Hello, and welcome to the Acushnet Holdings Corporation. Fourth Quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I would now like to turn the call over to Ms. Sondra Lennon, Vice President of Planning and Analysis and Investor Relations. Please go ahead, ma'am.
Good morning, everyone. Thank you for joining us today for Acushnet Holdings Fourth Quarter and Full Year 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 U.S. 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 those 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 U.S. Securities and Exchange Commission. Please also note that when referring to year- to- date or full year results or comparisons, we will refer to the 12-month period ended December 31st, 2021, and the comparable 12-month period. With that, I'll turn the call over to David.
Thanks, Sondra, and good morning, everyone, and thank you for joining the call today. As we will share with you this morning, Acushnet wrapped up a terrific year, exceeding fourth quarter expectations as our team once again delivered in a challenging supply side environment. Tom and I will also outline our initial outlook for 2022 and address how the company is responding to leverage competitive advantages to meet strong demand while confronting supply chain complexities. First and foremost, we are encouraged by the game's momentum with U.S. rounds up 5% in 2021 and up 20% or almost 90 million rounds versus 2019. This increase over the past two years was aided by play from some 800,000 new golfers, with juniors and women the fastest growing segments as reported by the National Golf Foundation.
Golf's participation story and trajectory outside the U. S. are similar, and we project rounds were up over 10% for the year in ex-U.S. markets. Acushnet's business is built around the needs and preferences of our target consumer, the game's dedicated player. This connection drives innovation and an organization-wide commitment to deliver products and services of the highest quality, which in turn fuels the company's sustaining growth. This focus on product and people continues to serve the company and our shareholders well. As was evident throughout 2021, the Acushnet team's creative spirit of innovation has powered the company's many successes, and I am especially appreciative of my fellow associates for their dedication and resilience during the past few years. The company's financial performance and growth are fueling strategic investments across the organization to fortify Titleist and FootJoy market leadership positions for the future.
Investments in product development and golfer connection are at all-time highs. Our major capital investment in golf ball operations is well underway, and increased spending behind the company's digital platforms is strengthening our B2B and B2C capabilities, which will positively impact how trade partners and golfers interact with our brands. Affirming our disciplined approach to capital allocation, the company returned $115 million to shareholders in 2021 through our dividend and share repurchase programs, representing our largest annual return to date. Building upon this momentum, I am pleased to announce that Acushnet's board of directors has approved a 9% increase to our quarterly dividend to $0.18 per share. The company has raised its dividend each year since initiating this program in 2017.
As we look to the future, we are confident that the company's strong balance sheet will fund ongoing investment in organic growth and continued support of our dividend and share repurchase programs, along with targeted M&A that leverages our expertise, infrastructure, and global reach. Now moving to our results. Here on slide four, we outline fourth quarter and full year sales and earnings. For the quarter, sales of $421 million and Adjusted EBITDA of -$5 million reflect strong demand and our decisions to prioritize production capacity towards building inventory for 2022, as well as the planned decline in Q4 club sales, which comp against last year's TSi driver launch.
For the full year, Acushnet revenues were up 33% to $2.15 billion, with double-digit gains in every segment and every region. Adjusted EBITDA increased 41% to $328 million, and the company generated $314 million in operating cash flow. At the core of this growth is the momentum generated by new Pro V1 golf balls, TSi drivers, T-Series irons, FJ Premiere and HyperFlex golf shoes, and many other successful new products. As Tom will address, gross margins held up well throughout the year as the tangible impacts of supply chain related cost increases were more than offset by favorable sales mixes, higher ASPs, and reduced promotional activity.
Now looking at our business by segment, Titleist golf ball sales of $668 million were up 32% on the year, led by record sales of new Pro V1 and Pro V1x models. The growth was led by the EMEA, U.S., and Japan markets, and we have been pleased to see demand for corporate custom golf balls begin to recover following the 2020 decline. Titleist clubs also finished the year up 32%, led by new TSi metals and with gains in every product category, which is especially notable given our twwo-year product life cycles. In achieving this growth, our team has pushed the limits of supplier component availability and our own production capacity as we chase steady demand throughout the year. Titleist TSi drivers had an especially strong year and were the number one driver on the PGA Tour in 2021.
We are very pleased with the early response to our new T-Series irons as we enter the peak spring club fitting season. Titleist gear posted a 29% gain on the year with growth in all product categories as our team did great work to keep product flowing as we strive to maintain field inventories and keep pace with brisk demand. FootJoy's business increased by near 40%, led by footwear and apparel, which grew at accelerated rates. The FJ brand is healthy and vibrant, inspired by innovative footwear, ranging from the classic inspired Premiere, the athletic Flex, and Pro SL, the number one spikeless shoe in golf. Apparel and outerwear momentum, which is particularly strong in the U.S., EMEA, and Korea. While not reportable segments, Titleist apparel in Asia and shoes also posted robust growth for the year.
Shoes was especially strong in the U.S. market, which was up over 50%. Next to slide six and a quick look at our business by region. Here you see all markets were up over 20% for the year as demand for Acushnet products was consistent across regions. Typically, we see outlier markets for one reason or another, but this was not the case in 2021 as the Acushnet success story played out similarly across our largest markets in the U.S., EMEA, Japan, and Korea. This is a testament to the good work of our global sales and marketing teams in positioning our products and our supply chain leaders who effectively coordinated tight availability to best meet global demand.
Now looking forward, we are encouraged by strong golfer participation and enthusiasm for the game, including a golfer base that grew in both 2020 and 2021. Market fundamentals are strong, trade partners are healthy, and channel inventories are generally lean. Looking inward, the talented Acushnet team is motivated to build upon our momentum as we structure our business for continued growth in spite of supply chain limitations, which we expect will impact our business throughout the year. The professional game is off to a great start in 2022, with especially exciting starts on the PGA, LPGA, and DP World Tours. This energy around the tours, especially in the first quarter, is an important catalyst as the golf season ramps up to a full opening in Q2.
Titleist golf ball momentum across worldwide tours is also strong, with usage at 75% and Titleist golf balls winning 10 of the last 12 PGA Tour events and winning every tournament played on the LPGA Tour in 2022. We recently launched new Titleist AVX, Velocity and TruFeel golf ball models and are poised to also launch new Tour Speed and Tour Soft golf balls in Q2. You will note this split launch timing is a change from prior years as we strive to make the most of tight raw materials availability through the first half of the year. Similar to 2021, we expect that Titleist golf balls will be on trade allocations for much of the year.
First half Titleist golf club introductions are on schedule, led by the launches of new Vokey SM9 wedges in March and new Scotty Cameron Phantom putters in April. New Vokey wedges made their PGA Tour debut as the most played wedge at the Tournament of Champions in January and have been number one at every PGA Tour event this year. In the first two months of the year, Scotty Cameron putters have won half the events on the PGA Tour and added wins on the DP World and LPGA Tours. As you might expect, we're excited about both product lines. FootJoy is off to a great start, led by their new Fuel footwear launch, and will soon introduce an expanded range of women's footwear and the new Tour Alpha series in Q2.
FJ apparel and outerwear also carry great energy into the new year, and trade response and bookings to our spring collections have been terrific. Lastly, we have high expectations for shoes and look to build upon our golf momentum and expect the ski category will begin to recover later this year following two years of retail disruption. In closing, we are optimistic about the structural health of the game and golf industry. As golfers walk into golf shops in the coming months, they will be enthused to see and try a wide range of exciting new Acushnet products designed to help them play their best golf.
Our team has a good handle on circumstances that are within their control, and I am confident they will continue to excel at adapting to the uncertainties that we are sure to confront as we navigate the coming months. Thanks for your attention this morning.
I will now pass the call over to Tom.
Thanks, David, and good morning, everyone. I would like to recognize all of our associates for the amazing efforts they put forth to manage through the continued impact of the pandemic and unprecedented supply chain challenges to deliver truly exceptional results for Acushnet in 2021. Starting with our Q4 results on slide 10, consolidated net sales for the quarter were $421 million, essentially flat to 2020 on a reported basis and up 1% level FX. Overall, strong demand continued, and this is a solid result, especially given the comp against our metals launch in Q4 of 2020. Gross profit for the fourth quarter was $204 million, down 7% versus last year, and gross margins were 48.6%, down 380 basis points.
The key drivers here were higher inbound freight costs, which continue to escalate, higher materials and production costs resulting from supply chain disruptions, and lower sales volumes of golf clubs, partially offset by higher sales volumes in FootJoy and higher average selling prices in golf balls. SG&A expense in Q4 was $209 million, up $35 million compared to 2020, and R&D expense was $15 million, up $1 million. Continued investment to take advantage of the increased levels of demand led to higher SG&A expense across all reportable segments, mainly in advertising, promotion, selling, and distribution. Income from operations for the quarter was a loss of $22 million, down $49 million from 2020.
Other expense was $1 million, down almost $8 million from the prior year, primarily from the absence of the reversal of an indemnification receivable related to an audit settlement that was recorded in Q4 2020. Income tax expense was $700,000, up $9 million from the prior year, primarily as a result of the absence of the associated tax benefits on the other expense item, which was recorded in Q4 2020. Net income attributable to Acushnet Holdings was a loss of $26 million, and Adjusted EBITDA was a loss of $5 million. Moving to our full year results, consolidated net sales for the year were $2.15 billion, up $536 million or 33% on a reported basis and up 31% level FX compared to 2020.
Gross profit was $1.12 billion, up 35%, and gross margins were 52.1%, up 60 basis points from the prior year. Gross profits were higher across all reportable segments, which comes primarily from higher sales volumes and higher average selling prices during the year, but partially offset by higher inbound freight across all segments and higher raw materials and manufacturing costs, primarily in Titleist golf balls. SG&A expense for 2021 was $795 million, up 30% compared to 2020, and R&D was $55 million, up $6 million. Much like I mentioned for Q4, investments we made throughout the year to take advantage of the increased levels of demand led to higher SG&A expense across all reportable segments, mainly in advertising, promotion, selling, distribution, and information technology.
In addition, our strong financial results led to higher employee-related costs for 2021. Income from operations was $260 million, which was up $114 million from 2020. Interest expense was $8 million, which was $8 million lower than 2020 on lower borrowings and lower average interest rates. Other expense was down $12 million, primarily due to the absence of the indemnification receivable reversal recorded in 2020 and a decrease in pension settlement charges. Income tax expense was $64 million, up $51 million, primarily because of higher income before taxes. Net income attributable to Acushnet Holdings was $179 million, up $83 million, and Adjusted EBITDA was $328 million, up 41%.
There is a reconciliation of net income to Adjusted EBITDA for Q4 and the full year in our earnings release, as well as in the appendix of the slide presentation. Moving to slide 11, we continue to benefit from the strength of our balance sheet. At the end of 2021, we had about $280 million of unrestricted cash on hand. Total debt outstanding was approximately $316 million, a decrease of $20 million from the end of last year. We had $386 million of available borrowings under our revolving credit facility. Our leverage ratio was 0.8x at the end of 2021, down from 1.6x at the end of 2020.
Consolidated accounts receivable at the end of 2021 was $174 million, down 13% from the end of 2020 on very strong cash collections during the fourth quarter. Our day sales outstanding were 52 days, which were down seven days compared to 2020. While continued strong demand and supply chain challenges impacted our inventory levels throughout the year, we were able to selectively build inventory during Q4 to better position our business for the upcoming season. At the end of 2021, consolidated inventories were $413 million compared to $358 million last year, up $56 million. The year-over-year increase was driven by FootJoy, which was up 34% across footwear, apparel, and gloves, and golf clubs, which was up 30%.
Cash flow from operations was $34 million for Q4 and $314 million for the full year of 2021. This compares to $97 million and $264 million for the comparable periods in 2020. We continue to make investments in the business in the form of capital expenditures. We spent $18 million on CapEx during Q4 and $38 million for the full year, which was up $13 million from 2020. For 2022, we expect our capital expenditures to increase to about $60 million as delays in receiving equipment caused by supply chain challenges shifted some of our 2021 CapEx into 2022. Turning to slide 12, our strong financial results have supported the continued execution of our capital allocation strategy. Our highest priority remains investing in the business with a focus on product innovation, golfer connection, and operational excellence.
We continue to pursue acquisitions that align with our focus on premium performance products that appeal to dedicated golfers. We believe these investments will advance our long-term strategy and drive growth at a favorable return. Our focus on generating strong free cash flow and returning capital to shareholders also remains a priority. In December, we paid our previously announced Q4 dividend, which increased our total dividends paid for the year to $49 million, up 7% compared to 2020. As David mentioned, our board of directors today declared a cash dividend of $0.18 per share payable on March 25th to shareholders of record on March 11th, 2022. This represents a 9% increase in our dividend and an expected Q1 cash outflow of approximately $13 million.
During the fourth quarter, we repurchased approximately 662,000 shares for a total of about $35 million. For the full year, we purchased approximately 1.4 million shares for a total of almost $66 million, which left about $98 million remaining on our current share repurchase authorization at the end of the year. Through February 25th, we had repurchased a little more than 1 million shares in 2022 for a total of about $53 million, including $37.5 million from Fila, completing the share repurchase agreement we announced in November. We expect to repurchase the remaining $45 million under our current share repurchase authorization between now and the end of 2022. Our capital allocation strategy is a foundational element of Acushnet's value proposition, which we continue to believe creates a compelling long-term total return for our shareholders.
Moving to slide 13, our outlook for 2022 reflects continued strong demand for golf and our products, a healthy pipeline of new product introductions, and the replenishment of lean field inventories. Our outlook also continues to be governed by supply chain limitations, which are causing raw material and component shortages and higher material costs across all of our businesses, which are driving up overall production costs. We continue to face elevated inbound freight costs, which we expect to continue throughout the year. Taking these factors into consideration, we expect our full year 2022 consolidated net sales to be in the range of $2.175 billion-$2.225 billion. On a constant currency basis, consolidated net sales are expected to be up between 2.7% and 5.0%.
We expect full year Adjusted EBITDA to be in the range of $325 million-$345 million. Within this, we expect full year gross margins to be down about 20-30 basis points, and we expect full year OpEx to be higher than 2021. However, OpEx will grow at a slower rate than sales. These expectations assume no significant worsening of the impact of the pandemic, including additional supply chain disruptions and incremental closures of global markets. We expect the timing of our business in 2022 to have a more normal cadence after having been disrupted during the past two years.
For the first half 2022, consolidated net sales are expected to be a little more than 50% of full year sales, and we expect first half 2022 Adjusted EBITDA to be about 60% of the full year, down from about 80% in 2021. The decrease in first half Adjusted EBITDA is mainly due to lower gross margins resulting from increased supply chain and freight costs and from higher OpEx as we continue to make investments to support our higher level of sales and to maintain the leadership position of our brands. The second half Adjusted EBITDA increase compared to 2021 comes from improvement in gross margins as we anticipate supply chain challenges begin to ease and from OpEx decreases relative to 2021.
In conclusion, our associates and trade partners helped us manage through unprecedented supply chain and pandemic related challenges to deliver tremendous results for Acushnet in 2021.
Looking forward, while we expect supply chain challenges to continue throughout the year, we are confident we will meet our financial goals for 2022 and deliver a solid long-term total return for our shareholders. With that, I will now turn the call over to Sondra for Q&A.
Thanks, Tom. Operator, could we now open up the lines for questions?
At this time, I would like to remind everyone, if you would like to ask a question, please press star, then one on your telephone keypad. Your first question comes from the line of Brett Andress with KeyBanc Capital Markets.
Hey, good morning, guys. David, could you maybe dig a little more into your generally lean channel inventory commentary? I guess this is a multi-part question, but you know, what are you seeing from a weeks on hand or a month on hand perspective? That's the first part. Are there any differences in inventory levels, either geographically or by product category? I think you mentioned balls staying on allocation here. The last part is, I guess, how do you think channel inventories you know really kind of evolve throughout 2020? Do we get back to normal this year at some point this year, or do we go into 2023?
Yeah. Okay. Good morning, Brett. In most regions, really across all our segments, they're lean, as we said, and I'd characterize that in the down 10%-20% with balls and clubs most impacted, right? We're a little better off with gear and footwear than we are with balls and clubs. You know, fair to say, we probably held ground in the fourth quarter in that any incremental production capacity was directed towards building our inventory levels for 2022. There are little to no discrepancies regionally, right? It's a consistent story around the globe. That's really the framing of the inventory picture.
Again, macro, call it down from our Acushnet products down some 10%-20%. I'll remind you know, They're seasonally low right now, right, as they should be with so much of the golf market about to open up in March and April. I think you'll see the marketplace in good shape come March, April, as us and others pipeline new products into the market. I do think we're gonna be strained throughout most of 2022, and it'll realistically be until the third quarter that we begin to get some semblance of normality as it relates to inventory. We do expect to be tight throughout the first half of the year.
I mean, I made the comment earlier that, as an example with golf balls, we'll be allocated on all models in all regions for at least the first six months of the year.
Got it. Thank you for that. Just thinking about EMEA and your exposure there, is there a way you can break out between maybe Eastern Europe and Western Europe? Have you factored in any supply or demand disruptions into the 2022 guide at this point? Just trying to get a sense of the broader exposure there.
Yeah. Obviously, in real time, what's happening over there, the immediate impact to our business, to the golf business is limited, if not minimal. You know, how this spreads throughout EMEA is still, of course, to be determined. From a supply chain standpoint, the only thing we would point to is just the cost of oil, right, which affects so much of our business. Beyond that, don't expect any, you know, supply chain disruptions that would be above and beyond what we've seen in the last couple of years. The biggest variable here is certainly gonna be what happens to the price of oil.
Got it. Thank you.
Your next question comes from the line of Daniel Imbro with Stephens Inc.
Yeah. Hey, good morning, guys. Congratulations on the quarter, and thanks for taking our questions. David, I wanna ask one on maybe the golf equipment and one on the apparel businesses. Starting on the golf equipment, obviously, you know the trends are strong, and it seems like the beginning of this year, you're seeing continuation of those trends. I guess, as you're thinking about this year, what data points are you looking at to get comfort that we are seeing growth in that core dedicated golfer cohort that you mentioned, which obviously drives most of your sales?
You know, given what you're seeing, if we do see overall rounds played, you know, down this year, just as we give back transitory golfers, do you think that we've seen enough conversion to more dedicated golfers to where the industry could still grow in that environment?
Yeah. Good morning, Daniel. You know, when you look back at our business, you know, we would say, of course, we're experiencing strong demand, and we know and expect that most of this comes from our core dedicated golfers. We know they're playing more, we know they're purchasing greater levels of equipment and apparel. Adding to that, you know, we know that the more golfers play, the more dedicated they tend to become, and we're seeing this also. Sort of, I think, fundamental to your question is this is the group, these are the players which most often prioritizes performance in their purchase decisions. I think fair to say this group has grown proportional to the total golfer base.
That's sort of broad commentary on how we think about the market today. As we look forward, I tend to agree with your premise that, you know, hey, you're looking at 21 rounds that were at a record level. I don't know that a 22 decline would be because of golfers getting in and out of the game. I think it's more gonna be a function of just the evolution towards a new normal in society and as folks transition maybe from remote work to hybrid work.
I think at the end of it all, you're left with a game that's still gonna be up double digits versus 2019, and we're just gonna be left with the ebbs and flows of how society responds in year three of a pandemic. I do think there are some really good habits and trends and fundamentals of the game that should stick. Again, to wrap it up, I agree that, hey, there should be some. It should surprise nobody if rounds of play are down a bit in 2022. You know, broadly equipment, again, we like what we see. We like current demand. As I said a minute ago, inventories are lean.
We think we can get enough out of our supply chains to grow the business. That is a tall ask given the base we established in 2021. When you add it up, golfer marketplace, inventories, demand, we think we're in a pretty good place as we head into the new year.
Got it. That's helpful. Thank you. Then on the apparel side, I think you mentioned spring pre-books are looking strong for FootJoy and shoes right now. Any indication on the early kind of back half selling season preorders? I think a lot of that pre-selling is going on right now on the apparel side. Are you seeing any outsized strength in maybe different groups of customers, like resorts versus green grass or in any certain regions, on the apparel side as you look at the back half, maybe pre-order book?
Yeah. Again, a lot of our business, most of our business would tend to be embroidered green grass apparel. You're right, bookings are strong for the first half of the year. They are strong. We're also balancing, you know, what we believe is the proper amount to put in the marketplace. You've got demand and you've got expected turn and sell through.
Overall, the apparel space, which I think your question gets at the reality that it was probably if equipment began to recover in the back half of 2020 and had a strong 2021, the apparel recovery really was a function of starting in 2021, and that was because supply chains just couldn't catch up in 2020, and you lost the spring season. We are real optimistic about apparel as it relates to certainly FootJoy shoes, and even our Titleist apparel in the Asian markets.
I do think the primary lead here, Daniel, is the first half story, and then there's gonna be a bit of a wait and see as to what plays out in the second half. Initially, second half bookings are strong as well.
Great. Super helpful. Then, Tom, just a quick clarifier on the model. In terms of CapEx seasonality, it looks like it stepped up pretty meaningfully in the fourth quarter here. How should we think about the cadence of your CapEx guide for the year? Is it gonna be more back half weighted or maybe more regular by quarter?
Yeah. Daniel, I think it'll be more regular by quarter. The back half nature in 2021 was really a function of, you know, delays in the supply chain, and we have a lot of, you know, orders out there now that are gonna come in more evenly throughout the year.
Great. Thanks, guys. Best of luck.
Thanks, Daniel.
Thank you.
Your next question comes from the line of Michael Swartz with Truist Securities.
Hey, good morning, everyone. Just wanted to ask a quick question on guidance, and I think you laid out the case that you're still seeing supply chain challenges and some inflationary headwinds, particularly through the first half of the year. Maybe give us a sense just in terms of magnitude of what that means, you know, maybe how much that's holding back your guidance for the year?
Yeah. Hey, Michael. Good morning. So as we called out, headwinds they'll vary by category. And I'll maybe I'll break it down by category to give you some color. With golf balls, it's really a story of limited raw material availability, and that's preventing us from operating our ball plants at full capacity, at least in the first half of the year. We do think that eases in the second half of the year. Different story on clubs, which is more a function of component availability and largely steel shafts. Last year, you may recall we talked about a grip shortage. Now we've got some constraints on steel shafts. Custom production for us in golf clubs has been at capacity for quite some time.
We do expect this to continue through the spring, which really has an impact on lead times, which are improving, although not as fast as anybody would like. It's a different story as we get to footwear and apparel, you know, we've got a JV footwear partnership. It continues to serve us very well, and our challenge is less about making product, producing product. It's more about moving it around the globe. That's an especially acute issue in the U.S. As an example, we've delayed the launch of a couple of footwear models by about two weeks in the U.S. just because of the complexities of port issues and congestion in our distribution network.
Not the case outside the U.S., where things are on time. I'd add in apparel and gear, it's similar to footwear. We're in decent shape from a production standpoint. The bottleneck is as much p ort-related distribution network-related, and most of that exists in the U.S.
Those are at minimum a bit of framing around how we think about some of the supply chain headwinds. I will say, coming off a year where sales were up 30-some-odd%, we think we did a pretty good job managing those supply chain headwinds. By virtue of us planning for growth, it should imply and does imply that we see a general sense of improvement in the supply chain environment, although still challenges and limitations.
Okay. Thank you for that. Then maybe just talking about some of the in the investments that you referenced. I know that you laid out a few, you know, a few of those that came through in the back half of 2021. What we're seeing in the second half is this incremental investment, or is this a continuation of some of the investments you've made in capacity and product beginning last year?
Yeah, it's a continuation. You know, the business has grown substantially from, say, 2019 levels. You know, there's a number of investments we've had to make and will continue to make to, you know, support the business at this level. You know, we continue to invest in our technology infrastructure to, you know, optimize our B2B and D2C platforms. You know, the investments are going to continue. We think our you know our OpEx is at sort of a new level. However, it has declined some relative to 2019, if you would, as a percentage of sales. We are seeing leverage, but we are gonna continue to invest at these levels.
Okay, great. Thank you.
Thanks, Michael. Your next question comes from the line of Joe Altobello with Raymond James.
Thanks. Hey, guys. Good morning. Just wanted to go back to the 2022 guidance for a second. Specifically the sales guidance in constant currency. It looks like you're assuming an increase of about 2.7%-5%. How much of that is coming from price increases? How much of that is coming from inventory replenishment? And how much of that is more underlying demand?
Good morning, Joe. Yeah, you know, that's pretty difficult to parse out at that level, especially when you think of our two-year product life cycle cadence. You know, as an example, you've got a Pro V1 launch last year, and a price increase. As you think about 2022, you know, no Pro V1 launch, it's in its second model year, so you would expect volumes to be down. We're still gonna benefit from the price increase. As you think about that across the whole portfolio with puts and takes, it gets difficult to parse it out into those buckets.
Okay. All right. That's fair. I guess kind of shifting over to capital allocation. You laid out your priorities nicely. But your balance sheet, you know, looks a lot different today than it did a couple of years ago. I'm curious how that's impacted the way that you think about capital allocation going forward.
You know, at this point, I would say it hasn't impacted it very much. You know, our priorities and our strategy remain the same. You know, we are still coming out of hopefully coming out of this pandemic cycle, and there's still a lot of uncertainty. We will continue to operate, I'd say cautiously. You know, we did buy $65 million worth of shares last year, and we did pay our dividend, you know, at about $50 million. We would expect in 2022 that the dividend would be a little larger. We're expecting to complete our current share repurchase authorization, which would put us close to $100 million of share repurchases.
I think David mentioned in his remarks, we returned $115 million of capital to shareholders in 2021, which was a record, and we would expect that to be closer to $150 million in 2022. We're gonna continue to return capital to shareholders, and we're going to continue to look for, you know, M&A opportunities similar to what we have in the past. I would say, you know, despite the strength of our balance sheet at this point, we haven't had any significant changes to our strategy capital allocation-wise.
Okay. Thanks, guys.
Thanks, Joe.
Thank you.
Your next question comes from the line of Casey Alexander with Compass Point Research & Trading.
Yeah, good morning. Most of my questions have been answered, but I do have one question. In relation to shoes, which you said had really strong growth in North America or U.S. Given your strong penetration into the green grass channel, is there an opportunity to introduce shoes into the green grass channel and continue to accelerate that growth?
Yeah, Casey. Really, the bulk and the majority of shoes' business is green grass. That's. I don't know if that answers your question, but when we look at shoes as U.S. business, I did make the comment it was up 50%. That's primarily a green grass story.
Okay, great. That's my only question. My other questions were answered. Thank you.
Thanks, Casey.
Thanks, Casey. Your last question comes from the line of Anna Glaessgen with Jefferies.
Hi, good morning. Thank you for taking our question. Thanks for the color on, you know, inventory build by segment. Could you also provide some color on the build between, you know, existing products and preparing for launches further in the year or in the quarter?
Yeah. I'll start with that one, Anna. You know, our launch schedule really for the first half is on track. As I noted, we have a couple of adjustments to our ball launch timing from what would typically be our approach in even numbered years. To get a little more granular on that, new AVX Velocity TruFeel golf ball models launched in late January, and we expect to launch new Tour Speed and Tour Soft in May. Again, a normal year, we would have launched all those together, but we felt this was the right approach as we manage tight raw materials availability and try to make the most of our production capacity. That's change.
We're about to launch new Vokey wedges in the next week, and we'll launch Scotty Cameron putters in early April. Both of those are on track and in good shape. I mentioned FootJoy, really excited about what's happening with FootJoy in the first quarter and into April. A couple of footwear launches have moved out a couple of weeks in the U.S. Really, as Tom noted, you know, our inventory is up. It's in better shape this year than we were last year, up 15%, up over $50 million, year-end 2021 versus year-end 2020. We're obviously very pleased with this increase, but ideally, it would be even higher, at a higher level, particularly in golf balls, where we're most hand-to-mouth.
Great. Thanks. Then, as the channel is replenished, and you make progress with that through the year, are you expecting, promotionality to reapproach, you know, prior levels? Or what's being baked in from that aspect in the gross margin?
Yeah. You know, the supply-demand relationship in the marketplace has been such for the last 18 months or so that there's been little to no promotional activity. I don't know that we're gonna get to a point of seeing meaningful promotional activity, at least in the first half of the year. In time, you're certainly gonna see it resume to some degree, but we think that's gonna be later, not sooner, and unlikely to see it, at least in the first half of the year.
Great. Thanks.
Anna, thank you, and thanks, everybody. As always, we appreciate your time and your interest in the Acushnet Company. Hope you all have a great spring, and we look forward to catching back up after the first quarter. Thanks again.
This concludes today's conference. You may now disconnect.