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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form
10-Q

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  to    
Commission file number: 001-37935
Acushnet Holdings Corp.
(Exact name of registrant as specified in its charter)
Delaware45-2644353
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
333 Bridge StreetFairhaven,Massachusetts02719
(Address of principal executive offices)(Zip Code)
 
(800225-8500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - $0.001 par value per shareGOLFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer

Accelerated filer
Non-accelerated filer

Smaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   No 
The registrant had 63,069,560 shares of common stock outstanding as of May 1, 2024.

ACUSHNET HOLDINGS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2024
TABLE OF CONTENTS
 
 
1

In this Quarterly Report on Form 10‑Q, the terms “Acushnet,” “we,” “us,” “our” and the “Company” refer to Acushnet Holdings Corp. and its consolidated subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which are subject to the “safe harbor” created by that section. These forward-looking statements are included throughout this report, including in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and relate to matters such as our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information. We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable” and similar terms and phrases to identify forward-looking statements in this report, although not all forward-looking statements use these identifying words.
The forward-looking statements contained in this report are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors, many of which are beyond our control. We believe that these factors include:
a reduction in the number of rounds of golf played or in the number of golf participants;
unfavorable weather conditions may impact the number of playable days and rounds played in a given year;
consumer spending habits and macroeconomic factors may affect the number of rounds of golf played and related spending on golf products;
demographic factors may affect the number of golf participants and related spending on our products;
changes to the Rules of Golf with respect to equipment;
a significant disruption in the operations of our manufacturing, assembly or distribution facilities;
our ability to procure raw materials or components of our products;
a disruption in the operations of our suppliers;
the cost of raw materials and components;
currency transaction and translation risk;
our ability to successfully manage the frequent introduction of new products or satisfy changing consumer preferences, quality and regulatory standards;
our reliance on technical innovation and high-quality products;
our ability to adequately enforce and protect our intellectual property rights;
involvement in lawsuits to protect, defend or enforce our intellectual property rights;
our ability to prevent infringement of intellectual property rights by others;
changes to patent laws;
intense competition and our ability to maintain a competitive advantage in each of our markets;
limited opportunities for future growth in sales of certain of our products, including golf balls, golf shoes and golf gloves;
our customers’ financial condition, their levels of business activity and their ability to pay trade obligations;
a decrease in corporate spending on our custom logo golf balls;
our ability to maintain and further develop our sales channels;
consolidation of retailers or concentration of retail market share;
our ability to maintain and enhance our brands;
seasonal fluctuations of our business;
fluctuations of our business based on the timing of new product introductions;
risks associated with doing business globally;
compliance with laws, regulations and policies, including the U.S. Foreign Corrupt Practices Act or other applicable anti-corruption legislation;
our ability to secure professional golfers to endorse or use our products;
negative publicity relating to us or the golfers who use our products or the golf industry in general;
our ability to accurately forecast demand for our products;
a disruption in the service, or a significant increase in the cost, of our primary delivery and shipping services or a significant disruption at shipping ports;
our ability to maintain our information systems to adequately perform their functions;
cybersecurity risks;
our ability to comply with data privacy and security laws;
2

the ability of our eCommerce systems to function effectively;
impairment of goodwill and identifiable intangible assets;
our ability to attract and/or retain management and other key employees and hire qualified management, technical and manufacturing personnel;
our ability to prohibit sales of our products by unauthorized retailers or distributors;
our ability to grow our presence in existing international markets and expand into additional international markets;
tax uncertainties, including potential changes in tax laws, unanticipated tax liabilities and limitations on utilization of tax attributes after any change of control;
adequate levels of coverage of our insurance policies;
product liability, warranty and recall claims;
litigation and other regulatory proceedings;
compliance with environmental, health and safety laws and regulations;
our ability to secure additional capital at all or on terms acceptable to us and potential dilution of holders of our common stock;
lack of assurance of positive returns on capital investments;
risks associated with acquisitions and investments;
our estimates or judgments relating to our critical accounting estimates;
terrorist activities and international political instability;
occurrence of natural disasters or pandemic diseases;
a high degree of leverage, ability to service our indebtedness, ability to incur more indebtedness and restrictions in the agreements governing our indebtedness;
our use of derivative financial instruments;
the ability of our controlling shareholder to control significant corporate activities, and that our controlling shareholder’s interests may conflict with yours;
our status as a controlled company;
the market price of shares of our common stock;
the execution of our share repurchase program and effects thereof;
our ability to maintain effective internal controls over financial reporting;
our ability to pay dividends;
our status as a holding company;
dilution from future issuances or sales of our common stock;
anti-takeover provisions in our organizational documents and Delaware law;
reports from securities analysts; and
other factors discussed under the heading "Risk Factors" in our most recent Annual Report on Form 10-K and in any other reports we file with the Securities and Exchange Commission (“SEC”), including this Quarterly Report on Form 10-Q.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.
Any forward-looking statement made by us in this report speaks only as of the date of this report. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, investments or other strategic transactions we may pursue. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.
3

Website Disclosure
We use our website (www.acushnetholdingscorp.com) as a channel of distribution of company information. The information we post through this channel may be material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about Acushnet Holdings Corp. when you enroll your e-mail address by visiting the “Resources” section of our website at https://www.acushnetholdingscorp.com/investors/resources. On our website, we post the following filings free of charge as soon as reasonably practicable after they are electronically filed with or furnished to the SEC: our annual reports on Form 10-K, our proxy statements, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. The contents of our website are not, however, a part of this report or intended to be incorporated by reference in any other report or document we file with the SEC.
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PART I.       FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
March 31,December 31,
(in thousands, except share and per share amounts)20242023
Assets
Current assets
Cash, cash equivalents and restricted cash ($12,085 and $12,532 attributable to the variable interest entity ("VIE"))
$48,722 $65,435 
Accounts receivable, net464,954 201,352 
Inventories ($5,783 and $9,621 attributable to the VIE)
537,412 615,535 
Prepaid and other assets123,360 114,370 
Total current assets1,174,448 996,692 
Property, plant and equipment, net ($8,877 and $9,044 attributable to the VIE)
293,387 295,343 
Goodwill ($32,312 and $32,312 attributable to the VIE)
223,221 225,302 
Intangible assets, net533,744 537,407 
Deferred income taxes26,618 31,454 
Other assets ($1,951 and $1,972 attributable to the VIE)
105,541 110,479 
Total assets$2,356,959 $2,196,677 
Liabilities, Redeemable Noncontrolling Interests and Shareholders' Equity
Current liabilities
Short-term debt$30,514 $28,997 
Current portion of long-term debt617 351 
Accounts payable ($3,151 and $6,059 attributable to the VIE)
151,180 150,514 
Accrued taxes57,182 46,398 
Accrued compensation and benefits ($240 and $1,233 attributable to the VIE)
67,551 111,136 
Accrued expenses and other liabilities ($4,190 and $1,687 attributable to the VIE)
129,033 113,739 
Total current liabilities436,077 451,135 
Long-term debt833,335 671,819 
Deferred income taxes7,286 7,080 
Accrued pension and other postretirement benefits69,951 69,634 
Other noncurrent liabilities81,267 84,137 
Total liabilities1,427,916 1,283,805 
Commitments and contingencies (Note 15)
Redeemable noncontrolling interests9,604 9,785 
Shareholders' equity
Common stock, $0.001 par value, 500,000,000 shares authorized; 63,287,749 and 63,429,243 shares issued
63 63 
Additional paid-in capital794,071 808,615 
Accumulated other comprehensive loss, net of tax(115,479)(104,349)
Retained earnings205,081 159,906 
Total equity attributable to Acushnet Holdings Corp.883,736 864,235 
Noncontrolling interests35,703 38,852 
Total shareholders' equity919,439 903,087 
Total liabilities, redeemable noncontrolling interests and shareholders' equity$2,356,959 $2,196,677 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 
 Three months ended March 31,
(in thousands, except share and per share amounts)20242023
Net sales$707,554 $686,290 
Cost of goods sold329,615 320,618 
Gross profit377,939 365,672 
Operating expenses:  
Selling, general and administrative236,592 222,539 
Research and development16,453 14,540 
Intangible amortization3,513 3,689 
Income from operations121,381 124,904 
Interest expense, net13,076 9,896 
Other expense, net339 664 
Income before income taxes107,966 114,344 
Income tax expense23,407 20,725 
Net income84,559 93,619 
Less: Net loss (income) attributable to noncontrolling interests3,203 (344)
Net income attributable to Acushnet Holdings Corp.$87,762 $93,275 
Net income per common share attributable to Acushnet Holdings Corp.:  
Basic$1.36 $1.37 
Diluted1.35 1.36 
Weighted average number of common shares:  
Basic64,621,122 68,213,068 
Diluted64,889,174 68,646,212 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
 
 Three months ended March 31,
(in thousands)20242023
Net income$84,559 $93,619 
Other comprehensive loss:
Foreign currency translation adjustments(12,071)565 
Cash flow derivative instruments:
Unrealized holding gains (losses) arising during period3,921 (833)
Reclassification adjustments included in net income(2,998)(5,211)
Tax (expense) benefit (203)1,784 
Cash flow derivative instruments, net720 (4,260)
Pension and other postretirement benefits:  
Pension and other postretirement benefits adjustments(90)(406)
Tax benefit 20 90 
Pension and other postretirement benefits adjustments, net(70)(316)
Total other comprehensive loss(11,421)(4,011)
Comprehensive income73,138 89,608 
Less: Comprehensive loss (income) attributable to noncontrolling interests3,494 (408)
Comprehensive income attributable to Acushnet Holdings Corp.$76,632 $89,200 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
 Three months ended March 31,
(in thousands)20242023
Cash flows from operating activities  
Net income$84,559 $93,619 
Adjustments to reconcile net income to cash flows used in operating activities
Depreciation and amortization13,781 12,631 
Unrealized foreign exchange gain(350)(2,768)
Amortization of debt issuance costs431 165 
Share-based compensation7,424 7,283 
Loss (gain) on disposals of property, plant and equipment424 (6)
Deferred income taxes4,541 14,278 
Changes in operating assets and liabilities
Accounts receivable(267,847)(218,544)
Inventories69,891 35,126 
Accounts payable(1,419)(4,833)
Accrued taxes12,340 31,468 
Other assets and liabilities(33,291)(54,837)
Cash flows used in operating activities(109,516)(86,418)
Cash flows from investing activities  
Additions to property, plant and equipment(7,275)(11,698)
Additions to intangible assets (Note 17)
 (22,235)
Other, net (901)
Cash flows used in investing activities(7,275)(34,834)
Cash flows from financing activities
Repayments of short-term borrowings, net (Note 5)
 (3,796)
Proceeds from credit facilities (Note 5)
436,709 539,783 
Repayments of credit facilities (Note 5)
(271,829)(275,873)
Purchases of common stock(33,322)(116,123)
Dividends paid on common stock(14,630)(14,304)
Payment of employee restricted stock tax withholdings(15,357)(11,455)
Other, net 1,078 
Cash flows provided by financing activities101,571 119,310 
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash(1,493)322 
Net decrease in cash, cash equivalents and restricted cash(16,713)(1,620)
Cash, cash equivalents and restricted cash, beginning of year65,435 58,904 
Cash, cash equivalents and restricted cash, end of period$48,722 $57,284 
Supplemental non-cash information  
Purchases of property, plant and equipment, accrued not paid$3,923 $3,595 
Additions to right-of-use assets obtained in exchange for operating lease obligations3,274 41,894 
Additions to right-of-use assets obtained in exchange for finance lease obligations434 607 
Dividend equivalents rights ("DERs") declared not paid496 452 
Contingent consideration (Note 17)
 3,000 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
9

ACUSHNET HOLDINGS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss,
Net of Tax
Retained
Earnings
Treasury StockTotal
Shareholders'
Equity
Attributable
to Acushnet
Holdings Corp.
Noncontrolling
Interests
Total
Shareholders'
Equity
(in thousands)SharesAmount
Balances as of December 31, 202276,322 $76 $960,685 $(109,668)$473,130 $(385,167)$939,056 $37,647 $976,703 
Sale of equity to noncontrolling interests (Note 1)— — 444 — (180)— 264 — 264 
Net income— — — — 93,275 — 93,275 379 93,654 
Other comprehensive loss— — — (4,011)— — (4,011)— (4,011)
Share-based compensation — — 7,119 — — — 7,119 — 7,119 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
447 1 (11,414)— — — (11,413)— (11,413)
Purchases of common stock (Note 10)
— — — — — (23,539)(23,539)— (23,539)
Dividends and dividend equivalents declared— — — — (13,629)— (13,629)— (13,629)
Balances as of March 31, 202376,769 $77 $956,834 $(113,679)$552,596 $(408,706)$987,122 $38,026 $1,025,148 
Balances as of December 31, 202363,429 $63 $808,615 $(104,349)$159,906 $ $864,235 $38,852 $903,087 
Net income (loss)— — — — 87,762 — 87,762 (3,149)84,613 
Other comprehensive loss— — — (11,130)— — (11,130)— (11,130)
Share-based compensation — — 7,260 — — — 7,260 — 7,260 
Vesting of restricted common stock, including impact of DERs,
net of shares withheld for employee taxes (Note 11)
406 — (14,934)— — — (14,934)— (14,934)
Purchases of common stock (Note 10)
(547)— (6,870)— (28,432)— (35,302)— (35,302)
Dividends and dividend equivalents declared— — — — (14,155)— (14,155)— (14,155)
Balances as of March 31, 202463,288 $63 $794,071 $(115,479)$205,081 $ $883,736 $35,703 $919,439 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
10

ACUSHNET HOLDINGS CORP.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and include the accounts of Acushnet Holdings Corp. (the “Company”), its wholly-owned subsidiaries and less than wholly-owned subsidiaries, including a variable interest entity (“VIE”) in which the Company is the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation.
Certain information in footnote disclosures normally included in annual financial statements has been condensed or omitted for the interim periods presented in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and U.S. GAAP. The year-end balance sheet data was derived from audited financial statements; however, the accompanying interim notes to the unaudited condensed consolidated financial statements do not include all disclosures required by U.S. GAAP. In the opinion of management, the financial statements contain all normal and recurring adjustments necessary to state fairly the financial position and results of operations of the Company. The results of operations for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the full year ending December 31, 2024, nor were those of the comparable 2023 periods representative of those actually experienced for the full year ended December 31, 2023. These unaudited interim condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and related notes for the fiscal year ended December 31, 2023 included in its Annual Report on Form 10-K filed with the SEC on February 29, 2024.
Use of Estimates
The preparation of the Company’s unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Variable Interest Entities
VIEs are entities that, by design, either (i) lack sufficient equity to permit the entity to finance its activities independently, or (ii) have equity holders that do not have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the entity’s expected losses, or the right to receive the entity’s expected residual returns. The Company consolidates a VIE when it is the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb expected losses or the right to receive expected benefits from the VIE that could potentially be significant to the VIE.
The Company consolidates the accounts of Acushnet Lionscore Limited (“Lionscore”), a VIE which is 40% owned by the Company. The sole purpose of the VIE is to manufacture the Company’s golf footwear and as such, the Company is deemed to be the primary beneficiary. The Company has presented separately on its unaudited condensed consolidated balance sheets, to the extent material, the assets of its consolidated VIE that can only be used to settle specific obligations of its consolidated VIE and the liabilities of its consolidated VIE for which creditors do not have recourse to its general credit. The general creditors of the VIE do not have recourse to the Company. Certain directors of the VIE have guaranteed the credit lines of the VIE, for which there were no outstanding borrowings as of March 31, 2024 and December 31, 2023. In addition, pursuant to the terms of the agreement governing the VIE, the Company is not required to provide financial support to the VIE.
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Noncontrolling Interests and Redeemable Noncontrolling Interests
The ownership interests held by owners other than the Company in less than wholly-owned subsidiaries are classified as noncontrolling interests. The financial results and position of noncontrolling interests are included in the Company’s unaudited condensed consolidated financial statements. The value attributable to the noncontrolling interests is presented on the unaudited condensed consolidated balance sheets, separately from the equity attributable to the Company. Net income (loss) and comprehensive income (loss) attributable to noncontrolling interests are presented separately on the unaudited condensed consolidated statements of operations and unaudited condensed consolidated statements of comprehensive income, respectively.
Redeemable noncontrolling interests are those noncontrolling interests which are or may become redeemable at a fixed or determinable price on a fixed or determinable date, at the option of the holder, or upon occurrence of an event. The Company initially records the redeemable noncontrolling interest at its acquisition date fair value. The carrying amount of the redeemable noncontrolling interest is subsequently adjusted to the greater amount of either the initial carrying amount, increased or decreased for the redeemable noncontrolling interest's share of comprehensive income (loss) or the redemption value, assuming the noncontrolling interest is redeemable at the balance sheet date. This adjustment is recognized through retained earnings and is not reflected in net income (loss) or comprehensive income (loss). The value attributable to redeemable noncontrolling interests and any related loans to minority shareholders, which are recorded as a reduction to redeemable noncontrolling interests, are presented in the unaudited condensed consolidated balance sheets as temporary equity between liabilities and shareholders’ equity. The amount of the loan to minority shareholders was $4.4 million as of both March 31, 2024 and December 31, 2023.
Cash, Cash Equivalents and Restricted Cash
Cash held in Company checking accounts is included in cash. Cash equivalents consist of short-term highly liquid investments with original maturities of three months or less which are readily convertible into cash. The Company classifies as restricted certain cash that is not available for use in its operations. As of March 31, 2024 and December 31, 2023, the amount of restricted cash included in cash, cash equivalents and restricted cash on the unaudited condensed consolidated balance sheets was $1.6 million and $1.7 million, respectively.
Foreign Currency Transactions
Foreign currency transaction losses included in selling, general and administrative expenses were $0.1 million and $1.3 million for the three months ended March 31, 2024 and 2023, respectively.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures." The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740) - Improvements to Income Tax Disclosures." The amendments in this update provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures.

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2. Allowance for Doubtful Accounts
The Company estimates expected credit losses using a number of factors, including customer credit ratings, age of receivables, historical credit loss information and current and forecasted economic conditions, which could affect the collectability of the reported amounts. All of these factors have been considered in the estimate of expected credit losses for the periods presented.
The activity related to the allowance for doubtful accounts was as follows:
Three months ended March 31,
(in thousands)20242023
Balance at beginning of period$8,840 $8,258 
Bad debt expense312 254 
Amount of receivables written off (196)(52)
Foreign currency translation(93)48 
Balance at end of period$8,863 $8,508 
3. Inventories
The components of inventories were as follows: 
March 31,December 31,
(in thousands)20242023
Raw materials and supplies$140,108 $157,455 
Work-in-process29,275 24,949 
Finished goods368,029 433,131 
Inventories$537,412 $615,535 

4. Product Warranty
The Company has defined warranties generally ranging from one to two years. Products covered by the defined warranty policies primarily include all Titleist golf products, FootJoy golf shoes and FootJoy golf outerwear. These product warranties generally obligate the Company to pay for the cost of replacement products, including the cost of shipping replacement products to its customers. The estimated cost of satisfying future warranty claims is accrued at the time the sale is recorded. In estimating future warranty obligations, the Company considers various factors, including its warranty policies and practices, the historical frequency of claims and the cost to replace or repair products under warranty.
The activity related to the Company’s warranty obligation for accrued warranty expense was as follows:
 Three months ended March 31,
(in thousands)20242023
Balance at beginning of period$4,997 $3,951 
Provision1,537 1,675 
Claims paid/costs incurred(1,296)(1,229)
Foreign currency translation(56)(11)
Balance at end of period$5,182 $4,386 

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5. Debt and Financing Arrangements
Credit Facility
The Company's credit agreement, dated as of December 23, 2019 (as subsequently amended on July 3, 2020 and August 2, 2022 (the "Credit Agreement")), provides for a $950.0 million multi-currency revolving credit facility, due to mature on August 2, 2027. As of March 31, 2024 and December 31, 2023, there were $485.2 million and $325.2 million, respectively, in outstanding borrowings under the Company's multi-currency revolving credit facility with a weighted average interest rate of 6.44% and 6.57%, respectively. As of March 31, 2024, the Company had available borrowings under its multi-currency revolving credit facility of $459.8 million after giving effect to $5.0 million of outstanding letters of credit.
The Credit Agreement contains customary affirmative and restrictive covenants, including, among others, financial covenants based on the Company's leverage and interest coverage ratios. The Credit Agreement also includes customary events of default, the occurrence of which, following any applicable cure period, would permit the lenders to, among other things, declare the principal, accrued interest and other obligations to be immediately due and payable. As of March 31, 2024, the Company was in compliance with all covenants under its Credit Agreement.
On May 2, 2024, the Company entered into a third amendment (the “Third Amendment”) to its Credit Agreement (as so amended, the “Amended Credit Agreement”). On June 28, 2024, the Canadian Dollar Offered Rate (“CDOR”) will cease to be published (the “CORRA Transition Date”). Pursuant to the Third Amendment, for loans denominated in Canadian dollars borrowed or continued after the CORRA Transition Date, the Adjusted CDOR (as defined in the Credit Agreement) is replaced by adjusted term CORRA (the Canadian Overnight Repo Rate Average administered by Bank of Canada) plus a credit spread adjustment of 0.29547% (for a one-month Interest Period) or 0.32138% (for a three-month Interest Period) (“Adjusted Term CORRA”). The applicable margin for Adjusted Term CORRA loans remains 1.00% to 1.75%, depending on the Net Average Total Leverage Ratio (as defined in the Amended Credit Agreement).
Senior Unsecured Notes
On October 3, 2023, Acushnet Company (the "Issuer"), a wholly owned subsidiary of the Company, completed the issuance and sale of $350.0 million in gross proceeds of the Issuer's 7.375% senior unsecured notes due 2028 (the “Notes”). The Notes were issued pursuant to an Indenture, dated October 3, 2023 (the “Indenture”), among the Issuer, U.S. Bank Trust Company, National Association, as trustee of the Notes, and the Company and certain subsidiaries of the Issuer as guarantors. The proceeds from the Notes offering were used to repay $345.6 million of the outstanding borrowings under the Company's multi-currency revolving credit facility, as well as to pay fees and expenses related to the Notes offering. In connection with the Notes offering, the Company incurred fees and expenses of approximately $6.4 million, of which approximately $6.3 million was capitalized as debt issuance costs within long-term debt on the unaudited condensed consolidated balance sheet and is being amortized to interest expense, net over the term of the Notes using the effective interest rate method. The fair value of the Notes, based on third-party quotes (Level 2), as of March 31, 2024 and December 31, 2023 was $362.3 million and $365.1 million, respectively.
The Notes bear interest at a stated interest rate of 7.375% (an effective interest rate of 7.813%) per year, with interest payable semi-annually on April 15 and October 15 of each year, beginning on April 15, 2024. Accrued interest related to the Notes of $12.9 million and $6.5 million was included within accrued expenses and other liabilities on the unaudited condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively.

The Indenture contains covenants that, among other things, limit the ability of the Company and its restricted subsidiaries to incur additional debt or issue certain preferred stock; pay dividends or repurchase or redeem capital stock; prepay, redeem or repurchase certain debt; make loans and investments; sell assets; incur liens; enter into certain types of transactions with the Company’s affiliates; and consolidate or merge with or into other companies. As of March 31, 2024, the Company was in compliance with all covenants under the Indenture.

Other Short-Term Borrowings
The Company has certain unsecured local credit facilities available through its subsidiaries. Amounts outstanding under other short-term borrowings are presented in short-term debt in the unaudited condensed consolidated balance sheets with the proceeds and repayments presented on a gross basis in the unaudited condensed consolidated statements of cash flows. There were $30.5 million and $29.0 million in outstanding borrowings under the Company's local credit facilities as of March 31, 2024 and December 31, 2023, respectively. The weighted average interest rate applicable to the outstanding borrowings was 0.74% and 0.45% as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, the Company had available borrowings remaining under these local credit facilities of $29.4 million.
14

Letters of Credit
As of March 31, 2024 and December 31, 2023, there were outstanding letters of credit related to agreements, including the Credit Agreement, totaling $8.0 million and $11.3 million, respectively, of which $5.0 million and $8.1 million, respectively, was secured. These agreements provided a maximum commitment for letters of credit of $58.0 million as of March 31, 2024.

6. Derivative Financial Instruments
The Company principally uses derivative financial instruments to reduce the impact of foreign currency fluctuations and interest rate variability on the Company's results of operations. The principal derivative financial instruments the Company enters into are foreign exchange forward contracts and interest rate swaps. The Company does not enter into derivative financial instrument contracts for trading or speculative purposes.
Foreign Exchange Derivative Instruments
Foreign exchange forward contracts are foreign exchange derivative instruments primarily used to reduce foreign currency risk related to transactions denominated in a currency other than functional currency. These instruments are designated as cash flow hedges. The periods of the foreign exchange forward contracts correspond to the periods of the hedged forecasted transactions, which do not exceed 24 months subsequent to the latest balance sheet date. The primary foreign exchange forward contracts pertain to the U.S. dollar, the Japanese yen, the British pound sterling, the Canadian dollar, the Korean won and the euro. The gross U.S. dollar equivalent notional amount outstanding of all foreign exchange forward contracts designated under hedge accounting as of March 31, 2024 and December 31, 2023 was $200.7 million and $209.6 million, respectively.
The Company also enters into foreign exchange forward contracts, which either do not qualify as hedging instruments or have not been designated as such, to reduce foreign currency transaction risk related to certain intercompany assets and liabilities denominated in a currency other than functional currency. These undesignated instruments are recorded at fair value as a derivative asset or liability with the corresponding change in fair value recognized in selling, general and administrative expenses in the statement of operations. There were no outstanding foreign exchange forward contracts not designated under hedge accounting as of March 31, 2024 and December 31, 2023. Selling, general and administrative expenses during the three months ended March 31, 2023, included a gain of $0.1 million related to undesignated foreign exchange forward derivative instruments.
Interest Rate Derivative Instruments
From time to time, the Company enters into interest rate swap contracts to reduce interest rate risk related to floating rate debt. Under the contracts, the Company pays fixed and receives variable rate interest, in effect converting a portion of its floating rate debt to fixed rate debt. Interest rate swap contracts are accounted for as cash flow hedges. The notional value of the Company's outstanding interest rate swap contracts was $100.0 million as of March 31, 2024 and December 31, 2023.
Impact on Financial Statements
The fair value of hedge instruments recognized on the unaudited condensed consolidated balance sheets was as follows:
(in thousands)March 31,December 31,
Balance Sheet LocationHedge Instrument Type20242023
Prepaid and other assetsForeign exchange forward$5,068 $4,378 
Interest rate swap620 452 
Accrued expenses and other liabilitiesForeign exchange forward1,053 1,931 
Interest rate swap 63 
Other noncurrent liabilitiesInterest rate swap 88 
15

The hedge instrument gain (loss) recognized in accumulated other comprehensive loss, net of tax was as follows:
 Three months ended
 March 31,
(in thousands)20242023
Type of hedge  
Foreign exchange forward$3,342 $(477)
Interest rate swap 579 (356)
 Total$3,921 $(833)
Gains and losses on derivative instruments designated as cash flow hedges are reclassified from accumulated other comprehensive loss, net of tax at the time the forecasted hedged transaction impacts the statements of operations or at the time the hedge is determined to be ineffective. Based on the current valuation, during the next 12 months the Company expects to reclassify a net gain of $7.1 million related to foreign exchange derivative instruments from accumulated other comprehensive loss, net of tax, into cost of goods sold and a net gain of $0.6 million related to interest rate derivative instruments from accumulated other comprehensive loss, net of tax, into interest expense, net. For further information related to amounts recognized in accumulated other comprehensive loss, net of tax, see Note 12.
The hedge instrument gains recognized on the unaudited condensed consolidated statements of operations were as follows:
 Three months ended
 March 31,
(in thousands)20242023
Location of gains in statements of operations  
Foreign exchange forward:
Cost of goods sold$2,738 $5,196 
Selling, general and administrative (1)
723 210 
Total $3,461 $5,406 
Interest Rate Swap:
Interest expense, net$260 $15 
Total$260 $15 
_______________________________________________________________________________
(1)    Relates to net gains on foreign exchange forward contracts derived from previously designated cash flow hedges.
Credit Risk
The Company enters into derivative contracts with major financial institutions with investment grade credit ratings and is exposed to credit losses in the event of non-performance by these financial institutions. This credit risk is generally limited to the unrealized gains in the derivative contracts. However, the Company monitors the credit quality of these financial institutions, as well as its own credit quality, and considers the risk of counterparty default to be minimal.

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7. Fair Value Measurements
Certain assets and liabilities are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
Assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 were as follows:
 Fair Value Measurements as of 
 March 31, 2024 using: 
(in thousands)Level 1Level 2Level 3Balance Sheet Location
Assets    
Rabbi trust$4,597 $ $ Prepaid and other assets
Foreign exchange derivative instruments 5,068  Prepaid and other assets
Interest rate derivative instruments 620  Prepaid and other assets
Deferred compensation program assets787   Other assets
Total assets$5,384 $5,688 $  
Liabilities    
Foreign exchange derivative instruments$ $1,053 $ Accrued expenses and other liabilities
Deferred compensation program liabilities787   Other noncurrent liabilities
Total liabilities$787 $1,053 $  
Assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 were as follows:
 Fair Value Measurements as of 
 December 31, 2023 using: 
(in thousands)Level 1Level 2Level 3Balance Sheet Location
Assets    
Rabbi trust$4,334 $ $ Prepaid and other assets
Foreign exchange derivative instruments 4,378  Prepaid and other assets
Interest rate derivative instruments 452  Prepaid and other assets
Deferred compensation program assets725   Other assets
Total assets$5,059 $4,830 $  
Liabilities    
Foreign exchange derivative instruments$ $1,931 $ Accrued expenses and other liabilities
Interest rate derivative instruments 63  Accrued expenses and other liabilities
Deferred compensation program liabilities725   Other noncurrent liabilities
Interest rate derivative instruments 88  Other noncurrent liabilities
Total liabilities$725 $2,082 $  
Rabbi trust assets are used to fund certain retirement obligations of the Company. The assets underlying the Rabbi trust are equity and fixed income exchange-traded funds.
Deferred compensation program assets and liabilities represent a program where select employees could defer compensation until termination of employment. Effective July 29, 2011, this program was amended to cease all employee compensation deferrals and provided for the distribution of all previously deferred employee compensation. The program remains in effect with respect to the value attributable to the employer match contributed prior to July 29, 2011.
Foreign exchange derivative instruments are foreign exchange forward contracts primarily used to limit currency risk that would otherwise result from changes in foreign exchange rates (Note 6). The Company uses the mid-price of foreign exchange forward rates as of the close of business on the valuation date to value each foreign exchange forward contract at each reporting period.
Interest rate derivative instruments are interest rate swap contracts used to reduce interest rate risk related to the Company's floating rate debt (Note 6). The valuation for the interest rate swap is calculated as the net of the discounted future cash flows of the pay and receive legs of the swap. Mid-market interest rates on the valuation date are used to create the forward curve for floating legs and discount curve.
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8. Pension and Other Postretirement Benefits
Components of net periodic benefit cost (credit) were as follows:
 Pension BenefitsPostretirement Benefits
 Three months ended March 31,
(in thousands)2024202320242023
Components of net periodic benefit cost (credit)    
Service cost$1,325 $1,434 $91 $119 
Interest cost2,703 2,943 133 172 
Expected return on plan assets(1,838)(1,962)  
Amortization of net loss (gain)58 21 (269)(201)
Amortization of prior service cost (credit)23 46 (34)(34)
Net periodic benefit cost (credit)$2,271 $2,482 $(79)$56 
The non-service cost components of net periodic benefit cost (credit) are included in other expense, net in the unaudited condensed consolidated statements of operations.

9. Income Taxes
Income tax expense increased by $2.7 million to $23.4 million for the three months ended March 31, 2024 compared to $20.7 million for the three months ended March 31, 2023. The Company’s effective income tax rate ("ETR") was 21.7% for the three months ended March 31, 2024 compared to 18.1% for the three months ended March 31, 2023.
The ETR for the three months ended March 31, 2024 differed from the U.S. statutory tax rate primarily due to the U.S. taxation of foreign income, state income taxes and the Company's geographic mix of income earned by the Company's international subsidiaries, partially offset by the impact of the U.S. deduction for foreign derived intangible income and federal and state tax credits. The ETR for the three months ended March 31, 2023 differed from the U.S. statutory tax rate primarily due to the impact of the U.S. deduction for foreign derived intangible income and federal and state tax credits, partially offset by the U.S. taxation of foreign income, state income taxes and the Company's geographic mix of income earned by its international subsidiaries.

10. Common Stock
Dividends
The Company declared dividends per common share, including DERs (Note 11), during the periods presented as follows:
Dividends per Common Share
Amount
(in thousands)
2024:
First Quarter$0.215 $14,155 
Total dividends declared in 2024$0.215 $14,155 
2023:
Fourth Quarter$0.195 $12,941 
Third Quarter0.195 13,098 
Second Quarter0.195 13,667 
First Quarter0.195 13,629 
Total dividends declared in 2023$0.780 $53,335 
During the second quarter of 2024, the Company's Board of Directors declared a dividend of $0.215 per share of common stock to shareholders of record as of June 7, 2024 and payable on June 21, 2024.
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Share Repurchase Program
As of March 31, 2024, the Board of Directors had authorized the Company to repurchase up to $1.0 billion of its issued and outstanding common stock. Share repurchases may be effected from time to time in open market or privately negotiated transactions, including transactions with affiliates, with the timing of purchases and the amount of stock purchased generally determined at the discretion of the Company consistent with the Company's general working capital needs and within the constraints of the Company’s Credit Agreement and the Indenture (Note 5).
On June 16, 2022, the Company entered into an agreement with Magnus Holdings Co., Ltd. ("Magnus"), a wholly-owned subsidiary of Fila Holdings Corp., to purchase from Magnus an equal amount of its common stock as it purchases on the open market over the period of time from July 1, 2022 through January 13, 2023, up to an aggregate of $75.0 million, at the same weighted average per share price (the "2022 Agreement"). On August 30, 2022, the Company amended and restated the 2022 Agreement to increase the aggregate dollar amount of shares of its common stock that it would purchase from Magnus from $75.0 million to $100.0 million, (the "Amended and Restated 2022 Agreement"). In relation to this agreement, the Company recorded a share repurchase liability of $92.6 million for 2,000,839 shares of common stock, which was included in accrued expenses and other liabilities and treasury stock on the consolidated balance sheet as of December 31, 2022. Between January 1, 2023 and January 13, 2023, the Company purchased an additional 167,689 shares of its common stock on the open market for an aggregate of $7.4 million, bringing the cumulative total open market purchases since the inception of the 2022 Agreement to $100.0 million. As a result, on January 23, 2023, the Company purchased 2,168,528 shares of its common stock from Magnus for an aggregate of $100.0 million, in satisfaction of its obligation under the Amended and Restated 2022 Agreement.
On June 9, 2023, the Company entered into an agreement with Magnus to purchase from Magnus an equal amount of its common stock as it purchases on the open market over the period of time from June 12, 2023 through October 27, 2023, up to an aggregate of $100.0 million, at the same weighted average per share price (the "2023 Agreement"). In relation to the 2023 Agreement, on November 3, 2023, the Company purchased 1,824,994 shares of its common stock from Magnus for an aggregate of $100.0 million in satisfaction of its obligation under the 2023 Agreement.
On March 14, 2024, the Company entered into a new agreement with Magnus to purchase from Magnus an equal amount of its common stock as it purchases on the open market over the period of time from April 1, 2024 through June 28, 2024, up to an aggregate of $37.5 million, at the same weighted average per share price (the "2024 Agreement").
The Company's share repurchase activity for the periods presented was as follows:
Three months ended March 31,
(in thousands, except share and per share amounts)20242023
Shares repurchased in the open market:
Shares repurchased 547,233 346,389 
Average price$64.51 $46.54 
Aggregate value (1)
$35,302 $16,122 
Shares repurchased from Magnus:
Shares repurchased 2,168,528 
Average price (2)
$ $46.11 
Aggregate value$ $100,001 
Total shares repurchased:
Shares repurchased547,233 2,514,917 
Average price$64.51 $46.17 
Aggregate value$35,302 $116,123 
___________________________________
(1) Includes $2.0 million related to shares repurchased not settled as of March 31, 2024.
(2)    In accordance with the share repurchase agreements, shares purchased from Magnus are accrued for at the same weighted average price as those purchased on the open market, as if the purchase from Magnus had occurred on the same day. As such, the average price of Magnus repurchases during any given period will differ from open market repurchases due to the settlement of the previously recorded share repurchase liability, as well as open market purchases made after the completion of the Magnus share repurchase agreements.
As of March 31, 2024, the Company had $339.7 million remaining under the current share repurchase authorization, including $37.5 million related to the 2024 Agreement. This program may be extended or otherwise modified by the Board of Directors at any time and will remain in effect until completed or until terminated by the Board of Directors.

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Common Stock Retirement
The Company records retirements of repurchased common stock, upon either formal or constructive retirement, at cost and allocates the excess of the repurchase price over the par value of shares acquired to both retained earnings and additional paid-in capital. The portion allocated to additional paid-in capital is calculated on a pro rata basis of the shares to be retired and the total shares issued and outstanding as of the date of retirement. When shares of common stock are retired, they are deducted from the number of shares issued.
During the three months ended March 31, 2024, the Company presented as retired 547,233 shares of its repurchased common stock with an aggregate repurchase price of $35.3 million, which the company intends to formally retire in 2024.

11. Equity Incentive Plans
Under the Acushnet Holdings Corp. 2015 Omnibus Incentive Plan (the “2015 Plan”), the Company may grant stock options, stock appreciation rights, restricted shares of common stock, restricted stock units ("RSUs"), performance stock units ("PSUs") and other share-based and cash-based awards to members of the Board of Directors, officers, employees, consultants and advisors of the Company. As of March 31, 2024, the only awards granted under the 2015 Plan were RSUs and PSUs.
Restricted Stock and Performance Stock Units
RSUs granted to members of the Board of Directors vest immediately into shares of common stock. RSUs granted to Company officers generally vest over three years, with one-third of each grant vesting annually, subject to the recipient's continued employment with the Company. RSUs granted to other employees, consultants and advisors of the Company vest in accordance with the terms of the grants, generally either over three years or, beginning in 2022, with one-third of each grant vesting annually, subject to the recipient’s continued service to the Company. PSUs granted to Company officers and other employees vest based upon the Company's performance against specified targets, generally over a three-year performance period, subject to the recipient's continued service to the Company. At the end of the performance period, the number of shares of common stock that could be issued is determined based upon the Company's performance against these targets. The number of shares that could be issued can range from 0% to 200% of the recipient's target award. Recipients of the awards granted under the 2015 Plan may elect to defer receipt of all or any portion of any shares of common stock issuable upon vesting to a future date elected by the recipient.
All RSUs and PSUs granted under the 2015 Plan have DERs, which entitle holders of RSUs and PSUs to the same dividend value per share as holders of common stock and can be paid in either cash or common stock. DERs are subject to the same vesting and other terms and conditions as the corresponding unvested RSUs and PSUs. DERs are paid when the underlying shares of common stock are delivered.
20

A summary of the Company’s RSUs and PSUs as of March 31, 2024 and changes during the three months then ended is presented below: 
 Weighted-Weighted-
 NumberAverageNumberAverage
 of RSUsFair Value RSUs
of PSUs (3)
Fair Value PSUs
Outstanding as of December 31, 2023868,063 $46.45 480,254 $46.07 
Granted289,817 66.75 155,572 66.77 
Vested (1)(2)
(439,436)45.89 (133,099)45.36 
Forfeited(7,273)46.95   
Outstanding as of March 31, 2024711,171 $55.07 502,727 $52.66 

_______________________________________________________________________________
(1)    Includes 50,237 shares of common stock related to RSU's that were not delivered as of March 31, 2024.
(2)    Based upon the Company’s level of achievement of the applicable performance metrics, the recipients of the 133,099 PSUs that vested during the three months ended March 31, 2024, were entitled to receive 266,198 shares of common stock. As of March 31, 2024, there were 86,762 shares of common stock that had not been delivered in connection with the vesting of these PSUs.
(3)    Number of PSUs reflects 100% of the target level grant and may not be indicative of the performance level expected to be achieved.
Compensation expense recorded related to RSUs and PSUs in the unaudited condensed consolidated statements of operations was as follows:
 Three months ended
March 31,
(in thousands)20242023
RSUs$4,496 $4,154 
PSUs2,764 2,965 
The remaining unrecognized compensation expense related to unvested RSUs and unvested PSUs was $34.9 million and $19.6 million, respectively, as of March 31, 2024, and is expected to be recognized over the related weighted average period of 1.6 years and 2.2 years, respectively.
A summary of shares of common stock issued related to the 2015 Plan, including the impact of any DERs issued in common stock, is presented below:
Three months endedThree months ended
 March 31, 2024March 31, 2023
RSUsPSUsRSUsPSUs
Shares of common stock issued418,829 219,831 436,491 231,580 
Shares of common stock withheld by the Company as payment by employees in lieu of cash to satisfy tax withholding obligations
(137,107)(95,814)(128,291)(91,842)
Net shares of common stock issued281,722 124,017 308,200 139,738 
Cumulative undelivered shares of common stock485,027 471,078 471,306 420,447 
Compensation Expense
The allocation of share-based compensation expense in the unaudited condensed consolidated statements of operations was as follows:
 Three months ended
March 31,
(in thousands)20242023
Cost of goods sold$403 $373 
Selling, general and administrative6,589 6,223 
Research and development432 687 
Total compensation expense before income tax7,424 7,283 
Income tax benefit1,672 1,492 
Total compensation expense, net of income tax$5,752 $5,791 
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12. Accumulated Other Comprehensive Loss, Net of Tax
Accumulated other comprehensive loss, net of tax consists of foreign currency translation adjustments, unrealized gains and losses from derivative instruments designated as cash flow hedges (Note 6) and pension and other postretirement adjustments (Note 8).
The components of and adjustments to accumulated other comprehensive loss, net of tax, were as follows:
 ForeignInterestAccumulated
 ForeignExchangeRate SwapPension andOther
CurrencyDerivativeDerivativeOtherComprehensive
(in thousands)TranslationInstrumentsInstrumentsPostretirementLoss, Net of Tax
Balance as of December 31, 2023$(95,425)$3,929 $227 $(13,080)$(104,349)
Other comprehensive (loss) income before reclassifications(11,780)3,342 579 132 (7,727)
Amounts reclassified from accumulated other comprehensive loss, net of tax (2,738)(260)(222)(3,220)
Tax (expense) benefit  (125)(78)20 (183)
Balance as of March 31, 2024$(107,205)$4,408 $468 $(13,150)$(115,479)

13. Net Income per Common Share
The following is a computation of basic and diluted net income per common share attributable to Acushnet Holdings Corp.:
 Three months ended
 March 31,
(in thousands, except share and per share amounts)20242023
Net income attributable to Acushnet Holdings Corp.$87,762 $93,275 
Weighted average number of common shares:
Basic64,621,122 68,213,068 
RSUs268,052 340,101 
PSUs 93,043 
Diluted64,889,174 68,646,212 
Net income per common share attributable to Acushnet Holdings Corp.:
Basic$1.36 $1.37 
Diluted$1.35 $1.36 
Net income per common share attributable to Acushnet Holdings Corp. was calculated using the treasury stock method.
The Company’s potential dilutive securities for the three months ended March 31, 2024 and 2023 include RSUs and PSUs. PSUs vest based upon achievement of performance targets and are excluded from the diluted shares outstanding unless the performance targets have been met as of the end of the applicable reporting period regardless of whether such performance targets are probable of achievement.
The following securities have been excluded from the calculation of diluted weighted-average common shares outstanding as their impact was determined to be anti-dilutive:
 Three months ended
 March 31,
 20242023
RSUs223,717 259,496 
22

14. Segment Information
The Company’s operating segments are based on how the Chief Operating Decision Maker (“CODM”) makes decisions about assessing performance and allocating resources. The Company has four reportable segments that are organized on the basis of product categories. These segments include Titleist golf balls, Titleist golf clubs, Titleist golf gear and FootJoy golf wear.
The CODM primarily evaluates performance using segment operating income. Segment operating income includes directly attributable expenses and certain shared costs of corporate administration that are allocated to the reportable segments, but excludes certain other costs, such as interest expense, net; restructuring costs; the non-service cost component of net periodic benefit cost; transaction fees; as well as certain other non-operating gains and losses that the Company does not allocate to the reportable segments. The CODM does not evaluate a measure of assets when assessing performance.
Results shown for the three months ended March 31, 2024 and 2023 are not necessarily those which would be achieved if each segment was an unaffiliated business enterprise. There are no intersegment transactions.
Information by reportable segment and a reconciliation to reported amounts are as follows:
Three months ended March 31,
(in thousands)20242023
Net sales  
Titleist golf balls$207,987 $192,001 
Titleist golf clubs203,886 180,781 
Titleist golf gear68,172 67,043 
FootJoy golf wear192,407 205,274 
Other35,102 41,191 
Total net sales$707,554 $686,290 
Segment operating income  
Titleist golf balls$42,167 $38,621 
Titleist golf clubs49,596 40,545 
Titleist golf gear10,113 12,190 
FootJoy golf wear26,439 30,801 
Other4,176 6,564 
Total segment operating income132,491 128,721 
Reconciling items:  
Interest expense, net(13,076)(9,896)
Restructuring costs (Note 16)
(6,967) 
Non-service cost component of net periodic benefit cost(776)(985)
Other(3,706)(3,496)
Total income before income tax$107,966 $114,344 
Information as to the Company’s operations in different geographical areas is presented below. Net sales are categorized based on the location in which the sale originates.
Three months ended March 31,
(in thousands)20242023
United States$418,243 $369,931 
EMEA (1)
101,679 104,760 
Japan37,150 46,375 
Korea75,251 88,984 
Rest of World75,231 76,240 
Total net sales$707,554 $686,290 
_______________________________________________________________________________
(1) Europe, the Middle East and Africa ("EMEA")
23

15. Commitments and Contingencies
Purchase Obligations
During the normal course of its business, the Company enters into agreements to purchase goods and services, including purchase commitments for advertising (including media placement and production costs), finished goods inventory, capital expenditures and endorsement arrangements with professional golfers.
The Company's purchase obligations as of March 31, 2024 were as follows:
 Payments Due by Period
 Remainder of     
(in thousands)20242025202620272028Thereafter
Purchase obligations (1)
$277,259 $52,003 $5,072 $2,433 $2,414 $7,239 
_______________________________________________________________________________
(1)    The reported amounts exclude those liabilities included in accounts payable or accrued liabilities on the unaudited condensed consolidated balance sheet as of March 31, 2024.
Litigation
The Company and its subsidiaries are party to lawsuits associated with the normal conduct of their businesses and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that some of these actions could be decided unfavorably. Consequently, the Company is unable to estimate the ultimate aggregate amount of monetary loss, amounts covered by insurance or the financial impact that will result from such matters and has not recorded a liability related to potential losses.

16. Restructuring Costs
During the first quarter of 2024, Lionscore approved a plan to permanently close certain production lines at the VIE's Fujian Fuh Deh Leh (“FDL”) factory as footwear production volume is shifted to a third party supplier. As a result of the closure, FDL plans to involuntarily separate certain direct and indirect manufacturing employees during 2024 (the "Plan"). After the restructuring, the remaining direct and indirect manufacturing employees at FDL will continue to service the remaining production lines. In relation to the Plan, during the three months ended March 31, 2024, the Company recorded involuntary employee termination costs of $7.0 million included in selling, general and administrative expenses on the unaudited condensed consolidated statement of operations. Accrued restructuring costs associated with the Plan are included within accrued expenses and other liabilities on the unaudited condensed consolidated balance sheet as they are expected to be paid out within a year. There are no further material costs expected to be incurred in relation to the Plan. However, Lionscore could implement additional restructuring programs in the future. See Note 1 and Note 14 for further information.

The activity related to the Plan was as follows:
(in thousands)Three months ended March 31, 2024
Balance at beginning of period$ 
Provision6,967 
Payments(4,720)
Balance at end of period$2,247 

17. Other Business Developments
In January 2023, the Company acquired certain trademarks from West Coast Trends, Inc., an industry leader specializing in Club Glove premium performance golf travel products, for $25.2 million including cash consideration of $22.2 million and contingent consideration of $3.0 million, which was subsequently paid in 2023. The trademarks acquired were included in the Company's Titleist golf gear reporting segment and will be amortized over a weighted average life of 10 years.
24

ITEM 2.      MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains management’s discussion and analysis of our financial condition and results of operations and should be read together with our unaudited condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs and involve numerous risks and uncertainties, including but not limited to those described in “Part II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission. Actual results may differ materially from those contained in any forward-looking statements. You should carefully read “Special Note Regarding Forward-Looking Statements” following the Table of Contents. Unless otherwise noted, the figures in the following discussion are unaudited.
Overview
We are the global leader in the design, development, manufacture and distribution of performance-driven golf products, and these products are widely recognized for their quality excellence. Today, we are the steward of two of the most revered brands in golf—Titleist, one of golf’s leading performance equipment brands, and FootJoy, one of golf’s leading performance wearable brands.
Our target market is dedicated golfers, who are the cornerstone of the worldwide golf industry. These dedicated golfers are avid and skill-biased, prioritize performance and commit the time, effort and money to improve their game. We believe our focus on innovation and process excellence yields golf products that represent superior performance and consistent product quality, which are the key attributes sought after by dedicated golfers. Many of the game's professional players, who represent the most dedicated golfers, prefer our products, thereby validating our performance and quality promise while also driving brand awareness. We seek to leverage a pyramid of influence product and promotion strategy, whereby our products are the most played by the world's best players, creating aspirational appeal for a broad range of golfers who want to emulate the performance of the game's best players.
We believe our differentiated focus on performance and quality excellence, enduring connections with dedicated golfers, and favorable and market‑differentiating mix of consumable and durable products have been the key drivers of our solid financial performance.
Our net sales are diversified by both product category and mix, as well as geography. Our product categories include golf balls, golf clubs, wedges and putters, golf shoes, golf gloves, golf gear and golf outerwear and apparel. Our product portfolio contains a favorable mix of consumable products, which we consider to be golf balls and golf gloves, and more durable products, which we consider to be golf clubs, golf shoes, golf gear and golf outerwear and apparel. Our net sales are also diversified by geography with a substantial majority of our net sales generated in five countries: the United States, Japan, Korea, the United Kingdom and Canada. We have the following reportable segments: Titleist golf balls; Titleist golf clubs; Titleist golf gear; and FootJoy golf wear.
Key Performance Measures
We use various financial metrics to measure and evaluate our business, including, among others: (i) net sales on a constant currency basis, (ii) Adjusted EBITDA on a consolidated basis, (iii) Adjusted EBITDA margin on a consolidated basis and (iv) segment operating income (loss).
Since a significant percentage of our net sales are generated outside of the United States, we use net sales on a constant currency basis to evaluate the sales performance of our business in period over period comparisons and for forecasting our business going forward. Constant currency information allows us to estimate what our sales performance would have been without changes in foreign currency exchange rates. This information is calculated by taking the current period local currency net sales and translating them into U.S. dollars based upon the foreign currency exchange rates for the applicable comparable prior period. This constant currency information should not be considered in isolation or as a substitute for any measure derived in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). Our presentation of constant currency information may not be consistent with the manner in which similar measures are derived or used by other companies.
We primarily use Adjusted EBITDA on a consolidated basis to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go to market execution and costs to incur across our business. We present Adjusted EBITDA as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. We define Adjusted EBITDA in a manner consistent with the term “Consolidated EBITDA” as it is defined in our credit agreement.
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Adjusted EBITDA represents net income (loss) attributable to Acushnet Holdings Corp. plus interest expense, net, income tax expense (benefit), depreciation and amortization and other items defined in our credit agreement, including: share-based compensation expense; restructuring and transformation costs; certain transaction fees; extraordinary, unusual or non-recurring losses or charges; indemnification expense (income); certain pension settlement costs; certain other non-cash (gains) losses, net and the net income (loss) relating to noncontrolling interests. Adjusted EBITDA is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to net income (loss) attributable to Acushnet Holdings Corp. as a measure of our operating performance or any other measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation. For a reconciliation of Adjusted EBITDA to net income attributable to Acushnet Holdings Corp., see “—Results of Operations” below.
We also use Adjusted EBITDA margin on a consolidated basis, which measures our Adjusted EBITDA as a percentage of net sales, because our management uses it to evaluate the effectiveness of our business strategies, assess our consolidated operating performance and make decisions regarding pricing of our products, go to market execution and costs to incur across our business. We present Adjusted EBITDA margin as a supplemental measure of our operating performance because it excludes the impact of certain items that we do not consider indicative of our ongoing operating performance. Adjusted EBITDA margin is not a measurement of financial performance under U.S. GAAP. It should not be considered an alternative to any measure of performance derived in accordance with U.S. GAAP. In addition, Adjusted EBITDA margin should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items, or affected by similar non-recurring items. Adjusted EBITDA margin has limitations as an analytical tool, and you should not consider such measure either in isolation or as a substitute for analyzing our results as reported under U.S. GAAP. Our definition and calculation of Adjusted EBITDA margin is not necessarily comparable to other similarly titled measures used by other companies due to different methods of calculation.
Lastly, we use segment operating income (loss) to evaluate and assess the performance of each of our reportable segments and to make budgeting decisions. Segment operating income (loss) includes directly attributable expenses and certain shared costs of corporate administration that are allocated to our reportable segments, but excludes interest expense, net; restructuring costs; the non-service cost component of net periodic benefit cost; transaction fees and certain other non-operating gains and losses as we do not allocate these to the reportable segments.
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Results of Operations
The following table sets forth, for the periods indicated, our results of operations. 
 Three months ended
 March 31,
(in thousands)20242023
Net sales$707,554 $686,290 
Cost of goods sold329,615 320,618 
Gross profit377,939 365,672 
Operating expenses:    
Selling, general and administrative236,592 222,539 
Research and development16,453 14,540 
Intangible amortization3,513 3,689 
Income from operations121,381 124,904 
Interest expense, net13,076 9,896 
Other expense, net339 664 
Income before income taxes107,966 114,344 
Income tax expense23,407 20,725 
Net income84,559 93,619 
Less: Net loss (income) attributable to noncontrolling interests3,203