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Rough 3rd Quarter for Acushnet/Titleist - but is it as bad as it sounds? Can this news possibly help as they prepare to go public? ACUSHNET LOSES SALES, PROFITS AND MARKET SHARE: The Acushnet Company, proud owners of Titleist and FootJoy, reported its 2015 third quarter operating results. Sales came in at $320 million, down $24.4 million from a year ago. Excluding the effects of foreign exchange rate changes, sales were down 1% versus the previous year, according to the company. Acushnet, rumored to be heading to Wall Street in 2016, generated a gross profit of $158.4 million in the reporting period, a gross profit margin of 49.5% and an operating income of $15.9 million, down 49% from the previous year. Approximately two thirds of the operating income erosion was due to foreign exchange rates, it said. Acushnet reported a net loss for the third quarter of $1.846 million. Year-to-date, the company reported sales of $1.182 billion, down $30 million on a reported basis but up 4% on a constant currency basis. It said foreign exchange rates impacted net sales by $74 million. Acushnet reported year-to-date operating income of $155.3 million, up 7%, and a 2015 cumulative net income over nine months of $60.6 million versus $58.8 million in the same period in 2014. â€œYear-to-date results reflect sustained performance in an industry that continues to adjust to and reflect a new reality. It is expected that as baseline participation, rounds of play and spending per golfer continue to reflect this new reality then everyone's expectations will be adjusted accordingly,â€ remarked Wally Uihlein, CEO of the Acushnet Company
TO BE OR NOT TO BE, THAT IS THE QUESTION: CNBC reported yesterday that Acushnet, owner of Titleist and FootJoy brands, is working towards an initial public offering. While it may be news to CNBC and in turn its viewers, the company's owners, Fila, have been on the record confirming this always was its original plan. "We've planned an initial public offering (IPO) since we acquired Acushnet in 2011. We will push forward with the plan," a FILA spokeswoman told the Korean Times in April. "Our goal is listing the company on the New York Stock Exchange next year. But things can change depending on market situation." As long time readers of the Daily Pulse and Web Street Golf Report may recall, in 2011 a Korean Consortium consisting of Fila and Mirae Asset acquired the company. Fila's investment was seen to be long term (a strategic investment) while Mirae Asset (investing on behalf of the Korean Pension Service Fund) was seen to be more of the traditional five-year invest and redeem. The fifth anniversary of the acquisition is in July 2016. Therefore, it only makes sense that the company would be exploring recapitalization options as it faces a potential redemption. "As a matter of policy, we do not respond to questions or speculation regarding strategic matters, including the capital structure of the company," stated Wally Uihlein, Acushnet's CEO upon inquiry from the Daily Pulse on the matter. Despite the rough and tumble times in the golf industry in recent years, the acquisition has been an excellent one for Fila and Mirae Asset. Acushnet has made money each year that it has been in the possession of the Korean Consortium. According to its financial performance, Acushnet has delivered in excess of $121 million in net income over the past three fiscal years alone. At the midway point of 2015, the company has earned another $62.5 million for its owners. The original purchase price was approximately $725 million in cash and $500 million in debt for the company. Over the relatively short time that Fila has had an ownership stake in Acushnet, its stake will have grown to 33% by 2016 as it coverts available bond warrants into equity. Fila's investment position of $100 million was roughly 12% at the outset and will have grown to 33% by 2016 assuming it converts the last tranche of available warrants, according to information publicly available on its web site. Should Acushnet elect to join the ranks of publicly traded companies in 2016, it would also present an open-ended exit strategy for its shareholders. It would in effective eliminate the need to undergo the necessity of future funding if a large shareholder decided to take their money elsewhere some time down the road. So why sell given the financial performance has been stellar via an initial public offering? In some countries, when investments are made on behalf of public funds, there are covenants that require redemption to be made through the public markets in order to receive an undisputed "fair market value." That could be the case here since it is public knowledge that many of the funds associated with the investors listed (Mirae, Neoplux) emanate from public holdings. Another mitigating factor that could be in play is some of the Koreans investors also probably looked at the Acushnet Company acquisition with an eye on the world's second largest GDP: China. Back in 2011, there was considerable discussion and hope that China could or would repeat the Japan Golf Market growth of 1970-1990. However, the reality that the Golf Course construction ban in 2004 and later the central Government anti corruption campaign (initiated in 2013) have dampened the hopes of many who were looking at China as the golf industry's next platform for growth opportunities. In the meantime, Acushnet must explore its available options based on what it likely knew when it was acquired back in 2011.
[by Golf News Net] Titleist’s parent company Acushnet filed suit on Monday against 10 independent ball makers in Massachusetts federal court, claiming the companies are illegally violating patents related to their shared dimple pattern. The ball makers sued are 3 Up Golf, Ariva Golf, German newcomer Vice Golf, Dixon Golf, Lightning Golf, Monsta Golf, Rife Golf, the makers of I Need The Ball, a South Korean company called Nexen Corp. and Kick X Golf. Three patents in question relate to the ProV1 golf ball. In 2003, the company released an improved ProV1 with 60 fewer dimples than the original. The company found that fewer dimples with variable sizes led to better performance. Two subsequent patents that came out of that additional refinement are in question, as well. The patents are used in a number of balls Acushnet currently sells under the Titleist brand. Acushnet claims each of the 10 companies is using the same dimple pattern: a triangular dipyramid pattern with 318 dimples and three different dimple sizes. All of the balls are manufactured in Taiwan by the same company (not named in the suit) with a cast, aromatic urethane cover at the approximately same thickness and hardness. The Massachusetts-based company is looking for a jury trial, seeking a verdict that will prohibit these ball makers from using this dimple pattern, as well compensatory damages. ---------- Very interesting - and confirmation that all of the balls named in this suit are manufactured in the same factory, with the same dimple pattern and basically the same construction... not sure if they're even the same price though lol