Acushnet - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $703.4M, up 1.2% constant currency and modestly above S&P Global consensus of $697.7M*, driven by Titleist equipment and Golf Gear strength. Diluted EPS was $1.62, up 20% YoY; S&P’s Primary EPS actual was $1.3922 vs $1.318 consensus*—a beat, aided by a $20.9M non-cash gain from the FootJoy shoe JV deconsolidation.
• Adjusted EBITDA of $138.9M declined 9.6% YoY (margin 19.7% vs 21.7% LY) as the company stepped up investment in Equipment and faced FootJoy softness; note S&P’s EBITDA basis shows $127.96M actual vs $136.78M estimate* (definition differs from company’s Adjusted EBITDA).
• Management maintained full-year guidance issued in February (Net Sales $2.485–$2.535B; Adj. EBITDA $405–$420M) pending tariff clarity; Q1 call framed 1H sales up low-single digits and a ~$4M tariff impact in Q2.
• Near-term stock narrative: product cycle momentum (new Pro V1/V1x, GT metals) vs tariff/macro uncertainty; incremental FX tailwind for Q2–Q4 “north of $20M” vs prior year if rates persist.

What Went Well and What Went Wrong

What Went Well

• Titleist equipment grew 2.2% reported (3.8% cc) on strong new Pro V1/V1x and GT drivers/hybrids/fairways; Golf Gear up 2.2% (3.9% cc) with pricing leverage.
• U.S. net sales rose 1.4%, EMEA up 2.2%, with broad-based gains; CEO: “a solid start…positive responses to new Pro V1 and continued momentum in…GT drivers”.
• Management highlighted resilient participation and rounds, especially EMEA/U.K. (+15%); “our teams are focused on…making the right long-term-based decisions while we navigate this period of tariff uncertainty”.

What Went Wrong

• FootJoy golf wear down 6.6% (4.9% cc) on lower footwear/apparel volumes; Asia apparel weakness continued, particularly Korea super-premium correction.
• Gross profit fell $5.2M YoY; Adjusted EBITDA declined $14.8M YoY and margin compressed to 19.7% from 21.7% YoY; CFO cited higher manufacturing costs in Titleist equipment and increased promotional/selling investments.
• Cash from operations was negative ($120.3M) in Q1 due to working capital seasonality; management reiterated cautious stance given evolving tariff regime (gross 2025 impact estimate ~$75M, with >50% mitigation targeted).

Transcript

Operator (participant)

Good morning, all, and thank you for joining us for today's Acushnet Company first quarter 2025 earnings call. My name is Drew, and I'll be the operator today. During today's call, after the prepared remarks, there will be a Q&A session. If you would like to register a question, please press star followed by one on your telephone keypad, and to withdraw your question, hit star followed by two. It's now my pleasure to hand over to Sondra Lennon, Vice President, FP&A, and Investor Relations. To begin, please go ahead when you're ready.

Sondra Lennon (VP, FP and A, and Investor Relations)

Good morning, everyone. Thank you for joining us today for Acushnet Holdings Corp.'s first quarter 2025 earnings conference call. Joining me this morning are David Maher, 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 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 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. When referring to year-to-date results or comparisons, we are referring to the three-month period ended March 31st, 2025, and the comparable three-month period in 2024. With that, I'll turn the call over to David.

David Maher (President and CEO)

Thanks, Sondra, and good morning, everyone. As always, we appreciate your interest in Acushnet Holdings. I am pleased to report on a solid start to the year for Acushnet, led by momentum in our Titleist golf equipment and golf gear segments. For the quarter, Acushnet delivered worldwide net sales of $703 million, a 1% increase over last year. Adjusted EBITDA was $139 million, which reflects a decrease of $15 million related to our decision to step up investment in our equipment segment in 2025. Getting to our segment results, you see golf equipment net sales increased almost 4% in the quarter, with gains in every region. This growth was led by the successful launch of new Pro V1 and Pro V1x golf ball models and continued momentum across our Titleist GT Metals product franchise, which was expanded in Q1 with the launch of new hybrids and GT1 metals.

The Titleist golf ball business grew 4%, with gains led by the EMEA region, which was up double digits as favorable weather contributed to an early start to their golf season. For context, golf ball revenues were up 11% on a reported basis versus two years ago, our most recent Pro V1 launch quarter. Our Titleist golf club business grew 4% versus last year and 15% on a reported basis when compared to the similar product launch cycle in Q1 2023. In most cases, we would expect Q1 club sales to be down in an odd year given the challenging comp against even-year Vokey wedge launches. This was obviously not the case in 2025, as GT Metals and Scotty Cameron Putters contributed to our growth over last year. Acushnet gear sales were up almost 4% in the quarter, with growth in all major markets led by EMEA and Japan.

Titleist gear posted steady gains, while the combined Club Glove and Links and Kings business was up double digits. Gear margin and OI trends were also favorable, as our team is doing good work generating operating leverage across the segment. FootJoy sales were down 5% in the quarter, which is attributable to lower closeout footwear sales and some targeted product line rationalization across the brand. We are pleased with the initial responses to new HyperFlex, Premier, and Quantum footwear models, and FootJoy Gloves, the global category leader, also had a nice start in the quarter. As noted on our last call, we characterized 2025 as a year of stability and improving profitability for FootJoy, with a higher percentage of premium sales as we exit what has been a two-year period of correction in the global footwear space.

Finally, net sales of products not allocated to a reportable segment were down slightly in the quarter. Shoes again posted nice gains, which were offset by a decline in Titleist apparel, as Korea's super premium apparel segment continues to correct after a period of outsized growth. Now, looking at the quarter by region, you see the U.S. market was up 1%, EMEA grew 4% with gains from all segments, and Japan and Korea were off 2% and 4% respectively. Common themes in the quarter with our Asia business are growth in Titleist equipment and gear and declines in FootJoy and Titleist apparel. The season started slowly in Japan and Korea due to poor weather, but we have seen improved conditions in March and April.

With a solid first quarter in the books, we are now focused on executing a full slate of ball, club, and footwear fitting events across all markets. Despite poor weather and a slow start in the U.S., where rounds were off 2%, we project that total worldwide rounds of play were up slightly for the quarter, led by a nice start in EMEA and the U.K., up 15%. I will now comment on how the changing tariff landscape is impacting Acushnet and some of the steps we are taking across the organization to mitigate these new costs. As we have noted in recent years, the company's supply chain is durable and regionally diverse, which provides our teams a good amount of operational flexibility to adapt to an uncertain and evolving tariff dynamic.

Our vertical integration in golf balls, golf clubs, footwear, and golf gloves first and foremost supports our efforts to achieve the highest quality standards in the products we produce. It also provides a good amount of control and agility as it relates to demand planning and global supply chain management. Roughly two-thirds of our worldwide golf ball output is produced in the United States, and our two Massachusetts-based ball plants supply the majority of our U.S. golf ball demand. Our Thailand plant supplies Pro V1 models to all other regions, now including Canada. Our golf ball business has a small exposure to tariffs from China-sourced raw materials, which we expect to mitigate by end of year. Additionally, we ship U.S.-produced performance model golf balls into Canada and Mexico, which are presently incurring a 25% tariff. We have not yet reacted to this temporary rate.

However, if this becomes permanent, we will likely take pricing measures. Club components are sourced from China, Taiwan, Vietnam, and the U.S., and we operate our own assembly centers in most major regions. All of our U.S. club demand is assembled in our Carlsbad, California facility. Our primary golf club tariff exposure today is from China-sourced club heads shipped into the U.S. Over time, we will reroute these heads to our international facilities and supply our U.S. production center with components sourced from the U.S., Taiwan, and Vietnam. As you know, we recently relocated our footwear manufacturing center from China to Vietnam. While we are confident this move has a long-term benefit, FootJoy, like most footwear companies, is exposed to tariff uncertainty in Vietnam, which was originally posted at 46% but is now at 10% during the current pause period.

The company owns and operates a standalone glove facility in Thailand, which produces both FootJoy and Titleist gloves, the number one and number two selling glove brands in the market. We are confident that Acushnet's supply chain footprint provides us with flexibility to adapt, most notably within golf equipment, our largest segment. As Sean will outline, we expect to mitigate a good portion of the current tariff impact by end of year and expect to realize further relief in 2026 from some of our actions that will take longer to materialize. With regards to pricing, we have not yet passed along increased tariff costs to consumers but do anticipate taking some regional pricing action on select products as we gain clarity on the extent and timing of our mitigation efforts.

In summary, we are pleased with our strong start to the year and the continued strength and resiliency of Acushnet's core consumer, the game's dedicated golfer. As you would expect, our teams are focused on providing exceptional product, fitting, and service experiences to golfers and our trade partners and making the right long-term-based decisions while we navigate this period of tariff uncertainty. Thanks for your attention this morning. I will now pass the call over to Sean.

Sean Sullivan (CFO)

Thank you, David. Good morning, everyone. As highlighted, we started 2025 with an increase in net sales of 1.2% over last year's first quarter. Adjusted EBITDA was $138.9 million, a decrease of 9.6% from the first quarter of 2024, but in line with our expectations as we continue to invest in key strategic initiatives. Net sales growth in the quarter was driven by continued momentum of our Titleist brand, with golf equipment and golf gear both growing by 4%. FootJoy net sales declined 5% in the quarter, primarily due to lower footwear and apparel volumes. Geographically, Q1 net sales were up year-over-year in the U.S., EMEA, and rest of the world, driven by golf equipment and golf gear.

First quarter net sales declined in Korea and Japan, primarily due to our FootJoy golfwear segment, largely in footwear, and lower net sales of Titleist apparel products that are not allocated to one of our three reportable segments. Gross profit in the first quarter of $337 million was down $5 million compared to the first quarter of 2024, primarily due to higher manufacturing costs in the Titleist golf equipment segment, as well as lower net sales in FootJoy golfwear. These were partially offset by higher average selling prices and lower distribution costs in golf gear and higher net sales in Titleist golf equipment. SG&A expense of $200 million in the quarter decreased almost $1 million from 2024.

Increases in advertising and promotional expense to support new product launches and selling expense primarily related to fitting network investments were more than offset by lower retail commission expense in Korea, as well as a $7 million decrease in restructuring expense related to a charge recognized in the first quarter of 2024 associated with our footwear production transition to Vietnam. R&D expense of $18.9 million was up $2.4 million compared to last year's first quarter, primarily to support next-generation product introductions. Net interest expense of $13.8 million in the quarter was up almost $1 million due to an increase in borrowings, partially offset by a decrease in interest rates. Moving to the other income expense line, I want to highlight a gain resulting from the transition of our footwear manufacturing from our China joint venture to Vietnam.

Because of the shift in footwear manufacturing out of China, we are no longer the primary beneficiary of the joint venture and therefore have deconsolidated the JV accounts from our financial statements. As a result of this deconsolidation, we recognize a non-cash pre-tax gain of $20.9 million during the first quarter, which has been excluded from the adjusted EBITDA calculation as noted in the reconciliation attached to our earnings release. Our effective tax rate in Q1 was 17.9%, down from 21.7% last year, primarily driven by a shift in our jurisdictional mix of earnings. Moving to our balance sheet and cash flow highlights, our balance sheet and cash flow positions continue to be very strong, allowing us to execute our capital allocation strategy while also navigating the current macroeconomic uncertainty. Our net leverage ratio using average trailing net debt at the end of Q1 was two times.

Overall, inventories declined 7% from the fourth quarter of 2024 and were roughly flat when compared to last year's first quarter. Overall, we are comfortable with our inventory quality and position. Capital expenditures were $11 million in the first quarter of 2025, and while we plan for approximately $85 million to spend in 2025, we will continue to assess considering the current environment. Through March, we returned roughly $51 million to shareholders with $36.6 million in share repurchases and $14.8 million in cash dividends. During April, our board of directors declared a quarterly cash dividend of $0.23 per share payable on June 20th to shareholders of record on June 6th. As of March 31st, we had $415.5 million remaining under the current share repurchase authorization.

On April 10th, 2025, we repurchased approximately 936,000 shares of our common stock from Magnus for an aggregate of $62.5 million related to our June 2024 share repurchase agreement. With respect to our previously disclosed December 2024 Magnus share repurchase agreement, through the end of April, we've repurchased approximately 90% of the $62.5 million target and expect to settle the related Magnus share repurchase obligation during the third quarter of 2025. Given the current market conditions, we will continue to assess our previously stated capital allocation approach for the balance of the year while monitoring leverage, liquidity needs, and the appropriate levels of investment. Moving to guidance for 2025, the macro environment remains highly uncertain due to changing trade policy. For that reason, we are not providing any updates to our consolidated full-year outlook until there's more clarity.

On a positive note, as David said, our core consumer remains strong and resilient. In terms of overall tariff exposure, based on our estimates, we expect our gross impact in 2025 to be approximately $75 million on the assumption that the current rate regime extends through year-end. The largest impact, or about 70%, relates to the China import tariff rate of 145%. If we had not worked to diversify our supply chain over the past few years, our tariff exposure would be much higher. We are taking actions to implement mitigation plans, including adjusting our global supply chain footprint, initiating cost and productivity programs both internally and externally with our suppliers, and considering selective price increases. Through these actions, we believe we can offset greater than 50% of the $75 million gross tariff impact during 2025.

Now turning to the first half, similar to our 2024 fourth quarter call, we currently expect first-half sales to be up low single digits versus the first half of 2024. We expect most of the additional tariff impact to fall in the second half based on our current inventory levels. For Q2, we expect an approximately $4 million tariff impact. Including this impact, we expect first-half adjusted EBITDA to be down low single digits as compared to last year's first half. In closing, we are very pleased with our performance in the first quarter of the year and remain focused on controlling what we can while servicing the needs of dedicated golfers. Our business and balance sheet are well-positioned for the current market environment and will continue to monitor the tariff situation and provide updates when appropriate. With that, I'll now turn the call over to Sondra for Q&A.

Sondra Lennon (VP, FP and A, and Investor Relations)

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

Operator (participant)

Of course. Thank you. We will now start today's Q&A session. If you would like to register a question, please press Star followed by 1 on your telephone keypad, and to withdraw your question, hit Star followed by 2. Our first question today comes from Megan Clapp from Morgan Stanley. Your line's now open. Please go ahead.

Megan Clapp (Executive Director)

Hey, good morning, Dave, Sean. Thanks for the question. I wanted to start maybe with the guidance. It seems like you're more pausing the guide to wait until there's more clarity, and it does not seem like anything has really changed around your second quarter expectation. Is the decision to pause, is it driven by anything you're seeing today as it relates to consumer demand or customer ordering patterns, or is it more so just the acknowledgment that there's less visibility today than there was three months ago, and there's a lot that can occur over the next couple of months?

David Maher (President and CEO)

Yeah, hi, Megan. I'll start with that one. Typically, this time of year, we do not update guidance, right? We say often Q1 is about pipeline and shipping product into the market. Q2, you get a read on consumer behavior. You get a read on early response to your products. As Sean said, we were prescriptive as it relates to the first half up low single. That is certainly informed by what we've seen up to this point in the year. Rounds of play, as noted, resilience. If I look at a slight decline in the U.S. and an uptick outside the U.S. for a net positive, that's a nice position to be in. Looking in the U.S., Florida up slightly in the quarter, California, Arizona up 8.5% in the quarter.

Going back to, we feel really positive about our consumer and the structural health of the industry. Certainly, we're careful and cautious with regards to what's happening from a tariff perspective. Our guide, I'm not sure it's a pause as much as this is how we generally play it this time of year, and we just exit Q2 with a much more informed position. What you could infer is we've reiterated our first half based on what we've seen today, and that is rounds of play stable, consumer purchasing stable through April.

Megan Clapp (Executive Director)

Okay, that's clear and helpful. Thank you. As it relates to the tariffs, maybe a follow-up for Sean, when you think about the mitigating actions, more than 50% of the $75 million this year, it seems like pricing is maybe the last resort. Could you spend a little bit of time just bucketing the actions, maybe what's first in your minds in terms of what you're going to do, and at what point do you think you'll make a decision on pricing?

Sean Sullivan (CFO)

Yeah, I can start. David certainly can chime in afterwards. I think that certainly you're right. I think the price is probably the last lever we would pull. In the intervening period, we're very focused on how do we redirect certain activities to markets and sourcing into the United States at the lower tariff rate, number one. Number two, we're having conversations with many of our suppliers and vendors and identifying opportunities to either cost share or reimagine the price points at which we're procuring the product. We do have a diversified supply chain. The biggest impacts in terms of our business is really the club business and FootJoy. And as David talked about, I think the club side, we have a plan and a path for later this year to source clubs in the United States out of non-China territories. So that's good.

On the FootJoy side, certainly pleased that our footwear is in Vietnam, but there are certainly apparel categories that we are looking at alternative opportunities. First and foremost, look at the supply chain, see where we can source into country from alternative areas. Over the longer term, I think we have a plan to move out of China in certain aspects of our business.

Megan Clapp (Executive Director)

Okay, great. Super helpful. Thanks. I'll pass it on.

Sondra Lennon (VP, FP and A, and Investor Relations)

Thanks, Megan. Operator, next question.

Operator (participant)

Our next question today comes from Joe Altobello from Raymond James. Your line's now open. Please proceed.

Joe Altobello (Equity Research Analyst)

Thanks. Hey, guys. Good morning. Appreciate the clarity on tariffs, obviously. I guess one question, I'm not sure anybody expects China to stay at 145%. So what does that $75 million look like if China was at, say, 50%, for example?

Sean Sullivan (CFO)

Yeah, Joe, I mean, again, I highlighted in our remarks, I mean, of our $75 million, 70% or more of that is related to China specifically. That is, what, $50-some-odd million is China. Presumably, if it is at $50 million, we are looking at a third of that number. That is a big opportunity to mitigate it if we go from $145 million to $50 million. Hopefully, I have given you those pieces to assess that.

Joe Altobello (Equity Research Analyst)

No, I appreciate that. I missed that. I apologize. Maybe kind of moving on to Asia, still a little bit of weakness, particularly in apparel in Korea and Japan. I think you mentioned that you saw a little bit of improvement later in the quarter and into Q2. Could you sort of elaborate on that a little bit?

David Maher (President and CEO)

Yeah, Joe. Slow starts, January, February, weather turns. March, April have been pretty good. We are back on track, but certainly a slow weather-related start there. A quick comment on Asia, and we like the trends of our equipment business and our gear business. As we have said recently, there has been some pressure on apparel in Asia. Just for context, and I have called out before this premium, super premium market in Korea, and it is outsized. It represents about 40% of the global golf apparel market opportunity. It is a very sizable market. It went on a big run over the last four or five years, and it is correcting. We saw it last year, and we see it this year. A, we are prepared for it. B, it is not surprising to us.

If I break up Asia, and in this case, really Japan and Korea, which are the second and third largest markets, I will park China aside just because it is not that big. If you look at Asia and Japan and Korea, rounds are resilient after a slow start. We like the trends of balls and clubs, and a watch-out continues to be apparel and footwear, which, again, we have planned for.

Joe Altobello (Equity Research Analyst)

Got it. Okay. Thank you.

Sondra Lennon (VP, FP and A, and Investor Relations)

Thanks, Joe. Operator, next question, please.

Operator (participant)

Our next question today comes from Michael Swartz from Truist. Your line's now open. Please go ahead.

Hey, good morning. This is Julian. I'm from Mike. Just one question. I guess relative to your guidance in February, how would a change in exchange rates have you seen impact that outlook?

Sean Sullivan (CFO)

Yeah. As we had entered the year, Julian, we had expected, as you know, a $35 million headwind. We experienced about a $12 million impact in Q1, right in line with our 10-15 that we had highlighted. I think that if today's rate were to persist through the end of the year, it's probably worth something north of $20 million tailwind for Q2-Q4.

Great. Thank you very much.

Sondra Lennon (VP, FP and A, and Investor Relations)

Thank you. Operator, next question, please.

Operator (participant)

Our next question today comes from Noah Zatzkin from KeyBanc Capital Markets. Your line's now open. Please go ahead.

Noah Zatzkin (VP and Equity Research Analyst)

Hi. Thanks for taking my questions. I guess first, maybe just a quick follow-up on the $20 million tailwind comment. Is that a kind of tailwind to overall numbers, or is that a tailwind versus kind of the run rate, $35 million impact that you had laid out previously?

Sean Sullivan (CFO)

Yeah, yeah. It's $20 million versus prior year is what I've highlighted, right? We've got the $12 million impact in Q1 that's a year-over-year headwind, and the $20 million would be a tailwind relative to prior year. I guess, therefore, net $8 million for the year is how I'm laying it out for you.

Noah Zatzkin (VP and Equity Research Analyst)

Okay. That's very helpful. Just as you think about kind of mitigation efforts beyond this year, is there a scenario where you'd be able to presumably diversify fully away from China, or are there some critical components that will have to remain in China? In general, if you think you can mitigate 50% this year, do you have any kind of guidepost in mind looking ahead? Thanks.

David Maher (President and CEO)

Yeah. So a couple of examples. Right now, we source clubheads from China, Taiwan, and Vietnam. We have assembly centers around the world. What we said is that we would move sourcing to the U.S. away from China into Vietnam and Taiwan. That's an existing move that we can make fairly quickly, yet we still anticipate China supplying our assembly centers in markets outside the U.S. Similar, we've got a diverse supply chain across our apparel franchises, but a good amount comes from China and the Far East and South America. It's more a function of moving away from China for products shipped and sold in the U.S. and rerouting some of that capacity to markets outside the U.S. I think in many cases, we've got a lot of dexterity and flexibility to move pieces around the board.

Where it gets a little interesting is we've got a small exposure in our golf ball business. We source raw materials from China, some raw materials from China to our ball plants in the United States and Thailand. We'll keep sourcing into Thailand. We'll look to move out of China in terms of our sourcing coming into the U.S. That takes a little while. You need to qualify new vendors. That probably won't realize or materialize until sometime next year. It is not a full exit from China. It is a move pieces around the board and minimize the product we bring in from China into the U.S., but I still expect we'll have some products flowing from China into markets outside the United States where there's no tariff exposure.

Sean Sullivan (CFO)

But to your.

Noah Zatzkin (VP and Equity Research Analyst)

Very helpful.

Sean Sullivan (CFO)

Question.

Noah Zatzkin (VP and Equity Research Analyst)

Go ahead.

Sean Sullivan (CFO)

For sure. Again, it's a fluid situation. Seemingly, it's changing by the day. We don't want to move too quickly and affect demand or the consumer, but the expectation is once we, if the current environment is the steady state, we would be in a position to mitigate 100% of this impact in 2026. That would be the expectation.

David Maher (President and CEO)

Yeah, and I'll underscore Sean's comment. Our objective is to take a very measured long-term view in what is a period of significant uncertainty. We think it's best for our business. It's best for our trade partners, and most importantly, it's best for our consumers.

If there's one takeaway, it is that we've got a lot of flexibility within our supply chain, and we're being measured and whenever, wherever we can, taking a long-term view and keeping our options open with the understanding that it's highly unlikely whatever the situation is today will be the situation it is two, three months from now.

Noah Zatzkin (VP and Equity Research Analyst)

Very helpful. Thank you.

Sondra Lennon (VP, FP and A, and Investor Relations)

Great. Thank you. Operator, next question.

Operator (participant)

Our next question comes from Carlos Gallagher from Jefferies. Your line's now open. Please proceed.

Carlos Gallagher (Senior Associate and Equity Research)

Good morning. Thanks for the question. Could you guys just unpack what you're seeing in terms of quarter-to-date demand trends? Are you seeing any signs of, or do you anticipate any reduced demand in international markets related to the move away from American brands?

David Maher (President and CEO)

Yeah, Carlos, good question. Obviously, we're watching it very, very carefully both in the United States and in markets outside the United States. I will say early days in the golf world, as so many markets just opened up in the last couple of weeks, so we don't have a deep or long bank of consumer data to work with. What I will say is here we are in early May, and we like the state of participation rounds. I would characterize our business in just about every market as normal for this time of year. Said differently, we haven't seen any meaningful swings or noteworthy swings in one direction or another, either in the United States or in markets outside the U.S. To your question, it's something we're watching very carefully. More notably, we're watching the state of the consumer very, very carefully.

When we do that, we also do it with the understanding and some degree of comfort that our consumer, the dedicated golfer, as we call it, over cycles has proven to be quite resilient. As we sit today, what we're seeing is about what we expected out of the U.S. markets and in markets around the world.

Carlos Gallagher (Senior Associate and Equity Research)

Super helpful. Thanks. Could you give us an update on the dynamics in the footwear space just related to some of the new entrants we saw last year and channel inventories?

David Maher (President and CEO)

Yeah. Hey, we're really happy with our footwear business. We've got a handful of new launches that have been well-received: HyperFlex, Premier, Quantum. We did comment on the top-line decline. We're selling fewer closeouts, which is a net positive. We've done some product line rationalization, which we think over time will be a positive for FootJoy as well. I did comment we look at 2025 as a year of top-line stability, a greater percentage of premium performance, full-price product, if you will, and a path to improve profitability. After what's been 18-24 months of correction in the footwear space as it worked through what we would characterize as an oversupply, generally, we look around the world and we see footwear inventories at a proper level for this time of year. Said differently, stores, retailers are full as they should be at the beginning of the season.

We think the year in footwear should be characterized as being more normalized than we've seen in the last couple of years. We like the early response and trends within our FootJoy business as well.

Carlos Gallagher (Senior Associate and Equity Research)

Great. Thank you. I'll pass it on.

David Maher (President and CEO)

Thanks, everybody. We appreciate your interest, and hopefully, Mother Nature cooperates this spring, and we all get out and play some golf. We look forward to speaking to you after Q2.

Operator (participant)

That does conclude today's call. You may now disconnect your line.