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Q&A With Acushnet COO David Maher

Today marked the initial public offering of Acushnet, makers of noted brands Titleist and Footjoy.

Longtime CEO Wally Uihlein rang the opening bell, flanked by many luminaries, including Butch Harmon, Jim Nantz, FILA chairman Gene Yoon, NYSE president Tom Farley and Brad Faxon. Also joining Uihlein on stage to the left in the image posted were Acushnet employees Diane Medeiros and Carlos Botelho who have been with the company for 51 and 44 years respectively.

The company COO, David Maher, who took that position in June, spoke from the New York Stock Exchange today about the IPO and future.

GS: You’ve been with the company since 1991, how would you describe the mood as Acushnet heads in this new direction?

DM: First and foremost, we like our brands to be front and center and our associate base really stays below the radar. Today they popped up above the radar and I think it was a great day for our associates. They’ve built some enduring brands and a very enduring business with the eyes of Wall Street gazing upon them they’re rightfully very, very proud. [The opening bell ringing] was simulcast to our plants in New Bedford and Thailand and around the world, so first and foremost a day of great pride for the folks of the Acushnet company.

GS: Going forward will we hear more about the associates, the renowned loyalty of Acushnet employees and how many of your products are still made in the United States?

DM: We’ll certainly need to be more transparent for financial reasons. We like to focus the attention placed upon us on our products, moreso than the people behind the products. But without question we’re going to have a broader and more transparent face to at least the financial community. We do believe, we’ve been around 80 years or so, and the Titleist ball has been number one in golf since 1949 and Footjoy has been the number one shoe in golf for six or seven decades. Our intent and our thoughts as we think about the future, we’ve got a proven and differentiated business model, number one. Our business has been built around dedicated golfers. There are eight million of them in the world and they account for about 70% of the total golf spend. Our focus is very clear as we think about the future under new ownership and we don’t expect to change that.

GS: What does an Acushnet IPO mean to your customers or does it mean anything to them?

DM: We hope not, we hope they think of us through our products and through the experiences they have with our products. Understandably many will also link the initial public offering with our company, but first and foremost we will make sure our interaction with them is as good as it’s always been and is only going to get better. As we think about the future, two certainties will be we know we need to continue to bring innovative new products to market and we know we need to continue to enrich and build upon the experiences we give dedicated golfers with our products. That truly is our focus. Insiders of the game and business will get a different view of the company because you’ll look at us through the public company lens but our hope is to continue to impress and earn the trust and loyalty of dedicated golfers with our product and the ways we interact with them.

GS: What is your position on the state of golf?

DM: We’ve talked about this a lot over the last few weeks as we’ve positioned the company and obviously there has been a lot of commentary about the industry over that time. It started in the 80s with the build a course a day where we went from 12,900 courses to 15,900 courses in the United States. It accelerated with the arrival of deep-pocket sporting goods companies when Nike and Adidas arrived, giving further validity to the potential size of the golf business. You had the retail expansion as big public companies joined the retail business and expanded their footprint. So you had three forces. Big buildup of golf course supply, a big buildup of golf retail supply and more OEM’s in the space.

Predicated on that, with the way ratings are spiking, call it the “Tiger Effect”, it’s only a matter of time before the golf population grows. Number one. And then I think what we’ve realized is that it prompted us to think about our business, we’ve done well in good times and we’ve done well in tough times in part because of our focus on the dedicated golfer. But the correction that’s played out, we’ve seen, accelerated by the sub-prime crisis in ’08 and ’09 exposed some of the tenuous nature of our industry. And over the last five years you’ve seen that correction. We’re dealing with a contraction of golf courses, 100 to 150 a year over the last several years. We’ve seen a dramatic reduction in retail square footage, from Sports Authority to Edwin Watts to Golfsmith the last several weeks, and we’ve seen some changes to the OEM landscape as Nike’s made a shift in the way they’re thinking about golf and as Adidas is looking to sell Taylor Made.

We see that as a necessary correction that is resulting in an improved set of industry fundamentals. So those that are left standing, whether it’s the golf courses or the OEM’s or the retail players will be operating in an environment that is just a whole lot more healthy than it had been over the last several years. We see that correction as probably 70 or 80 yards downfield, it’s got a little geographic bent to it and it’s probably further along in some areas more than others and largely that issue is primarily a U.S. issue. The rest of the world, where we transact our business, it’s been a whole lot more stable which, as a global company, has allowed us to weather the storm of that contraction.

But what we have seen, and this year is a good example as despite some pretty rigorous turmoil at retail, our sales are up. Our dedicated golfer is resilient, they continue to be engaged, but we are dealing with some obvious contraction at retail, and what that means for manufacturers is a reduction in the inventory you have in the marketplace which, yes, causes a little bit of short term pain. But longer term we feel good about the purchase behavior of our dedicated target audience.

GS: Will becoming a publicly traded company put more pressure on Acushnet to expedite and increase new product launches?

DM: It’s something we’ve talked about a lot the last several weeks as we were presenting the future plans of the company. Really our launch cadence begins with the dedicated golfer. It really is in sync with their replacement cycles. In clubs we tend to run every couple of years and with balls the same. Footwear is a little bit different. It’s a little more accelerated because that’s as much a fashion play. But the cadence of footwear is different than equipment.

We don’t have any intent to change that. It takes us a while. To think about this industry and what it takes to bring measurably improved product to market, it takes resources. We spend more money than any of our competitors on R&D. It takes time, there is an incubation period to bring meaningful performance benefits to the market. So we really like that launch cadence we’re on and we packaged it to the investor community as a competitive edge and they agree.

Do we think we are going to accelerate the timing of our launch cycles? I think that would be a road to ruin for us.

GS: The target range of the offering price was missed, should we read something into that?

DM: No, that’s left in the hands of the bankers and traders. We go tell our story to investors and we frame the industry in its rightful lens. But really, the valuation, you put out a projection, that falls in the hands of the bankers and traders, so that really has no effect on us. We enter the world a public company today and are committed to what we’ve said all along that we’re a company dedicated to delivering long term growth with great reliability and predictability, so that doesn’t change.

GS: Is Wally Uihlein is committed to staying on as CEO for two more years?

DM: As Wally would say, as long as he can add value Wally’s going to be here. Unless we kick him out. But no, Wally’s been a very active part of this process and has no plans to exit any time soon. He’s a remarkable leader and visionary, and he’d be quick to point out too that his proudest accomplishment is the team he’s built behind him. We feel real good about Wally’s place and outlook and more importantly he feels really good about the many talented folks behind him.

GS: The symbol for Acushnet GOLF, how was that not taken?!

DM: Years ago it was Golfsmith when they were traded on NASDAQ. What else could we be called!

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