Hello, and welcome. Welcome to the Cushnet Company fourth quarter 2025 earnings call. My name is Josh, and I will be the moderator for today's call. All lines will be muted during the presentation portions of the call with an opportunity for questions and answers at the end. At this time, I'd like to introduce your host, Mr. Cameron Balma, Director of Investor Relations. Cameron, you may proceed.

Good morning, everyone. Thank you for joining us today for Cushnet Holding Corp's fourth quarter and full year 2025 earnings conference call. Joining me this morning are David Marr, our President and Chief Executive Officer, and Sean Sullivan, our Chief Financial Officer. Before turning the call over to David, I would like to remind everyone that we will make forward-looking statements on the call today. These forward-looking statements are based on a Kushnitz 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 measures, including items such as net sales on a constant currency basis and adjusted EBITDA. Explanations of how and why we use these measures and reconciliations of these items to the most directly comparable GAAP measures 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 net 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 are referring to the 12-month period ended December 31st, 2025, and the comparable 12-month period in 2024. With that, I'll turn the call over to David.

Good morning, everyone. Cameron has been with our team for a while and it is my pleasure to welcome him to his first quarterly earnings call. We appreciate your interest in the Kushnet and look forward to sharing our 2025 results and future outlook today. As a starting point, we are pleased with our fourth-quarter performance as our teams executed our year-end plans and did good work preparing for the 2026 season and several product launches. As Sean will outline, revenues were up 7% for the period, and we generated nice momentum in our operating segments. Turning to slide four, for the full year, Akushnet achieved net sales of $2.56 billion and adjusted EBITDA of $410 million in 2025, growth of 4% and 1.5% respectively. These results were made possible thanks to the talented and dedicated associates who make up Akushnet and our committed trade partners who are on the front lines wherever golf is played. There are several highlights within these operating results, led by the Titleist Golf Equipment segment, which grew 6% on the year, as investments in product development, precision manufacturing, and fitting pay dividends across our golf ball and golf club businesses. As you will note from our revenue growth, the company is benefiting from recent capacity expansion projects which will continue with a focus on cast urethane golf ball production and custom golf club assembly in 2025 new pro v1 posted gains across all regions contributing to a 4% increase in golf ball net sales on the year with EMEA Japan and the US our fastest growing markets we are pleased with increasing demand for our AIM, or Alignment Integrated Marking Golf Balls, and operationally, we continue to benefit from the expansion of our automated custom imprinting capabilities, which is driving efficiencies and reducing lead times. Within equipment, 2025 was a strong year for Titleist Golf Clubs, which grew more than seven percent, led by the successful launch of new T-Series irons and steady growth in metals and Scotty Cameron putters. Our Vokey Wedge franchise also posted strong results in year two of the SM10 product cycle. Ongoing investments in product development and our global club fitting network frame how we characterized the Titleist Golf Club opportunity. The Cushnitz gear business increased 6% on the year with especially strong increases by by Titleist Gear in EMEA in the US, and growing momentum for Club Glove travel products. Now moving to FootJoy, we are pleased with the direction this business has pointed. Sales were down 1%, mainly due to reduced discounted sales versus last year. On the strength of products like Premier and HyperFlex, we are seeing a favorable mix shift towards our premium, high-performance footwear franchises, and the FJA Mobile FitLab program is delivering a value-added fitting experience which helps golfers select the best footwear performance and comfort option for their games. And growth in gloves and apparel added to Foot Choice momentum and improved profitability for the year. Rounding out our portfolio, we continue to generate strong growth with our shoes brand up 9% on the year led by double-digit gains in the U.S. Titleist Apparel also delivered a promising year led by growth in China and our business in Korea. As to Akushnet's regional performances, full-year 2025 results affirm our previous commentary about the Titleist equipment segment, posting gains in all major regions led by the U.S. and the MEA, and softer conditions in Japan and Korea, where our equipment gains have been offset by declines in the correcting apparel and footwear categories. A Cushnet's strong financial performance in 2025 supported ongoing investment across our business and the company's commitment to returning capital to shareholders. For the year, dividend and share repurchases totaled $268 million, bringing our total return over the past four years to more than $1.1 billion. And furthering Acushnet's commitment to our shareholders, I am pleased to announce that our Board of Directors has approved an 8.5% increase to our quarterly dividend payout in 2026 to $0.25.5 per share. This marks the ninth consecutive annual dividend increase since the program was initiated in 2017. These actions reflect the board's confidence in Acushnet's ability to execute and their positive outlook towards the company's leading positions within the structurally healthy golf industry. As you will note, the company remains focused on investing to position the company for future growth, while also returning capital to shareholders as appropriate. Now looking ahead, we start by pointing to the game's global momentum, with worldwide rounds projected to have increased about 2% in 2025, with growth in the MEA, the U.S., and Japan, and a flat year in Korea. In the U.S., our largest market, the number of golfers again increased, contributing to this rounds of play momentum. The global golf industry, as defined by golf courses, teaching centers, and golf retailers, continues to be healthy with strong financials supporting ongoing investments as the industry adapts to meet ever-evolving golfer preferences. Within Akushdit, we are enthused by our new product pipelines and sustaining momentum our brands carry into 2026. As is customary in even-numbered years, we successfully launched a comprehensive lineup of new Titleist golf balls in this first quarter, including ProB1X Left Dash and new AVX Toursoft and Velocity models. It's also a busy year for Titleist Golf Clubs with new Vokey SM11 wedges and a new lineup of Scotty Cameron Mallet putters launching in Q1. Both products debuted on worldwide tours earlier this year and initial responses have met our very high expectations. Plans are well underway for our new driver launch in late June, earlier than our customary Q3 timing. Titleist drivers are number one on the PGA Tour, and we are enthused by the great work from our product development and operations teams to provide added flexibility around launch timing. We will share more details about this product on our May call. One of our key narratives in recent years has been our focused investments in golf equipment R&D, operational efficiencies, and capacity expansion, and point to these investments as drivers to our recent growth and confidence in our ability to deliver enhanced innovation, product development, and best-in-class golfer experiences, core attributes to the long-term success of Titleist Golf Equipment. The Cushnitz gear business is well-positioned, coming off a strong 2025, and we are planning for growth led by gains in the U.S. and the MEA. Within gear, we pursue exceptional performance and quality to differentiate our products with discerning core golfers. The FJ brand continues to move forward in 2026 as we leverage high-performance Premier and Pro SL franchises to strengthen our position as the number one shoe in golf. And we continually evolve our outerwear and apparel offerings with a focus on our premium segments as we position FJ for the future and manage near-term tariff headwinds. As to our investments in 2026, in support of Acushnet's priorities and our longer-term growth opportunities, we will prioritize strategic capacity expansion and the build-out of our global fitting networks for golf equipment and footwear, expand our B2B and D2C capabilities to new regions, and invest in the future of the Titleist Performance Institute, where demand for PPI's golf-specific health, fitness, and swing expertise is outpacing our available capacity. Collectively, we expect these investments will support our future growth plans and enable operating leverage over the long term. In summary, we are optimistic about the structural health of the golf industry and are focused on expanding our momentum in the Titleist golf equipment segment, strengthening our gear and FJ wearables business, and investing in key initiatives that we believe will pay dividends over the next several years. I have confidence in the Akushna team and their ability to provide dedicated golfers with leading products and services as we seek to build long-term value for shareholders. Thanks for your attention this morning. I will now pass the call over to Sean.

Thank you, David. Good morning, everyone. Turning to our 2025 financial results, fourth quarter net sales were up 7% when compared to the fourth quarter of 2024, primarily driven by higher net sales in Titleist Golf Equipment. Adjusted EBITDA was $9.8 million, lower than last year's fourth quarter of $12.4 million. Looking at our segments, Titleist Golf Equipment was up 10% in the quarter, largely due to higher sales volumes of our T-Series irons and SM10 wedges, partially offset by lower GT driver sales, which comped against last year's launch. Foot Joy net sales grew 4.5% during the fourth quarter, driven by favorable mix shift and higher average selling prices in footwear. Golf Gear net sales decreased 5% in the fourth quarter. Overall, 2025 fourth quarter gross profit of $211 million was up $3 million compared to last year's fourth quarter. As a reminder, during last year's fourth quarter, we recognized a one-time benefit related to a PTO policy change that impacted gross profit by approximately $7 million. Gross profit for the full year was $1.2 billion, up 3%, or $34 million, primarily resulting from higher sales volumes, higher average selling prices, and favorable mix. Gross margin fell to 47.7%, down 60 basis points from last year, primarily related to incremental tariff costs of approximately $30 million. SG&A expense of $206 million in the quarter increased $13 million compared to the fourth quarter of 2024. Last year's SG&A expense included a one-time PTO policy change benefit of approximately $9 million. SG&A expense of $833 million for the full year increased $32 million, or 4%, from 2024. Excluding the $9 million one-time PTO policy change benefit, the $23 million increase was primarily related to higher employee expenses, including the support of our fitting initiatives, higher A&P expenses related to product launches, and higher information technology-related expenses. Interest expense was up approximately $6 million for the full year due to a year-over-year increase in borrowings. Additionally, we recognize a $17 million charge from debt extinguishment related to our fourth quarter refinancing, which I will discuss in a moment. Our full-year effective tax rate was 21.9 percent, up from 19.2 percent last year. The increase in ETR was primarily driven by changes in our jurisdictional mix of earnings and a reduced income tax benefit related to the U.S. deduction of foreign-derived intangible income. Moving to our balance sheet and cash flow highlights, we continue to maintain a strong balance sheet and cash flow profile, enabling us to invest back in the business while also returning capital to shareholders. In the fourth quarter of 2025, given attractive market conditions, we proactively strengthened our balance sheet by extending our revolving credit agreement out to 2030 and refinancing our senior notes into a 2033 maturity at a more favorable interest rate. Our net leverage ratio at the end of 2025 was 2.2 times. Our inventory levels increased $33 million, or about 6% from year-end 2024, primarily due to higher tariff costs as well as increased inventory to support the accelerated metals launch in Q2. Capital expenditures in 2025 were $74 million in line with 2024 free cash flow which we define as cash flow from operations less capex totaled 120 million dollars in 2025 this was down from 170 million in 2024 due to the increased inventory levels additional spend related to the ongoing implementation of our new ERP system in our 2025 voluntary retirement program During 2025, we returned $268 million to shareholders, consisting of $56 million in cash dividends and $212 million in share repurchases, or approximately 3.1 million shares. As of February 21, 2026, the remaining amount on our share repurchase authorization was approximately $241 million. Turning to our full-year 2026 outlook, full-year net sales are projected to be between $2.625 billion and $2.675 billion on a reported basis. On a constant currency basis, our current expectation is that consolidated net sales will be up between 2.5% and 4.5% compared to 2025, with growth across all reportable segments, as well as growth both domestically and internationally, with strength in EMEA and rest of world markets. Turning to tariffs, as we discussed previously, we expect approximately $70 million of tariff costs in 2026, reflecting the tariff environment in place prior to the Supreme Court's February 20th ruling. While the decision impacts certain tariff programs, the timing, implementation, and durability of any changes remain uncertain. As a result, our 2026 financial guidance reflects the continued assumption of approximately $70 million of tariffs. As we gain greater clarity on the path forward, we will update you with any material changes to our outlook. We expect our full year of 2026 adjusted EBITDA to be between $415 and $435 million. At the midpoint, our adjusted EBITDA margin would be approximately 16% flat with 2025. As we remain focused on driving sustainable long-term growth, we continue to invest in the business through a number of strategic initiatives, including expanding our global fitting network across our Titleist golf equipment and foot choice segments, strengthening our global B2B and D2C capabilities, and enhancing consumer engagement through the Titleist Performance Institute. In 2026, we will continue the implementation of our new global cloud-based ERP system, which we expect to enhance our customer service, supply chain, and finance capabilities and support operating efficiencies across the business. As a result, we anticipate approximately $6 million of incremental operating expense in 2026 related to the implementation. Given these investments, we expect full year 2026 SG&A growth, excluding the incremental ERP expense, to be generally in line with our sales growth projections as we believe these initiatives position the company for sustained growth and operating leverage. Looking ahead, our capital allocation strategy remains unchanged. We continue to prioritize investing back in the business and returning capital to shareholders through our dividend and an opportunistic share repurchase program. From a financial policy standpoint, we remain focused on maintaining net leverage at or below 2.25 times on average, while allowing for flexibility to account for seasonality and other business needs that may arise. We expect capital expenditures in 2026 to be approximately $95 million. This step up primarily reflects investments in golf ball manufacturing capacity and increased club production throughout the world as we scale our facilities to support the continued demand for our products. We view $95 million in 2026 as a high watermark, with capital spending expected to step down in the subsequent years. In addition, we expect to invest approximately $25 million in capitalized costs associated with our ERP implementation in 2026. Turning to free cash flow, we expect 2026 to improve meaningfully versus 2025 and normalize back towards recent run rates. This improvement reflects the absence of several one-time cash outflows incurred in 2025, which I highlighted earlier. Moving to calendarization, we expect reported first half 2026 net sales to be up mid to high single digits compared to the first half of 2025, with growth primarily coming from titleless golf equipment driven by the launch of new SM11 Vokey wedges and the acceleration of our new metals launch to June. We expect first half 2026 adjusted EBITDA to also increase mid to high single digits year over year, as increased sales resulting from new product launches more than offset the impact of higher tariff costs. From a quarterly perspective, we expect first half growth in both net sales and adjusted EBITDA to be heavily weighted towards the second quarter, again driven by the Vokey wedge launch and the acceleration of our metals launch into June. We expect first quarter net sales to increase low single digits, primarily related to the strength in our Titleist golf equipment segment. In closing, as David mentioned, the golf industry is structurally sound, our product portfolio is well positioned, and our performance in 2025 reflects strong results by our entire team. We remain focused on execution in 2026, despite continued economic uncertainty with tariffs, while also making the necessary investments intended to continue to deliver long-term growth for all stakeholders. With that, I will now turn the call over to Cameron for Q&A. Thanks, Sean.

Operator, could we now open up the line for questions?

Certainly. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. To remove that question, please press star followed by 2. If you are using the speakerphone, please pick up the handset before using the keypad. Once again, if you would like to ask a question, please press star followed by one. The first question comes from the line of Simeon Goodman with Morgan Stanley. You may proceed.

Hi, this is Lauren Ng on for Simeon. Thanks for taking our question. First, we just wanted to get more color on the 2026 product calendar. I know you guys alluded to this earlier in the call. But can you comment on your innovation pipeline for the new driver and new wedge launches?

So, you know, as we often do, we'll point you in an even-numbered year, 26, two years back to 2024. That's the best like-for-like view of our timing and product pipeline. And that holds true, really, in golf balls and wedges and putters for this year, also across our gear and wearables business. What's different, and we did call it out, is that we've elected to accelerate the launch of our new driver. into late June. Typically that happens in early August. So more to follow in terms of timing and product details, et cetera. But we wanted to give you that visibility to let you know that the model will be a bit different in 26 solely because of the driver launch timing change. We haven't brought that story to our trade partners. They're aware of it, but we haven't brought the product story to our trade partners. So until we do that, So we're going to keep that one under wraps.

Thanks, Warren. Okay, great. Next question, please. And just a quick follow-up. If you could just give us any more color on your expectations for the U.S. market specifically in 26 and maybe how we should think about volume versus price for these categories.

Yeah, I'll start and maybe Sean can get into volume price. But U.S. market, we've said for a while, has been our healthiest. And it really starts with a strong consumer base, right, rounds of play in the U.S. over the last five, six years are up 25%, and really driven by, I think we said it, seven or eight years in a row of golfer increases. So from a golfer base and a participation standpoint, very, very healthy. I might add also, and I've talked about this before, in the late 2016, 17, 18 period, the industry corrected. We saw a contraction of retailers, manufacturers, so the industry got lean and fit at the end of the 20-teens, and then we've seen this pandemic-lid surge the last five, six years. So it came in fit and then went on a bit of a growth spurt. So we like the fundamentals. Industry participants, whether it's golf courses or teaching centers or golf specialty retailers, are financially sound. So structurally, the U.S. market is probably our healthiest around the world, But part two to that, it's also benefiting from a very, very strong golfer-based consumer participation momentum that we've seen over the last handful of years. And the final point I would add is just in terms of how we think about the market today. It's February. The market is, from an inventory standpoint, where it should be. Inventories are full and vibrant in open markets. and lean and almost dormant in closed markets that'll change here in the next four, six weeks. But no, we're enthused about the U.S. market and really led by what's happening at the golfer base in the U.S.

Yeah, Lauren, maybe what I'd add, just on a segment basis, really the focus for you should be in the golf equipment. Again, reiterating and reinforcing the two-year product introduction cycle. So, 26 is obviously not a Pro V1 launch year. Historically, we have seen, you know, flat to down volumes in the ball business. But if you look at where we're at versus two years ago, we feel very good about where the golf ball business is performing and delivering. And then on the club side, again, you see the strong growth we experienced in 25. But if we look at volumes versus 2024, we expect, you know, good growth from the club business with the mails launch in 26 versus 24.

Great.

Thanks, Lauren. Operator, next question, please.

Thank you. The next question comes from the mind of Randy Connick with Jefferies. You may proceed.

Yeah, thanks a lot. I think, David, for you, you had a meaningfully more constructive tone around the footjoy business. It seems like all the efforts around product architecture, the FitLab, are really paying off. So kind of maybe walk us through a little deeper on where we are with the FootJoy business. It seems like people are moving towards the premium products. And then after that, can we get an update on Japan and Korea? I think you said Japan will be up this year. I think that's a change. Korea flat, so an improvement from down. But you talked about apparel and footwear still languishing a little bit in those markets. Maybe give us an update on where we go from here with those markets and those categories.

Yeah, great. Thanks, Randy. So starting with FootJoy, you know, we noted a year or so ago that, you know, coming out of what was an 18-24-month correction period in the footwear industry following the pandemic surge, right, We had a whole lot of demand, and just the way that supply chain works, we chased that demand as an industry. Demand normalized, yet supply kept running. So we had an inventory correction issue that we dealt with as an industry. You know, we feel we got through it about a year or so ago. So what it meant for FootJoy, and FootJoy's got a wonderful long history, over 100 years, been the number one shoe in golf for over 75 years. So we continually lean into the high-performance heritage of that brand as we think about innovation in the future. And we said a while ago we're going to be more focused on the bottom line than the top line, again, coming out of this correction period. The team's done a really nice job of that. I made the comment earlier that, you know, while sales were down slightly, it really is – it was a commentary or function of lower, closeout, reduced volume sales. So I've called out a handful of our products, whether it's Premier, whether it's Traditions, whether it's Hyperflex or ProSL. We're really leaning into our premium performance products, and we're rationalizing the product line down at some lower price points and raising the floor, if you will, on some of the lower price points. So structurally, we like where we are. Haven't really commented about what's happening with apparel, but it's a similar story. And the team is doing a really good job. So I'm pleased with the direction and trend lines of the FootJoy business. Again, moderating top lines, lower top line, but a more accelerated bottom line. The caveat to that is, of course, tariffs. So that business, more than others, heavily burdened by tariffs. We're doing a good job mitigating, offsetting as best we can. And then the final piece is FitLab, right? We've benefited as a company with ball fitting and club fitting going back into the 90s. Footwear fitting has arrived in full force with footwear, both in the U.S. and around the world. So FitLab is just another, you know, I talk a lot about products and services. That's another service that helps optimize our products and make sure golfers have their very best experience, whether it's from a performance standpoint or a fit standpoint. So that's, again, high level on FootJoy. Your comments, Randy, on Japan and Korea, maybe just some level setting. You know, both those markets, we had some nice growth in equipment in certainly balls and clubs in 2025. Gear, wearables, FootJoy, softer businesses. You know, we run a Korea, Asia-specific apparel business, Titleist Apparel over there. So we've been pleased with the equipment of business in Japan and Korea, but wearables have been soft for us in the industry. I'll make a couple comments about Japan as we look ahead. We do expect growth, again, similar led by equipment, maybe temperate expectations in gear and wearables. And similar to Japan, really a similar story in Korea, where we're a little bit more bullish about equipment and are taking a tempered, measured, conservative outlook vis-a-vis wearables and footwear. But in terms of rounds of play and what's happening in those markets, if I look at Japan, up slightly, rounds up slightly. That's a positive last year, up about 10% versus 2019. Parade is a little bit of a different story. similar about last year up about 20-25% versus 2019. So healthy markets, equipment landscape similar in Asia as it is in U.S. The key differentiator is really wearables. Footwear and apparel has been softer for the last couple of years, which leads to our temperate expectations in those segments.

Super helpful. Just last question. A lot of the commentary has come through around, I guess, pricing. So is your view that we still are in a very firm pricing environment across all categories, let's say in particular balls and clubs, it feels pretty good the consumers, you know, very much willing to pay higher prices for more innovation, et cetera?

Yeah, we're careful, right? We've said this before. We're careful with pricing, but we're dealing with the realities of input cost and distribution costs and labor and all that, not to mention tariffs. So as we think about pricing, we took action more notably with FootJoy in gear in the second half of 25. You'll see some pricing action in equipment in the first half of 26. Yeah, our job is anytime you take price, you got to work a little bit harder to show value, whether it's improved product or a better fitting experience. We don't take it lightly but but so far so good in terms of how we've how we've both mitigated higher cost and and in within that had to had to pass along some of those costs so we don't take it lightly but but again so far so good and again first half of 26 you'll see some equipment price increases across our lines really attached to new club products and then on golf balls it's going to be more a the U.S.-Canada story around Pro V1, where rest of world, we took some pricing measures last year. So, you know, we're trying to be thoughtful and strategic. We look at it case by case. We look at it market by market, but so far so good. But again, as I said, every time we take price, it compels us to work a little bit harder on the product side and the experience side to make sure we're showing value.

Very helpful. Thanks, guys. Thanks, Randy.

The next question comes from the line of Joe Alcibello with Raymond James. You may proceed.

Good morning. First question on the quarter, I was not expecting 19% club growth, and based on your guidance, I'm not sure you were either. So maybe talk about what drove that upside. Was there a timing issue? And why didn't we see that flow through on the EBITDA line?

Yeah, Randy, I'll take it, Sean. I'm sorry, Joe. So, yeah, no, I think we saw, you know, in the quarter top line, we saw, you know, better than expected performance across all segments, particularly in clubs, as you called out. Just really great execution by the team, continued strong demand. You know, I think David talked about the T-Series iron. So, just really pleased with how that played out. So as it relates to the conversion rate, again, we had the impact of tariffs in Q4. As you know, it was $15 million, the largest quarter of the year, against the total of 30. So not particularly a surprise to us in terms of how the bottom line delivered relative to our expectations.

Okay, that's helpful. Maybe on the subject of tariffs, I think you mentioned this morning $70 million total, so let's call it $40 million incremental. incremental, how much of that is IEPA?

That is all IEPA. The incremental 40 is the IEPA tariffs. So, you know, as I said in my prepared remarks, we're going to, you know, similar to the approach we took last year, we're going to let things settle in and we'll update you as appropriate rather than trying to follow the to-ing and fro-ing on this topic. So that's the current situation.

Have you filed for a refund yet?

No, we have not, but, you know, we're obviously monitoring the market, obviously talking daily with advisors and assessing our approach and, you know, the ability to get a refund for sure. So still early days.

Thank you, guys. See you next week.

Next question, please. The next question comes from the line of Matthew Both with J.P. Morkin. You may proceed.

Great, thanks. It's Amanda Douglas on for Matt. So, David, with the healthy golf industry backdrop, as you cited, could you speak to your top priorities into 2026 to capture additional market share within the equipment category, and specifically any initial feedback you've received from channel partners on your new launches as we look ahead to the core selling season?

So just in terms of how we think about growth and share, I'll really bring it back to really what our core principles are, and that is, number one, get the product right, get it as good as we can get it. We validate it through the pyramid, and then we really invest behind our fitting experience. We're trying to bring to golfers great product and a world-class fitting experience that helps them decide that what we're bringing to market is better than what's in their bag, and that's it. So no magic tricks up our sleeve beyond get the product right, get the golfer experience right. Within that, we work real closely with our trade partners to educate them, to partner with them, to make sure our golfer connections are effective and working. So that's as much the longstanding proven playbook. Amanda, help me. Part two of your question was about what?

Just any feedback you've received from channel partners on your new product launches?

I'll just level set. It's February in the golf industry. Most of the industry is still under cover of snow as we are here. But early days, we like. We've launched a whole series of golf balls as planned, as expected. We're pleased. almost too early to say on wedges and putters those are just those are just arriving in the market here now so i don't have a lot of great color to talk about how new products have been received but what i can say about the market is when when when the weather's okay people are playing golf and and when it's not they're not so we had a little bit of some ice storms across the southeast in in january as you'd expect that that slows things down but it's january but by and large when when weather's okay people are playing playing golf and the game is alive and healthy in terms of really getting a sense for the market and what's happening we've always said you know first quarter is really about shipment in second quarter gives you a read on what's happening in the market how the consumers behaving and how they're responding to your products so we tend to reserve our commentary or assessment until until a little bit a little bit later in the year. But yeah, no, for this time of the year, we like where we are with the exception of, again, we're under three feet of snow here in New England.

That's helpful. And Sean, just as a follow-up, maybe if you could speak to your overall expectations for gross margins in 2026, maybe relative to the 60 basis point decline in 2025, and any differences you see between front half and back half gross margin drivers.

To reiterate what I said in my prepared remarks, as we look at 2026, we're expecting gross margins to be relatively flat to 2025. So I think in the context of higher input costs and particularly in our golf equipment segment, as well as the incremental tariff landscape that we've talked about and some of the pricing actions we've taken, we feel very good about the ability to deliver and hold margins flat year over year as it relates to you know gross margin first half second half again I would guide what we talked about in terms of the growth so seemingly given what I've talked about in terms of first-half sales and EBITDA contribution I'll leave it to you to model how that gross margin may impact you're probably gonna see slightly higher in the first half

and maybe less so in the back but overall on a full year basis like I said consistent with 2025 that's helpful thank you thanks Amanda next question please the next question comes line of Noah that that skin with key bank capital markets you may proceed hi thanks for taking my questions I guess just to kind of follow up on on pricing and not only specific to you guys but across the industry what are you kind of seeing from competitors in terms of pricing if you've seen it kind of broadly like have you I guess heard chatter or have a sense for how kind of retail partners are responding to that and then kind of like within that framework how do you think that positions you relative to some others meaning are others kind of been more aggressive on pricing similar I'm just trying to understand kind of the pricing landscape thanks yes I guess I guess no a couple observations one would be and and I said this about a cushion it I do think it it could make this analogy to the to the total industry and this is just from what we've seen again the

early pricing moves were were gear and wearables just due to the life cycles of those of those segments and we saw industry-wide that play out in in the second half of 2025 you didn't see as much pricing action in equipment bowls and clubs and 25 so I think you're starting to see that now so again I think our our profile and flow is similar to what what you'll see in the industry in terms of what we how we think about our our positioning and all this you know we're we're a premium position product and we work hard to earn that position and I know our competitors will as well but but by and large yeah we are we are seeing price increases flow through retail it's early right as I've said it's early it's February we are seeing some price increases flow through retail I don't think anybody's surprised by that we all we all saw that coming in as much the fourth quarter but in terms of how it stacks up and how the consumer responds it really is it's going to take a few more months to get it to get a read on how the consumer processes you know company a verse company verse company C but we do believe and feel pretty good about our position and our ability to take price and I say that principally because of the belief we have on our products and the belief we have in the experience we can bring to golfers. So a little bit of more to follow in terms of how the market reacts, but that's common for this time of year. So I think that's the best we can frame it for you.

No, that's really helpful. And you touched on this, I think, a little bit kind of as it relates to top-line trends across different regions. But anything to call out in terms of maybe health of the sport across international markets? It's obviously early in the year, but any changes in how you're thinking about different markets? Thanks.

Yeah, I would just, you know, hey, a good year for golf in 2025, right? U.S. was up, Canada, U.K., mainland Europe up, up, up, all good. So that's the first thing I'll point to. Many of those regions are now in their off-season. So, again, I'll have a different answer two, three, four months from now. But they certainly come in with favorable, positive trends. I will say we continue to be, you know, we see the consumer strongest in the U.S. That's not a surprise. We see durability, the most durability across equipment, balls and clubs. and you know we've called out the watch outs of Korea and Japan notably as it relates to really apparel in those spaces but that's the regional view but anytime I can sit here in February and say rounds were up in most regions around the world certainly in Western markets that's terrific and just to round out you know Japan Korea about flat last year so didn't have bad years They just didn't post the big growth in 25 that we saw elsewhere.

Thank you.

Question, please.

Thank you. The next question comes from the lineup. Doug Lane with Water Tower Research. You may proceed.

Thank you, and good morning, everybody. Staying on the rounds of golf, the resilience is impressive, another good year in the U.S. and elsewhere. But last year, if I remember right, the U.S. started out slowly, and then it made it up, more than made it up in the back half. So why was the difference between the first half and the second half last year in U.S. rounds of golf?

Hi, Doug. Yeah, really that simple. You had some tough weather. You had some tough weather in the southeast that slowed things down, and that's just the fact of life in the golf business. Mother Nature has her say. But that was the issue. We had a slow start due to weather, and then we saw weather normalize, and nice to see the comeback.

And have you talked about who's playing the more rounds of golf? Is it more retirees? Is it more people in the South? Is it more amateurs, teenagers? Really, what's driving the increased rounds of golf, the persistent increased rounds of golf over the last several years?

Yeah, so we really point to the NGF, National Golf Foundation. They do a nice job collecting data, help us understand the evolving golfer base. It really coming from all angles, but I would say the AVID is certainly playing and alive and well. But the two call-outs that, again, their call-outs that I'll pass along would be the fastest-growing segments over the last several years have been women and juniors. So they're certainly providing outsized contribution to the growth we've seen over the last handful of years. And just for context and just using some big round numbers, in 2019, there were about 800 million rounds of golf played worldwide. and that number is going to be just shy of a billion this year. So it's about a 23% increase, but in real-world terms, it's 180, 190 million more rounds of golf being played today. And as I say that, I'm always compelled to point to the PGA's and the PGA club professional and the outsized role and contribution and importance of their work in taking care of the game and really growing the game. But hopefully that answers your question.

No, that's very helpful. Thank you. And just one more, if I might. You know, we read out and hear about the bifurcated consumer these days where, you know, the higher end continues to spend and the lower end seems to be a little squeezed. And you've got a pretty wide variety of products. You have low ticket, high ticket, consumables, durables. So how are you seeing consumer behavior here in your ecosystem?

I think we talked a lot about it in terms of how our products are performing but I will I will package your question to sort of point to our our dedicated golfer right there they're avid they're passionate they'll play if you can prove to them if you can prove to them that you've got a better product they're inclined to purchase it it's gonna help them play better so so we like the we like the construct and and demographic that is this dedicated golfer we talk about you know we characterize them as middle class plus so so they're a nice demographic and we've said over time they're you know they're they're recession resistant they're not you know they're not recession proof but over cycles we've seen they're committed and have it so so golf has a great consumer you're right we have a broad and vast portfolio of products in terms of varying price points. But by and large, we focus on premium performance, and that's where the bulk of our story is. That's where the bulk of our R&D efforts reside. That's where the bulk of our product line is constructed. But I think the heart of your ask is this dedicated golfer, which the company sort of uses as the sun to our solar system. And they're a strong cohort, for sure.

Okay, that's helpful. Thank you.

Thank you.

The next question comes from the line of J.T. Waldman with Roth Capital Partners. You may proceed.

Good morning, guys. Thanks for taking my questions. If we could just start first on GNA. I think last time in November, we were maybe expecting to see some leverage there, just given the voluntary retirement program and kind of a good year or 18 months of prior investment. So, just curious to see what kind of change there. It sounds like G&A growth is expected kind of in line with revenue. So, you know, are there incremental? What kind of changed?

Yeah, JP. So when I look at 2025 versus 24, I think if you normalize for the PTO in 24, you normalize for the ERP and some of the one-time things that I talked about, I think we have effectively delivered OPEX growth at less than the rate of sales. So I feel good about that in terms of 25. And I think as I talked about for OPEX in 26, you know, again, we have some incremental expense as well, but overall expect growth to be in line with sales. So, again, we're making, you know, we're making progress and, you know, delivering incremental benefits. And, again, it's not a one-time unlock that's going to happen here. I think you're going to start to see that gradually over the coming years in terms of delivering operating leverage.

Okay, understood. And just one follow-up on tariffs. So, understanding that it's obviously an extremely fluid situation. But if I think about kind of the – what we maybe discussed is sort of the four levers to offsetting, you know, pricing, vendor cost sharing, some G&A leverage, and then I think we talked about, you know, maybe being able to tighten some advertising promotional expenses. And so, really the question is, you know, as you think about the 26 guide, is there any tightening in terms of the advertising and promotional that if you know tariffs went away in the next three to four months like you actually have an opportunity to invest more there and you know could see some some top line upside is that you know how are you thinking about that yeah i guess how i'm thinking about is you know feel really good about the guide feel really good about the performance of the business the ability to overcome uh the incrementality of the tariff

landscape albeit obviously seemingly changing um but no we we are continuing to invest in an a p uh yeah you know you'll see it uh in the filings um you know we we increased a p in 25 uh not not significantly but low single digits and you'll you've seen that the last couple of years so So we have incredible confidence in our golf equipment franchises and FootJoy. So we're going to continue to invest behind those. Certainly, given, as David said, it's early, it's February. But overall, no, we're not using this as an opportunity to pull back on A&P to support our long-term growth. So I think it's business as usual, despite the tariff landscape. And again, we'll have to see how the year goes by, but we feel good about the guide in the context of all those.

Thanks for taking my questions.

Thank you. Thanks, everybody. As always, we appreciate your time and interest this morning, and look forward to getting back with you in a few months to provide updates on the quarter.

Ladies and gentlemen, thank you for attending today's conference call. This is not an inclusive conference. Please enjoy the rest of your day.