about the Q4 . And I don't think there's anything unusual about demand , about product or otherwise that would indicate otherwise .
Speaker #3: Yeah . I'll just I'll just affirm Sean's point as it relates to the two year product cadence . Really , in equipment . Right .
Speaker #3: The best way to see like for like comparison Q4 25 in equipment balls and clubs is to look back two years because that's when the product line was was comparable .
Speaker #3: Again , gear footwear less of a two year story . But yeah , just to reiterate Sean's point , we feel really good about our business .
Speaker #3: We feel really good about the half , how we're organizing our stories and our product lines for next year . So we don't we don't really think about it or see the fourth quarter as being a period of deceleration .
Speaker #3: We see it as a period of continued momentum generation , but it is it is noteworthy to call out within equipment of of how we look at things over a two year product life cycle .
Speaker #7: Okay , great . That's helpful . Thank you . Good luck .
Speaker #2: Thanks , Pedro . Operator . Next question please .
Speaker #1: Thank you . Our next question is from Noah's Atkins at KeyBanc capital . Please go ahead .
Speaker #8: Hi . Thanks for taking my questions . I guess first , if you could just kind of comment on how you're feeling about inventory in the channel , both both in terms of your inventory and from an industry perspective .
Speaker #8: And then just any comments on potential changes or or not in retail partner ordering habits . Thanks .
Speaker #3: Yeah . So so I would just first say , Noah , that , you know , inventories in the golf industry at this time of year should be relatively low as you move as , as the snow belt , if you will .
Speaker #3: And northern markets and mid belt markets sort of move out of season . And they should be relatively low . They are . So we like what we see there .
Speaker #3: And in the Sun Belt they should be high . And they're they're filling up the stores for the start of their season . So that's the that's the , the , the expectation as we look at channel inventories around the world .
Speaker #3: And that's what we're seeing . So no unusual call outs . Sure there are pockets here and there but nothing that bubbles up to to to caution or concern .
Speaker #3: We really look at our our channel inventories on a , on a on a months of inventory basis and all very much in line with where they should be .
Speaker #3: And then the next step will be , you know , our retail partners who are open for the holidays in the north and mid belt will will fill up their shops here in the fourth quarter .
Speaker #3: But it's as much commentary on the ebb and flow of inventories in golf throughout the year . So again , channel inventory is at a as a at a seasonally low level .
Speaker #3: And very much , very much in line with with what we expect . And you know , to our own inventories . Yeah , really , really good shape .
Speaker #3: Sean mentioned it . We like what we have . We like the quality of it . We did some pull forward along the way to , to to stay in front of ever evolving tariffs .
Speaker #3: But we like we like where things where things sit from an overall channel inventory perspective .
Speaker #8: Great . Very helpful . And maybe just looking outside of the US obviously , you know , maybe some some puts and takes when you're looking across regions .
Speaker #8: Media has been strong this year . Japan's been a bit softer as has Korea been . So just any thoughts on both your business and the sport outside of the US ?
Speaker #8: Looking ahead . Thanks .
Speaker #3: Yeah . You know I think I think I've leaned into enough . The US business right . Real strong rounds of play consumer I think our numbers bear that out especially strong in in EMEA this year .
Speaker #3: And UK . I think that speaks to pretty good fundamentals . But but clearly they're getting a bump because of some very favorable weather against some less than favorable weather a year ago .
Speaker #3: And that that attributes or contributes to , you know , some of the high high growth rates we're seeing around the play . And obviously that's good for balls and gloves and consumables .
Speaker #3: So those two , those two markets , particularly strong maybe a minute on Japan . So I made the comment earlier Japan rounds are flat .
Speaker #3: They're certainly up versus 4 or 5 years ago . So structurally Japan's in decent shape I would say to our business we feel we feel pretty good about equipment , right ?
Speaker #3: We like our our equipment positioning , bulk growth this year , year to date is obviously strong . So again , part one of the story is equipment in Japan .
Speaker #3: Is is healthy and trending in the right direction . A couple of behind the scenes stories in Japan would be we're going through a pretty meaningful repositioning with footjoy business .
Speaker #3: We're exiting some price points , introducing some more premium products in the market . So we had we had expectations to be down in 2025 , and we're meeting those expectations .
Speaker #3: And then and then I would add to it our gear business is Japan . Japan has been down . I think that's a little bit timing and a little bit overall market .
Speaker #3: Market softness . But again , Japan equipment in pretty good shape and repositioning happening within within Footjoy and gear . And then I'll move to Korea .
Speaker #3: Really a similar story our there . Their equipment business our equipment business in good shape . Balls and clubs in good shape . I've talked to over the years about the ascension and growth of of the premium apparel business in that market .
Speaker #3: It rode up high and it and it's been through a bit of a correction this year . And we're seeing that have a negative effect on our business .
Speaker #3: But overall structurally in decent shape from equipment standpoint , footwear and apparel , softer . And I would just add the the consumer not as not as healthy in Japan and Korea as we're seeing , certainly in the US .
Speaker #3: But again , you add it up . We're still we're pleased with how the game is holding up . Again , rounds of play roughly flat in both markets .
Speaker #3: We're comfortable with . And again , as we look at the comp versus a handful of years ago . There's been a bump in the golf marketplace in those markets .
Speaker #3: But I think they're just dealing with some some different macroeconomic forces that are that are shaping consumer spending . And we're certainly seeing that in our business .
Speaker #8: Thank you .
Speaker #2: Thanks , Noah . Operator next question please .
Speaker #1: Our next question is from Doug Lane at Water Research . Please go ahead .
Speaker #9: Yes . Hi . Thank you . Good morning , everybody . I just wanted to press a little bit on Europe because you just seen a noticeable acceleration in growth in Europe , including double digit local currency growth in two of the last four quarters , after really most of 2024 and 2023 being flattish , maybe down a little bit .
Speaker #9: So is there something more going on there than weather , or are we seeing a change in the competitive dynamic in Europe ?
Speaker #3: Yeah , I think it's you know , I don't want to give all the credit to weather , but but certainly rounds of play and the golf industry is , is , has been very healthy .
Speaker #3: You know UK up up low double digits in rounds of play that just drives the golf economy . So I think the golf economy is outpacing other other sectors .
Speaker #3: Yeah . Are we like we like our our positioning and our share positions across all our categories . So we're certainly growing in all categories .
Speaker #3: It's just it's a whole lot healthier environment . This year than we've seen in in the last couple of years . And again , just just a healthy , healthy rounds of play environment .
Speaker #3: Nice execution by our team . We got our product lines right in in those markets . And the final piece would , would be just our continued build out and activation of fitting across balls and clubs .
Speaker #3: And now footwear . We're doing more fitting in in EMEA than we ever have . And that's certainly having a favorable impact on again on balls on clubs and across across footwear , which is the latest entrant into our into our into our fitting realm with Fit Lab .
Speaker #3: So yeah , really happy with the team , happy with the market weather deserves some of the credit . But but but not all of the credit .
Speaker #4: Okay .
Speaker #9: That's good color and just one last thing on working capital with the use of working capital is more than twice what it was last year .
Speaker #9: Is there something going on there specifically that is using up more cash than last year ?
Speaker #3: I mean , again , we talked about the inventory . We talked about some of the investments we're making in it and some of the systems .
Speaker #3: So I think that Doug is having some impact of it . But , you know , overall , I feel good about the free cash flow outlook conversion as well .
Speaker #3: So I don't feel very comfortable about our working capital position .
Speaker #9: Okay . Thank you .
Speaker #2: Thank you .
Speaker #3: Well thanks everybody . As always we appreciate your your time on these calls . And look forward to connecting in a few months .
Speaker #3: As we as we wrap up the fourth quarter in 2025 and start talking more in earnest about 2026 , thanks again .