Good morning, everyone, and welcome to the Acushnet Holdings Corp. Third Quarter 2023 Earnings Conference Call. My name is Carla, and I will be your operator for today’s call. I will now hand over to your host, Sondra Lennon, Vice President of Planning, Analysis, and Investor Relations, to begin. Sondra, please go ahead.

Good morning, everyone. Thank you for joining us today for Acushnet Holdings Corp.’s third quarter 2023 earnings conference call. Joining me this morning are David Maher, our President and Chief Executive Officer; and Sean Sullivan, 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 nine-month period ended September 30, 2023, and the comparable nine-month period. With that, I'll turn the call over to David.

Thanks, Sondra. And good morning, everyone. We appreciate your interest in today's call. I will start on Slide 4 and get right into our results. Acushnet posted third quarter sales of $593 million, a 6% increase over last year. Adjusted EBITDA for the period was up 14% to $99 million. For September, net sales were up 10% to almost $2 billion, while adjusted EBITDA increased 21% to $378 million. I will pause here to thank my teammates for their commitment and dedication, which fuels the company's performance. Looking at our business by segment, you see the strength and momentum of Titleist Golf Balls and Golf Clubs, driving the company's growth. Titleist Golf Balls were up 6% in the quarter and 16% year-to-date. New Pro V1 and Pro V1x models are leading this growth and our golf ball manufacturing team is doing good work to keep pace with strong consumer demand. As we approach the holiday retail season, our golf ball availability position is healthy, and we have transitioned to building inventory to support new product launches scheduled for early 2024. And across the worldwide tours, Titleist Golf Ball usage is more than seven times that of the nearest competitor, and at the Men's and Women's U.S. Open and Open Championships, all four winners played a Titleist Golf Ball, showcasing the quality, total game performance, and versatility that define the number one ball in golf. Moving to Titleist Golf Clubs, our team posted another strong quarter with sales up 18% for the period and 17% year-to-date. New Titleist T-Series irons launched in August and are off to a solid start with early demand meeting our high expectations. Titleist was the most played iron on the PGA Tour this past season for the 19th time in the past 20 years, and Titleist TSR drivers also continue their streak as the most played driver on tour. Rounding out our club business, we are also pleased with the momentum and sustained demand for Vokey wedges and Scotty Cameron putters across the worldwide tours and in the marketplace. And affirming their global strength, Titleist Golf Balls and Golf Clubs have posted year-to-date sales gains in all regions. Now moving to Gear, you see sales were down 20% in the quarter and up 9% year-to-date. This third quarter decline was expected as we compared against last year's outsized growth when much of our gear volume was delayed into Q3 due to supply chain disruptions we experienced in the first half of 2022. We are pleased that our gear delivery and service have returned to healthy levels and that the timing of our business is on a normalized and demand-driven cadence. Now to FootJoy, sales increased 3% in the quarter and are flat year-to-date due mainly to the strength of our U.S. business. Growth in the quarter was led by apparel and a modest increase in footwear as we effectively differentiate our new golf shoe products in a crowded retail environment. Affirming our comments on the last call, we expect the industry will continue to work through excess footwear inventories for the next few quarters, and we remain confident that our team will manage through this period while protecting FootJoy’s premium positioning and long-term interests. Now to Slide 6 and look at our business by region, here, you see the strength of the U.S. market and consumer in our quarterly and year-to-date results. The U.S. is setting the pace with rounds of play up 4% year-to-date and on track to surpass their previous high mark from 2021. We see this as positive commentary on the overall health of the sport and the additive impact of the expanding golfer base. Healthy participation and strong demand across our portfolio are driving Acushnet's 8% third-quarter and 15% year-to-date growth in the U.S. Golf balls, clubs, and shoes were up double digits year-to-date, while Gear and FootJoy have posted high single-digit gains for the period. Outside the U.S., we estimate that rounds in EMEA, Japan, and Korea were off low single digits through September, largely attributable to unfavorable weather compared to last year. Acushnet year-to-date sales, as you see, are off 1% in EMEA, up 9% in Japan, and down 2% in Korea; Rest of World sales have increased 14%. As noted, ball and club sales are up in all regions, while footwear declines and a soft apparel market in Korea have negatively impacted both Titleist and FootJoy apparel sales. And now looking forward, the attractiveness of Acushnet's core consumer, the game's avid and dedicated player and the company's enduring commitment to product and service excellence continue to drive the strong financial performance and positive outlook we share today. We're excited about the momentum behind our Titleist, FootJoy, and Shoes brands and healthy market fundamentals and are confident in the investments we are making across our businesses to position Acushnet for sustaining leadership and growth. Golf participation is vibrant, with worldwide rounds of play tracking ahead of their 2021 peak, and golf courses and retail partners are investing in their facilities and experiences to meet evolving consumer preferences. On the new product front, we're optimistic about early interest in our new T-Series irons and are confident our custom fitters and supply chain will support high-quality golfer experiences and our ability to meet anticipated demand levels. Our golf ball team is on track to launch several new models in early 2024. Remember, in even years, we launched new AVX and performance models. We have high confidence in the health of our supply chain and ability to successfully execute these launches and also look to benefit from recently added capacity, which will support improved Pro V1 availability going forward. We're equally confident in the state of our new product pipelines for Titleist Gear, FootJoy, and Shoes and are well positioned to meet the anticipated Q4 and holiday demand and launch a wide range of new products next quarter. In summary, we believe the company's commitment to making high-performance, high-quality golf products, focus on the game's dedicated golfer, proven track record of product innovation and supply chain management and ongoing investment in our product development, golfer connection, and manufacturing, will support the company's long-term growth objectives. These priorities, along with the company's disciplined approach to capital allocation, remain the foundation of Acushnet's proven investment thesis. Thanks for your time this morning. I will now pass the call over to Sean.

Thank you, David. Good morning, everyone. As David highlighted, we had a great quarter and strong year-to-date performance. Third quarter net sales increased 6% over the same period in 2022, driven by higher sales in Titleist Golf Clubs, Titleist Golf Balls, and FootJoy Golf Wear. Adjusted EBITDA was $99 million, a 14.2% increase. For the first nine months of 2023, net sales and adjusted EBITDA increased 9.9% and 20.6%, respectively. Net sales growth in the quarter was driven by continued momentum of our Titleist brand with Golf Clubs and Golf Balls growing by 17.9% and 6.2%, respectively. FootJoy sales were also up in the quarter by 3.4%, driven mainly by apparel. Titleist Golf Gear decreased by 19.9% from the third quarter of 2022, which, as David mentioned, reflects a comparison to the outsized quarter we had last year. Net sales were up in Q3 across all regions, except for Korea, where the market continues to be impacted by soft footwear and apparel sales. Gross profit in the quarter was $309 million, up 4.6% compared to 2022, primarily due to higher sales volumes in Titleist Golf Clubs, higher average selling prices in Titleist Golf Balls, and lower inbound freight across all reportable segments. Titleist Golf Gear's gross profit was down mainly due to lower sales volumes, and FootJoy's gross profit was down primarily due to unfavorable manufacturing overhead absorption and increased promotional activity in footwear. Overall gross margin of 52% was down 80 basis points, largely due to the FootJoy factors I just mentioned, primarily offset by lower inbound freight costs across all reportable segments. SG&A expense of $210 million in the quarter increased $8 million or 3.8% from 2022, mainly due to higher advertising and promotion expenses in Titleist Golf Clubs and Titleist Golf Balls, higher selling expense primarily due to employee-related expenses, partially offset by lower retail commission expense in Korea and lower IT-related expenses. R&D expense of $16 million was up, mainly due to higher employee-related expenses. Our increase in intangible amortization was due to the acquisition of trademarks related to Titleist Golf Clubs and Golf Gear in the fourth quarter of 2022 and the first quarter of 2023, respectively. Interest expense of $9 million in the quarter was up $5 million due to an increase in borrowings and interest rates, with a little more than half the increase coming from higher debt balances. Our effective tax rate in Q3 was 16.5%, down from 22.9% last year, primarily driven by a shift in our mix of jurisdictional earnings. Our forecasted effective tax rate for fiscal year 2023 is expected to be in line with our year-to-date rate of approximately 19%. Moving to our balance sheet and cash flow highlights. Our balance sheet and cash flow positions continue to be very strong, allowing us to continue to execute our capital allocation strategy with ongoing investments in the business and return of capital to shareholders being our highest priorities. I am pleased to report that on October 3, 2023, we completed the issuance and sale of $350 million of 7.38% senior unsecured notes due in 2028, which further enhances Acushnet's liquidity position. The proceeds from the notes offering were primarily used to repay borrowings under our revolving credit facility. Our net leverage ratio at the end of Q3 was 1.6 times. Inventories declined from both last quarter and year-end, and we are comfortable with our inventory quality and net position given the current state of demand and the supply chain. We expect inventories to increase at year-end to support 2024 product launches. Year-to-date cash flow from operations was up significantly from the prior year, mainly due to changes in working capital, primarily inventory. Capital expenditures were $42 million in the first nine months of 2023 and are still expected to reach approximately $75 million in fiscal year 2023, given a heavily loaded Q4 pipeline. Through September, we returned roughly $245 million to shareholders in 2023, with $205 million in share repurchases and $40 million in cash dividends. Today, our Board of Directors declared a quarterly cash dividend of $0.195 per share payable on December 15 to shareholders of record on December 1. As of September 30, we had $202 million remaining under the current share repurchase authorization. Between October 1 and October 27, 2023, we purchased approximately 386,000 shares of our common stock on the open market for an aggregate of $20.2 million, bringing the cumulative total open market purchases since the inception of the 2023 share repurchase agreement with Magnus to $100 million. As a result, we expect to purchase approximately 1.8 million shares of our common stock from Magnus for an aggregate of $100 million on November 3, 2023, in satisfaction of our commitment under the 2023 agreement. After settlement of this agreement, we will have approximately $82 million remaining under the share repurchase authorization. Turning to our full year 2023 outlook, we're maintaining our view for revenue to be between $2.35 billion and $2.4 billion, up 5% to 7.2% on a constant currency basis compared to 2022. This outlook incorporates continued momentum in the golf ball and golf club categories. However, some of our third quarter outperformance in golf clubs was due to timing, notably in Japan, where this year's iron launch was a quarter earlier than last year's fourth quarter metal launch. At the midpoint, our revenue would be up 6.1% on a constant currency basis. With respect to adjusted EBITDA, we are narrowing our range to be between $365 million and $375 million. In terms of the fourth quarter, on top of the shift of golf club revenue to Q3, I just mentioned, I also want to point out that our outlook reflects incremental investments in the fourth quarter, in particular, selling, R&D, and advertising and promotion as we look to build upon momentum heading into 2024. In closing, we're very pleased with our performance in the first nine months of 2023 and remain focused on executing on our priorities for the balance of the year and beyond.

Thank you, Sean. Operator, could we now open up the lines for questions?

We will now take our first question today from Randy Konik from Jefferies. Randy, your line is now open, please go ahead.

Yes, thanks. And good morning, everyone. I guess, Sean, just real quick to clarify, is there any way to quantify the impact of that shift in Japan from the fourth quarter into the third quarter? Just give us a little flavor there. And then, I guess, David, just give an update on just market thoughts by region. The U.S. market continues to power ahead even with very wet weather. So, that's very positive. Just wanted to get your thoughts just on how you feel about the U.S. market relative to Europe and Asia at this point in the cycle?

Hi, Randy. I'll take that. So U.S. certainly point to rounds of play, obviously healthy. I think we're on track to be – we're up about 4% year-to-date, which set against the backdrop of a very wet spring in open markets, particularly the West. I think the industry generally feels really good about what we're seeing in participation. So U.S. participation is up low single, and outside the U.S., down low single in terms of rounds play. And that's got a bit of a weather impact as well. I think when I looked at the third quarter rounds profile outside the U.S., it was flat to up 1%. So, the U.S. is outpacing in rounds. And I would say the U.S. is outpacing in consumer spending as well, which I don't think surprises any of us. We certainly saw a bit of a pullback from the consumer in Europe this year, which we expected. Japan, little bit like Europe. The one area that may be a bit of an outlier is Korea, where we called that out in our prepared remarks with the apparel space in the Korean market. But by and large, I'm very happy with participation, particularly in the U.S., pleased with consumer spending in the U.S., and would note that there is a slight trailing outside the U.S., both in terms of rounds of play and consumer spending. But where we sit today with the market where it is, with consumer spending where it is, I think it just speaks to the strength and resilience of the sport. And then when you refine that a bit into our dedicated golfer, you see that group as even more resilient than the broader consumer space.

Yes. And then Randy, on your first question about the clubs, again, we are obviously very pleased with how the irons launch has gone. When you look at Japan in Q3 this year versus last, we're probably up about $5 million in the region. And certainly, we're comping. And I think the key point here is we're comping against a metals launch that happened in Q4. So it's as much about what you should expect in Q4 as what we experienced in Q3.

And then last follow-up. Just Sean, again for you, just on gross margin. Can you just walk us through some of the upcoming puts and takes you expect just to impact gross margin ahead? It sounds like there's still ASP strength. Freight rates are down. I don't know if raw materials are as well or labor. Just want to get your thoughts on how we should be thinking about just trends around, again, the puts and takes around gross margin? Thanks, guys.

Yes, sure. So I feel very good about the gross margin outlook. I think on the positive side, we have experienced benefits in 2023 from freight, as you called out. I think the majority of that, Randy, we have experienced through the nine months. I think as I look at Q4, probably a small tailwind on freight relative to the prior year, but I think moving to a more normalized state. We talked about the strength of the ball and the club segment. So I think that will continue to bolster the gross margin. And on the flip side, again, we've talked about our customization, our distribution. We've talked about manufacturing overhead. So, in many respects, the footwear category and what impact our production and manufacturing has as it was in the quarter, a bit of a drag. Overall, I feel good about the gross margin outlook. And those are a couple of other things that are I guess, on the one hand, normalizing, on the other hand, we'll – I think we'll hopefully, as David said, as we cycle through the footwear market, we'll start to see, hopefully, a turnaround in terms of the manufacturing absorption.

Very helpful, thanks, guys.

Thanks, Randy. Operator, next questions, please.

We will now take our next question from Megan Alexander from Morgan Stanley. Megan, your line is now open, please go ahead.

Hi. Thanks very much. Maybe if I could just follow up on that last question from Randy, can you maybe talk about, in the third quarter where gross margin came in relative to your expectations? And then I guess, more broadly, the 3Q number was relatively in line with 3Q 2019 was. So as we think about next year, is 2019 the right base to think about, or Sean, to your point, are some of the pressures you're seeing in footwear this year perhaps transitory and you maybe can recapture them next year? So 2019 may not be the right base to think about?

Yes. Megan, I'll comment on sort of the look back to 2019. Certainly, from a product launch cadence standpoint, I think, 2023 versus 2019 is a fair comp. Remember, right, 2024, we get into even years, and that changes our launch profile. We launched AVX and performance models. We'll launch a new driver. So always even-to-even is a better look back, and odds to odds are a better look back. But in terms of the flow of product and the cadence of product, I think that's the right way to think about it. The wildcard, as you well know, is the business is just a lot bigger, which is changing. Our margin profile changes to how we spend, there's a little bit of shift to when we spend. But by and large, in terms of pointing to what's the right way to think about the business on a going forward basis. I do like the even-to-even comparison with the understanding that you do have to kind of park what happened in 2021 and 2022 aside.

Yes. And then Megan, just in terms of gross margin for the quarter, I mean, it was generally in line with expectations. I think we expected strong performance from balls and clubs and the contribution. We knew we had some offsets in the FootJoy category. I think one of the things I didn't really comment on in Randy's question was raw material pricing. I think we've seen normalization there, with some moderation across the board. So we really have good visibility to raw materials, primarily in our ball and clubs business. So all in all, gross margin for the quarter was in line with our expectation.

Okay, thank you. That's helpful. And then maybe can you just probably give an update on retail inventory? You mentioned footwear again. I guess, how does that look relative to last quarter? And would you expect that to kind of work itself out in the fourth quarter? Or could that perhaps bleed into next year?

So, I'll just caveat this by saying we're at a seasonally low point in time in the golf industry, right? It's November and a lot of the retailers, a lot of our golf courses have closed or will soon close. So we're at a seasonal low. I would characterize inventories broadly as generally healthy and within the range of normal, which we feel good about heading into the holiday and next year. The one outlier we've called out has been footwear. And the way we think about that, I would say it's probably 10% to 15% heavier than where it should be. And again, keep in mind, I'm speaking about broader channels, not just our footwear business, but global inventories across channels. So if I look at it as being 10% to 15% heavier than what it may be, it might have been 15% to 20% heavier three to four months ago. So, I think it's working its way through the inventory cycle. The other part of that is, I would point to, it's going to be on the lower end in the U.S. and the higher end outside the U.S. And then within the U.S., it's important to note that a lot of that inventory tends to be concentrated in the off-course channel. You don't see a lot of excess inventory on course. So, it is concentrated. But in terms of how do we work through it, we do think we're a couple of cycles to go to get to a more normalized state. But the reality is we made a nice step forward over the last three to four months.

Got it. Thank you very much.

Thanks Megan. Operator, next question, please.

Our next question comes from Matthew Boss from JPMorgan. Matthew, your line is now open, please go ahead.

Thanks, and congrats on a nice quarter.

Thanks, Matt.

So David, maybe higher level, could you elaborate on the underlying enthusiasm for the game of golf that you cited? Maybe how you see the brand positioned across categories to capture market share opportunity? And do you think multiyear, this could potentially change, if we think about pre-pandemic? I think it was basically a low to mid-single-digit revenue growth rate. Just any changes as you think multiyear.

Yes. So, Matt, I'll start with sort of our view of the sport over the last several years; rounds globally are tracking in the U.S., up about 19%, 20% ahead of where they were pre-pandemic. There has been a big step-up, right? We have more golfers. People are prioritizing the sport differently in their lives. People are working differently. And I think the game is benefiting from – it's realizing the benefits of its exercise components, its outdoor components, its socialization components, all that goes along with it. So the sport is obviously very, very healthy. In the U.S. and around the world, I've made the point a few times that I think we're five years running where the golfer base has grown fastest-growing segments, juniors women. So, a lot of positives in the sport, and I'll bring that commentary to Acushnet in our business. As you know, we're focused on the dedicated player. We tend to be a bit more focused in our product approach and our messaging approach. As we say routinely, they're pretty resilient, they're pretty passionate, and in good times, they play and think about equipment. And we're seeing that in our results, not only this year, but over the last several years. And then we also point to that audience in recessionary times and look at their resilience in recessionary time. So really, the core of the Acushnet story is this core dedicated player. There are some other factors that are playing out as well, and that is the professional game, right, vibrant, alive and well. We're seeing a return of corporate spend on golf that went very quiet during the pandemic years, but we're seeing corporate spend, whether it's through outings or through the promotion of events pick up again. That's a healthy positive. More broadly, the game, the sport facilities, whether it's golf courses, whether it's golf specialty retailers have had a pretty good run these last few years. They're taking their successes and reinvesting in the future. So, what we're seeing here in the last couple of years is the game is doing a nice job reinvesting in itself and understanding that, hey, there has to be evolution; there has to be some adaptation in order to continue this momentum that we're experiencing. So, all in all, we feel really good about where the sport is today and the fundamentals are very strong. Again, I made the point earlier that I would put an asterisk next to rounds of play this year; they're going to be up about 4%. That's with some real tough weather around the U.S., which says people are avid, people are committed and they're utilizing the capacity that exists within golf courses at a higher level than they typically have. But a lot of positives and certainly, we're aware of all the macro concerns in the marketplace in the world, and we factor those into our calculus and our forward thinking as well. But net-net, the sport is in a really good spot.

Great. And then, Sean, could you elaborate on the investments that you cited in 4Q across segments? And just help us to think about operating expense dollar growth relative to sales growth as we think about the opportunity for operating expense leverage multiyear.

Yes. As I called out, we're really trying to invest in the business, build on the momentum for 2024 – build on the momentum we have now for 2024 and beyond. I cited the selling, I cited R&D, and other advertising and promotion. So obviously, the club and ball franchises and the Titleist brand is a big part of that. So you're going to see – our expectation is meaningful investment in OpEx in Q4 relative to sales growth. So again, we talked about that on the last call; probably had more ambition around IT and some other areas that we had called out. We certainly are still working on a number of enterprise-wide technology initiatives that are going well, but probably the pace of investment and spend is slightly lagging where our expectations were – was, I guess, at the end of Q2. So I figured I'd call that out as well because that is a slight positive. So we certainly will expect the investment in Q4. I think we've got some ambitious plans. And we think that, again, we like where we're from an EBITDA margin perspective, our OpEx investment. I do think that we're investing significantly in our customization and distribution capabilities that we certainly can talk more about on future calls, but we really think we're setting ourselves up for good operating leverage in the business. As we've called out a number of times, this business has grown significantly over the last three or four years. I think between customization, distribution, and technology, we really have an opportunity to build a real scalable platform and create operating leverage in the business in the mid to long term.

Great color. Best of luck.

Thanks, Matt. Operator, next call, please.

Our next question is from Joe Altobello from Raymond James. Joe, your line is open, please go ahead.

Good morning. This is Martin on for Joe. Congratulations on a great quarter. I do want to touch really quickly on the revenue guide. There's only two months left. And I believe last year, you've narrowed the guide to about $25 million, so we just view the $50 million gap. It's a little bit wide. Would you mind touching based on some of the uncertainties for the remainder of the year?

Yes. Happy to, Martin. So again, obviously two months left in the new year. It is a seasonally low point, as David talked about. I think that given the macroeconomic environment, we're just taking a conservative approach to Q4 on the sales side. October results are certainly coming in line with expectations. Across the board, I think the footwear category and FootJoy we're keeping an eye out. We've talked about it a number of times now. But as we think about – it just seemed like the prudent approach to hold firm on the sales side. We certainly tightened the adjusted EBITDA range given the Q3 performance in our outlook for the year, so we thought prudent to tighten that one, and we have certainly more confidence – leaving the range where it was at sales seemed to be appropriate at this point.

Hey, Martin, just the only thing I would add to that is clubs. We did – Sean mentioned in his remarks, there was a timing shift within clubs, which we shipped irons in Q3 this year. Last year, remember, we launched metals in Japan in Q4. That won't repeat. So that's the only unusual call out on a year-on-year comp that is worth noting.

Great. Appreciate it. I just got a question about the fire in Taiwan. Is that to get an opportunity for Titleist to gain incremental ball share?

Well, we are certainly considering possibilities. A lot of questions left unanswered. I'll tell you, Martin, I am going to pass on that one. We don't have a relationship with Launch Tech, and I think others are best positioned to speak on that one. So at this point, it's too early to say, but certainly, we're modeling possibilities and scenarios.

Got it. Once again, congratulations.

Thanks.

Thanks, Martin. Operator, next questions, please.

Our next question is from JP Wollam from ROTH MKM. JP, your line is now open, please go ahead.

Great. Thanks for taking my questions here. First off, could you maybe just touch after taking price on the Pro V1 this year, have you seen any kind of impact from that price change? Any response from consumers or retailers about that change in price and any impact to share as you think about going forward? And then just maybe also on that note, as we think about revenue next year, exiting the peak season this year, are there any conversations with retailers or pro shops that kind of how are you thinking there's changes in the way consumers are buying? Or just any major trends to point out as you think about how to position for next year from a revenue perspective? Thank you.

Yes. Okay, JP. So as to pricing, we are nine months into – well, we're ten months into the new Pro V1 pricing. It has settled in. Obviously, we're having a very good year both in terms of sell-in and sell-through from a share standpoint. You never want to be cavalier about price increases, but we think the market understands and accepts the price change. And we think most importantly, we've done a good job showing value associated with that price change. So again, never want to take price increases lightly, but I think we did a good job positioning new models in the marketplace. And again, our sales data and certainly, sell-through data would suggest the consumer has accepted and understands the reasoning and the value associated with that. In terms of retailers and major trend shifts, nothing to call out other than, again, I'll make the point that even years, particularly on golf balls, even years flow differently than odd years, right? We launched and pipelined new Pro V1 this year. We won't do that next year in 2024, but we'll launch in pipeline AVX and our performance models. So just a different cadence, that's the big story. I will say it looks as though certainly as our retailers have stepped up their revenues, and I made this point before, almost half of our businesses in the U.S. is on course. So it's got a little bit of a different profile than maybe the market in total. But I think our retail partners and green grass partners have done a really good job keeping pace with stepped-up demand. And I really can't call out an area where they're going to change or think differently about how they purchase and stock product. The only exception might be – and it's specific to how we're running our business and you see our success in golf clubs, we keep activating our custom-fitting network, and that works really well for us. So that might invite a more measured or lesser inventory position at retail from a golf club standpoint, but that's only because we're pushing – we keep pushing the envelope and investing behind our custom-fitting efforts.

Great, thank you. And then maybe just one follow-up. In terms of the share repurchases, just wondering if there is any kind of cadence that you're thinking about in terms of that remaining $80-ish million. And I don't want to jump the gun, but just curious if there's any ongoing talks about kind of re-upping that plan and maybe when we might hear about that? Thank you.

Yes. No, good question. So obviously, we'll settle tomorrow. That will leave us with $80 million. I think our historical pattern is as good as a predictor of our approach to capital allocation. Again, we're investing heavily in the business, as you know, in the form of R&D and capital expenditures as we called out today. We've got a nice dividend and a robust share repurchase program. I guess the best way to answer that is I would expect that probably at some point in the first half of 2024, you'd see that $80 million needing to be revisited.

Great, thank you. And best of luck moving forward.

Thank you.

Thanks, JP. Operator, next question, please.

Our next question comes from Daniel Imbro from Stephens Inc. Daniel, your line is now open, please go ahead.

Hey guys, this is Reed on for Daniel. I just had one quick question for you. As we see smaller players move into the space specifically more in like balls and apparel, does that change any of your thinking around the competitive landscape any way you would run the business differently? And anything on your go-to-market strategy? Also, as you just sold off your new senior notes, would you think about maybe acquiring one of these businesses, one of these up-and-coming smaller guys that are starting to disrupt the market? Thank you.

Yes. Reed, I'll just preface by saying we certainly take all competition very, very seriously. As you know, we've been at this a long time, and this is not new. We continually have seen a flow of new competitors. I will speak a little bit differently about balls than apparel. I don't see the competitive landscape in balls being that dynamic or influenced by smaller players today. But again, we always watch carefully. So, I'm not sure that narrative is as outsized as maybe you see in apparel where you do see it just got a low cost of entry, low-barrier entry. It's not difficult to get in the apparel business. What's difficult is sustaining an apparel business over the long term, and that's most important to us. So, specific to our portfolio, we've said this before, our apparel portfolio, we've got FootJoy as a global premium player with strength across markets. We've got Titleist apparel in Korea and the Asian markets, which approaches the super premium, and we've got shoes in Western markets as well. So, we like the construct and composition and size of our apparel portfolio and are likely not inclined to add to it at this point. So, we're certainly paying attention. We watch all competitors and take them seriously. But as you've seen, and I think our results speak to it, our primary focus and investment have been in totally, and that's serving us very well.

All right, thank you guys.

Thank you, Reed. Operator, next question, please.

We will now take our next question from Casey Alexander from Compass Point. Casey, your line is now open, please go ahead.

Yes good morning. And thank you for taking my questions. I'd like to approach that from a little bit of a different aspect. The recent fire at the Taiwanese golf ball plant appears to have taken a substantial portion of capacity out of the system, particularly for value golf balls, right, when you are about to reintroduce your new lines of value golf balls. Is there a possible shortage out there that you guys could take advantage of in terms of capturing some incremental market share and building affinity with new customers who maybe were using other brands, but due to the fact that some of that capacity is out of the system, does that provide you guys an opportunity to take share there?

Yes, Casey, I'm inclined not to go down that road. But I would point you to, and the company is public, so you can get a sense for what they've produced. A lot of their production, our understanding is – has been at the practice ball and value end of the segment. So a lot of their production is where we don't compete. Some of it is certainly. So again, we don't have a relationship with Launch Tech, and I know there is a lot happening around the fire and the explosion and when they'll open. So again, I'm just – I'm inclined to let others comment on that, particularly the affected party, Launch Tech.

Thank you.

Thanks, Casey. David, thanks, and thanks, everybody. As always, we appreciate your interest. I wish you the best for the holiday season and look forward to getting together again on our next call to update our fourth quarter and give you a good look into our 2024 plans. Thanks again.

This concludes today's call. Thank you for your participation. You may now disconnect your lines.