Sean Sullivan: At the end of the day, as I’ve said a few times, we’re really guided by the leverage in terms of maintaining leverage below 2.25 times. So often given the cadence of the year with the sell on in the first quarter, the investment in working capital, we look at the share repurchase and the Magnus agreements in the context of overall leverage. So I don’t know that, I would read a whole lot into past practice or current practice, but I really point you to, we’re trying to manage business and maintain a very strong balance sheet with that leverage target.
Operator: The next question is from Mike Swartz from Truist Securities.
Mike Swartz: I just wanted to start with the ball business and maybe following up on Joe’s question, but taking a little higher level view of. In a typical even numbered year lapping a Pro V1 launch, it’s been very rare that the ball business has grown. And I think even back in February, you had said, you expected the ball to grow year-over-year. I think you have had a loyalty program before, understanding you’ve gotten some new product launches this year. But I guess, has something structurally changed relative to maybe the pre-pandemic level where you can now grow in even number of years in that business or is this more of a factor of inventory levels are just still too low and you are still rebuilding some of that this year?
David Maher: Mike, I would say, what’s different today versus handful of years ago. I’ve said this before, but annually, there are about a 150 or so million more rounds of golf being played today than were played in 2019, right? So you do the math on that, what it means to a golf ball company. I would also say that we’ve been producing golf balls at near full capacity for quite some time to keep pace with demand and to put enough product in the market to represent the brand the way we want it to be represented. So without pointing to one singular event, I would say, overall demand is up. We think our shares are up. We think our manufacturing capabilities and output certainly this year versus last year are in better shape. And I would point to global channel inventories as being as being healthy and where they ought to be.
So not one singular answer but rather health across the board. I mentioned a moment or two ago, we’re seeing a nice return of the corporate business and have for the last couple of years. So a lot of positives there and particular to the quarter. We were a bit constrained last year from a supply standpoint and lead times were longer than we would have liked, that is no longer the case. So I think you are seeing the business perform sort of without limitations right now, whereas the last couple of years we’ve had limitations due to raw materials, we’ve had limitations due to strong demand, et cetera, et cetera. So we like where we are. I will say longer term, we’d like to normalize our production schedules. So we’re not operating at peak capacity for as long as we are.
And we do expect that at some point that will happen. But for the time being, we like the way the business is running. And again, I think I’ve given you three or four ideas as to why we saw what we saw in Q1 of ’24 where again a Pro V1 launch was comped favorably. So obviously, we feel real good about the ball business. And our most pressing, not threat, but our most pressing area of interest right now is really weather, because when weather is decent people are out playing golf and purchasing Titleist golf balls. So hopefully that gives you some color.
Mike Swartz: And then just second question, just to put a finer point on the first quarter, because I think when you gave kind of the guidance and the cadence of the year back in February, I think it implied EBITDA dollars down year-over-year. Obviously, you came in ahead of that. So is that simply the product of better performance at your distribution center and maybe a little bit of the Vokey launch slipping into the first quarter versus I guess your assumption that some of that would have been in the second quarter when we talked in February?
Sean Sullivan: Yes, that’s fair. That’s a fair portrayal of the first half in terms of where we sit here today versus the end of February.
Operator: The next question is from Noah Zatzkin from KeyBanc Capital Markets.
Noah Zatzkin: Just wondering if there’s any early reads on your census sell through across categories exiting the quarter in terms of trajectory from March into and through April. Has demand in April remained strong? Any color there would be great, particularly as it relates to FootJoy?
David Maher: I would say the common theme in Q1 was, where weather was decent, demand was good. Where weather was less than decent, demand was affected. So the southeast in particular was slower than we would have liked, again, not surprising given the rounds profile. I would say and we hear this every year, as weather turned and as March turned to April, we did begin to hear some more positives from our retail partners as their seasons opened up. So I think the narrative is more about delayed start to season versus strong demand, weak demand. Within our product lines, we’ve been especially pleased with our wedge launch and early demand there, that team did a great job, as I’ve said, and early demand has been strong. So much of our products are custom fit.
And a lot of that activity is going to start here in April, May, June, July. So we’ll have just a much better read on our custom fitting activity, whether it’s golf clubs, golf balls. I called out some new footwear fitting opportunities that we’re going to embark on here later this month. And now to your final comment about FootJoy, again, we really like the product story. We like what’s happening in our footwear business and our apparel business, and our glove business. I think we’ve pointed to back half growth in that business after what was obviously a slow start, although, we did call out growth in the US, which we were pleased with, more than offset by some declines outside the US. So FootJoy is working its way through a correction period.
And again, we’re optimistic for growth in the back three quarters of the year, really built around a product portfolio that we feel really good about.
Noah Zatzkin: And maybe just one other question. Just on your comments around the North America distribution center start-up exceeding expectations. Just wondering if you could provide a bit of color there in terms of how we should be thinking about the potential P&L benefits both near term and long term?
