BC - Earnings call transcript Q1 2020

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Operator

Good morning and welcome to Brunswick Corporation's first quarter 2020 earnings conference call. All participants will be in a listen-only mode until the question-and-answer period. Today's meeting will be recorded.

If you have any objections, you may disconnect at this time.

I would now like to introduce Ryan Gwillim, Vice President, Finance and Treasurer.

Ryan Gwillim

you us. thank and morning for joining Good With Foulkes, CFO. Brunswick's the call are Dave this morning CEO me on and Bill Metzger,

we that this expectations. prepared remind our about from future include begin these would keep statements results Before to in could Please like materially mind certain remarks, forward-looking everyone actual our call, I during results. comments our will that with differ

consider, please and For refer our factors the details filings release. on recent today's to press the SEC to

are our at documents brunswick.com. at these of All available website

During we financial the in of and presentation, measures to will our presentation to also sections provided certain information. non-GAAP consolidated be financial non-GAAP the are GAAP this reconciliation referring appendix statements to Reconciliations accompanying of the results. financial today's

to the Dave. turn to like over call would I now

Dave Foulkes

good Thanks morning everyone. and Ryan

these I this endure family we with more over partners times everything taken despite proud like the the that who us employees, we work those around global Brunswick communities pandemic this for on in Before a our world interact prepare navigating resumption of for during them. the with juggling more couldn't normal operate. of basis, daily XX,XXX recognize minute immense our for to staying morning, the our would positive employees help on impact steps be start dynamic to to which a business the environment, activity. through has I had and and life COVID-XX going in and on many take has

and policies. quick mandate prompt, shutdowns continuity restarts, coordinated a and are production recently, To to program orderly support instituted home our we progressive wage work from implemented employees, we

deep including many safety productively. in across globe, cleaning As environment processes the our to a completed our order procedures PPE safe we can in measures have enhanced locations health provide instituted employees many screening, have distancing which work and return in and work employees and temperature to

To partners. other global business accessories, network continue our distribution time we enable servicing dealers, which to suppliers base, parts this their our business is for critical difficult a open know day. customer and our next delivers We and dealer kept or same have

with are many have and during interest We terms showrooms when product a our to worked extend closed. time curtailment floor-plan lenders also payment

our are we match a and to with production working production supply ramp purchases base Finally, ensure with up. smooth needs

of we the Lastly, have in fight responded virus. to against communities needs the the our

donated care facilities responders local in areas have We and electrical are and pumps, the with others to first directly used masks PPE health we which dealing in producing many by fight. be to operate equipments and

supporting lines. also support are We the organizations charitable are on front providing that

The of U.S., COVID-XX as states pandemic engine has materially world. manufacturing the the implemented impacted home around our at suspended temporarily guidelines. most on facilities March our boat business at and operations XX stay we In

and of allowed the term suspend Our ensured prompt safety us affected anticipated decision and rebalance to employees health inventory to in levels demand. near with production the reduction

XX, weeks. we resumed the du Mercury's Lac at facility April in Whaler in On Boston have last facilities at and and opened additional two partial operations Fond

screening, distancing, all facilities and protocols. today, online PPE manufacturing of major new temperature As back our cleaning are U.S. with

Approximately busy orders and take XX% season capability get including engines and customer with during boats a to which in a time in our sell is their operate, in get dealers, people on out water. and the these of dealer water businesses, able some to by providing Enabled are their majority open limitations, distribution continued capacity, the with the dealers have to of large network having to these some boats our base. service,

been and Freedom boat remaining many creating restrictions unseasonably stay wet affected and during conditions is most spring. orders. better has versus locations more allowed the and generally Boating even in to the local easing, the with to also opportunities encouraged at were April home XXXX parts of some weather still cold operating due as given limitations are closed Boat country Club

reopen X plan measures growth. on company-operated in acceleration prospective we new recent on place generating in May And to been with excitement locations members, and to new with have resulting focusing However, member in a protect health. membership employee

the Outside facility. manufacturing have by resumed global all U.S., from May aside one facilities X, production U.K. will

Our Belgium delivering manufacturing Poland continent. remained distribution hub our and are resumed Portugal open our and across boats. and supporting is network And have boat in production has the dealer operations

although Our small as for initial horsepower Year and Chinese the facilities weeks three around dealing impacts. closed the Suzhou, engine facility open, China Japan with COVID-XX China New the manufacturing in remain the was country

for accounts also which cost goods, our our base, global all to of of and supply supplying Chinese less components than is XX% Our operational fully locations.

We in same new global Our in addition New to are protocols. reopened operational. operations facilities Princecraft using health in our and advanced Mexico. Asia-Pacific our we in facility to and reopen Monday, operations production Canada group Canada boat this our also Reynosa, Zealand plan the are facility and on production in All week safety production systems distribution our

are In and Australia, pleased relaxation Europe closed to boating were New see and announcing Australia to have many countries of Zealand since and been restrictions. starting reopen of dealers OEMs, recently We New now mid-March, which as some our Zealand, restrictions. boat relax shelter

cost is for that our demand lower the revenue $XX we XXXX from In million benefiting XXXX. implemented structural adjust products, levels already lower our have match to spending certain of cost in light measures of near to reductions Recall targets. term taken

directly by suspension We of production staff affected salaried have the and furloughed production.

increases workforce freeze salaried hiring a for instituted employees. also merit and salaried annual canceled We

In have suspended discretionary priority or curtailed and delayed addition, we capital lower projects spending.

expenses expenses XX% These reduction forecast operating measures originally versus to contributing for XXXX. roughly are a in

a and cost year minutes, discuss the later ability make few structure, highly have conditions the economic to in in our additional necessitate. expense Bill which reductions further variable we should will Given flexible

first including managing also our are $XXX hand, quarter our structure. We the of drawn with from capital benefiting approximately on We million revolver. from ended proceeds cash fully prudently

on execute liquidity. to to and maintain We sufficient monitor bolster debt our and opportunities expect covenants to cushion against continue

profile after debt our no with term Given Products long extended greatly the has issuances undertaken bond retail until the XXXX. been maturity maturities significant acquisition, Power

We repurchases prior in quarter of early in share March. $XX completed the to million activities first suspending

remainder planning repurchases additional of year not current the to for the any outlook. are due we However, business the

Our and has second dividend been in approved paid June. will quarter be

reduced initiatives for million. product that We million it spending and capital the further from remaining between and earnings digital market spending and gains have is programs The new to $XXX becomes which $XXX share to-date. expenditures our if we will necessary. opportunity million actions have protected drive reduce in have Finally, of future our to year in $XXX over the growth we do largely support and

in despite to global with year. resulting line from March, expectations the robustness the of pandemic, and began earnings businesses the consistent were economy demonstrated with performance our in part of plan quarter progression marine-focused performing with of our provided the particularly first at global sales disruption Our quarter. the of shutdowns the unprecedented the the that the latter COVID-XX beginning in Prior portfolio our of

share retail and propulsion outperformance businesses U.S. Power our marine The accessories strong remained demand parts gain steady exhibited in market to with outboard trends. continued and significant Mercury of Products.

brands, history Sea of success shows Our led into Boston boat its [indiscernible] and leveraged of recorded early Boat retail strong in busiest season some Ray, bulk premium the at weekends Whaler operations. and Freedom its and by

at our resumed lower of the due which, almost The primarily many material our results I on impact mentioned, quarter, April. production COVID-XX all from facilities, to stemming pandemic of had as revenues of the in in a manufacturing production suspension

our to global control. of operating businesses of able businesses demonstrating our of margins and generate This in operating However, impact austerity market. operate us resiliency distribution continued half were extremely to production shutdowns enabled the we expense through to offset an with earnings year, challenged and consistent prior the measures the

Next, to and sales were spots International the resilient the as region XX%, relax at U.S., review currency total revenues total on despite exit performance stay are we to countries down remained were more in X%. while orders. the I or excluding down constant seeing markets acquisitions. relatively begin basis, by home would sales of international segments pandemic like bright our In a

regions strong commercial higher boat International our most and particularly horsepower by the North in benefited was Asia-Pacific, in in for particularly affected applications. performance from engines performance pandemic, American operations. sales Revenue

table than the volume likely second the March on for in trends to slowness in states half volume by to through powerboat this half for COVID-XX exceeding than up were retail strong less performance the the in quarter, total main for of less as comprises The U.S. quarter, move provides we In the was XX% is the the than flat of retail first of unit prior industry the XXXX. offset number pandemic. the reported This the January which and year, the performance quarter. figures, sales meaning of that resulting market. some Note make volume expectations color which marine the less being February, quarter revised be versus segments March in

were outboard horsepower in than As sold Outboard were registrations outboard over quarter, X% inboard, XXX and XX% complete anticipated. of better yet slightly outperform for on expected, unit but information April, to more Mercury retail categories. sterndrive, significantly high continues with registrations performance outperformed QX we market than up in but engines representing have these down the is boats XXXX over the We don't product today. horsepower initially believe product engine

the additional on applications XXXX. based offer recently of XXXX remainder have business, than our call. financing Finance in later from similar the partners healthy with outlook Bluewater or information for through on in to comments our will addition, for applications banking April, In our retail some internally been on higher and Bill

I financial will Bill turn now comments some on additional the performance. our to over for call

Bill Metzger

good everyone. Thanks morning Dave and

decreased finished with lost an the costs year-over-year, were of XX.X% prior the control to due earnings $X.XX with incurred share, For the measures as and up X% sales first expense volume adjusted operating basis other pandemic. austerity lower relatively We charges offset shares in Adjusted outstanding. XX%. per year quarter, response stayed net impact of and to primarily X%, operating EPS margin quarter and adjusted on the operating while at consistent down as sales an by

breaking to January accessories Before consistent into call. I the the segments, are like quarter, parts that first in is and on segment I would two quarter we and remind discussion the performance reporting review everyone businesses with propulsion this the

XXXX segment. engine weaker relatively horsepower horsepower anticipated propulsion and offset consistent with categories and QX the was systems as for outboards lower of sterndrive continued by as strong sales with related engines. outboard higher and Revenue Starting demand was controls

in record saltwater horsepower especially by February. as market Dave earlier, gain performance markets in demonstrated in continue Boat Miami our Show As mentioned share at higher we the substantial to engines, share

through exchange its activities disruptions, including and engines to inventory quarter, rates and was demand COVID-XX operating and existing the were these slightly Adjusted of suspension the to mix. meet of foreign impact favorable margins reduction earnings a continue manufacturing quarter up able unfavorable benefits Mercury cost sales shipments leverage including to costs items from operating capabilities the beyond. end of distribution the in the and The resulting and tariffs. increased impact changes from temporary more of exceeded in of and

were activity Power the segment, strong other operating at boating disrupted as end towards XXXX, performance and versus growth time businesses. was parts both dealer at was in policies, in seasonal offset revenues accessories down stay by Products were the and lower the down and affected In usually many operations quarter a locations by accelerating. X% when sales sales which home This sales are of earnings at X% the

revenue the with were favorable boat mix, from The by suspension exceeded operating the higher affected towards of or along were million, in reflecting $XX revenues temporary earnings manufacturing activities. year Adjusted earnings shipping by benefits down segment's plants million, and and prior lower of were the $XX quarter. cost a exceeding reductions. versus less sales volume, the of substantially Segment impact approximately XX% retail and end which reduction all the discounts planned lower

leader of retail, market in Our versus saltwater quarter a of production including Boston at Comparisons very first Whaler, premium years manufacturing perform new the disruptions the brands strong fishing ramp models in the of continue impact between in XXXX. and category. to reflect strongly up XXXX the

to and well As customers. substantial dealers Whaler retail referenced we both lines, extremely received Boston which and launched been have previous Advantage product has on calls, by have upgrades Conquest

margins. versus the quarter Freedom on than XX% also Boat trailing in weeks strong contributing operating of of strong XX-month with Dealer basis, with on of another a first quarter with by XX had pipelines X% measured ended the XXXX. more quarter, quarter the Club hand, units sales boats lower

forward and are COVID-XX, for As the manage a which planning we caused short production move term result changeover, demand in lower to and substantially model levels production we of by to year brands. QX advance disruptions certain may

year trailing levels dealer pipeline and XX-month projections demand. to in prior basis earning assume year-end a Our This likely weeks on hand at exceed positioned will cause be inventories accommodate for forward-looking on will to our the year-end. measured improvements

While this double be trailing into moving percentage low and levels by demand reduced appropriate for XXXX. metric XXXX versus may digit be will still improved will be higher, a inventory year-end

wholesale required. activity adjust are retail assumptions stocking will Our and upon and how shipments obviously production we pipeline and evolves dependent levels as

the including macro the results the performance resulting of remainder countries economy. involves Projecting will the operating and questions, the ultimately degree and many demand current on market and of the of marine XXXX unanswered influence and pandemic, factors states for are impact response There of uncertainty. a progression consumer. These environment high global the the still of

full U.S. the In and remainder moderating marine year is low-XXs market following percent with of that businesses be of retail quarter XXXX, the half global our a from on down have to We the demand for teens XXXX second be response, high range declines our based to anticipate marine unit scenarios the been over of down for year preparing second the in plan industry significantly assumptions: project the for will the the of levels. year. We

all We XXXX. that comparisons We pipeline boat retail believe in the for product preserves be the planning growth to half between $XXX executed drive with and of second year. the parts portion half reduction aftermarket programs of of of XXXX operating are better assuming actions market below for critical which sales slightly than of business earnings returns to second levels, should in funding the the we mostly of million above for expenses more that demand, we at or believe of that XXXX trends $XXX accessories year and slightly year, At gains. normal usage share assuming back level in the will million this and the future performing due be will the prior wholesale are half

primarily trend retail formal remains to to of would U.S. the For marine withdrawn, due better than comparisons although anticipate performance, our guidance P&A year, the full revenue we our resiliency slightly market business.

projects. us fall mid-XXs to flow million, mid-XXs and in priority We the allowing percent, of between expect $XXX excess cash funding operating free of to includes deleverage which high generate

of to and of our actions operate overstated the benefits This the as second cost operating of cash perform operations as flow. demand disruption While and operations recovery our and of strength factors boating domestic previously quarter global cannot well will to the market be be P&A is international discussed. the most expected startup normalized significant continued the where activity, generate other incorporates of in additional that global important to business, we challenging, the versus economy, from the and positive resumption channel and production profitably anticipate level the determining It of be safe assumptions. our absence factors ultimately we current

uncertainty. like and definitely also a is our few advantage a critical make about would this cost which I structure, comments period of to in margin

lowered the XX manage our During years. financial to we last have global substantially which fixed structure, crisis, cost over we the continued prudently

us initiatives. our margins product series This elevated also excellence operate new a puts position operational as we and during have crisis. We a variable in this of investments through successful strong

to sales, cost $XXX to additional positions totals incremental an also on important assuming billion across austerity fixed the structure includes note are our to million earlier. rate actions approximately our in further shock. $XXX a cost position million, products $XXX if less position. and as of cost R&D spending healthy evaluating substantially It by the run basis portfolio. This our run Our strengthen implement strengthen have This billion of to $X.X our required manage measured this investing aggressively per base the by annual level includes new or continue approximately flexibility quarter. is Dave rate is It current cost breakeven to actions plan approximately structural we structure competitive million current that actions to affected to point we $X.X at business we demand in lower P&A referenced

and due certain on fixed now be mid-XXs operating would end This of and the lower based We to segments and by range. deleverage anticipate volume in assumptions, customer our to these will range of variable assumes, like of to which margins, to boats between mix. leverage experience XX% operating following, deleverage deconstruct reductions, operating from I note would I that factors our XX%. segment affected our product the composition the the costs. low-XXs up towards the middle the and propulsion some of could estimates each the in that with P&A range, lower high end at volume to percentage, actions variability due the

an and tariffs factors operating are impact There production, foreign related COVID-XX basis. unfavorably comparisons, million will including mitigated a costs. commodities. these positively overall leverage we Headwinds of unfavorable that being include number currency, to are reductions XXXX There The versus on efficiency absorption to of are also and pricing, by due affecting factors anticipate impacts in lower of factors $XX million. initiatives SG&A several cost other unfavorable $XX

earlier, As lower cost reduction structural actions are spending evaluate continuing we to including I actions. mentioned to flex if required,

Our and of current is position is strong great liquidity focus. an very area

liquidity several and cash cash generate at debt million access well including our and our end million planned over free as retain $XXX the flow requirements. year-end. quarter ability anticipate our facility position, second to $XXX to having of the our by between liquidity is $XXX and and total factors, repayment credit influenced dividend Our planning by full million of as We revolving

would improved free versus I performance due flow of increases payment accounts QX working year-end. needs, compensation year's point QX out our of QX free always was the has with $XXX our to balances the of from accruals. million proceeds and credit XXXX. as usage QX revolving We in well $XXX cash cash a in includes at million flow receivable ended as This capital cash million been versus free period cash under of inventory $XXX totaling facility. $XXX and including seasonal flow approximately mostly that borrowings variable reduction million in usage, previous

cash and the projections free the year remainder Our trends favorable the assumes challenging being most capital positive earnings working flow of period. for QX with seasonal

our borrowing These Wells facility credit of under credit a cushion our Fargo is our also Distribution drawn, to leverage capacity generation sufficient revolving facility JV test assume tests. wholesale pertain to versus throughout earnings year both coverage the level Based with and have The covenants test. is fully revolving we the and these an tied interest on anticipated financing Finance.

the on flow year. I remainder an certain P&L and the will impact update with conclude for of items will our that cash

not free or the these since from only January number Aside estimates have of changed slightly have the cash just changed most I discussed, flow call.

to We million of and million working $XXX between million the million expect use $XX and $XXX incur $XX between year, capital and of depreciation for amortization.

rate digit tax effective the be is percent double estimated for XX% tax to year, and to the in cash anticipated with low a rate between XX% range. be Our

Our now taking outstanding shares the average in figure into million XX.X quarter. is shares shares, the repurchased account first

have which have We the this capital strategy in response on most noting. on already slide, adjusted Two the to been items still are commented uncertain assumptions environment. worth of

First, upcoming This is position our policy from as our Dave and mentioned, objective unchanged financial share, dividend we with of levels. enabled an will QX decision consistent dividend through which cycle. $X.XX strong our by quarterly pay is our per economic of sustaining

environment policy as continue dividend will the our business basis throughout on year. the to unfolds evaluate We quarter-by-quarter a

credit higher interest borrowings expense million estimate Second, our net reflects $XX facility. our under of revolving

liquidity to repay of end ability requirements. the towards year, have a of depending this upon or the facility all We portion the

comments. to I our continue will Dave back to call the now outlook turn

Dave Foulkes

Thanks Bill.

are executing enabled across of the especially repower to our in our our continuing for engines and and to international against added greater dealer, capacity XXX channels. still share, priority improvements than the ourselves from of production and horsepower we our segment, levels with horsepower in strategic satisfy find now higher businesses, the priorities to Amongst category, by of we The our expand enterprise. our continue environment, arising be course, propulsion well greater health as restart challenging for ability in operating online operating is mix top market our demand continues and priorities. economic the a businesses operate safety to Although employees and

controlling and of through course, uncertainty this is, production Optimizing of period priority. costs a

control new products earnings the systems on we and developing engines for that enable However, future. and focused line remain our further will top exciting technologies and into growth also related

committed yet remain customer category. market engines. performance it position leadership a and technology base we smaller to retain These Finally, our delivering serve our to improved in remains loyal our this products lineup in goal of sterndrive/inboard and

Turning accessories our to parts and segment.

relatively future. We unchanged. boat Our be anticipate with the strong social even measures distancing continuing primary continuing objectives usage to remain into

continues our a economic As reminder, based their is well equipped Power in is the difficult and conditions part be well these replacement use and challenging and business P&A market even systems performing in generate the group, continue boaters as to boats leader systems and to electrical conditions. Products, the aftermarket consumables XX% for of parts. in and need products to advanced is which perform is

provide opportunities to their growth boat elements continues technical business the increasing products. differentiating seek integration systems and focus complexity as OEMs Our of on to face

provides and business efficient breadth one-stop our Our and efficiently P&A and ability channel global This across a for to levels. and distribution access inventory consumers of network sale quick thousands of the manage products to globe. the provides shop with to delivering dealers of is points an P&A products, OEMs, our excellent

growth. was in the advanced and includes group, Attwood with both of Finally, for group operating businesses, area Power model cost and this formed our optimizing of which objective the Products systems

map improve profitable boat brands, on margins operating launching Finally, focus products while across will following its our its continue premium to road new particularly the segment portfolio. in focused to

of in well as retail discussed remainder levels Bill XXXX As over outlook our influenced level revenue be for activity will XXXX. of the XXXX earlier, as the by

We necessary will as market pipeline to adjust demand our manage and monitor continue to inventories. production plans

We growth will execute Club its against to continue and strategy. Freedom Boat strategic also expand

adding more synergy We our have continuing added far and on to in to in the bringing locations of capitalize opportunities. XX number and thus locations XXXX anticipate XXX XXXX, locations

in we our resilience brands the and the and challenges health business, near term In overall industry-leading remain closing, despite technologies, plan, strategic marine substantial in our of market-leading facing consumer. confident

production and strategy generate our structure, the of Each earnings remainder cost and position flow maintaining businesses should XXXX. to anticipated. strong capabilities and us capture cost flexibility to upside greater Our highly of demand is cash adaptable market strong businesses, balance capital variable discipline to than throughout aftermarket allowing meet demands us to operating be

cost had efforts and term successful trajectory capital of actions January. our plan given the execution conditions planned economic will focus in we conditions confident for with financial strong economic of resume on our our products year The solid are change, executed as record strategic strong growth track than beyond. a we well in economic year to two that position shareholder exit reduction years entering position But as generate new environment and near us taking exit back XXXX decisive portfolio strategic and in significant navigate of and this last to together our this is crisis continuing substantially The pipeline actions the COVID-XX environment. our and the and and and we with different we what quick value strategy momentum the

boating the encouraged and crisis While more presenting, our boat restrictions fact U.S. some of of we we in in were activities, significant lead list dealerships reopening acceptable by very now to this of include generation related products. that clearly recreational activity online by and the progressive the recent the responding challenges recognize and by is to with majority increases states are the

communities on do COVID-XX, including most will recovering would heartfelt from from part essential lines. first workers in healthcare Brunswick Lastly, on front the and by and of I helping our fighting employees the our best persevere this crisis. affected to through to the like and wishes to recover team, and ultimately and those continue myself those behalf infection Brunswick send responders,

the now will for line questions. I open

Operator

[Operator Instructions].

with Our Wedbush first Securities. James comes question from Hardiman

with may You proceed your question.

James Hardiman

morning. Thanks for Good taking call. my

in commentary. could on April So bit little I was you hoping a the hone

more up like going being you that maybe know be speak guess, but have that down And most recently, lot of you I for How in about is week relative think teens, bit talked your MarineMax think guidance, guys. little possible up is assuming things to low-XXs. that current how blocks, April are at maybe that? the retail we even that's sounds us broader then am of turning a that to notably guidance, I don't not of presumes the within environment? high least last you through have I context building it April and, just technical the should a sustainable? strength given sort I

Dave Foulkes

it's two April James, distinct has been month Hi here. halves for clearly us. Dave Yes. a of

seen The of in it the first like kind half first of seen end Right is the the little we a time all pointing have have We of direction. more March. loan positive we was pull indicators that would which I of recently good year. And up more leading premium at substantially the the applications, particularly are from say, the end indicators a getting on versus dealerships, are certainly, last now, certainly marketplace.

yes, the last week-and-a-half have would different. kind So I of say been significantly

about excited are we Obviously, that trajectory.

into No, that the sure. that number year guidance provided. is fully But that hoping we not not are sustainable. it's fully? completely are that we built Obviously, are We full it there a of things could trajectory Is happen.

is balance full more much I we longer a have year between recent our a think period. what over of seen guidance

James Hardiman

high have QX are Presumably, you Okay. how back than about going That's teens, thinking to be given far I about to year? up think presumably about, low-XXs. think helpful. right, within the we is is our how QX that. any in to industry back worse But that? the QX half way to the just about there significantly way then you work way think And before could of Any year, how mean, the again, for fall us

Bill Metzger

if will kind as I you SSI a a it, March March teens. that. about When look James, at mid I guess down of benchmark, Yes. I think take

associated that of guess throughout Assuming of of a lot of be the the careful like March. June. trends my all to think that shelter think factors is the with more process. of I indicator, more that we reduction May that's I some much everybody April month April, of And to what it disruptions very about the on impact benefit, is, the the a and look of just which the are and much quite prevalent a think times part. to are some with think, And we possible way in got saw start very the seeing There's course two home. registration is that needs affected I March will But I be it's at leading should on

So be or I the would expect two. that reporting month extremely in to next choppy

James Hardiman

to But retail to thinking the flat the if to year, being it, about and April of you during I to am in it quarter the year remainder apologize. improvement But be call like then and be clear get being sounds way? just about a pretty clear, XX%, just for be that first down, perspective. any factoring wrong wouldn't from the thinking Am XX% I I

Bill Metzger

half you in think dynamics of mid the of that There's March states factor same with states to going another teens. trend down half were the reporting, James, to of likely are have the way. I the

So think guess. in likelihood flat revised gets right all now, revised, to being when it's my it going March with be lower, be I would

Dave Foulkes

quarter flat. the was And

Bill Metzger

And was flat. the quarter

Dave Foulkes

March down, Bill mid But as was teens. said,

doubling So the that like. mid teens double if that what that, of is think you would down April look we

James Hardiman

then somewhat from I things see. there? getting presumably And better

Bill Metzger

Correct.

Dave Foulkes

Correct.

James Hardiman

it. Got

Okay. Thanks guys.

Dave Foulkes

James. Thanks

Operator

you. Thank

Altobello question next from Joe with Raymond James. comes Our

with proceed question. may your You

Joe Altobello

of their being their hone dealers. Thanks. smaller looking? of health mean, sense dealers base in is that how sell on looking any your dealer Not the I Hi beyond of how guys. obviously your your MarineMax are you to situation the that, largest. some for But kind through, and and liquidity more financials maybe

Dave Foulkes

shape. I are in broadly think pretty we good

the sentiment levels more certainly, And two last of say. still is would extremely low positive. week concern, or trending I weeks over have We dealer

kind service Many, more mid-XX% are maintenance sales open. dealerships seeing curbside online kind of of many we operations, dealers I recently of maintained of pickup, kind have things. those and and think that

say, low. broadly comment would Bill, So a from you, but I pretty

Bill Metzger

Yes.

especially uptick inventory looking spent most the to own, boating on resume are also I a perspective. helpful. to curtailment think payments or boats of that, time like and assistance these in the Most Joe. very is times at which actions payments what helpful government obviously that applied activity have the and helpful. in liquidity we some starting bit like And helpful at to water things fashion I smaller service having call inventory fact is that quite that interest is would a getting mix levels, for Remember defer extremely dealers form especially very dealers. And indicators of of this, taken see dealers, some leading we dealers, from are So and

Joe Altobello

Got it.

$XXX Okay. million, the secondly, issue, in mentioned terms And OpEx you $XXX of million. the

$XX that's we million of I had comes what planned. much environment? is that a million of if And $XX hopefully How you do million million, better much down are year, next probably in originally how that think? think $XX you from $XX back to structural

Dave Foulkes

definitely structural. know I portion don't would would if it an I Joe. exact you number, say is Yes. I a of give

the stick localized But and out I disruptions us of you company make try we have kind trends much as are the we around that now. think and there wouldn't continue a can. to seen number working our make that as sure some you production try and base, from we here right process stuff. of are as although very things a Obviously, I are leaning is, to cost what give we

Operator

Thank you.

King. C.L. with Stember Scott from comes question next Our

with proceed may your You question.

Scott Stember

are to ramping at, maybe just back Thanks Can try I were you ramping back in to of the are you sense guess guys taking COVID, talk compared to for least capacity about April my to as the that before how are you questions. things up get near term in a up? and May, you up where ramping

Dave Foulkes

Yes. Sure.

weeks the have inventory area through side, was production point. got started first to So platform, place the the couple ago consistently and levels that racing and XXX the engine. line on the we to where ramp demand newest have XXX the highest the That a where engine our lowest we our was of began produces we had the up and XXX

introduce We progressively restarted will we have the then lines. XXX other line horsepower XXX, now and

our managing to are that I work safety sure ramping all of are make allows that and the upside in protocols a protect that we for here, health and are new way we up. this progressively us feel to But think, are we we though obviously, progressive. we being up even ramping

really of didn't side, on the production when one soon on make we would we boats the during interim sold as as is, diligently getting rerack line. line restarted. prioritize off And production prior those to we to sure our and restart shut retail the retail down abruptly XX, the On we worked about a the that things trapped we boats March talk fairly we sold lot operations the I boat say of period

restart I a in of of So boats. quite able portion would being already good with retail sold position say significant a to QX covered we are by

but that So quickly. to relatively is be ramp progressive, up allowing to us

So for example, at right now, every Boston know Whaler, as far is as I production line up.

case that would base next protocols is, balancing, the have the more restarted that good, I might is supply months. in making - can have news retail safety we the that a that say sure But of product we sold is But the lot are health not that that everything places be we that do certainly work. quite prioritize the recently. So everywhere, and good several

Scott Stember

the financial frame the you offering experiences the about this, that impact financial what Okay. crisis maybe you have, your around? arm to talk to during guys And you time dealers. curtailments just some loss expect would talked I the with guess, about, of expected just and were regards what back this Maybe and

Bill Metzger

take inventory was pretty issue much a crisis, I I but was that a that. say repurchases, of an inventory we dealer single, Scott, general better would number on perspective, for will Loss an Yes. mix dealers. sort from large years. health And digit double with. one entering experience this for and of that positioned actually It a low couple had we of high perspective are just of manageable

every upon pretty some more year-over-year we total, more for need to a get a helpful lot, how we bit in cycle are And deal going get as I of that equipped we bit a sort gain think dealers, to think disciplined. with that. think well industry-wide, very a depending be and conservative. demand long think experience. I They I little And little just shortfall that I is more

principal The curtailment couple here sold. opposed products pay it's boat of allow products. dealers try talking we payments dealer against is year to as And place something really model putting about existing to it's another to are give really a to are objective before the in a when collecting and XXXX sold just that selling months of

So a dealers product fairly this. lots that have their small subjected it's of to percentage that's on

little a payment the the boats a And liquidity probably of bit deferring boat time obligation they a associated with same need can the and up cost the interest generated most. interest the relief of actually and gets it sold them cash obligation. gets interest the the gives with pay at until the That when interest, they so

Operator

Thank you.

comes Our Baird. Craig with next question from Kennison

question. with may proceed You your

Craig Kennison

usage. all It's taking at shot to another questions XXXX, portfolio morning. for uncertainties. some that nice to into as of boat end, know few my In I others, well people. options marinas as it see markets, the Good closed. framing downturn. boating despite one are a taking be that And I as for designed Thanks am any in there the curious face if recreational available to might these and was have are visibility performing we you

do that you think So might how year? all accumulate through together what net this of hours boating to

Dave Foulkes

seen of interesting And Dave. have Craig, Freedom I Boat is really strong. say it's places. that a I Hi boating where with allowed, would hours. to usage it's all if could I been we don't is it know net Club. out boating But number in

boating. the consumer access people want We go to to bit have who and more a

to been has the was think membership over I what think close the I period year. growth it last our week last in double same

are really people desirous out get to the on water. clearly, So

had people continues I has particularly, think strong, to boating Florida, excitement of a have reopening lot of around We in then Freedom. And strong. be been

say subjectively, would are that to the stay are there I some want people are orders are at as we subjectively soon places as home to going believe get out. So lifted,

Bill Metzger

something precluded to they There get people lot do. out wanting on being of want safe water seems the awful that to boating, they a places able be as it in to be to noise where are people from an because view and activity

Dave Foulkes

vacations, not for boat with a the summer staff sports We just interesting, have maintain buy us, college distancing, to that not think the is I allows the school decided industry. this and and a earlier, obviously, I of taking that international was which members with one happening prospect have an as of recreate number little them of talking probably common because we is pretty and then and to were was essentially spring favorable saying through It people anecdote. heard and think people,

Dave Foulkes

Thank you. Great.

Operator

Thank you.

question next Tim Wells Our Conder comes with from Fargo.

You your may proceed with question.

Tim Conder

you last thank for that comment. Dave,

We some same are things of hearing too. the

or some If sports eating vacation, you on boating. taking related you people out looking maybe power not do, whatever destination are save commuting things, are or the to including

asked market of framing units question boats. James market. that. So no, thank you roughly aluminum-related for on the is confirming the of the Back Roughly the by original to XX%

down in little where fishing question can those seeing domestic? worse, down good you outboard could it is the engine low-XXs expectations. within is accelerate or put So right And Where horsepower you this you the aluminum if fiberglass? of are already gains? it any that and I Do really downturn? kind feel is this guess now that, Is Is a through large color versus pedal you you time then position your there? color in saltwater international? And do Balanced? that? to Any my other about at teens, better real outlook, talked there give look there bit versus high a you

Dave Foulkes

Yes.

first the characterize the the would say, will So part internationally. through Yes, we and we substantial. I first here. Yes, the last taking share quarter, take is gains opportunity not them horsepower. see are of their off question seeing would team at market domestically maybe absolutely high I And on and the do foot as pedal Mercury I

product a our bring as line lines the had to up our it first dropped yes, back, had bring had priority. service that So channels already we low all inventory levels. to remains two They were back relatively was first you to that's their capacity do we And where have, high coincidence to no lines, horsepower that absolutely it know, now. the

So yes, and domestic international.

if applications, tremendous lot domestically we the we as We don't when your to around of if we part internationally estimating in market, fidelity know your back have when but question, are calculating, a were commercial know seen Asia, strength of I fiberglass. don't get well. aluminum or I particular first

Bill Metzger

I launches mean, the remainder the product categories, good our feel over especially new Whaler, year. of the we I fiberglass think and with comparisons favorable pretty about Boston

are we see going some where to place nice a that's think I growth.

Dave Foulkes

in in rates. spike sea a saw We interest

Bill Metzger

outboard rates. commercial, would And those all gains, driving I have and you think share repower way share thee if Yes. we And about the about sea characterize, saltwater, are gains. talked of

thought would. we unfolding it So the it is way

Operator

you. Thank

comes Our BMO Capital Gerrick Markets. from next Johnson with question

You may proceed with your question.

Gerrick Johnson

book your Great. wondering was what the worth And then supply this with of quarter dollars looks here. Good you. Thank Mercury order to? I outboards you more like morning. OEMs sold boats. from Sticking than you

the maybe out pipeline can for talk inventory So engines? about there we

Bill Metzger

monitor two, else. start We Gerrick. much materially monitor with everything as we disconnected just we And the as pipelines not will I between the pipeline. are

I with shape in we comfortable and pretty good very in both. are think both

lot do more to view it has opportunity to trailing think retail. fact had that maybe portends forward in to is the of growth versus we forward, have of sales with our of at a kind what the I outboard

order the pace If are. quarter. everything there our to, and second same about order way books, building of the see at be kind a up sort moving is just like more are are ramping books what And it's we I is is here any versus unfolding at industry to would we we forward of production the the opportunity in them there, consistent the refer with growth expect we disconnect. retail that And would obviously, pipeline is everybody what in

Gerrick Johnson

one Okay. Great. from me. one Thanks. And last

performance? primarily U.S.? you April geographies March If Are together, than the took others you geographic seeing end and of seeing better do and then certain are you where

Dave Foulkes

OUS.

Bill Metzger

have I looked looked be dealers I had place across at been When the where to been operate. gotten am not consistent to March, reported, restrictions the to that where allowed least there's that by It pretty and be sure it at granular. we have Gerrick. has influenced board, in states

are around get major boating to centered hold I full pretty be that will when say April I population. a we aren't those concentrations going well. think places to things March, activity where correlate and retail there tends of of

boat, SSI have areas to see to much interesting be see outperformed been two think that's restrictions I think or just to where have think So out the willingness ability I to how going some over that areas months I in those plays as the data and how greatest. next of three people's the about

Dave Foulkes

areas the somewhat faster, Yes. big a lot think. restrictions I that of boating say would relax are also I likely to

several marinas pleased really were New York, we that ago. Jersey area Although weeks New the opened

in of a is So good the I progress. boating part think where economy, we are seeing significant areas

Operator

Thank you.

Mike with question SunTrust. next comes Our from Swartz

may with question. your proceed You

Mike Swartz

off should your commentary Yes. low-XXs maybe I operating mid-XXs, Hi. historically, over around Good think the said you trend start just the and outlook mid-XXs. And morning time think guys. in that deleverage with more to mid-XXs. I Bill, there, said you have to

versus So maybe the how about the maybe we should all it lower mix? what's higher the means end range? maybe of frame Or disconnect there? of the think And that? range what end Is product the

Bill Metzger

Yes.

the So think if of $XX kind are you essentially is million going range it, about impacts what to to volume the of be. $XX the million

we to boat's how what cost reduction. XX% together and of $XX kind mix million able level $XX XX% the response volume flex range. is are in of all gets you that If to do million P&A will The to of to you propulsion it and deleverage, reductions in kind of

bit, be for that producing, I is headwinds the period in either. to that headwind and And time. op we cost With I where factors really of kind are the that's that a run say there rate what of volume shutdowns And all one operating bit we biggest below would things, bit production some extra kind normally factors. with rate other The under than necessarily against carries a normally facing would little kind pulling and not absorption. we on would of sales greater down the consider propulsion, a probably factor Michael, absorption we is fixed off that of operating little just anticipate. the especially of trading in be inventories it And are It's that column expense. are little

So with comfortable are delivering. where I we am pretty

are And just quite offense period portfolio little cost the to still And that's all you a a significant XX% defense. lot at continue on where in we we about volume to have think out do three I with volume offset play balancing delevering to we to playing a to think, a are that. really I the the And same. ought a frankly, XX%, reduction. side instead of fairly is reduction

are decision expected that all it last of can position spend growth our maintaining million optionality and $XXX products that $XXX is all to our on the we at and critical three-year plan. maintaining R&D And us our financial we we the million, allows a in maintains fact because of worth make

I think So very all just it's is and of stuff trade-offs. that important

Operator

concluding Dave Thank would you. I remarks. the turn like back for to to At this call time, some

Dave Foulkes

of earnings all much very call. for attending you you thank Well, the

the our and we the in I our but our to the COVID-XX, strategy product face think decisively cost responding last as benefits our can particularly see over actions, investments by business can few capital is of the you structure presented our company and of with the made you model our and portfolio additional years. changes see, and challenges

the are forward. leading a the the in boat encouraged maintaining indicators as go by We are lot we market, trajectory certainly but of of flexibility we

same the have great we So strategy.

We great have same team. the

much. which this us We of than formidable we are continuing into to all invest and in new products more even and out and were technologies be will we going you digital the very initiatives, carry will in. coming future Thank

Bill Metzger

Thanks everybody.

Ryan Gwillim

everyone. Thanks

Bill Metzger

safe. Stay

Operator

Thank concludes participating. conference you. you Ladies and for today's Thank call. gentlemen, this

disconnect. may You now

Brunswick (BC) 1 May 202020 Q1 Earnings call transcript