Acushnet Holdings Corp.: Form 10-Q for the period ended Sep 30, 2025

The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in “Part II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” following the Table of Contents. Unless otherwise noted, the figures in the following discussion are unaudited.

Overview

We are the global leader in the design, development, manufacture and distribution of performance-driven golf products, and these products are widely recognized for their quality excellence. Today, we are the steward of two of the most revered brands in golf—Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wearable brands.

Our target market is dedicated golfers, who are the cornerstone of the worldwide golf industry. These dedicated golfers are avid and skill-biased, prioritize performance and commit the time, effort and money to improve their game. We believe our focus on innovation and process excellence yields golf products that represent superior performance and consistent product quality, which are the key attributes sought after by dedicated golfers. Many of the game's professional players, who represent the most dedicated golfers, prefer our products, thereby validating our performance and quality promise while also driving brand awareness. We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the world's best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game's best players.

We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers and favorable and market‑differentiating mix of consumable and durable products have been the key drivers of our financial performance.

Our net sales are diversified by both product category and mix, as well as geography. Our product categories include golf balls, golf clubs, wedges and putters, golf shoes, golf gloves, golf gear and golf and ski outerwear and apparel. Our product portfolio contains a favorable mix of consumable products, which we consider to be golf balls and golf gloves, and more durable products, which we consider to be golf clubs, golf shoes, golf gear and golf outerwear and apparel. Our net sales are also diversified by geography with a substantial majority of our net sales generated in five countries: the United States, Japan, Korea, the United Kingdom and Canada. We have the following reportable segments: (i) Titleist golf equipment, (ii) FootJoy golf wear and (iii) Golf gear.

Recent Developments

Voluntary Bridge to Retirement (“VBR”) Program: During the second quarter of 2025, we initiated a VBR program to reduce operating costs and bridge certain long-tenured eligible employees to retirement. As part of this program, eligible employees were offered severance in the form of salary and benefit continuation. In connection with the VBR program, during the three and nine months ended September 30, 2025, we incurred restructuring costs of $2.1 million and $8.6 million, respectively. We expect to incur additional restructuring costs associated with the VBR program of approximately $5.0 million in the fourth quarter of 2025. See “Notes to Unaudited Condensed Consolidated Financial Statements – Note 16 – Restructuring costs,” Item 1 of Part I to this report.

FootJoy Footwear Joint Venture Deconsolidation: As previously disclosed, until 2024, the majority of our FootJoy footwear was manufactured in a facility in Fuzhou, China, owned by a joint venture in which we have a 40% interest, with the remaining 60% owned by our long-standing Taiwan-based supply partner. During 2024, FootJoy shifted footwear production volume from Fuzhou, China to a third-party facility located in Long An Province, Vietnam, which is operated by an affiliate of the same Taiwan-based supply partner. The joint venture ceased production at its Fuzhou, China facility in January 2025 and FootJoy currently contracts to manufacture substantially all of its footwear at the third-party owned Vietnam manufacturing facility. As a result of shifting our footwear manufacturing from the joint venture's Fuzhou, China facility, we are no longer the primary beneficiary of the joint venture and have deconsolidated the accounts of the joint venture from our unaudited condensed consolidated financial statements. As of September 30, 2025, we account for our investment in the joint venture under the equity method of accounting. As a result of this deconsolidation, we recognized a non-cash gain of $20.9 million during the nine months ended September 30, 2025, and currently expect the investment may generate net losses in future periods. See “Notes to Unaudited Condensed Consolidated Financial Statements – Note 1 – Summary of Significant Accounting Policies,” Item 1 of Part I to this report.

Tariffs and Foreign Exchange: The U.S. government has recently implemented significant tariff measures, including a baseline tariff of 10% on most products imported into the United States, as well as individualized tariffs on products imported from select trading partners, including Canada, China, Mexico, Thailand and Vietnam. As a result, we are incurring incremental tariff costs in connection with importing raw materials, component parts and finished goods, and increased U.S. tariffs have led and may continue to lead to the imposition of retaliatory tariffs by foreign jurisdictions. Additionally, the U.S. government has announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. Current uncertainties about tariffs and their effects on trading relationships may further affect the costs of our imported raw materials, components parts and finished goods and increase market volatility and currency exchange rate fluctuations. We continue to monitor the economic effects of these developments and evaluate opportunities to mitigate their related impacts. See “Risk Factors,” Item 1A of Part II to this report, for additional information.

One Big Beautiful Bill Act ("OBBBA"): On July 4, 2025, the U.S. government enacted the OBBBA, which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. The legislation has multiple effective dates, with certain provisions effective in 2025 and others in future periods. The Company has completed its initial assessment of the enacted law and has included the impact of the enactment within its consolidated financial statements for the nine months ended September 30, 2025.

Key Performance Measures

We use various financial metrics to measure and evaluate our business, including, among others: (i) net sales on a constant currency basis, (ii) Adjusted EBITDA on a consolidated basis, (iii) Adjusted EBITDA margin on a consolidated basis and (iv) segment operating income (loss).

Since a significant percentage of our net sales are generated outside of the United States, we use net sales on a constant currency basis to evaluate the sales performance of our business in period over period comparisons and to forecast our business going forward. Constant currency information allows us to estimate what our sales performance would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency net sales and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. This constant currency information should not be considered in isolation or as a substitute for any measure derived in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our presentation of constant currency information may not be consistent with the manner in which similar measures are derived or used by other companies.

We primarily use Adjusted EBITDA on a consolidated basis to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding the pricing of our products, go-to-market execution and costs to incur across our business. We present Adjusted EBITDA as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. We define “Adjusted EBITDA” in a manner consistent with the term “Consolidated EBITDA” as it is defined in our credit agreement. Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization, and other items defined in our credit agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income (loss) relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to net income (loss) attributable to Acushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items, or affected by similar nonrecurring items. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income attributable to Acushnet Holdings Corp., see “—Results of Operations” below.

We also use Adjusted EBITDA margin on a consolidated basis, which measures our Adjusted EBITDA as a percentage of net sales, because our management uses it to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go-to-market execution and costs to incur across our business. We present Adjusted EBITDA margin as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to any measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items, or affected by similar nonrecurring items. Adjusted EBITDA margin has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA margin is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.

Lastly, we use segment operating income (loss) to evaluate the effectiveness of business strategies, assess segment operating performance and make decisions regarding costs to incur across the business. Segment operating income includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes certain other costs, such as interest expense, net; restructuring costs; the non-service cost component of net periodic benefit cost; transaction fees; as well as other items that are not allocated to the reportable segments.

Results of Operations

The following table sets forth, for the periods indicated, our results of operations.

(in thousands)

(1) For the three and nine months ended September 30, 2025, includes $2.1 million and $8.6 million, respectively, related to the VBR program. For the nine months ended September 30, 2024, includes $7.0 million related to the optimization of our supply chain.

(2) For the three and nine months ended September 30, 2025, includes $1.8 million and $7.8 million, respectively, related to our information technology optimization. For the three and nine months ended September 30, 2024, includes $2.1 million and $8.0 million, respectively, related to our information technology optimization.

(3) For the nine months ended September 30, 2024, includes $2.5 million related to our distribution optimization.

(4) For the three and nine months ended September 30, 2025, includes $0.6 million and $1.9 million, respectively, related to the amortization of capitalized implementation costs for cloud computing arrangements. For the three and nine months ended September 30, 2025, includes pension settlement costs of $0.9 million related to lump-sum distributions to participants in our defined benefit plans as a result of the VBR program. For the nine months ended September 30, 2025, includes a non-cash gain of $20.9 million related to the FootJoy footwear joint venture deconsolidation. In addition, the three and nine months ended September 30, 2025 and 2024 include other gains, losses or costs added back for purposes of calculating Adjusted EBITDA as defined in our credit agreement.

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

Net sales by reportable segment is summarized as follows:

(in millions)

Net sales information by region is summarized as follows:

(in millions)

(1) Europe, the Middle East and Africa (“EMEA”)

Segment operating income by reportable segment is summarized as follows:

(in millions)

Net Sales

For the three months ended September 30, 2025, net sales increased 6.0%, or 5.3% on a constant currency basis, compared to the three months ended September 30, 2024. The increase was driven by higher net sales in Titleist golf equipment, primarily due to higher average selling prices in golf clubs and sales volumes in golf balls, as well as higher net sales in Golf gear and FootJoy golf wear, primarily due to higher average selling prices across all product categories in both segments.

The increase in net sales in the United States was largely driven by increases in Titleist golf equipment of $13.4 million, in Golf gear of $4.8 million and in FootJoy golf wear of $2.4 million. The increase in Titleist golf equipment was primarily driven by higher average selling prices in golf clubs, as well as higher sales volumes of our 2025 Pro V1 golf ball models. In addition, higher sales volumes of our newly introduced T-Series irons and second model year SM10 wedges were more than offset by lower sales volumes of second model year drivers and fairways. The increase in Golf gear was primarily driven by higher average selling prices across all product categories. The increase in FootJoy golf wear was primarily due to higher average selling prices in golf gloves and apparel. An increase in net sales of products that are not allocated to one of our three reportable segments also contributed to the change in net sales.

Net sales in regions outside the United States increased 5.8%, or 4.0% on a constant currency basis, driven by increases in EMEA, Rest of World and Korea, partially offset by a decrease in Japan. In EMEA and Rest of World, the increases were driven by higher net sales across all reportable segments. In Korea, the increase was primarily due to higher net sales in Titleist golf equipment, largely due to golf balls. In Japan, the decrease was due to lower net sales across all reportable segments, as well as lower net sales of products that are not allocated to one of our three reportable segments.

Gross Profit

Gross profit increased $14.9 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Gross margin decreased to 48.5% for the three months ended September 30, 2025 compared to 49.0% for the three months ended September 30, 2024. The increase in gross profit was primarily the result of increases in Titleist golf equipment of $6.8 million, in FootJoy golf wear of $3.7 million and in Golf gear of $3.1 million. The increase in Titleist golf equipment was primarily due to the higher sales volumes and higher average selling prices discussed previously, partially offset by an unfavorable shift in product mix. The increase in FootJoy golf wear was primarily due to the higher average selling prices discussed previously and a favorable shift in product mix. The increase in Golf gear was primarily due to the higher average selling prices discussed previously. An increase in gross profit of products not allocated to one of our three reportable segments also contributed to the change in gross profit. These changes in gross profit also include higher tariff costs due to the tariff measures discussed previously.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased $5.2 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. This increase was primarily the result of increases of $4.1 million in advertising and promotion expenses and $2.8 million in selling expense, partially offset by a $1.6 million decrease in administrative expense. The increase in advertising and promotion expenses was primarily in Titleist golf equipment to support new product launches. The increase in selling expense was primarily due to investments in our product fitting networks and to enhance consumer engagement. SG&A expenses also include a $1.7 million decrease in losses on foreign exchange forward contracts. In addition, during the three months ended September 30, 2025, SG&A expenses include restructuring costs of $2.1 million related to the VBR program.

Interest Expense, net

Interest expense, net increased $1.3 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to an increase in borrowings, partially offset by a decrease in interest rates, as well as an increase in interest capitalized related to our information technology optimization.

Other Expense (Income), net

Other expense, net increased $1.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to a $1.5 million increase in the non-service cost component of net periodic benefit costs driven by an increase in settlement costs, partially as a result of the VBR program.

Income Tax Expense

Income tax expense increased $15.4 million for the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Our effective income tax rate (“ETR”) was 37.3% for the three months ended September 30, 2025 compared to 19.3% for the three months ended September 30, 2024. The change in ETR was primarily driven by changes in our jurisdictional mix of earnings, as well as a reduced income tax benefit related to the U.S. deduction of foreign-derived intangible income resulting from the enactment of the OBBBA.

Segment Results

Titleist Golf Equipment Segment

Net sales in our Titleist golf equipment segment increased 5.7%, or 5.0% on a constant currency basis, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily driven by higher average selling prices across all golf club product categories and sales volumes of our 2025 Pro V1 golf ball models. In addition, higher sales volumes of our T-Series irons launched in the third quarter of 2025 and SM10 wedges were more than offset by lower sales volumes of second model year drivers and fairways.

Operating income in our Titleist golf equipment segment increased $2.6 million, or 3.2%, compared to the prior year period. The increase in operating income resulted from an increase of $6.8 million in gross profit, partially offset by higher operating expenses of $5.0 million. The increase in gross profit was primarily driven by the higher sales volumes and higher average selling prices discussed previously, partially offset by an unfavorable shift in product mix and higher tariff costs.

Higher operating expenses were a result of increases of $3.9 million in advertising and promotion expenses and $1.8 million in selling expense.

FootJoy Golf Wear Segment

Net sales in our FootJoy golf wear segment increased 4.0%, or 3.1% on a constant currency basis, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to higher average selling prices across all product categories and higher sales volumes in apparel, partially offset by lower sales volumes in footwear.

Operating income in our FootJoy golf wear segment increased $4.3 million compared to the prior year period, primarily driven by an increase of $3.7 million in gross profit. The increase in gross profit was primarily due to the higher average selling prices discussed previously and a favorable shift in product mix, partially offset by higher tariff costs.

Golf Gear Segment

Net sales in our Golf gear segment increased 14.2%, or 13.2% on a constant currency basis, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily driven by higher average selling prices across all product categories and sales volumes in golf gloves.

Operating income in our Golf gear segment increased $3.1 million, or 75.6% compared to the prior year period, largely as a result of an increase of $3.1 million in gross profit, primarily driven by the higher average selling prices discussed previously, partially offset by higher tariff costs.

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

Net sales by reportable segment is summarized as follows:

(in millions)

Net sales information by region is summarized as follows:

(in millions)

Segment operating income by reportable segment is summarized as follows:

(in millions)

34

Net Sales

For the nine months ended September 30, 2025, net sales increased 3.5%, or 3.6% on a constant currency basis, compared to the nine months ended September 30, 2024. The increase was driven by higher net sales in Titleist golf equipment, primarily due to higher average selling prices in golf clubs and sales volumes in golf balls, as well as higher net sales in Golf gear, primarily due to higher average selling prices across all product categories. These increases were partially offset by lower net sales in FootJoy golf wear, primarily due to lower sales volumes in footwear, partially offset by higher average selling prices. An increase in net sales of products that are not allocated to one of our three reportable segments also contributed to the change in net sales.

The increase in net sales in the United States was primarily driven by increases in Titleist golf equipment of $44.4 million and in Golf gear of $10.2 million, partially offset by a decrease in FootJoy golf wear of $4.9 million. The increase in Titleist golf equipment was primarily driven by higher average selling prices in golf clubs and higher sales volumes of our 2025 Pro V1 golf ball models and GT hybrids. These increases were partially offset by lower sales volumes of second model year wedges, drivers and performance model golf balls. The increase in Golf gear was primarily driven by higher average selling prices across all product categories and higher sales volumes in golf gloves. The decrease in FootJoy golf wear was primarily due to lower sales volumes in footwear, partially offset by higher average selling prices across all product categories. An increase in net sales of products that are not allocated to one of our three reportable segments also contributed to the change in net sales.

Net sales in regions outside the United States increased 1.8%, or 2.3% on a constant currency basis driven by increases in EMEA and Rest of World, partially offset by decreases in Japan and Korea. In EMEA and Rest of World, the increases were driven by higher net sales across all reportable segments. An increase in net sales of products that are not allocated to one of our three reportable segments also contributed to the change in net sales in Rest of World. In Japan, the decrease was due to lower net sales across all reportable segments, primarily in FootJoy golf wear in the footwear and apparel product categories, as well as in net sales of products that are not allocated to one of our three reportable segments. In Korea, the decrease was largely due to lower net sales in FootJoy golf wear, primarily footwear, and Golf gear, partially offset by higher net sales in Titleist golf equipment.

Gross Profit

Gross profit increased $30.6 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Gross margin was 48.6% for the nine months ended September 30, 2025 compared to 48.7% for the nine months ended September 30, 2024. The increase in gross profit was primarily the result of increases in Titleist golf equipment of $12.5 million, Golf gear of $12.3 million and FootJoy golf wear of $2.7 million. The increase in Titleist golf equipment was primarily due to the higher sales volumes and higher average selling prices discussed previously, partially offset by higher manufacturing costs. The increase in Golf gear was primarily driven by the higher average selling prices discussed previously and lower distribution costs. The increase in FootJoy golf wear was primarily driven by the higher average selling prices and a favorable shift in product mix, partially offset by lower sales volumes discussed previously. An increase in gross profit of products not allocated to one of our three reportable segments also contributed to the change in gross profit. These changes in gross profit also include higher tariff costs due to the tariff measures discussed previously.

Selling, General and Administrative Expenses

SG&A expenses increased $18.7 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. This increase was primarily the result of increases of $12.2 million in advertising and promotion expenses and $9.0 million in selling expense. The increase in advertising and promotion expenses was primarily in Titleist golf equipment to support new product launches. The increase in selling expense was primarily due to investments in our product fitting networks and to enhance consumer engagement. SG&A expenses also include a $2.2 million decrease in expense related to our distribution optimization, as well as a $5.4 million decrease in foreign currency transaction losses, offset in part by a $2.8 million increase in losses on foreign exchange forward contracts. In addition, for the nine months ended September 30, 2025 and 2024, SG&A expenses also include restructuring costs of $8.6 million related to the VBR program and $7.0 million related to the optimization of our supply chain, respectively.

Research and Development

Research and development expenses increased $4.9 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily as a result of additional expenses to support next generation product introductions.

Interest Expense, net

Interest expense, net increased $3.1 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to an increase in borrowings, partially offset by a decrease in interest rates, as well as an increase in interest capitalized related to our information technology optimization.

Other Expense (Income), net

Other income, net increased $18.4 million for the nine months ended September 30, 2025 compared to other expense, net of $1.3 million for the nine months ended September 30, 2024, primarily due to a non-cash gain of $20.9 million related to the FootJoy footwear joint venture deconsolidation. This increase in other income, net was partially offset by an increase of $1.6 million in the non-service cost component of net periodic benefit costs driven by an increase in settlement costs, partially as a result of the VBR program.

Income Tax Expense

Income tax expense increased $11.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. Our ETR was 23.6% for the nine months ended September 30, 2025 compared to 21.6% for the nine months ended September 30, 2024. The change in ETR was primarily driven by changes in our jurisdictional mix of earnings, as well as a reduced income tax benefit related to the U.S. deduction of foreign-derived intangible income resulting from the enactment of the OBBBA.

Segment Results

Titleist Golf Equipment Segment

Net sales in our Titleist golf equipment segment increased 4.9%, or 5.0% on a constant currency basis, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily driven by higher average selling prices in golf clubs and sales volumes of our 2025 Pro V1 golf ball models. In addition, higher sales volumes of our GT hybrids launched in the first quarter of 2025 and T-Series irons launched in the third quarter of 2025 were more than offset by lower sales volumes of second model year wedges, drivers and performance model golf balls.

Operating income in our Titleist golf equipment segment decreased $13.6 million, or 5.3% compared to the prior year period. The decrease in operating income resulted from higher operating expenses of $26.8 million partially offset by an increase in gross profit of $12.5 million. The increase in gross profit was primarily driven by the higher sales volumes and higher average selling prices as discussed previously, partially offset by higher tariff and manufacturing costs. Higher operating expenses were a result of increases of $12.5 million in advertising and promotion expenses, $7.7 million in selling expense, $4.0 million in research and development expenses and $2.7 million in administrative expense.

FootJoy Golf Wear Segment

Net sales in our FootJoy golf wear segment decreased 1.9%, or 1.8% on a constant currency basis, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, due to lower sales volumes, primarily in footwear, partially offset by higher average selling prices across all product categories.

Operating income in our FootJoy golf wear segment increased $5.6 million, or 15.8% compared to the prior year period. The increase in operating income resulted from lower operating expenses of $2.9 million and higher gross profit of $2.7 million. Gross profit increased primarily as a result of the higher average selling prices discussed previously and a favorable shift in product mix, partially offset by lower sales volumes as discussed previously and higher tariff costs. Lower operating expenses were primarily a result of decreases of $1.5 million in advertising and promotion expenses and $1.2 million in administrative expense.

Golf Gear Segment

Net sales in our Golf gear segment increased 7.5%, or 7.7% on a constant currency basis, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, driven by higher average selling prices across all product categories and higher sales volumes in golf gloves.

Operating income in our Golf gear segment increased $10.4 million, or 37.5% compared to the prior year period. The increase in operating income resulted from higher gross profit of $12.3 million, largely due to the higher average selling prices and lower distribution costs discussed previously, partially offset by higher tariff costs.

Liquidity and Capital Resources

Our primary cash needs relate to working capital, repurchasing shares of our common stock, capital expenditures, paying dividends, servicing our debt and pension contributions. Additionally, from time to time, we may make strategic acquisitions and investments to complement our products, technologies or businesses, which could impact our liquidity needs. We expect to rely on cash flows from operations and borrowings under our multi-currency revolving credit facility and local credit facilities as our primary sources of liquidity.

Our liquidity is impacted by our level of working capital, which is cyclical as a result of the general seasonality of our business. Our accounts receivable balance is generally at its highest starting at the end of the first quarter and continuing through the second quarter, and declines during the third and fourth quarters as a result of both an increase in cash collections and lower sales. Our inventory balance also fluctuates as a result of the seasonality of our business. Generally, our buildup of inventory starts during the fourth quarter and continues through the first quarter and into the beginning of the second quarter in order to meet demand for our initial sell-in during the first quarter and reorders in the second quarter. Both accounts receivable and inventory balances are impacted by the timing of new product launches.

As of September 30, 2025, we had $88.1 million of unrestricted cash and cash equivalents. As of September 30, 2025, 97.1% of our total unrestricted cash and cash equivalents was held by subsidiaries in regions outside of the United States. We manage our worldwide cash requirements by monitoring the funds available among our subsidiaries and determining the extent to which we can access those funds on a cost-effective basis. We are not aware of any restrictions on repatriation of these funds and, subject to foreign withholding taxes, those funds could be repatriated, if necessary. We have repatriated, and intend to repatriate, funds to the United States from time to time to satisfy domestic liquidity needs arising in the ordinary course of business.

Macroeconomic factors could impact our results of operations in ways we cannot currently predict. Nonetheless, we believe that cash expected to be provided by operating activities, together with our cash on hand and the availability of borrowings under our multi-currency revolving credit facility and our local credit facilities (subject to customary borrowing conditions) will be sufficient to meet our liquidity requirements for at least the next 12 months. Our ability to generate sufficient cash flows from operations is, however, subject to many risks and uncertainties, including current and future economic trends and conditions, demand for our products, availability and cost of our raw materials and components, foreign currency exchange rates and other risks and uncertainties applicable to our business, as described in our Annual Report on Form 10-K for the year ended December 31, 2024. See “Risk Factors,” Item 1A of Part II to this report for additional information regarding risks associated with U.S. and foreign trade policies.

Debt and Financing Arrangements

As of September 30, 2025, we had $416.1 million of availability under our multi-currency revolving credit facility after giving effect to $4.2 million of outstanding letters of credit. Additionally, we had $33.2 million available under certain local credit facilities of our subsidiaries.

The credit agreement governing our multi-currency revolving credit facility contains customary affirmative and restrictive covenants, including, among others, financial covenants based on our leverage and interest coverage ratios. This credit agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of September 30, 2025, we were in compliance with all covenants under our credit agreement.

The indenture governing our senior unsecured notes contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock; prepay, redeem or repurchase certain debt; make loans and investments; sell assets; incur liens; enter into certain types of transactions with the Company’s affiliates; and consolidate or merge with or into other companies. As of September 30, 2025, we were in compliance with all covenants under the indenture.

See “Notes to Unaudited Condensed Consolidated Financial Statements – Note 5 – Debt and Financing Arrangements,” Item 1 of Part I to this report and “Notes to Consolidated Financial Statements – Note 11 – Debt and Financing Arrangements” in our Annual Report on Form 10-K for the year ended December 31, 2024 for a description of our debt and financing arrangements. Additionally, see “Risk Factors – Risks Related to Our Indebtedness” as described in our Annual Report on Form 10-K for the year ended December 31, 2024 for further discussion surrounding the risks and uncertainties related to our debt and financing arrangements.

Dividends and Share Repurchase Program

During the nine months ended September 30, 2025, we paid dividends on our common stock of $42.4 million to our shareholders. During the fourth quarter of 2025, our board of directors declared a dividend of $0.235 per share of common stock to shareholders of record as of December 5, 2025 and payable on December 19, 2025.

As of September 30, 2025, our board of directors had authorized us to repurchase up to an aggregate of $1.25 billion of our issued and outstanding common stock.

During the nine months ended September 30, 2025, we repurchased 2,842,719 shares of our common stock at an average price of $65.96 for an aggregate of $187.5 million. Included in this amount were 1,889,313 shares of our common stock repurchased from Magnus Holdings Co., Ltd. ("Magnus"), for an aggregate of $125.0 million. As of September 30, 2025, we had $264.7 million remaining under the current share repurchase authorization.

See “Notes to Unaudited Condensed Consolidated Financial Statements – Note 10 – Common Stock,” Item 1 of Part I to this report for a description of our share repurchase program and our share repurchase agreements.

Capital Expenditures and Other Investments

During the nine months ended September 30, 2025, we invested $51.3 million in capital expenditures. We expect to invest approximately $75.0 million in capital expenditures for the full year, although actual amounts may vary depending upon a variety of factors, including the timing of certain capital project implementations and receipt of capital purchases. Capital expenditures generally relate to investments to support the manufacturing and distribution of products, our go-to-market activities, as well as investments in facilities to support our global strategic initiatives.

In addition, during the nine months ended September 30, 2025, we invested $29.7 million in capitalized implementation costs associated with the implementation of a new global cloud-based enterprise resource planning ("ERP") platform as part of our plans to integrate our operations and enhance our supply chain and finance capabilities. We expect to invest approximately $35.0 million in capitalized implementation costs associated with this global ERP platform for the full year.

Cash Flows

The following table presents the major components of net cash flows from operating, investing and financing activities for the periods indicated:

(in thousands)

38

Cash Flows from Operating Activities

The decrease in cash provided by operating activities was primarily driven by investments in our global ERP platform, as well as an increase in cash used to fund other working capital requirements. At any specific point in time, working capital is subject to many variables, including seasonality and inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates.

Cash Flows from Investing Activities

The increase in cash used in investing activities was driven by changes in capital expenditures.

Cash Flows from Financing Activities

The decrease in cash used in financing activities was primarily driven by an increase in net proceeds from credit facilities, offset in part by an increase in purchases of common stock.

Contractual Obligations and Off-Balance Sheet Arrangements

During the normal course of business, we enter into agreements to purchase goods and services, including purchase commitments for advertising (including media placement and production costs), finished goods inventory, capital expenditures and endorsement arrangements with professional golfers. There have been no material changes to these purchase commitments since the year ended December 31, 2024.

As of September 30, 2025, other than as discussed above, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates from the information provided in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Standards

We have reviewed all recently issued accounting standards and have determined that, other than as disclosed in "Notes to Unaudited Condensed Consolidated Financial Statements – Note 1 – Summary of Significant Accounting Policies," Item 1 of Part I to this report, such accounting standards will not have a significant impact on our consolidated financial statements or otherwise do not apply to our operations.

We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates, such as interest rates, foreign exchange rates and commodity prices and availability, as well as inflation risk. We do not enter into derivatives or other financial instruments for trading or speculative purposes and do not believe we are exposed to material market risk with respect to our cash and cash equivalents.

In addition, we are subject to broader market risk that is created by the global market disruptions and uncertainties resulting from macroeconomic challenges, geopolitical events, tariffs, trade and other international disputes. See “Risk Factors,” Item 1A of Part II to this report, for additional information regarding risks associated with U.S. and foreign trade policies.

Interest Rate Risk

We are exposed to interest rate risk under our various credit facilities which accrue interest at variable rates, as described in "Notes to Unaudited Condensed Consolidated Financial Statements – Note 5 – Debt and Financing Arrangements," Item 1 of Part I, to this report. Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control. We are exposed to changes in the level of interest rates and to changes in the relationship or spread between interest rates for our floating rate debt. Our floating rate debt requires payments based on a variable interest rate index. Increases in interest rates may reduce our net income by increasing the cost of our debt.

From time to time, we enter into interest rate swap contracts to reduce our interest rate risk related to floating rate debt. Under these contracts, we pay fixed and receive variable rate interest, in effect converting a portion of our floating rate debt to fixed rate debt. As of September 30, 2025, there were no interest rate swap contracts outstanding. See "Notes to Unaudited Condensed Consolidated Financial Statements – Note 6 – Derivative Financial Instruments," Item 1 of Part I, to this report for further discussion of our interest rate swap contracts.

We performed a sensitivity analysis to assess the potential effect of a hypothetical movement in interest rates on our annual pre-tax interest expense. As of September 30, 2025, we had $554.8 million of outstanding indebtedness at variable interest rates. The sensitivity analysis, while not predictive in nature, indicated that a one percentage point increase in the interest rate applied to these borrowings as of September 30, 2025 would have resulted in an increase of $5.5 million in our annual pre-tax interest expense. This sensitivity analysis disregards fluctuations in balances of our outstanding variable rate indebtedness due to borrowings and repayments throughout the year.

Foreign Exchange Risk

We are exposed to foreign currency transaction risk related to transactions denominated in a currency other than functional currency. In addition, we are exposed to currency translation risk resulting from the translation of the financial results of our consolidated subsidiaries from their functional currency into U.S. dollars for financial reporting purposes.

We use financial instruments to reduce the earnings and shareholders' equity volatility relating to transaction risk. The principal financial instruments we enter into on a routine basis are foreign exchange forward contracts, pertaining to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won, the Australian dollar and the euro. The periods of the foreign exchange forward contracts designated as hedges correspond to the periods of the forecasted hedged transactions, which do not exceed 24 months subsequent to the latest balance sheet date. We do not enter into derivative financial instrument contracts for trading or speculative purposes.

We performed a sensitivity analysis to assess potential changes in the fair value of our foreign exchange forward contracts relating to a hypothetical movement in foreign currency exchange rates. The gross U.S. dollar equivalent notional amount of all foreign exchange forward contracts outstanding at September 30, 2025 was $218.1 million, representing a net settlement liability of $1.5 million. The sensitivity analysis of changes in the fair value of our foreign exchange forward contracts outstanding as of September 30, 2025, while not predictive in nature, indicated that the net settlement liability of $1.5 million would increase by $18.4 million resulting in a net settlement liability of $19.9 million, if the U.S. dollar uniformly weakened by 10% against all currencies covered by our contracts.

The sensitivity analysis described above recalculates the fair value of the foreign exchange forward contracts outstanding by replacing the actual foreign currency exchange rates and current month forward rates with foreign currency exchange rates and forward rates that reflect a 10% weakening of the U.S. dollar against all currencies covered by our contracts. All other factors are held constant. The sensitivity analysis disregards the possibility that foreign currency exchange rates can move in opposite directions and that gains from one currency may or may not be offset by losses from another currency. The analysis also disregards the offsetting change in value of the underlying hedged transactions and balances.

The financial markets and currency volatility may limit our ability to cost-effectively hedge these exposures. The counterparties to derivative contracts are major financial institutions with investment grade credit ratings. We monitor the credit quality of these financial institutions on an ongoing basis.

Commodity Risk

We are exposed to commodity price and availability risks with respect to certain materials and components used by us, our suppliers and our manufacturers, including polybutadiene, zinc diacrylate, urethane and ionomers for the manufacturing of our golf balls, titanium and steel for our golf clubs, leather and synthetic fabrics for our golf shoes, golf gloves, golf gear and golf apparel, and resin and other petroleum-based materials for a number of our products.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost, and inflation in the cost of our products, overhead costs or wage rates may adversely affect our operating results. While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we believe that inflation in the form of increased raw materials and other input costs, including inbound freight and wage rates, has at times impacted our business, results of operations, financial position and cash flows. In the future, sustained and higher inflationary environments, including increased raw material and other input costs, could materially impact our business, results of operations, financial position and cash flows.

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the fiscal quarter ended September 30, 2025. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There were no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

You should carefully consider each of the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, as well as the other information set forth in this report. There have been no material changes to the risk factors as described in our Annual Report on Form 10-K for the year ended December 31, 2024, except as indicated below.

U.S. and foreign trade policies, including the assessment of tariffs and other impositions on imported goods, may have a material adverse effect on our business, financial condition and results of operations.

The U.S. government has recently implemented significant tariff measures, including a baseline tariff of 10% on most products imported into the United States, as well as individualized tariffs on products imported from select trading partners, including Canada, China, Mexico, Thailand and Vietnam. As a result, we are incurring incremental tariff costs in connection with importing raw materials, component parts and finished goods. The U.S. government has also announced and rescinded multiple tariffs on several foreign jurisdictions, which has increased uncertainty regarding the ultimate effect of the tariffs on economic conditions. These actions are impacting bilateral trade relations, with many U.S. trading partners imposing or publicly considering retaliatory tariffs on U.S. imports. The tariff policy environment has been and is expected to continue to be dynamic, and the ultimate impact of any tariffs will depend on the magnitude and duration of the tariffs and the countries impacted. If we are unable to mitigate tariff-related risks through supply chain adjustments, pricing strategies, sourcing arrangements or other measures, our business, financial condition and results of operations could be materially adversely affected.

Additionally, U.S. policy changes and uncertainty about such changes may increase market volatility and currency exchange rate fluctuations. As part of our foreign currency exchange rate hedging strategy, we have and expect to continue to execute forward contracts to protect against adverse changes in foreign currency exchange rates and to mitigate foreign currency transaction risk. However, our hedging activities may not offset more than a portion of the adverse financial impact resulting from unfavorable movement in foreign currency exchange rates, which could materially adversely affect our business, financial condition and results of operations. See “Our operations are conducted worldwide and our results of operations are subject to currency transaction and translation risks that could materially adversely affect our business, financial condition and results of operations” and “We have significant international operations and are exposed to risks associated with doing business globally,” Item 1A of Part I to our Annual Report on Form 10-K for the year ended December 31, 2024.