The Pellucid Perspective - November 2010 - (Page 16)

EQUIPMENT MANUFACTURERS Mixed Financial Results for Q3 and September YtD By Jim Koppenhaver W hile the financial world wasn’t exactly waiting with Given that our industry is prone to significant fluctuations bated breath for the Q3 financial results of the public- quarter to quarter, probably due to shifting business rather than ly-traded major golf equipment manufacturers, those consumers behaving erratically, I put more weight in the YtD of us immersed in the industry were somewhat holding our period where they’re still showing topline revenue growth over breath to see what the Q3 and September Year-to-Date (YtD) 2009 of 80M EUR on a base figure of 633M EUR (or a doublefigures would show. Given that I’m generally and widely ac- digit gain of 13%, that’s LTD material). One closing note, acknowledged as the “industry pessimist” on all things numeric, cording to the press release, TMaG doesn’t break out operating I can say that at first blush it doesn’t appear as bad as I had results for the golf division, which leaves a little wiggle room anticipated. for the fact that the revenue gain may not have been optimally In the past two weeks, 3 of the major manufacturers, Calla- profitable. What can be said in categories that are down in dolway, Acushnet and TaylorMade-adidas Golf (TMaG) released lar sales 2-5% YtD is that TMaG is taking meaningful share their Q3 topline financials and the September YtD cumulative from someone in what is the only game in town (share gains vs. results. While it’s often challenging siftcategory growth). ing through all the “puts” and “calls” in the Turning our attention to the Acushnet You can understand revenue, profit and earnings releases that release, they didn’t have one of their better are made available for public consumption, Q3s but, on a YtD basis, they’re finding my skepticism in the it appears that TMaG bucked the trend ways to grow revenue and protect profit. current golf industry and produced a Q3 “up,” extending their For the quarter, they reported a drop in YtD success while Acushnet and Callaway net sales of just over $13M (down 5%) cycle that anyone showed Q3 declines but are holding on and an Operating Income before charges out there (with the to modest YtD gains vs. 2009. Let’s take and gains (not a GAAP measure) of $6M a look at a recap and my interpretation - down 41%. See what I mean about those exception maybe of of what we got from the major publiclybig quarter-to-quarter swings? To my the appraisers and the point, however, of the folks in Fairhaven traded manufacturers. I usually tend to lead with the bad news people making money figuring out how to win long term in most but, just to be contrarian in this piece, we’ll any market, the September YtD results for on golf courses going Acushnet are growth of 2% in net sales at start with the good news (on the surface). A business associate had tipped me off a the $1B mark. At the Operating Income bad) could be living few weeks ago in a conversation that he level, Acushnet tipped the scales for the the dream but he thought TMaG would come in above exSeptember YtD period at $115M, up an pectations and I found that hard to believe. amazing 85% vs. last year’s figure of only stuck with his call. Of course in my defense, his reasoning $62M. and sourcing was a little bit suspect. He Unless I’m missing something though, indicated that on a recent road trip with there’s got to be some “puts” and “calls” in several of the TMaG execs and sales managers, they portrayed that comparison of the two YtD periods to generate that big a the image of their 2010 as “living the dream.” swing in the 9 month results year-to-year. One of the benefits You can understand my skepticism in the current golf in- that Acushnet enjoys in the 2010 golf equipment cycle is that it dustry cycle that anyone out there (with the exception maybe has the least exposure of the major manufacturers to the hardest of the appraisers and the people making money on golf courses hit segment, golf clubs. On the flip side however, the YtD trend going bad) could be living the dream but he stuck with his call. in rounds being down 4% isn’t providing even a neutral wind Looking at the TMaG release topline, they reported that their to their primary consumable sectors (balls, gloves, shoes, etc.), Q3 revenue was 221M EUR, up 37M EUR or a 20% increase. so it’s not like they’re getting a free pass this year either. In a Those are living the dream numbers until you read a little fur- recent interview with South Central Golf Magazine, Acushnet ther, where they note that 16% of that 20% gain was due to cur- CEO Wally Uihlein outlined his case that US growth will be rency translation favorability, which means they effectively got challenging given the stagnant rounds and golfer population a currency-neutral gain for the quarter of 4%. While that’s not trends, with more likely growth in international, which he illiving the dream, it beats a sharp stick in the eye. lustrated by saying that the US accounted for roughly 75% of November 2010 16 The Pellucid PersPecTive

Table of Contents for the Digital Edition of The Pellucid Perspective - November 2010

The Pellucid Perspective - November 2010
Examining the Third Party Tee Time Marketing Issue
A Primer on Third Party Tee Time Marketers
Some Cities Willing to Buck Declining Golf Trend
Feel Golf Head Defies New Wedge Rules
Washington DC/Northern VA Profile
Oct YtD Weather Impact Sep YtD Utilization
Mixed Financial Results for Q3 and September YtD
Heard it Through the Grapevine

The Pellucid Perspective - November 2010