GOLF - NYSE

Hello everyone and thank you for standing by. Welcome to the Acushnet Company's First Quarter 2023 Earnings Call. My name is Emily and I'll be coordinating your call today. [Operator Instructions] I will now turn the call over to our host Sondra Lennon, Vice President of Financial Planning and Analysis. Please go ahead.

Good morning, everyone. Thank you for joining us today for Acushnet Holding Corp's first quarter 2023 earnings conference call. Joining me this morning are David Maher, our President and Chief Executive Officer; and Tom Pacheco, our Chief Financial Officer. Before I turn the call over to David, I would like to remind everyone that we will be making forward-looking statements on the call today. These forward-looking statements are based on Acushnet's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations. For a list of factors that could cause actual results to differ, please see today's press release, the slides that accompany our presentation and our filings with the U.S. Securities and Exchange Commission. Throughout this discussion, we will make reference to non-GAAP financial metrics, including items such as revenues at constant currency and adjusted EBITDA. Explanations of how and why we use these metrics and reconciliations of these items to a GAAP basis can be found in the schedules in today's press release, the slides that accompany this presentation and in our filings with the U.S. Securities and Exchange Commission. Please also note that references throughout this presentation to year-on-year sales increases and decreases are on a constant currency basis unless otherwise stated. As we feel this measurement best provides context as to the performance and trends of our business. And when referring to year-to-date results or comparisons, we will refer to the 3 month period ended March 31, 2023 and the comparable 3 month period. With that, I'll turn the call over to David.

Thanks, Sondra, and good morning, everyone. As always, we appreciate your interest in Acushnet Holdings. I am pleased to report on a strong start to the year and as reflected by our results, the Acushnet team is excelling on the product development, manufacturing, and supply chain management fronts. My talented teammates are doing great work adapting and strengthening our capabilities, adding agility and capacity to keep pace with steady demand. Showcasing the overall health and diversity of the Acushnet portfolio, each segment and region reported gains in the quarter with Titleist golf balls, clubs, and gear growing double digits, helping to fuel the company 17% year-over-year increase to $686 million in the quarter. And bottom line results for the period grew by 22% as Acushnet delivered adjusted EBITDA of $147 million, generating operating leverage and benefiting from favorable mix shifts from our full slate of new product launches. We are pleased with this start to the year and the continued momentum of our core consumer, which is translating across our businesses. Tom will share greater details in a few minutes. Shifting now to our segment overview, Titleist golf balls increased 21% over last year, led by the successful launch of new Pro V1 and Pro V1x in all regions. For context, we shipped roughly 0.5 million dozen more Pro V1s compared to last year, which is commentary on the health of the franchise and our strengthening supply chain. New Pro V1 models are quickly making their mark across the worldwide professional tours and contributing to 74% usage more than 8 times the nearest competitor. And with 70 wins through last week, Titleist golf balls have notched 58 more titles than the number two brand. Titleist was the most played ball at the Augusta National Women's Amateur trusted by 74% of the competitors in one of their most prestigious events. And since switching to new Pro V1x, Lilia Vu has played 5 tournaments and won two of them, including her first major at last week's Chevron Championship. During the stretch she is incredible 64 under par with her new Pro V1x golf ball. On the supply side, Titleist golf ball channel inventories are in good shape to start the year and we are steadily building our backstock to normalize levels. Our global golf ball inventories are at their healthiest levels since 2019. Although, we do anticipate that Pro V1 and AVX models will remain in tight supply through the summer months. Titleist golf clubs also posted a strong start to the year with sales increasing 16% to $181 million. New TSR driver and fairway momentum continues to build as this franchise enters its first spring season and we are especially pleased with TSRs performance in light of so many competitive launches in the quarter. TSR is the most played driver on the PGA and DP World tours and affirming the strength of Titleist clubs across the competitive spectrum. Titleist was the number one driver, iron and wedge at the 2023 Augusta National Women's Amateur. Our team did great work successfully launching the all new lineup of Scotty Cameron super select putters in March, as we continue to strengthen this leading putter franchise. Our overall golf club component availability is in good shape, and we expect lead times to be healthy throughout the upcoming season. On the Titleist gear, which was up 57% for the quarter. This outsize growth reflects strong demand for our new lease legend and player sandbags, a favorable comp against last year's supply chain limited quarter, and the early shipment of some April custom gear demand as we prioritize service and build momentum in our custom operations. Gear was most impacted by last year's supply chain complications and as seen with these first quarter results, our team has done great work adapting to ensure product is available when and where it is most needed. Now to FootJoy, which posted sales of $205 million, an 8% increase for the quarter. FJ apparel had another terrific quarter was sales up double digits, as we realize the benefits from recently enhanced customization and fulfillment capabilities. Similar to custom gear, we shipped some April custom apparel demand in March as we strive for on-time or early delivery to start the season. The FJ team fortified its position as the number one shoe in golf with new premier, HyperFlex and traditions launches in the quarter. FJ golf KJUS are defined by performance, style and comfort innovation. And we are especially pleased with FJs positive energy and momentum, which are helping the brand to stand out in this category. Not noted on this slide, but worthy mention is the ongoing growth and development of our KJUS business, which was up over 30% in the quarter. We are enthused about KJUS momentum and long-term growth prospects, as our team does great work building a foundation around product and operational excellence to support the brand's continued expansion. Now taking a look at revenues across regions, you see the U.S. market set the pace up 25% for the quarter, and with growth coming from all segments. Japan and Korea also reflect the good work of our teams to set the stage and position new Titleist and FootJoy products for the peak spring and summer periods. Our business across EMEA was flat in the quarter in line with expectations and comping against last year's outsize growth. Globally, while the first quarter is not a major driver to annual rounds of play, U.S. rounds were flat for the period in spite of declines in the West resulting from much needed rainfall. Rounds outside the U.S. are projected down low single digits for the quarter, again due to unfavorable weather cups. Overall, global golf participation remains healthy and resilient as we enter the second quarter. Before handing the call over to Tom, I will affirm our confidence in the company's product lines and operational capabilities and the resilience and engagement of Acushnet's target consumer, the games dedicated golfer. Interest in the sport is in great shape, the professional game is healthy as reflected by strong ratings, and golf courses are financially sound with many making meaningful capital investments to enhance their long-term value proposition and appeal. Acushnet's retail inventories are very healthy and total channel inventories have returned to normal levels and golf shops are well-stocked for this time of year. As is often the case, there are pockets that have our attention, including footwear in the U.S., golf clubs in Japan, and apparel in Korea. Our teams are well-conditioned to monitor these situations and will adapt if and as necessary. In summary, the golf industry is on firm footing and well-positioned for the future and while Acushnet is not immune to macro-economic pressures, we have over time proven to be resilient due to the avidity and favorable demographic profile of our core consumer the game's dedicated player. Our global teams have done nice work positioning Titleist, FootJoy, KJUS products in golf shops, and we are confident in our ability to deliver compelling product and service experiences throughout the upcoming season. Thanks for your attention this morning. I will now pass the call over to Tom.

Thanks, David, and good morning, everyone. I would like to begin by thanking our talented associates for their outstanding effort they put forth in Q1 to deliver yet another strong quarter for Acushnet. Starting with our Q1 results on Slide Nine, consolidated net sales were $686 million up 13% reported and up 17% level effects versus 2022. This is a strong start to the year with all reportable segments showing growth in the quarter on both a reported and constant currency basis. Gross profit for the first quarter was $366 million, up $49 million or 15% versus the prior year, and gross margins were 53.3% up 100 basis points. The increase in gross profit and gross margin is primarily the result of higher sales volumes and lower inbound freight costs, partially offset by the unfavorable impact of currency across all reportable segments. SG&A expense in Q1 was $223 million up $27 million or 14% compared to 2022 and R&D expense was $15 million, up slightly compared to the prior year. The increase in SG&A was primarily from higher selling expense, due to increase sales volumes, increased advertising and promotional expense, primarily related to new product launches and an increase in administrative expense mainly due to employee related costs. Income from operations for the quarter was $125 million, up $20 million or 19% compared to 2022. Interest expense was up $9 million in the quarter compared to last year, with a little more than half of the increase coming from higher debt balances and the remainder coming from higher interest rates. Our effective income tax rate for Q1 was 18.1%, down from 20.4% last year, primarily because of a result of a shift in our mix of jurisdictional earnings. Net income attributable to Acushnet Holdings was $93 million, up $12 million or 15% compared to 2022 and adjusted EBITDA was $147 million, up $27 million or 22% from the prior year. There was a reconciliation of net income to adjusted EBITDA for Q1 in our earnings release as well as in the appendix of the slide presentation. Moving to Slide 10, the strength of our balance sheet continues to provide us flexibility. At the end of Q1, we had about $55 million of unrestricted cash on hand. Total debt outstanding was approximately $829 million with approximately $159 million of available borrowings remaining under our revolving credit facility. Our leverage ratio was 1.8 times at the end of Q1. The increase in our total debt results primarily from an increase in working capital, our share repurchase program, and our recent acquisitions. Consolidated accounts receivable at the end of Q1 was $435 million, up $58 million from Q1 of the prior year and our day sales outstanding was 52 days, up 1 day compared to Q1 of 2022. Inventory at the end of Q1 was $639 million down $36 million or 5% from the end of 2022. We saw overall declines in golf clubs, gear and FootJoy and an expected increase in golf balls inventory during the quarter, as we continue to play catch up from previous raw material shortages. Overall, we are comfortable with our inventory quality and position and we are confident that our inventory will continue to trend towards normal seasonal levels with further decreases in Q2 and Q3, before a slight increase in Q4, when we prepare for 2024 product launches and golf season. Cash flow from operations for the first quarter of 2023 was an outflow of $86 million compared to an outflow of $164 million for the same period in 2022. The improvement in cash flows from operations comes primarily from a lower use of working capital, mainly inventory. And we continue to make meaningful CapEx investments in our business. We spent $12 million on CapEx during Q1, about the same as Q1 2022. We still expect our full-year capital expenditures to increase compared to the full-year 2022 to about $75 million, as we continue our golf ball Strategic Investment Program, make investments in club assembly capacity around the world, and continue to make investments in our fitting capabilities to further enhance our golfer connection. Moving to Slide 11, our strong financial results support the continued execution of our capital allocation strategy. Our highest priority remains investing in the business in the form of OpEx and CapEx with a focus on product innovation, golfer connection, and operational excellence. And we will continue to evaluate potential acquisitions and other investments that align with our focus on premium performance products that appeal to dedicated golfers. We believe that these investments advance our long-term strategy and drive growth at a favorable return. Our focus on generating strong free cash flow and returning capital to shareholders continues to be a high priority. In March, we paid our previously announced dividend, which resulted in a cash outflow of approximately $14 million. And our Board of Directors today declared a quarterly cash dividend of $0.195 per share, payable on June 16 to shareholders of record on June 2. This will result in a Q2 cash outflow of approximately $13 million. During Q1, we purchased about 2.5 million shares of our common stock for approximately $116 million, including approximately 2.2 million shares from Magnus for $100 million. At the end of Q1, we had about $291 million remaining under our current share repurchase authorization. Our capital allocation strategy is a foundational element of Acushnet's value proposition, which we continue to believe creates a compelling long-term total return for our shareholders. Shifting to our outlook on Slide 12, we are pleased with our solid start to the year and we are maintaining our guidance, as it is our practice to not make meaningful shifts in our guidance until we get through the first half of the year. Overall, we continue to see steady demand for golf and Acushnet products, we are pleased with the success of our recent launches and they're excited about our upcoming product introductions over the balance of the year. As you would expect, our outlook continues to be tempered somewhat by caution, given the overall economic environment or currency is still expected to be a headwind for the balance of the year and more so in Q2, we expect all segments to show growth on a constant currency basis for the full year. We expect to continue to benefit from lower inbound freight rates and reduced air freight utilization. However, we expect some headwinds from higher input costs and from the return of some promotional activity, albeit at lower than pre-pandemic levels. Taking these factors into consideration, we are reaffirming our full-year 2023 guidance. We expect consolidated net sales to be in the range of $2.325 billion to $2.375 billion up 3.5% on a reported basis at the midpoint. On a constant currency basis, consolidated net sales are expected to be up between 5% and 7.2%. And we expect full-year adjusted EBITDA to be in the range of $345 million to $365 million up 5% compared to 2022 at the midpoint. In conclusion, our associates and trade partners enabled us to again deliver strong results in Q1. While being cautious given current economic uncertainty, we are pleased by the structural health of the industry, the momentum of our brands, and the investments we are making in the business. We remain confident, we will meet or beat our financial goals for 2023 and beyond and deliver a solid long-term total return for our shareholders. With that, I will now turn the call over to Sondra for Q&A.

Thanks, Tom. Operator, could we please open the line for questions?

[Operator Instructions] Our first question today comes from Daniel Imbro with Stephens. Please go ahead. Daniel?

Yes. Hi, good morning, everybody. Thanks for taking our questions. David, I want to start on the golf club side, really impressive I think TSR, it seems to be holding in market share pretty well despite competitors launching product. We have seen some other large competitors launch additional products kind of later in 1Q. So I guess, could you characterize the competitive backdrop you're seeing for golf clubs, are you seeing anything changing on the promotional or just pricing front? Maybe not promotion just MSRP pricing? And how do you think that unfold through the years, is all the products out? Could it be more launches coming from competitors that stuff the inventory in the channel more? Just kind of curious how you think that plays out this year?

Yes. Good morning, Daniel. So first off, we are very pleased with TSR. And as is the case, every spring and every first quarter, we do anticipate a whole lot of competitive activity. We launched typically in Q3 of even years and then we braced for a whole lot of competitive launches in the first quarter of odd years, which is the case this year. We're certainly seeing inventories at full levels, which commentary on as much time of year inventories and golf shops are ready for the season ahead. So we've not seen any meaningful areas for concern, you do bring up a good point, there have been some extensions. As is I think the industry puts forth some new products, as everybody thinks about a new golfer base and a little bit bigger golfer base than existed three, four, or five years ago. But really, in terms of how that's impacting the market, I think too soon to say in many respects, I'll remind everybody that in many parts of the country and the world, golf is just getting started. We're two weeks in here up in New England, in Europe, similar story just getting started. So best characterizes is there's an appropriate amount of inventory in the marketplace, and golf shops are full. And really a lot will depend on what plays out over the next couple of months. In terms of our own plans with TSR. Again, we like our approach, we like the way we come at it with two-year product life cycles. And sort of our modeling anticipates what we get out of Q4 and then what we typically see in the first part of the year through competitive launches. But more than anything, we like the way we've weathered the storm of competitive launches if you will.

Right and quick clarifier, you guys a couple of years ago did some extension to use up freight as well. Is the TSR lineup full today or could there be more that you guys could look at?

Yes. I think we were like where we are now in our lineup is really fitting bass TSR-2, TSR-3 would be the core TSR-4 hits a different part of the spectrum and TSR-1 hits a different part of the spectrum. But we like where we are. I'll tell you the one addition we did put in the market this spring was some lightweight Vokey wedges, not a big volume play. But it's just an emerging part of the market. Again, commentary on the new consumer that's out there and some new fitting interests that we're seeing around just to generally lighter weight wedge. So we did enter that space in the first quarter of this year. But again, not a major volume play, but we think an important space for us to be in.

Great, that's helpful. And then last question just on the guidance. I think it's been an investor's focus this morning. Given the beat, the momentum sounds like it's continuing, David. Can you talked about the puts and takes of why you didn't pick up the guidance. You did mention in your prepared remarks that there was some April launch -- April shipments for FootJoy and gear that got pulled forward into March. If you could you quantify what that pull forward was into March, and then just talk about the guidance and maybe why you're keeping it here after a solid third of the year?

Yes, so we did custom demand, custom throughput has been the most challenging over the last couple of years as it tends to happen in the peak season of February, March, April. So our custom operations really around FootJoy apparel in the U.S. and title this gear in the U.S. We were just compelled to keep those engines moving and moving fast and that allowed us to pull some demand forward. I put that in the $5 million to $10 million range, Daniel, just for context. And then as it relates to guidance that says much about our just our past practice, we've been at this a long time and it's we just think it's prudent to see the season unfold and see what happens with sell-through, because so much of what you get in the first quarter is selling. Certainly there's a decent amount of sell-through coming from open markets in the Sunbelt. We just think it's prudent and it's been our past practice to defer any meaningful guidance shifts until we get through the second quarter. We are obviously pleased with the start, but we think it's the right prudent play to see things unfold a little bit over the coming months.

Perfect. I appreciate all the code this morning and best of luck moving to the spring. Thanks.

Our next question today comes from Casey Alexander with Compass Point. Casey, please go ahead.

Yes. Hi, good morning. A couple of quick questions. First of all, are you generating any longer-term expense savings from the IP purchase that you made previously?

Good morning, Casey. Yes, we are -- so the -- as we said last quarter that shifted from sort of a royalty model to an owned model. And so the costs associated that shifted out of the cost of goods sold line item in the P&L and into the amortization line item. And there is a benefit of that, given the duration of the amortization life of the intangibles.

Alright, great. Thank you. Secondly, how much still remains open on the share repurchase program? And would you given the increase in long-term debt outstanding? Would you kind of shift priorities to bring that back down some before re-engaging on share repurchase or do you still have room to do both?

So at the end of Q1, we had a little over $290 million remaining under our current share repurchase authorization. Our increased debt level at the end of Q1 is as much a function of our seasonality as anything else. But Q1 is always -- the end of Q1 is always our highest borrowing point in the year. And in fact, we've already at the end of April, our debt is already below $750 million. So we would anticipate continuing with our share repurchases in a similar manner to what we've been doing. I think last time we said, we expect the current authorization to be fully utilized sort of mid-next year.

Okay, great. Thank you. And then my last question is, there was a couple million dollars of one-time items that added back into EBITDA from the distribution and custom fulfillment investments. Is that just one quarter? Or should we expect to see that over a number of quarters before it runs off?

You should expect to see that over at least the next two quarters and potentially bleeding a little bit into Q4.

Okay, great. Thank you very much. I appreciate your taking my questions.

Thanks, Casey. Thank you.

Thank you, operator. Next question, please.

The next question comes from JP Wollam with ROTH Capital Partners. Please go ahead.

Great, thanks for taking the questions today. Maybe, if we could just start first on the club business? Maybe from a high level? Is there just anything you can point out about any trends you're seeing with consumers right now? Whether it's, you know, shorter, repurchase cycles. You know, there's so much macro talk going on that I would just be interested if you guys have any thoughts there?

Yes. I'll bring that question first to sort of how we run the club business, right? We operate on two-year product launches. So we're, in year one of drivers and metals and some putters, and we're in year two, for irons and in wedges. So again, I think that serves us well. I think it helps mitigate some of the ups and downs of the club business. And it lends a sense of resilience and stability to our club business that we've seen over the years. It also and as importantly, correlates with some repurchase cycle behavior of our consumers in our businesses is very, very fitting biased in that in the great majority of golf clubs, we sell our custom fit and when we think that that's a real positive for our retail partners for our own business, and most importantly for our consumers, we think get the best experience out of our products. As to what we're seeing, the fitting activity continues to be at a nice level. I think that's reflected in our results where we've done a nice job in all categories. You know, that's probably the most important metric that we would look at is fitting engagement and fitting level levels and globally we continue to see high interest in demand for fittings, and that contributes to our results and our outlook for the coming months, in terms of golf clubs.

Great, thank you. And then maybe just shifting over to the ball side of things. I think the comment in your remarks was about still building the backstop to normal levels. Maybe, if you could just talk kind of where you are relative to normal levels. And then, you know, is there any missed sales? Whether it's this year? Or maybe it's something that, you know, impacting early next year, just trying to kind of quantify if there's, if there's any pain points because of the lower than normal backstop?

Yes, so about a year ago, we started, we resumed production at full capacity. And that was commentary on raw materials availability. So when raw material available, availability improved, our capacity ramped up. So we're in a very good spot today, our comment is as much about backstock of really Pro V1, Pro V1x. And edX, we're going to be tight over the next couple of months, we do think it will, we think we're in good enough shape, where we'll have full inventories in the market that may be a little leaner than we'd like to see. But we don't anticipate outages. And we do expect that by the end of this year, we'll get back to somewhat of a normal cycle. You can tell sequentially, I made the comment, we shipped about a half a million dozen more probie ones this year than last that again, commentary on the health of the franchise, but also commentary on our team's ability to produce product. But I would say near term we like where we are, we do have some allocations in place just to make sure we spread product availability fairly and broadly. We don't anticipate outages we do anticipate field inventories will be a little bit lean. But we're going to do everything we can to avoid outages. And again, by the end of the year, we think we'd be back to more normalized levels.

Great, thank you very much.

Thank you, JP. Operator. Next question, please.

Our next question comes from Noah

Thanks for taking my question. You know, I guess just a high-level question for me, you know, related to kind of maintaining the guidance and noting kind of caution around macro related to that. Historically, you know, in terms of your brands being positioned, you know, at the premium end, like what do you typically see from consumers in a recession? Do you see trade-down? Do you see kind of extended repurchase cycles? Like how do you think about the behavior of the avid golfer in a recession? Thanks.

Yes, so we've been through a bunch of them over the decades, I guess. And if there's any common theme, it's our dedicated golfer, we talk about this a lot tends to be more resilient than most and that speaks to their passionate ability for the game and it also speaks to their relatively strong demographic profile. So our consumer tends to be resilient. We do not see a lot of trade down from our consumers. We see consumables hand pulled up the best and certainly better than durables, we see sometimes equipment purchased lifecycles extended a bit. And we tend to see rounds of play hold up fairly well, again, from our core consumer. If we go back to the last recessionary period 809. I think consumer spending was off macro in the range of 15%. We were down our top line was down and you pin you back out COBRA at the time, which we owned about half that and I think that's as much as anything commentary on the strength of our core consumer that really we've built, we've built our business around.

Very helpful and just want maybe on kind of equipment retail side, you know, I think weather obviously challenging in March. Have you seen improvement or heard or heard anecdotally improvement on the retail side? Moving into April and how us kind of thinking about retail, moving through the year. Thanks.

Yes. so I'll in this will be a more U.S.-centric answer just because the U.S. market is often running. But rounds were down I think point 2% which is in our view, very healthy, particularly when you consider California was off almost 20%, Arizona off 10 plus percent. So when you look at rounds profile, you feel pretty good about the health of the rounds, given some serious weather in the West Coast, which is, you know, far more positive long term than not. The numbers we see out of Golf Datatech, total spending in the quarter on equipment, apparel was down 1%. Again, we think that holds up pretty well. That's through March. We haven't seen any deviation from that. And APR, either high or low. So we think it's we think it's best described as stable. So much of this, so much of what you're going to see in March or excuse me, rather than April is a function of when the season starts. And we're still very weather variable and weather dependent in a lot of parts of the country. You get good weather, the season starts fittings happen, and we see an uptick. And if you get if you get less than favorable weather some of that some of that activity is deferred into May. So I would characterize April is really not too dissimilar from what we saw on the first three months of the year.

Very helpful. Thank you.

Thank you, our operator. Next question, please.

Our next question comes from Ivan Feinseth with Tigress Financial. Ivan, please go ahead.

Thank you for taking my questions. And congratulations on the great results and start to the year. Can you give me some discussion of like what demographic trends you see shaping that will continue to drive? Increasing rounds of golf, increasing player engagement new players come into the game?

Yes, so a lot of thanks, Ivan, a lot of what we point to is data from the National Golf Foundation, I'll speak to some high-level demographic trends we've seen over the last handful years 2022 mark the fifth year in a row where the game added golfers, obviously a real positive and over that time, the fastest growing segments were juniors and women. So we'd be like the overall demographic trends in the game. I will point to also our business I talked about the Democrat dedicated golfer a few minutes ago, you know, we point to there the 15% of players who play 40% of the rounds and spend 70% of the dollars in the game. That is our sweet spot. And that's really what we've built our businesses around. We've seen that increase commensurate with the broader increase in the marketplace. So that's some of the data that's that the National Golf Foundation would put out there more anecdotally, I would say, we look at rounds and how rounds held up versus whether and we see that as a real positive. We look at the capacity of golf out there. And in many respects, many clubs are at capacity for memberships. So there's a full, generally full marketplace in private golf, golf clubs in particular. So the fundamental foundational trends of the game are very healthy. And again that's U.S. commentary. When we look around the world, and really to Japan and Korea, which are the second and third largest markets. You know, we see we do see similar trends Japan rounds were up I think, I think 7% 8% in the quarter. Actually check that they were up more like low single digits in the quarter, Korea down a little bit, and as much weather related, but that's as much commentary coming off of a really strong run over the last couple of years. So if you look around the globe, you do see the number of golfers increasing. Rounds play really heady, healthy, and steady in the face of some tough weather. And at this point, we think you're going to be you're going to see some ebbs and flows based on weather. But by and large, if you look at where the game is today versus where it was five years ago, very healthy and clubs reflect that in terms of their memberships. Public horses reflect that in terms of their rounds of play. You know where it goes from? Here is the great question mark. I will say it's been our observation that the game has held up from around and participation standpoint, very well, given where we were a couple of years ago and our belief that while folks stopped spending money on travel and vacations and new sports and had a lot of discretionary time for golf. We understand that a lot of those activities have returned. And in spite of that, we look at rounds of play being flat from historically high levels. And we see that as a real positive.

Ivan, did you have any other additional questions?

Analogies or improvements that you see in your equipment that can drive sales that, you know, as people improve the way they play, they want to continue to play for example.

Ivan, could you repeat the question you cut out in the beginning of that? Thank you.

Sorry. And so what kind of ongoing technological developments in equipment do you see happening that drive people to improve people's games that drive them to want to play more and then buy new clubs? Or what do you see as the catalysts for additional club upgrades? For example, equipment upgrades?

Yes and it's really twofold. One, you know, just continued product improvements, right. We're an industry that's built around product innovation, I will add, we're a heavily regulated industry in terms of distance. But in terms of innovation to make products better, we still think there are a lot of ways to do that. In our case, Ivan and this is true with balls and clubs, and even footwear to an extent. Our path forward is also predicated on a whole lot of customization and fitting activities. We know that some of the best paths for improvement for players is through benefiting experience to make sure they're playing the very best equipment for that game. So I put that in the same category. As I put equipment innovation, it's fitting innovation, and expanding our fitting activities. We do a whole lot of fittings today. But we know there are a lot of golfers out there who would still benefit from fitting experience again, whether it be for balls or clubs or even footwear.

Thank you. Again, congratulations on the great start to the year.

Thank you. Well, thanks, everybody. As always, we appreciate your interest in Acushnet. We hope for a nice spring season and hopefully, I'll get out and play a little bit and we look forward to talking to you after the quarter.