Justin Rose to Honma

[jlebeane13]

 

I'm not sure UA's financials are strong enough to allow them to do something like that.

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

Yes they can afford it!

If you look at numbers it wouldn't make sense for UA. They have been losing a ton of cash since 2016. Buying a hard goods business in golf when your already hemorrhaging cash is crazy.

Combine that with the fact TMAG players have apparel deals with major apparel brands like Nike and Addidas would make it impossible for UA to even consider it.

[the bishop]

I'm not sure UA's financials are strong enough to allow them to do something like that.

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

 

I am glad you aren't a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

Yeah revenue and EPS are two different things.

[delmer]

I'm not sure UA's financials are strong enough to allow them to do something like that.

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

 

I am glad you aren't a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

 

I haven't looked at any of their financials but I'm glad you can take a couple sentences I wrote and knock me.

 

As I explained I thought it would have made sense back when they were one of the rumored to be one of the interested parties in 2016. I was a PGA professional at a private club and then I turned into a rep for one of the OEMs and half the battle its getting into an account.

 

From a buyer's standpoint I probably wouldn't do business with UA when I had access to Taylormade and Adidas on one account and in one system unless I had a lot of demand for UA. On the flip side of the coin if I had UA and Taylormade connected to each other I would do a lot more business with UA than Adidas so it is almost like buying instant presence in the market.

 

It seems like UA did it the old fashioned way of just hitting the bricks and getting their salesforce out there and earning business rather than buying accounts.

 

I still think the biggest sticking point would have been the mess that the brand ambassadors would have been until contracts started to turn. You would've had your poster boy playing Titleist equipment and then the equipment poster boys all wearing Nike and Adidas.

 

Like I said in a previous post with Honma it could make a lot of sense to buy Taylormade because you'll instantly have access to basically every buyer in the world and you'll gain notoriety for both your equipment and your apparel but you're taking on the risk that is the big money pit that Taylormade has become.

[asw7576]

Wow ... breaking news :)

[DRRicks]

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

 

I am glad you aren’t a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

 

 

I'm not sure UA's financials are strong enough to allow them to do something like that.

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

 

I am glad you aren’t a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

 

Nope. Net loss was 4th quarter. Operating profit of approximately $120M.

 

http://investor.underarmour.com/news-releases/news-release-details/under-armour-reports-fourth-quarter-and-full-year-results-0

[CStephenson17]

 

 

I am glad you aren’t a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

 

 

I'm not sure UA's financials are strong enough to allow them to do something like that.

 

At the time that's what I thought as well. I'm no financier but it seems like a company with revenue in the $5B range could pull off a $425M purchase.

 

I am glad you aren’t a financier. UA already has interest expense of $35 million a year and posted a net loss last year. Add more interest obligation onto that plus extra expenditures for R&D.

 

Nope. Net loss was 4th quarter. Operating profit of approximately $120M.

 

http://investor.underarmour.com/news-releases/news-release-details/under-armour-reports-fourth-quarter-and-full-year-results-0

 

Incorrect per your link.

[DRRicks]

In this case you should go off of operating profit, as there was a large one-time tax that was paid. So, not truly indicative of performance.

[CStephenson17]

In this case you should go off of operating profit, as there was a large one-time tax that was paid. So, not truly indicative of performance.

 

The tax rate was cut this past year which doubles down on net being worse. And net is indicative because it looks at interest, which is what my point was to begin with them already having a high interest obligation.

[Grimace45]

At approx $200M in EBITDA they should be able to finance $2B just based off their results. The deal would be financed off of a pro forma of the combined company which in theory should increase the borrowing capacity. Not sure what TMs enterprise value is but it could be a deal that is doable for UA.

[g-off]

perhaps whoever buys tm does the same to them as they have done to adams and yes!

[matt70286]

They likely can also add back ~$195mm of restructuring costs. Their EBITDA is about $325mm without that so Adj EBITDA is probably around ~$520mm. They could easily do it although a few things:

- UA have stated that managing debt is a priority in the near to medium term

- UA are looking to expand margins, and hard goods / golf equipment margins generally suck

- the financial sponsor probably hasn’t done enough at this point to make TaylorMade valuable / attractive enough where they would want to sell (at least not at the return they are likely looking for)

[GolfChannel]

Well, had nothing to do with Rose, but had my fitting at my local Edwin Watts and ended up with a Honma TW 737-445. Thing was long and stupid easy to hit with no warm up. Also, given my miss is left, thing never went left. Everything straight or butter cut. Also, given some of the options out there, happily it isn’t blingy.

[OldTomMorris]

Did TM try to retain Rose on staff?

[delmer]

Did TM try to retain Rose on staff?

 

I doubt they made a hard push for him. It seems like the new owners are trying to get some of the big contracts off the books. I think TM did better when they were more worried about winning bag counts than having the biggest names on staff.

 

That is a good question though. What sells more drivers, Just Rose using one or being the #1 driver on tour?

[GolfChannel]

I was under the impression that TM was still owned by a holding company. So, they are basically trying to get it as lean and attractive as possible before selling it.

[Jacked_Loft]

Nice posts here all. The last page was better than sitting in school for a week.

[GoGoErky]

Did TM try to retain Rose on staff?

 

Doubt it. Like with Sergio they are moving on from deals that don’t benefit them as much as tiger, Rory, day, dj

[Smitty120]

Noticed TM staff bag and headcovers gone as of today. Wonder if we will see change of clubs next event he plays. :)

[Smitty120]

As I said.... the TM Staff bag and M series headcovers are gone.

[CStephenson17]

Contract is up at end of year. Not hard to follow.

[RH82]

As I said.... the TM Staff bag and M series headcovers are gone.

Not exactly but okay.

[xxio]

As I said.... the TM Staff bag and M series headcovers are gone.

Not exactly but okay.

 

The bag change could be just giving his caddy a lighter load in the heat/humidity.

[OldTomMorris]

As I said.... the TM Staff bag and M series headcovers are gone.

 

Noticed that too, initially I just thought it was because the caddy was still struggling but why change the head covers as well. I'm sure if it was just to help the caddy out they could have sorted a TM branded bag, appeared to be unbranded or a non-hardware brand bag.

 

Correction: the carry bag and head covers were TM branded

[madaboutgolf]

the tournament he played last week was his last under contract to TM one of the commentators on sky sports said ..

[OldTomMorris]

It was a little peculiar to start the event with a TM staff bag plus head covers etc. then midway thru the event ditch the branded bag and head covers.

 

Correction: the carry bag and head covers were TM branded

[gaffs]

It's a risky move for him to change up when he is playing the best golf of his life. I'm sure Honma can replicate the blade irons and wedges he plays pretty easily. The woods, driving iron and putter may be more of a difficult transition.

 

Will be interesting to see if he sticks with a TM ball.

 

I imagine he will go with a mixed bag of TM and Honma for a while.

 

Here's hoping he puts some of those gold Honma clubs into the bag...

 

[OldTomMorris]

It's a risky move for him to change up when he is playing the best golf of his life. I'm sure Honma can replicate the blade irons and wedges he plays pretty easily. The woods, driving iron and putter may be more of a difficult transition.

 

Will be interesting to see if he sticks with a TM ball.

 

I imagine he will go with a mixed bag of TM and Honma for a while.

 

Here's hoping he puts some of those gold Honma clubs into the bag...

 

I think Rose will continue to use his TM wedges so the only thing that will change is his irons (4-9). I really don't think this change will be an issue at all, of course if he doesn't start well everyone will point to the new equipment.

[drew1527]

Noticed TM staff bag and headcovers gone as of today. Wonder if we will see change of clubs next event he plays. :)

Still looks like TM to me.

 

It’s still a TM stand bag and the covers say taylormade so not sure how this is earth shattering or any insight on a switch.

[MCoz]

As of now Rose is changing the irons. Driver and wedges are to remain for now as I understand it. Not sure about the fairway woods. The TM ball is set to stay.

 

By the way Goosen is going to Callaway (actually used some of the stuff at the Father & Son while wearing a TM Hat). TM doesn't really support Champions Tour through contracts. They will supply equipment but not pay $$$.

 

Molinari is set to going with Callaway by contract, He played TM equipment in '18 while as a non contract free agent.

[RdS22]

It was a little peculiar to start the event with a TM staff bag plus head covers etc. then midway thru the event ditch the branded bag and head covers.

 

Correction: the carry bag and head covers were TM branded

 

He had a different guy on the bag for the first round, that could explain the bag change. Maybe his caddy got sick which will make sense for the carry bag