Earnings Call Transcript - GOLF Q1 2021

Operator, Operator

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.

Sondra Lennon, VP of FP&A and Investor Relations

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.

David Maher, CEO

Thanks, Sondra. Good morning, everyone, and thank you for joining today's call. I'm happy to share Acushnet's first quarter results and discuss our outlook for the remainder of the year. For the quarter, Acushnet's revenues reached $581 million, showing increases of 42% and 34% compared to 2020 and 2019, respectively. Titleist brand equipment and gear sales saw a rise of 51% compared to last year and 38% compared to the first quarter of 2019. FootJoy also experienced growth, with gains of 22% and 13% versus 2020 and 2019. Our adjusted EBITDA was $135 million, reflecting a 156% increase over last year and a 111% increase compared to the first quarter of 2019. Today, Acushnet's Board of Directors has approved a quarterly cash dividend of $0.165 per share, demonstrating the Board's confidence in our financial position and future outlook, as well as our ongoing commitment to return capital to shareholders as part of our long-term investment strategy. I want to express my gratitude to my colleagues for delivering these impressive results, which are a direct result of our team's dedication and execution throughout 2020 and into the first quarter. Despite challenges such as remote work and limited travel, the company has continued to benefit from the expertise of the Acushnet team, especially our product development, operations, and supply chain management teams, who have performed admirably in these tough conditions. We have been fortunate that our efforts to keep our associates safe during the pandemic have been effective, which remains our top priority. This focus has contributed to increased output from our golf ball plants, global club assembly teams, and footwear and glove factories. I also want to acknowledge our global network of trade partners who have excelled in providing golfers with excellent service and safe experiences in the game of golf. Now, referring to our business by segment, Titleist golf balls saw growth of 49% for the period, driven by one of our most successful Pro V1 launches. This is particularly impressive given our decision to delay new Pro V1 production last fall to meet fourth quarter demand and that our raw material supply was disrupted by Texas storms in February, leading to a two-week shutdown at our New Bedford Ball Plant II. Our long-tenured golf ball operations group has significantly contributed to our success. The Titleist golf balls story continues on professional tours, where Pro V1 and Pro V1x have been utilized by 75% of players this season, which is over nine times more than the nearest competitor. Additionally, 91% of participants at last month's Augusta National Women's Amateur used a Pro V1 or Pro V1x golf ball. Titleist Golf Clubs also reported an outstanding quarter, with sales increasing by 67%, driven by strong demand across all club categories and regions. New TSi metals have been a key factor in this growth, along with notable demand for Titleist irons, Vokey wedges, and Scotty Cameron putters, which are in their second product life cycles. Even with adjustments made to our Titleist club assembly workflow due to COVID, our golf club operations team has risen to meet new challenges. Titleist Gear also continued to gain momentum with a 22% increase, demonstrating the team's effectiveness in navigating global supply chain complexities. FootJoy's growth of 22% was led by robust gains in footwear and gloves, along with strong apparel growth. FootJoy is enjoying significant momentum across markets, particularly with the new Premiere Series, which was the top shoe at the Masters, and the new HyperFlex models. Recently, FootJoy collaborated with renowned designer Todd Snyder to develop a limited edition footwear and apparel collection, which received a positive response from consumers. Now, moving to our regional performance, the US, Japan, and Korea all experienced strong sales, each posting gains of over 40% for the quarter. EMEA was up 8%, though it has faced challenges due to COVID-related lockdowns. Each segment showed double-digit growth compared to the first quarter of 2019. In the US, rounds of play rose by 24%. Our new products are receiving excellent feedback, and overall consumer demand for golf equipment remains strong. Japan saw slight growth in play, though a recent lockdown is expected to affect numbers moving forward. Korea registered a healthy 20% increase in rounds, and both Titleist and FootJoy have made strong starts, aided by the success of new products. In contrast, EMEA experienced a downturn in participation due to course closures, but we believe interest is strong when courses are open, which bodes well for the summer and fall seasons. Looking ahead, we remain optimistic about strong demand for Acushnet products, healthy participation rates in most regions, and a rising interest in both men's and women's professional games globally. Inventory levels are generally healthy, albeit slightly below normal, and there is a strong demand for custom-made products, leading to longer lead times, likely extending into the second quarter. Raw material availability for golf balls and components for golf clubs is fair, though we expect some shortages throughout the year as suppliers catch up with demand. Many of the new golfers contributing to the game's growth are avid players, and the National Golf Foundation estimates an addition of around 500,000 new participants in the US. Demand for golf instruction and coaching also remains robust, a positive indicator for the game's long-term health. Given these early season indicators, we have increased our expectations for the remainder of the year while maintaining necessary caution due to health concerns and supply chain uncertainties. In recent months, we've adjusted various aspects of our business to meet the strong demand, which will influence our operational timing throughout 2021, particularly with golf clubs. In certain cases, we accelerated product launch dates to leverage peak demand. For Titleist irons and Vokey wedges, which are in their second product life cycles, we increased initial volumes to cater to strong first-half demand while acknowledging this strategy might lessen available inventory later in the year. Looking further ahead, we are committed to leveraging current momentum in the golf industry to drive future growth as the sector looks to thrive post-pandemic. To support this, we plan to invest in product innovation, golfer engagement, digital advertising, and supply chain improvements in alignment with the favorable golf market climate. Our strong financial position motivates us to invest in our future, and we are willing to prioritize long-term growth over short-term earnings. We project these investments will total about $15 million in operational costs in the latter half of the year, distributed across our segments. While we won't go into details, Tom will discuss how these investments, along with changes in club and ball volumes, will influence our business timing in 2021. In conclusion, both the company and the game of golf are in excellent condition, and we are excited about our long-term potential. Thank you for your attention this morning, and now I will hand the call over to Tom.

Tom Pacheco, CFO

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 FootJoy 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 FootJoy, 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 the 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, and 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 second quarter 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 operational expenses 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, advertising and promotion, 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.

Sondra Lennon, VP of FP&A and Investor Relations

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

Operator, Operator

Your first question comes from the line of Casey Alexander with Compass Point.

Casey Alexander, Analyst

Hi. Good morning. Normally, I don't give compliments during public calls, but achieving a 1.6 times inventory turnover in a single quarter is truly exceptional. I want to extend my congratulations to your team for that.

David Maher, CEO

Thanks, Casey.

Casey Alexander, Analyst

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?

David Maher, CEO

I want to highlight some points that Tom and I discussed. The timing of our business has significantly changed during the latter half of last year and into 2021 due to strong market demand and supply chain disruptions. Casey, to provide some clarity, I’d like to share a few key aspects of how we view the rest of the year. We have increased our internal projections following a solid first quarter. As I mentioned, we shifted a considerable amount of club volume from the latter half of 2019 into 2021. This includes TSi, fibers, and hybrids. Additionally, we are seeing changes with irons and wedges, which are nearing the end of their product life cycles. We brought those launches forward into the first half, with new irons set to debut in the third quarter, leading us to reduce the sell-off of irons and wedges. This represents a shift from the second half to the first half of the year. Our Pro V1 loyalty program has performed exceptionally well this year, which we expect will enhance our first half results, though we might see a slight offset in the second half. Furthermore, we have a true field launch of a golf ball scheduled for 2022, which typically occurs in the fourth quarter of odd-numbered years. We did this in 2019 and 2017. There are some additional freight challenges we are dealing with as well, along with approximately $15 million in operating expenses related to strategic investments. We've covered a lot of topics, but the main point is that there are many variables in our business influencing our performance, especially since odd years usually correspond with odd years and even years with even years—though this year deviates from that trend due to clear macroeconomic factors.

Casey Alexander, Analyst

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

David Maher, CEO

Thanks, Casey.

Operator, Operator

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

Randy Konik, Analyst

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, etc. Just anything you can give us on that color on what they're saying to you, would be super helpful. Thanks.

David Maher, CEO

Thanks, Randy. I will clarify that it's early May, and the golf season in the Northeast and Midwest has just started recently. Looking at the overall US situation, rounds played were up about 25% in the first quarter. We observed three key trends: strong performance in the Sunbelt, while the Northern and Midwestern markets faced declines mainly due to weather. We typically don't focus too much on the rounds played in the Northeast and Midwest during the first quarter, but there was a significant drop. Additionally, many golfers who would usually travel from the North to the South to play golf in the first quarter didn't do so because of travel restrictions. However, overall, finishing the first quarter with a 24% increase is impressive. Anecdotally, tee sheets are consistently booked, golf professionals are extremely busy, and club memberships are more limited than they have been in a long time. This reflects the renewed interest in golf we observed in the latter half of 2020 and into the first few months of 2021. We believe we’re seeing the healthiest environment we've experienced in quite some time. Regarding the broader marketplace in the Midwest and Northeast, we will need to wait until the end of the second quarter for more insight based on data from May and June.

Randy Konik, Analyst

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.

Tom Pacheco, CFO

Yes. From a capacity perspective, we are still operating 24/7. We are nearing our maximum production capacity. Our production capabilities have improved somewhat as COVID vaccinations have become more widespread, leading to reduced absenteeism since fewer employees need to take time off due to potential exposures. Additionally, there have been some easing of COVID restrictions. Therefore, we are seeing improvements in our production capabilities, and we are at full capacity.

David Maher, CEO

Yes, Randy, I'd like to add that we've emphasized this over the years. We prefer to manufacture what we sell, and the control we have over our supply chain benefited us in the first quarter. We operate three ball plants, our own glove factory, and a joint venture shoe factory, along with club assembly sites worldwide. This setup served us well. As Tom mentioned, we are at peak capacity in some areas and have noticed improved or reduced absence rates. Additionally, our suppliers and partners exceeded expectations this quarter, providing more rubber components for golf balls, more grips, and more shafts than we initially anticipated. This clearly contributed to our strong performance in the first quarter. The broader message is that we effectively leveraged the strength of our supply chain, which is reflected in our results. We see loyalty rewarded across all sales channels, including green grass and digital. The enthusiasm for the game is evident. We are launching a new product this year, and we usually see favorable results during a new Pro V1 launch year compared to the previous year. More than anything, it reflects strong early season interest in the game.

Randy Konik, Analyst

Got it. Thanks guys. Very helpful.

David Maher, CEO

Thanks, Randy.

Sondra Lennon, VP of FP&A and Investor Relations

Thank you, Randy. Operator, next question please.

Operator, Operator

Your next question comes from Kimberly Greenberger with Morgan Stanley.

Unidentified Analyst, Analyst

Hi all. This is Javi 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?

Tom Pacheco, CFO

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.

Unidentified Analyst, Analyst

Great. Thank you.

Tom Pacheco, CFO

You're welcome.

Sondra Lennon, VP of FP&A and Investor Relations

Thanks, Javi. Next question, operator, please.

Operator, Operator

Your next question is from Joe Altobello with Raymond James.

Joe Altobello, Analyst

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.

Tom Pacheco, CFO

Yes, Joe, I won't go into details, but I can provide some data points. We certainly analyze industry sell-through and shipments, and we believe that our shipments exceeded the industry's. This gives us confidence that we performed well in terms of market share. Additionally, it's important to consider inventories to assess how effectively different companies are replenishing the pipeline. Therefore, it's crucial to focus on shipments, sell-through, and inventory replenishment. Overall, we feel positive about our share strength across all categories. Our situation is somewhat unique because we have drivers, fairways, and hybrids that are still gaining traction, while our irons and wedges are at the later stages of their life cycles. Comparing performance to the same period two years ago, we had robust results in year two. We feel good about our position as we head into the second quarter.

Joe Altobello, Analyst

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, etc.

Tom Pacheco, CFO

Yes, the channels are performing well. We noticed that green grass in the US is quite strong. Most of those locations received seasonal opening orders to stock up, which did happen. Globally, as I mentioned, they are generally in decent condition, with Asia and EMEA closest to normal. The US is the most challenged, seeing a slight decline. Clubs and gloves may be down more than gear and apparel, but overall they are in good shape. Global footwear, which has been heavy in recent years, is now lighter, which we consider a long-term positive. The big question is when we will return to normal. The industry is indeed moving back towards normal, but we are facing challenges, particularly concerning supply constraints. This affects what we can produce and the availability of raw materials, impacting our ability to return to normal levels. The good news is that consumers are still actively engaged, even though inventories may be low. The challenge we’re all facing is the significant shift towards custom products, which has resulted in lead times increasing to three or four weeks instead of the usual one week. Our company, however, is doing as well as or better than most in this situation.

Joe Altobello, Analyst

Got it. Thank you.

Sondra Lennon, VP of FP&A and Investor Relations

Thank you, Joe. Operator, next please?

Operator, Operator

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

Daniel Imbro, Analyst

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?

Tom Pacheco, CFO

The increase we discussed in the last call was primarily driven by supply chain execution. Consumer demand remained strong throughout the quarter. The key concern was how well we could meet that demand with our supply chain, and it performed effectively, contributing to our outstanding results. Regarding continued demand, we are experiencing strong momentum into April, though there are still two months left in the quarter. Overall, the demand remains robust in April.

Daniel Imbro, Analyst

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 Q1. 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?

Tom Pacheco, CFO

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.

Daniel Imbro, Analyst

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

Tom Pacheco, CFO

Thank you.

Sondra Lennon, VP of FP&A and Investor Relations

Thank you, Daniel. Operator, could we take the next question, please?

Operator, Operator

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

George Kelly, Analyst

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?

Tom Pacheco, CFO

Yes. George, while I won't go into too much detail, I'll provide as much information as I can. When we refer to golfer connection, we mean ball fitting, club fitting, tech representatives, and increased engagement with golfers. This also ties into our loyalty programs, among other initiatives. So when we mention golfer connection, that encompasses our main focus. In terms of spending, there have been favorable shifts within the golf industry that have revealed new investment opportunities across our business. This includes areas like digital, golfer connection, advertising and promotion, and supply chain. As the industry has evolved and grown over the past couple of years, these shifts have opened up opportunities. Our strong financial position enables us to make these investments, and we are eager to proceed with these initiatives in the latter half of the year.

George Kelly, Analyst

Okay. The next question is about your balance sheet. Looking ahead over the next year to 18 months, I see your balance sheet moving toward a much stronger net cash position. Will this have any impact, if you can share? It seems like your cash flow priorities have not changed significantly. Given the strengthening of your balance sheet over the past two to three years, I'm curious if you will have the ability to return more cash to shareholders or how you intend to use that financial flexibility.

David Maher, CEO

Yes, you're right. Our capital allocation priorities remain the same. We continue to invest in the business and are focused on dividends and share repurchases. We have restarted our share repurchase program. We expect to generate strong cash flow in the foreseeable future, and as time goes on, if this materializes and we have the opportunity to take further action with our capital allocation, we will certainly consider it. However, for now, there is some uncertainty in the market, and we are evaluating things on a quarterly basis.

George Kelly, Analyst

Okay. And then my last question is more of a big-picture one. You're increasing your operating investments by $15 million this year. Based on what you're observing, is it reasonable to assume that some of the recent changes in gameplay and the influx of new golfers indicate that your business model is being built on the premise that these changes are lasting? Could you discuss how you anticipate this will develop over the next year?

Tom Pacheco, CFO

Well, George, we’ve touched on this in our last call, and your question is one we frequently consider. Reflecting on the past year, we experienced a period of shutdown followed by a robust recovery. I mentioned that we estimate around 500,000 new players joined the game in 2020, which is a US figure, with perhaps half that globally. The game is set to emerge from COVID even stronger than before. We say this cautiously, given the challenging circumstances we've faced. Overall, the game comes out of this time more resilient. While it may not be a straightforward acceleration in our business, we have to acknowledge the tough comparisons to the remarkable second half we experienced last year in terms of rounds played. Still, the game, the industry, and participation rates have changed significantly over the last year, and we are adapting accordingly. Whether through the capital investments we announced a few months ago or the strategic investments we are unveiling now, these are our responses to the opportunities we see ahead.

George Kelly, Analyst

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

Tom Pacheco, CFO

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.

George Kelly, Analyst

Okay. Thank you.

Tom Pacheco, CFO

You're welcome.

Sondra Lennon, VP of FP&A and Investor Relations

Thank you, George. David 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.

Operator, Operator

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