Good morning, ladies and gentlemen and welcome to the Acushnet Holdings Corporation First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After today’s presentation, we will conduct a question-and-answer session and instructions will be given at that time if you would like to ask a question.

I would now like to hand the conference over to Sondra Lennon, Vice President of FP&A and Investor Relations. Please go ahead. .

Good morning, everyone. Thank you for joining us today for Acushnet Holdings first quarter 2021 earnings conference call. Joining me this morning are David Maher, our President and Chief Executive Officer; and Tom Pacheco, our Chief Financial Officer.

Before turning the call over to David, I would like to remind everyone that we will be making forward-looking statements on the call today. These forward-looking statements are based on Acushnet's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations.

For a list of factors that could cause actual results to differ, please see today's press release, the slides that accompany our presentation and our filings with the US Securities and Exchange Commission.

Throughout this discussion, we will be making reference to non-GAAP financial metrics, including items such as revenues at constant currency and adjusted EBITDA.

Explanations of how and why we use these metrics and reconciliations of these items to a GAAP basis can be found in the schedules in today's press release, the slides that accompany this presentation and in our filings with the US Securities and Exchange Commission.

Please also note that when referring to year-to-date results or comparisons, we are referring to the three-month period ended March 31, 2021 and the comparable three-month period. With that, I'll turn the call over to David. .

Thanks, Sondra. Good morning, everyone and thanks for joining today's call. I am pleased to report Acushnet's first quarter results and discuss our outlook for the balance of the year. Getting right to the quarter, Acushnet revenues of $581 million are up 42% and 34%, respectively versus 2020 and 2019.

Titleist brand equipment and gear sales increased 51% versus last year and 38% compared with the first quarter of 2019. And FootJoy posted gains of 22% and 13% versus 2020 and 2019. Adjusted EBITDA of $135 million increased 156% over last year and 111% as compared to the first quarter of 2019.

Earlier today, Acushnet's Board of Directors approved the company's quarterly cash dividend of $0.165 per share reflecting the Board's confidence in the company's financial position and future outlook and ongoing commitment to return capital to shareholders as part of our long-term total return investment strategy.

I must acknowledge and thank my fellow associates for delivering these exceptional results, which are traceable to our team's commitment and execution throughout 2020 and into the first quarter.

Despite mostly remote work and limited travel during the past year, the company has and continues to benefit from the talented Acushnet team and most notably our product development, operations and supply chain management teams which have excelled given challenging circumstances.

We have been fortunate that widespread efforts to keep our associates safe and well during this pandemic have been effective. This has been and remains our highest priority which has contributed to heightened output levels from our golf ball plants global club assembly teams and footwear and glove factories.

Additionally, I must acknowledge our global network of trade partners who continue to excel at providing golfers with high levels of service and compelling and safe experiences around the game of golf. Now turning to page 5. We will take a look at our business by segment.

Titleist golf balls increased 49% for the period led by one of our most successful new Pro V1 launches.

This achievement is especially noteworthy given our decision to delay the start of new Pro V1 production last fall to meet fourth quarter 2020 demand and that Texas storms in February disrupted our raw material supply causing a two-week shutdown at our New Bedford Ball Plant II.

During the past year the company has greatly benefited from the talent and experience of our long-tenured golf balls operations group. The Titleist golf balls success story begins on the worldwide professional tours where our Pro V1 and Pro V1x golf balls have been used by 75% of players this season more than nine times the nearest competitor.

And emphatically affirming Pro V1's total game performance and quality promise 91% of the field at last month's Augusta National Women's Amateur teed up a Pro V1 or Pro V1x golf ball. Titleist Golf Clubs also posted a terrific quarter with sales for the period up 67% with strong demand in all club categories and all regions.

New TSi metals are leading this growth which has been complemented by healthy demand for Titleist irons, Vokey wedges and Scotty Cameron putters in the second year of their respective product life cycles.

Our Titleist club assembly workflow has been significantly modified during COVID yet as indicated by these results our golf club operations group has risen to meet new challenges. And Titleist Gear continued to build momentum delivering a 22% increase as our team effectively navigated global supply chain complexities and delays.

FootJoy's 22% quarterly growth was led by double-digit gains in footwear and gloves and high single-digit apparel growth. FootJoy is built building terrific momentum in all markets with new Premiere Series which was the number one shoe at the Masters and new HyperFlex in traditions models.

Highlighting FootJoy's commitment to performance and style leadership, FootJoy recently partnered with iconic designer Todd Snyder to develop a limited edition footwear and apparel collection which was launched last month to strong consumer response.

And finally, our shoes brand also posted a sales gain in the quarter with golf and lifestyle growth offsetting a decline in Ski. Now turning to slide 6 and a look at our business by region. Sales in the US, Japan and Korea were strong across the board with each region posting 40%-plus gains for the quarter.

EMEA was up 8% and this region which has been most impacted by COVID related lockdowns and facility disruptions. Each of our segments posted double-digit gains as compared to the first quarter of 2019. In the US rounds of play increased 24% in the quarter.

Our new products have been very well received and overall consumer demand for golf equipment remains robust. In Japan, play was up low single digits for the quarter. And after a steady start to the golf season much of the country went into lockdown last month which is expected to continue into next week.

Korea posted a healthy 20% increase in rounds and both Titleist and Foot.Joy are off to great starts fueled by the success of new Pro V1 golf balls, TSi metals and Foot.Joy golf shoes and apparel. And across EMEA, play was down as you would expect given many courses were temporarily closed during the period.

Across the region participation has been healthy when courses are open for play which we think bodes well for the summer and fall seasons.

Now looking forward, we remain enthused about strong demand for Acushnet products healthy participation rates in most regions and the overall energy and interest for the men's and women's professional games across worldwide tours. Globally field inventories are healthy if not slightly below normalized levels.

Demand for all of our custom-made products is strong causing extended lead times which we expect to last through the second quarter. Golf balls raw material and Golf clubs component availability are in decent shape that we expect to face periodic constraints through the end of the year as our supply partners drive to keep pace with demand.

Avid golfers are making up most of the incremental rounds. And new juniors women and younger adults continue to contribute to the games growth with a number of new participants in the US estimated at 500000 golfers by the National Golf Foundation.

As noted on our last call demand for instruction and coaching is robust which we see as a positive long-term indicator for the game and business of golf.

As a result of these positive early season indicators we have raised our expectations for the balance of the year while continuing to reflect the necessary level of caution given global health and supply chain uncertainties.

In recent months we have adapted many areas of our business to capture strong demand and this will affect the timing of our business throughout 2021 most notably in golf clubs.

In some instances such as TSi-1 and 4 drivers and fairways and TSi hybrids, we were able to pull forward new product launch dates to take advantage of peak early season demand.

And with our Titleist iron and Vokey wedge franchises both of which are in the second years of their product life cycles we took advantage of the opportunity to front load volumes into the first half of the year to capture strong demand with the understanding that this will reduce end-of-life cycle sales in the second half given inventory constraints.

Looking longer term we remain committed to leveraging the company's and industry's momentum to position our business for future growth as the golf industry reaches for new heights in a post-pandemic world.

In support of this commitment, we are planning to make a variety of investments over the balance of the year to bolster our product innovation, golfer connection, digital A&P and supply chain capabilities commensurate with a favorable golf market opportunity.

The company's strong financial position compels us to invest in our future and we remain prepared to forsake short-term earnings upside in order to fortify our long-term profitable growth strategies. These projected investments will amount to roughly $15 million in OpEx in the back half of the year which will be spread across each of our segments.

While we won't get into specifics, Tom will address how these investments along with shifting club and ball volumes will impact the timing of our business in 2021. In closing the company and game of golf are in great shape and we are enthused about our long-term prospects. Thanks for your attention this morning.

And with that I will hand the call over to Tom. .

Thanks David and good morning everyone. I would also like to thank our associates for their hard work and the resilience they have continued to show in the current environment, which has resulted in Acushnet's exceptional first quarter performance. Starting with the income statement highlights.

Consolidated net sales for Q1 were $581 million, up 38% on a constant currency basis compared to Q1 2020 as the strong momentum we saw in the second half of 2020 continued and our supply chain output exceeded our expectations.

Gross profit for the first quarter was $311 million, up $110 million or 55% versus 2020 and gross margin was 53.5% up 430 basis points. The increase in gross profit comes from higher sales volumes across all segments and was partially offset by higher inbound freight costs.

The increase in gross margins resulted primarily from a favorable product mix shift and higher average selling prices in golf clubs, higher manufacturing absorption and a favorable mix shift in golf balls and a shift in Foot.Joy towards e-commerce and retail sales. SG&A expense in Q1 was $176 million, up $24 million or 15% compared to 2020.

The increase in SG&A comes primarily from higher selling and distribution costs resulting from the higher sales volumes during the quarter which were partially offset by lower advertising and promotional costs that have shifted to later in the year. Income from operations was $120 million which was $99 million higher than 2020.

Interest expense for the quarter was $3.6 million down $500,000 from Q1, 2020. And our effective tax rate was 24.3% down from 46% in 2020 as a result of a shift in our jurisdictional mix of earnings. Net income attributable to Acushnet Holdings was $85 million $76 million higher than 2020. And our Q1 adjusted EBITDA was $135 million, up $82 million.

There is a reconciliation of net income to adjusted EBITDA in our earnings release, as well as in the appendix of this slide presentation. Moving to the next slide. Our balance sheet continues to strengthen. At the end of Q1, we had $111 million of unrestricted cash on hand.

Total debt outstanding was approximately $352 million, a decrease of $167 million from Q1 of last year and we had $376 million of available borrowings under our revolving credit facility. Our leverage ratio was 1.1 times at the end of Q1, down from 1.8 at the end of Q1 2020.

Consolidated accounts receivable at the end of Q1 2021 was $388 million, up $78 million from the end of Q1 2020 on our very strong sales during the quarter. Our days sales outstanding were 57 days, which were down three days compared to last year.

Consolidated inventories were $330 million at the end of Q1 compared to $365 million last year, down $35 million. The year-over-year decrease was driven by golf balls, which were down about 21%. Golf clubs, which were down about 19%. And Foot.Joy, which was down about 6%.

Cash flow from operations was an outflow of $30 million for Q1 compared to an outflow of $73 million for Q1 of last year. The lower cash outflow from operations comes mainly from higher net income, partially offset by higher working capital.

Looking to capital expenditures we spent a little more than $6 million during Q1 compared to just under $6 million last year.

We expect our capital expenditures for full year 2021 to be in the range of $45 million to $50 million, driven by the key strategic investments in Golf Balls operations and precision manufacturing capabilities we discussed last quarter. Turning to the next slide. Our capital allocation priorities remain unchanged.

We expect to continue to prioritize and make targeted investments in the business with a focus on product innovation, golfer connection into operational excellence and to continue to seek acquisition opportunities that align with our focus on premium performance products that appeal to dedicated golfers.

We believe that these investments advance our long-term strategies and will drive growth at a favorable return. We also will continue to focus on generating strong free cash flow and returning capital to shareholders. We increased our dividend to $0.165 per share during the first quarter of 2021 for a total cash outflow of $12.7 million.

And as David mentioned, our Board of Directors today declared a cash dividend of $0.165 per share payable on June 18 to shareholders of record on June 4, which would represent an expected 2Q cash outflow of approximately $12.2 million. On March 5, we early terminated the amendment to our credit facility and we resumed our share repurchase activity.

During Q1, we repurchased about 56,000 shares for a total of approximately $2.4 million. These repurchases triggered the final determination date under our share repurchase agreement with Magnus Fila.

As a result on April 2, we repurchased about 355,000 shares from Magnus for a total of approximately $11.1 million, which completed our agreement to purchase 24.9 million worth of shares from Magnus. For the full year 2021, we still expect to repurchase up to a total of $40 million worth of shares.

We remain committed to our capital allocation strategy and believe this is a foundational element of our value proposition which creates a compelling long-term total return for our shareholders. Moving to our outlook.

Demand for our Acushnet products and golf participation remained strong and our team continues to effectively manage through disruptions in the global supply chain, temporary operational cost increases and periodic market closures, all of which have added a high degree of variability and unpredictability in forecasting our business.

Our outlook for the full year 2021 has improved. We expect our reported sales to be in the range of $1.79 billion to $1.87 billion, up about 14% at the midpoint compared to 2020. On a constant currency basis, we expect sales to grow in the range of about 9% to 14%.

And we expect adjusted EBITDA to be in the range of $255 million to $285 million, up about 16% at the midpoint of the range. Of course, these expectations assume no significant worsening of the impact of the COVID-19 pandemic including additional significant incremental closures of global markets and additional supply chain disruptions.

With a very strong first quarter and the second quarter, which we expect to be about 75% to 80% higher than 2020, we project very healthy first half sales gains as compared to both 2020 and 2019.

We also confirm our prior comments that second half sales will be lower than both 2020 and 2019, primarily as a result of changes in timing that will shift approximately $50 million to $60 million of golf clubs sales out of the second half of 2021 that we discussed on our call in February.

Absent these shifts, sales in the second half would be higher than 2019. Additionally, due to an especially successful Pro V1 loyalty rewarded program this spring, we expect that some golf balls volumes have shifted from the second half of 2021 into the first half.

We now expect 2021 gross margins to be negatively impacted by $18 million to $20 million higher from freight expense driven by recent increases in global air and container costs and by our increased utilization of air freight and we now anticipate these conditions to last through the end of the year.

And we currently expect OpEx in each of the remaining quarters of 2021, to be higher than the corresponding quarter in 2019.

As David mentioned, we expect to make about $50 million of strategic investments over the balance of the year in product innovation, golfer connection, digital commerce, A&P and supply chain enhancement to fortify and improve the strong market position of our brands.

As a result, while we expect strong growth in adjusted EBITDA for the year compared to 2020 and 2019, we do expect that first half adjusted EBITDA will be higher and that second half adjusted EBITDA will be lower than 2020 and 2019. In conclusion, our associates and trade partners did an excellent job keeping up with the continued strong demand.

And our supply chain held up well, which enabled us to deliver exceptional first quarter results. While we remain cautious in our planning, we have increased our full year 2021 financial goals and we believe we continue to be well positioned to execute our long-term strategies and to deliver a solid long-term total return for our shareholders.

With that, I will now turn the call over to Sondra for Q&A..

Thank you, Tom.

Operator, could we now open up the line for questions?.

[Operator Instructions.] Your first question comes from the line of Casey Alexander with Compass Point..

Hi. Good morning. And normally, I don't make complements on public calls, but the ability to turn your inventory 1.6 times in one quarter is, just -- that's a remarkable achievement. So, I would congratulate your team on that..

Thanks, Casey..

Yes. I am looking at your guidance to a certain extent and for the rest of the year, consensus has EBITDA at $174 million and the midpoint of your guidance is $135 million.

And so I would ask, why shouldn't we look at your guidance as being somewhat overly conservative?.

Well, I'll point to -- and maybe just to call back on some of the comments that Tom and I hit on. The timing of our business has been greatly altered in really the back half of last year and throughout 2021, given market demand obviously very strong and supply chain disruption and constraints. So Casey, maybe it will be helpful.

I'll give you a couple of just building blocks of how we're thinking about the balance of the year. We've raised our internal projections based on a strong Q1. And as I noted, we did move a good amount of club volume from the second half -- really the second half of you would consider it 2019 into 2021. TSi, fibers, hybrids.

There's also a phenomenon playing out with irons and wedges, which are at the end of their life cycle. We pulled those forward into the first half. Iron is a good example. We'll launch new irons in the third quarter. We're going to reduce the sell-off of irons and wedges. So, that's a bit of a shift from H2 to H1.

We've had an incredibly strong PRo V1 loyalty program this year, which is great. It will bolster the first half we think with some offset in the second half.

And then the other piece would be, we've got a -- while not overly sizable, we've got a true field launch that typically -- a golf ball launch that typically happens in the fourth quarter of odd number years. We did in 2019. We did in 2017. This was pushed into 2022.

And then really, as Tom mentioned, we've got some incremental freight dynamics that we're working through. And as I talked, about another $15 million or so in OpEx associated with strategic investments. Covered a lot of ground there.

But the point is there are a lot of moving parts and pieces in our business and that we benefited, because odd years typically overlap on odd years and even years typically even -- typically overlap on even years, less so the case this year for obvious macro reasons..

Okay, great. Thank you for taking my question. I appreciate..

Thanks, Casey.

Your next question comes from the line of Randy Konik with Jefferies..

Hey, guys. How are you? I guess David, I just want to get your updated thoughts on the conversations you're having with your green grass partners. You mentioned last quarter. You mentioned it again on the call this morning about the idea of more lessons being taken.

I just want to get some perspective on what they're saying around lessons? What they're saying about the fullness of their key sheets or not? Get some perspective on additions on the private side of the membership additions, et cetera. Just anything you can give us on that color on what they're saying to you, would be super helpful. Thanks..

Yes. Thanks, Randy. I will qualify it by timing, and that it's early May, in Gulf and the Northeast and Midwest really just opened up in the last several weeks. But pointing -- and this is broadly US commentary. But pointing to what we saw in the first quarter, US rounds were up about 25%. What we saw there was really three dynamics.

Very strong in the Sunbelt, as you would expect. Northern and mid-belt markets were down, really due to weather. Again, we don't get too hung up on rounds of play in the Northeast and Midwest in the first quarter, but they were down significantly.

And then we knew you had the reality that a lot of folks who would -- a lot of golfers who would typically travel from the north to the South in the first quarter to play golf didn't play -- didn't do that because they weren't getting on planes. But net of it, if you get through the first quarter up 24%, really, really strong.

Anecdotally, T-sheets are full. As I've said, golf professionals are as busy as they can be. Club memberships are tighter in supply than they've been in a long time. And no surprise right given interest in demand for the game that we saw second half of 2020 and really into the first three, four months of 2021.

So, you know what we see a healthy environment and we see it as healthy as we've seen in a long time. As to what we're seeing in the broader marketplace again Midwest Northeast we're going to have to really defer that to end of second quarter when we get some May and June intel under our belts..

Got it. And then can I just get some perspective on where you are with capacity on the ball plant side of things? And then just expand a little bit upon the success you're seeing with the loyalty program on the Pro V1 side.

Anything you're learning there that you could perhaps expand that program further or into other areas of your business? Just curious on how you're thinking about the success of that program..

Yes. From a capacity perspective, we are still running 24/7 shifts. So, we are at close to -- or at our maximum capacity in terms of production.

Our production capabilities have improved somewhat as COVID vaccinations become more widespread which has manifested itself in reduced absenteeism as less employees are having to call out because of potential exposures and things like that and there's been some loosening of COVID restrictions as well.

So, we are seeing improvement in our production capabilities. And we are at full capacity. .

Yes, Randy, I'll take the moment too to add that we've said this over the years. We like to make what we sell. And the control we have over our supply chain served us well in the first quarter, right? We have three ball plants. We have our own glove factory. We have a joint venture shoe factory. We have club assembly around the world.

So, that served us real well. As Tom mentioned, capacity, we're at peak levels in some areas and we continue to see better or reduced absent T rates. Another piece of our story is our vendors and supply partners overachieved during the quarter.

So, we ended up getting as an example more rubber components for golf balls, more grips, more shafts than we were initially led to believe. So, that obviously played into what was a strong first quarter for us.

But I think the macro theme there is we were able to leverage the control and strength of our supply chain in the first quarter and you see that in our results. Loyalty rewarded. I look at that and see that. And when we see where that business is coming from it's really coming from all channels, green grass, of course, digital et cetera.

It's coming from all channels. And I think it's as much commentary on enthusiasm for the game, right? We've got a new product this year. So, we always expect in a new Pro V1 launch year to index a little bit favorably than the prior year. But more than anything it's just -- to us it's commentary on a strong early season interest for the game..

Got it. Thanks guys. Very helpful..

Thanks Randy..

Thank you, Randy. Operator, next question please..

Your next question comes from Kimberly Greenberger with Morgan Stanley. .

Hi all. This is Javi [ph] from Kimberly's team. I'm wondering you mentioned $15 million additional operating expenses in the back half of the year. And obviously this quarter SG&A was up 15%.

So, I'm wondering if you could give a little bit of color on the cadence of those expenses throughout the quarter, particularly considering the shift in the launches that you mentioned?.

Yes, the $15 million of incremental OpEx investment will be fairly evenly spread throughout the balance of the year and is really not impacted by any of the changes in the cadence of some of our product launches..

Great. Thank you..

You're welcome..

Thanks, Javi. Next question, operator, please..

Your next question is from Joe Altobello with Raymond James. .

Thanks guys. Good morning. Quick question on the market. Does it have any sense for what the equipment industry grew in the first quarter? I'm trying to put your Titleist growth here of 51% in content. I know it's a wholesale number not a retail number, but any color on market share trends in the quarter would be helpful..

Yes, Joe I won't get into specifics. I can put some data points out there. Certainly, we look at industry sell-through. We look at industry shipments. And our sense is that our shipments outpaced industry shipments. So, we come out of that feeling as though we -- from a share standpoint we did well.

The other reality is you got to look at inventories too to see who's done a better job than others replenishing the pipeline. So, more than ever it's shipments and it's sell-through and its inventory replenishment that you need to look at. But we can add it and feel nothing but positive about share strength really in all categories.

And again, our story is a bit unique because we've got drivers in the early days. We've got fairways and hybrids in the early days. But as I said we've got irons and wedges in the back half of their life cycles which as we compare that performance first two years prior, we had really strong performance in year two.

But we like our position heading into the second quarter. .

Got it, that's helpful. And maybe in terms of channel inventories you mentioned they were very healthy if not a bit tight.

Do you expect them to normalize this year, or does that extend into 2022? And are there any particular channels that are more completed than others in terms of green grass potential et cetera?.

Yes. Well channels are good. We took a look at green grass in particular in the US they're strong. And as you'd expect most of those doors receive a season opening pipeline order to really fill up the shop. So, that did happen.

As we look at it around the world, as I said overall, they're in decent shape Asia and EMEA are probably closest to normal US probably the most challenged, falls down just slightly. Clubs and gloves may be down more so. Gear and apparel, but really in good shape.

And global footwear, which over the years certainly in the last couple of years has been on the heavy side is now on the light side, which we view as a long-term positive. The challenge of when do we get back to normal. Certainly, the industry is marching back towards normal.

The challenge is -- and it's reflected in all our forecast and projections is just supply constraints, right? What can we make and the flow of raw materials and how that's going to constrain our ability to get back to normal levels. But good news is, I don't think consumers are putting the arms away right now although inventories may be down.

The challenge we're facing and the entire industry is facing as so much of the industry has moved towards custom products, whether it's custom balls or custom clubs. Lead times are running far longer than anybody is comfortable with. Again, our company I think is doing as well if not better than most. But it's become an industry challenge.

And golfers have been understanding as they turn a one-week lead time historically into what's become a three, four-week lead time nowadays. .

Got it. Thank you..

Thank you, Joe.

Operator, next please?.

Your next question is from the line of Daniel Imbro with Stephens Inc. .

Hey. Good morning, guys. Thanks for taking the question. I wanted to start on the top line. As of mid-February I think last call, Tom, you noted sales were up kind of low to mid-20s. You ended the quarter at 42%. That implied March was a pretty big number over 80%.

Is that easier comps? I mean to what extent do you think stimulus supported March? And then any comment on whether that level of demand has sustained here into April as compared to even easier?.

Yes. The majority of increase from what we said on the last call really had to do mostly with supply chain execution. So demand -- consumer demand was strong throughout the quarter.

And the variable or the concern was really about the supply chain and how much of that demand we'd be able to meet and the supply chain came through and led us to our exceptional results. As it relates to the continued demand, what we're seeing so far is continued strong demand and momentum into April, but still two months to go in the quarter.

So no, additional commentary there. But the demand is continuing to be strong in April. .

Got it. And then follow-up on Casey's question from earlier just on the guidance. Yes, it looks like the revised ranges kind of flowed through the full revenue beat in 1Q. But the margin guidance did come down even accounting for the $10 million in higher freight and the $15 million in higher OpEx.

It looks like underlying margins are still coming down for the rest of the year to get to the midpoint of the guide.

Are there any other variables that you'd call out that are weighing on that profitability outlook?.

The only thing I'd add to that, Daniel, is the gross margin impact of the shifting of some of the wedges and iron sales into the first half. Those would have been normally in the second half. And so the gross margin gross profit that comes along with those sales has shifted out of the second half and into the first half.

So that would be the other piece. .

All right. Great. I will follow it offline. Thanks, Tom..

Thank you..

Thank you, Daniel.

Operator, could we take the next question, please?.

Your next question comes from the line of George Kelly with ROTH Capital Markets. .

Hi, everyone. Thanks for taking my questions. So just a couple for you. First the $15 million of incremental OpEx, can you give us a little more detail just on what that is? And specifically the golfer connection. I heard you mention a couple of times golfer connections.

So just curious to learn more about that?.

Yes. Hey, George, we're not going to get too detailed, but I'll help you out as best I can. And specific to golfer connection, for us that is ball fitting, that is club fitting, that is tech reps, that is more on the ground engagement with golfers, okay? It also flows through our loyalty programs et cetera, et cetera.

So when we talk golfer connection that's really what we're talking about. But as I think about that spend certainly the -- spends have shifted under the golf industry in a very favorable and positive way.

And with those shifts have uncovered some opportunities for us to invest across our business, again from digital to golfer connection, to A&P, to supply chain really all across our business.

And as the industry has evolved and accelerated in the last couple of years again it's just uncovered opportunities that -- as I made the point earlier, our strong financial position allows us and compels us to make those investments, which we're prepared to do and frankly very excited to do over the back half of the year. .

Okay. Okay. And then next question relates to your balance sheet. So I -- just looking out over the next year 18 months I view your balance sheet just getting to a net cash position much stronger position. And I'm just curious if that will impact if you can tell us at all. It didn't sound like your cash flow priorities have changed a whole lot.

And with all that strengthening that you've seen in your balance sheet over the last two, three years just curious if you'll have an ability to return more cash to shareholders or how you want it -- how you want to utilize that power, I guess?.

Yes. You're right. Your capital allocation priorities at this point haven't changed. We're still investing in the business. We're still focused on dividends and share repurchases. We have reinitiated our share repurchase program. We do anticipate strong cash flow generation over the foreseeable future.

And as time progresses if that comes to fruition and we have the ability to do more things within the realm of capital allocation we'll certainly consider that. But at this point we're -- there's still some uncertainty in the market and we're kind of taking it quarter-by-quarter..

Okay. Okay. And then last question for me. This is more of a 10,000 per share kind of question. But is it -- so you're expanding some of your operating investments $15 million this year.

And -- is it a fair assumption with what you're seeing today, that some of this shift and increase in gameplay and new golfers et cetera, that you're building your business model assuming that some of these shifts are permanent.

And maybe if you could just talk about that, how do you think this is going to shake out a year from now?.

Well, George -- and we've talked about this a little bit on the last call. And your question is something we think about often. As we look at what's played out in the last year right, with a quarter of call it shutdown and then really strong recovery. I made the point. We think there are about 0.5 million new players that entered the game in 2020.

That's a U.S. number, maybe half that around the world. So the game is going to come out of COVID stronger, than it was when it went into COVID. And we say that carefully, because it's built around obvious very difficult moment in events. But the net of it is the game comes out of this period stronger.

And will it be a straight-line acceleration of our business, maybe not. We talked about the reality of hey it's going to be tough to comp against the historic second half we saw last year from a rounds of play standpoint. But hey, the game and industry and rates had changed in the last 12-plus months. And we're responding to that.

So whether it's our capital investments we announced a few months ago, whether it's the strategic investments we're announcing now. Those are our responses to the opportunity we see before us..

Okay. Great. And last question for me, just CapEx expectations for the year..

Yeah. We continue to forecast $45 million to $50 million for the full year. We did about $6 million in Q1. And we continue to be on track for the $45 million to $50 million..

Okay. Thank you..

You're welcome..

Thank you, George..

George thanks. And thanks everybody. As always, we really appreciate your interest and time on these calls. And look forward to catching up, after Q2. Have a great spring. Thanks so much..

This concludes today's conference call. You may now disconnect..