BC - Earnings call transcript Q1 2021

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Operator

Good morning, and welcome to the Brunswick Corporation's First Quarter 2021 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 Brent Dahl, Vice President, Investor Relations.

Brent Dahl

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

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

please these refer today's For are to recent to details on website and All the SEC our press on consider, release. documents factors available filings brunswick.com. our at

accompanying will During our financial turn now referring presentation, the and consolidated financial non-GAAP over today's information. call provided the statements sections are of we Appendix Dave. non-GAAP results. be to I reconciliation to this presentation the the certain will GAAP to to in Reconciliations of measures financial

Dave Foulkes

Thanks, good Brent, morning, and everyone.

start for a our operating and had XXXX levels, demand retail facilities historic businesses OEM healthy Our production satisfy from driving partners drive to necessary with participation our performance, to fantastic boating dealer increased and market, orders all outstanding field across low marine our network. continues a inventory products Robust strong results. to with very financial

transportation and industry pandemic. the exceptionally momentum and generated tighter performed teams further the excited to supply harness growth we Our continued to our leadership. conditions, positive about we've have face are of labor impact and And from well propel COVID-XX in headwinds, the our ability

strongest market lineup deliver industry. to leveraging in continues business earnings the margin outperforming Propulsion top-line, product by Our and growth, and expanding outstanding the the

demand. drove systems as full of demand operating strong increased and range together with our retail result high margins boat to a accessories of strong and delivered sales, businesses robust parts growth satisfy attempt services, OEM aftermarket Our boating manufacturers and participation, which for as top-line

the year, for performed consistent first inventory elevated at for our surge as same plans historically fewer XX in low double-digit boat pipeline operating first in dealer continued still end quarter, last time Our reaching inventory time with quarter, Despite production the is the the anticipated, the XX% driving the with levels the in adjusted in well, over levels, of retail business margins year. years. demand boats versus

busy has will which year, Club discuss couple had further a Boat the an of extremely Freedom start in to Finally I slides.

We for exceptional from and season see our the we momentum most well and our as we in the have as increase, the of are enter guidance in rest year can to beyond. prime perform confident significant ability markets, you retail

to with Before of insights future we Club discuss wanted share the favorable trends updated boat and you business. our buyers from reflect I XXXX some concerning members results the quarter, our for Boat for the that very Freedom

to younger to buyer in outperform the boat average the Last years more and industry reached attracting boaters, was age strong diverse in come. and continue industry the average lowest very growth over decade. for a us We level years in Brunswick's year, two positioning new, than its younger

year, to of promising member of buying that buyer female in while record in In important the for Brunswick an making the favorable which also being double boat to talent. announce rate, are and the the important awards during Brunswick typical industry. milestones secure years update important Brunswick boat first-time are industry. first on boat entire our younger I second ability buyers that positioning our our than minority, to almost employees, XXX to marine am and we new very and up I briefly extremely top trends the in for consecutive member Boat industry. pleased years some the the wanted fact our trends also for higher a and for encouraging investors was and quarter, and younger Freedom Brunswick female three equaled more a you percentage than future secure by boat for healthy Freedom employees and least and overall Brunswick basis highest has younger XXXX. for Employers innovation Best of as base recognized still inspiration recognized These points inclusion XX% Diversity XXXX U.S. average Those Club, cornerstones Freedom one are of X,XXX with entered first-time been Brunswick's Equally than saw and years and employing the operations. survey for on source percentage a demographic, their boat our over customer, buyers were strategy an of even at in our buyers validation that culture members XX,XXX our for Additionally, five chosen and on based are at people Forbes a three the XXXX, the than of averaged notable which of was working Diversity. independent female Company. companies

Palm the goals, the in a Report International XXXX In was was of exceptional recently the the against sustainability of saltwater We reviews first Sustainability XXXX. at show end safety we history, with also And progress broader positive. the incident the the in-person Spring including you our of health major Attendance and COVID-XX wanted of also for prioritization industry. very in the the pandemic. our lowest face challenges achieved of marine I outcomes brands were season immense the our rate published our the share first since of from our boat March time This up in-person return outperformed shows reported we what have Boat employees. and and Company of the looks XXXX, was The which held the XXXX to Beach recordable to snapshot resulting like. Show

four-day on new, driven the this horsepower doubled the the boats and than year with more Consumers Ray I'll market. number show, also overall game XXXX see able this some of highlights launched than Whaler course repower the more and XXX for of with now recently sold revenues our to the by Sea for Boston to engine. time, segments demand Over in and changing increased versus boats marine Verado Mercury's V-XX provide eager were first person the quarter first many models. their tripled,

retail business Propulsion XX gain investment especially in nodes in each horsepower of have horsepower. category categories of in the recent share levels XXX continues outsized over higher significant where market horsepower outboard we years. Our quarter, in in engines, in in gains Mercury focused to higher horsepower share gained first with excess

at As I orders. this including or Tiara, OEM with Florida mentioned mind fanfare. February and earlier, out Many even designed twin, XXXX, and already Fountain, X V-XX triple have already in Boston with are horsepower, our engine partners, and in configurations Scout, with much being OEMs Verado both Viking in Ray sold Mercury Whaler Many very brands, own boats quad launched new for XXX Sea models its are engine to Lake and taking customers. and popular

or helped New also fuel propeller controls, OEM industry-leading technology, Mercury's enhanced relationships, businesses. continued have with growth rigging in along investments in the significant new and

continues and growth are opportunities. capitalize pull Mercury's this anticipate to actions. capacity we projected fully regularly to on able having to meet additional future we As review we ahead accelerate, growth demand our to requirements some capacity ensure In regard,

OEM earnings production to participation experienced Parts aftermarket Our businesses remain sales increased from orders with to also the trends quarter keep needs, the strong with as Accessories significant due growth top-line up retail and in demand. resulting service elevated and and accelerated

participation service into with the are trends from ever, their busier that reports network centers continuing XXXX XXXX. dealer strong Our than

dealers parts conditions favorable get larger and early a in distribution of operating demand segment. and to to a addition, and need healthy next-day accretive all network the weather margins they which business on that are U.S. strong to in component parts for basis. the non-marine its return This same-day In serves the aftermarket significant categories product need the a the consumers or some were Systems The to has many also enabling force. demonstrated water OEM drives service growth across Group, and segments delivered overall to Advanced its products

quarter, boat execution with of had successful an revenue strong outstanding its product Our in operating resulting growth, together and plan, margins. segment earnings double-digit with

slots XX% well sold Sea a retail the slides, year, wholesale will models out continued XXXX. the now and sold discuss Whaler, other now detail of demand our which for we into Ryan inventory, ramp stated and more facility plan. historically up in expand production calendar at remain Ray in with are Pipeline many consistent Given few Portugal. our on plans to low at Coast continue and to the workers with with hire our We and additional remains production most Reynosa at our track reopen Palm to staff facilities levels, operations at surge, and

Freedom markets memberships and will boating Club growth opened Boat location with exceed XXX Freedom in XXXX. very including it XXX earliest. However, expectations, acquisition also until than more We be XXXX York, acquired UK. has New at locations, franchise acquired through and unlikely we the organic to in continues our significantly which both now since our been XX,XXX remains is operations new over the growth major locations that rebuilt expanding in XXXX. Chicago first in and and pipelines Freedom

reminder, allows and a operated economic having increase the gain us As the company territories, full faster allows growth. to of to us investment benefits enable locations to

I operated our boating to businesses. Boateka to opportunity and enhance allow to provide locations and company consumer addition, F and the close In end get our the other us including offerings

external plans of more challenges has about performance outstanding our that which and our I'll manage have discussing financial on businesses You today's daily to Brenna initiatives at The been our the a Freedom Investor our been presentation. hear basis. sometimes Business upcoming without and end for Acceleration from discuss on and Day, some not will continue operational other mitigate, I

United supply supply, storms cost resin outages raw and degrees. continue and in Southern challenges while and tight supply, shortages, exceptionally performed semiconductor product foam, teams material States in present disruption, our our the to third-party resulting to power to resulting varying particular and transportation Central oil-based producers affected Our of and businesses production increases, chain and including Winter well.

purposeful challenges have However, far to scale us want demand. of the robust and to to for manufacturing our our continuity production our keep on necessary integration, track plans supply teams, reach network thank enabled marine work XXXX. market satisfy the as ensure unique with I to and our our mitigate for these in vertical well our industry, supply global together supply the together partners, as continuing to third-party so our

Finally, remain successfully which we add many acquisition manufacturing in other have to we as hard our been and tight talent to production. working but increase in locations product, conditions teams labor manufacture talent teams and our

performance sales constant a business like of would basis. the I review by to currency on region our Next,

to Canada First back of performance U.S. XX%. from with provides propulsion sales boat International outboard market all categories half significant the Outboard XX% growth first and The Mercury up across up market up very quarter region, growth Europe the of sales was the more in This strength first continued growth All market. in I in unit significantly momentum and main the segments the the segments. continued retail earlier. with all trend engine each powerboat contributing and continuing reported strong retail international XXXX from XX% recent regions, taking growth sales the categories. in and sales were of its XXXX. table retail increased in up ahead Brunswick's the three with performance P&A registrations on in in gains quarter, sales. especially color quarter, boat marine with discussed U.S. as outperforming in in quarter, with were share rates, unit Asia-Pacific the market XX%

we applications, remain in and positive. season very lead other all indicators As the selling sentiment generation, the dealer primary enter U.S., leading finance

three these name comments already In confidence performance. time dealer the comments previous turn March, calls, in additional addition, the the call of our our as on XXXX. high percentage orders customer approximately the at the factors end continuing similar through of with strength received percentage Ryan give over financial attached market from is same last will I the to a times of to for us move retail now our All year. we on

Ryan Gwillim

and morning Dave good everyone. Thanks

the starting quarter outstanding. but in on impact own Year-over-year are March year, last last in the two given against comparisons decades. particularly first of Our helpful its the stands quarter were our any not quarter performance results COVID significant from

adjusted the partially segment benefited and each sales favorable on quarter an for were costs. in by by global up favorable for foreign and for we each basis was from any First from XX%, absorption currency being available earnings compensation adjusted with in exchange operating increased operating margins Adjusted Sales were by quarter XXX%. marine strong demand sales, rates, impacted changes increased positively EPS as mark XX% $X.XX, have offset highest the higher while products, factory which increased net variable earnings production, records.

million the dealer technology the the in free Adjusted operating year of quarter the strong of quarter, as XX.X% Finally, with In and from first strong XXXX product sales of Continuing the is from growth investments had to were than mix, schedules $XX more All together to basis In the gains. due Parts earnings. with builders of cash we is production, take up across our quarter the addition and operating continued usage quarter growth factors boat operating up quarter Accessories flow demand in from the operating capacity allowing time, which XX% of as positive component XX.X% product margins built international segment, and category is flexible OEM in leverage business were in OEM, of up share inventory boaters sales usages prior Operating adjusted the with the $XXX adjusted the with manufacturers the they and in retail flow favorable resulting enabled channels and XX% demand Lund boat customer free customer and segment, production. businesses. were XX% aftermarket-driven, first to independent quarter, increase leveraging mix the margins were leading mid-tier $XXX showed selling elevated operating in driving earnings brand. sales for our favorable strong theme Whaler benefiting from as another by for versus XX%, our and up million business margins robust increased all the in affecting cash of positively XXXX, business each ramp strong significantly on revenues better increase augmented XXXX QX continued boat and work adjusted sales gains earnings and versus as to XX% XXX strong this being XXXX. categories. the the in benefiting water, sales more increased very increases, all to leisure points annuity-based the quarter ahead we value had season, channels. market first strong brand the having experienced which a in Revenue successful Propulsion with prime million premium Each increased performances brands, in of contributed results, Boston and to quarter. Bayliner as operational advantage in

XXXX. contributed the throughout the stated a above Operating to third of year retail the only approximately positively impacted one that were lower by the quarter it's and be margins, and increased goal can our accretive Club, segment's trend Although double-digit consecutive quarter this margins revenue, Boat of sales beyond. also which and we earnings the segment. X%, believe X% is the earlier, above Dave we versus margin this discount of discussed levels Freedom continues at profile to that continue

to continues up approximately produce units units ramp X,XXX quarter, the production added XX,XXX in of excess continued consistent plans units to dealer the few boat producing from retail our is during given only Our which hundred robust of with the we in XX% year. Despite market. fourth the XXXX, quarter a inventories to

on by weeks of versus under just with March XX% with basis, lower boats ended year. a time the XX units on twelve-month last in brands field boat trailing Our same hand, measured

our benefits but will support We automation, by related the announced Portugal XXXX providing retail facilities, our begin believe anticipated that unlock near-term we earlier brands with labor of capacity our year year. through footprint to Coast, continue the and to necessary the work Palm actions current which production to initiatives, will satisfy to to continue select in including capital manufacturing additional the Reynosa, end capacity and the demand, the

with and between between guidance anticipate outstanding the range XXX provide elevated adjusted resulting following $X.XX. new many demand billion, growth $X.XX in of to approximately our We're drive providing factors, cash industry pipeline U.S. and where periods, second our We diluted to EPS the recent of million; participation, revenue and as early strong XXXX, both to second historically together free growth the with including These also to XXXX. points, to products grow margin northern of $X.X than versus operational across levels result directional Spring, ability the clarity adjusted a percent of XXX performance, leverage remain excess operating satisfy businesses and due continue product $XXX to growth demand quarter, to remain percent weeks basis our of in production unit over pipelines. enhanced regions for net Marine the full-year XXXX, we regarding product to guidance of high-single-digit flow on mid XX% a operating lower all upcoming pipelines anticipate and retail the boating very $X.X As sales XXXX; in percent. adjusted sales retail low rebuild continued operating strong quarter in in billion low-XXs and of in in expenses to

capital million. the increases build and results cash stronger are throughout receivable, flow which look year. over conclude still anticipated $XX will the capital second a we increase projection of relates increases the working cash to of and to the significant of deliver will working to As in XXXX, update in the that impact flow higher together challenging an The will accrued for payable we last year, half earnings, with XXXX, extremely a in $XXX usage free year. exceeding our for and for of the comparisons in Projected working $XXX only capital estimate believe million on despite that now top-line accounts half we certain I year. update We a the P&L to remainder accounts resulting lower expenses items with growth the earnings million anticipated second of XXXX.

directed million to $XX year already debt in early cash obligations, repaid of year. This the Our capital advantage been and our approximately position. slightly We increased our places the anticipate million as augmented We cost expenditures have assumptions, $X some growth the the however, in take $XX We new to quarter, and of of shares growth, million long-term demand organization. stronger, initiatives plan still spending and additional spending business. million to $XXX businesses, $XXX capacity projects, April. product all our initiatives to continue capital approach and in accelerate repurchased we retire select cases plan future of on $XXX primarily support, to strategy first in our to million throughout to systematic in quarter will automation in the in in support million Propulsion reduction and year and our investments be throughout

We ninth dividend, usual, and to or our in payout raising our keep strong our our shareholders. XX% our ratio cash us enables are a close the than also to year a for to and strong to returns share, XX% to provide year, as raise range, the dividend straight XX% earlier $X.XXX our position increase, continue to target

Freedom Dave had will discussed busy we've with Club Boat impact expanding Finally, Completed start an primarily to XXXX results, remain continue on deals earlier. active call a Dave will in in several the intend activity, immaterial as throughout now year additional we to to but over the to comments. deals back M&A areas our including I year. outlook turn ACES the and Freedom and to-date close have P&A,

Dave Foulkes

Ryan. Thanks

solid and our businesses operating strategic for not on our call, and XXXX disappoint. of has January us combination our businesses the was by priorities. consumer quarter to As robust outstanding squarely an year quarter operational setting up discussed first felt deliver on all track did the our to during execution and demand be against The we that of we

the expanding especially saltwater, top and for customers dealer, priority from channels. and and be existing repower share, international OEM demand to segment outboard the Our in new engine continues Propulsion market satisfying

heavily into solutions and product to industry-leading top-line future. will propulsion earnings far continuing project in and that we are the growth new We invest introductions enable

to our and digital technology, the strategy. and operating remains of on segment focused of in its connected distribution strength support advanced product global Accessories and Parts products of areas optimizing Our position leverage its model battery systems, in ACES

new on further we retail plans, segment will in by our look to excellence, operational continue out products, area Boat its in focus to first will for launching margins, robust very activity portfolio. our The opportunities continuing We executing operating quarter capacity improving build build and expansion to focus this technology systems pipelines as and on refilling a M&A successes environment.

we on a the Company's new on Lastly, in we announced recently where and strategy, building we products. of initiatives, the connectivity electrification, access Robotics, where partnership remain marine our of keenly shared a areas new but and plan with in ACES autonomy, portfolio also accelerating Carnegie focused

year say because advance We call will a investor view on all continue across with DEI than will It's Virtual I about we our Company's Wave, But depth to company. welcome have so update a the Investor since provided ESG on cover to comprehensive to Next our strategy also and May this virtual on that's strategies more I'm much Day. you more on been in we Brunswick's, the you strategy, XXth. our going today's event

differentiate Brunswick leisure be available once or and on the next will it we at our of update longer-term topic. done to investor May that our decade. pre-recorded discuss XXth and originally was as morning to an with have with we to chunks as will certain past brunswick.com, you Monday view XXXX initiatives by in days, to in your in business leaders presented gathered available be The Miami, As content at that provide have strategy bite-size February XXXX all will grow through well

hold May at on questions Central noon our of also Daylight Q&A Monday, session to will We a ask management investors Time. for XXth team

of information early a All in release be available will press this made next week.

announced update this event, will will today. Just be providing that on providing not our substantial abbreviated financial we details which financial increase XXXX and an include during $X.XX further regarding a XXXX of will be reminder our the EPS between update per share to full a $X.XX targets, target as Ryan while

again global and time population once for our during and effort, families dedication, to thanks all our still a for offer sacrifices heartfelt communities. employee want is challenging their to I Finally, what

plan expectations. has enabled Your strategic work seamlessly to and our profit hard significantly initial outpace execute growth us and our

questions. will the now open We for line

Operator

Instructions]. now session. [Operator Thank be you. gentlemen, and will having our question-and-answer we Ladies

Securities. comes proceed question Wedbush with question. first your James from with Our Please Hardiman

James Hardiman

Hey, good morning.

I in guess, production You expansion quarter. to quarter physical seems question great my you about in later look the a here about I if at $X.X most billion. first that is did where fourth and right? happen how, like just sales increases year talked XXXX. But obviously, it of So so slated is

are $X.X able is that did of billion quarter, of pull You to north you off number sort How this higher. question so XX% one.

Dave Foulkes

James, of Well, all had with That think businesses plans back it's things Hi we Dave to up really here. advance in I of kind the through of end other year, in At we plans across really. flight were to initiatives. a last of although begins still ramped come number significantly, to our add shifts, QX. manufacturing

we were in hired we're think So and hiring, X,XXX now -- I people QX. continue we've

is So do labor tight having people talent on relatively not our do straightforward it. It's market, boost. a that have teams but board in just those to to obviously managed huge a

than we've up more So all additional to boats shifts. produce businesses. anticipated. the of people those originally added has throughout able been production Mercury we BG has ramped with

really transportation in-flight think and QX hard work, that supply and we've saw that of in matured things. across you've able mitigate a a QX seen chain through been of to nicely what experienced of I multiple has verticals other some So still lot situation kind and you headwinds the was into

incredibly obviously in So for. had of terms which grateful to those effect immaterial really we're disruption a production us,

James Hardiman

the how to about pick think seen split now point, of sort It's we've to we however going number margin made. just at sort encouraging. companies and benefits How The right don't amongst that improvement the some question. up, right? do margin promotional question a last margin it's this power environment, are unique it not know and then sort and second then I question, here? is benefits, doing well for take And sustainable are up But what's know, post-pandemic, is think want million-dollar has been just I I that of don't you've can really many between XXXX if you to I buckets you so helpful. whether but think expansion so into And leverage current this? of investors, post, that promotions Really of sustainable --

Ryan Gwillim

here May. get Day, its James, a are of growth believe But coming more we is sustainable, on good that's margins beyond. XXth and little into the Investor Hey, morning XXXX you'll Ryan on sustainable bit the color and and XXXX on that

increased the across right entire certainly helping -- fixed cost other and Keeping on now last is a good of continue. for and that fixed a costs are of throughout all the is years and and footprint growing not lot as facilities. is continue things whole something for that the some top-line grow focused we're of within absorption we've big we I we're our as volume the been earnings, on several growing We guide our here and us low to adding the system so to think segments, will

bit, but favorable continuing and always bounce around benefits also little business those we're of have We second half to see throughout units. of some mix that fluctuate kind a most sales from quarter-to-quarter, our first mix to half will

we that a by continue go a continue results. we're from to pandemic but you or are be but is anything of potential that there. or inflation So and about unique there of terms a some really -- if talked you Dave cost to bespoke seeing the It's driven being really nothing factor this It's to and bad confident back for take in will margins But material you're do, I initial in didn't be, kind tariffs our ever us. our plan is three-year thought trajectory last from year, normal guy. plan, laid we headwinds like we or a grow a out get there, of pretty think to no, where February don't of that we'd in bit

Dave Foulkes

where Group, it at introducing, would higher matter we're product I that James, margin. no whatever add, a Mercury, introduced gross is every that new being Boat is,

on we backed that the margins higher every year. efficiency lowering about of not So have that we've initiatives new off products costs strategy, the and been come manufacturing are all automation the progressively at all -- at part in talking that and gross are our

mitigate mitigate will putting pricing of time So reductions we implement but the place month. around what have and continue to some not over the and will efficiency short-term transportation after we've headwinds cost just other these elevated and we the fixed those in consistently even things, that that automation are been initiatives for -- though and increased other month

Operator

you. Thank

Our with Wightman Please your next question question. comes Wolfe Research. with Fred from proceed

Fred Wightman

for question. Thanks the guys. Hey, taking

You times a call. on few momentum alluded retail to different continued the

I you those weather, point retail Ryan, could of on a move put mentioned through Northern some comparisons? tougher April recently start demand to strong year prior seeing what states and think, finer just to you're we out due at of you some as you lap but

Dave Foulkes

Hi, look Ryan Retail P&A. retail, is strong, can Yes. very or it's boats at than and our just or add. stronger engines brands are David you whether very, and

So as we're know, very the To things is performance, mid-XX%, I which, other and both in the in retail some strong. first is SSI insight you by April accretive April, into data quarter. to think, up

is the to And water. than in Canada ice So we've off the that number we trends their particularly boats see Upper desperate and through lakes weather did the people are continued for not seeing any there. pullback think, northern Northern year earlier were last get in generally to The the warmer; Midwest. start markets, in season reasons, a I of was just in

year, cases has to of causing in which really without wants our no also us four pull other dealer great great, boats lot of purchase our a obviously, Great, terms for record at and no OEM, for season to for So markets, started great business six and the things. Nobody, to product continue rates last than P&A to of caught weeks but a accelerating earlier northern people dealers, P&A. engines and right now. means, in get on lot in

driving So us. for momentum it tremendous is

Fred Wightman

side. to the to And maybe wholesale shift just

XX% inventory that for for give mentioned the XXXX, sort just of this timeline year. Can fact XXXX to sense look what like side? the that us capacity on to that dealer we going You be earmarked you already meaningful of a it's until a your is make progress ahead looks start we think as given you to

Dave Foulkes

the XXXX were for are premium some sold, XXXX our significant the Yes. taking Well, I brands, think we sold, already number noted -- slots wholesale already brands. in of for of slots that also they're a particularly in

for unit XXX%. wasn't significantly we've noted are happened, was We that first -- now weeks really, and more three boat show There then right was our But show, that we that and people ago, a those -- below the XXXX. the XXX% the low a brands, XXXX revenues were inventory Boat premium sales essentially, up in our are bigger saltwater Beach boats. our tripled very revenues versus quoted. interesting field levels buying but Palm in-person averages in than up tripled it our about Show that We at

five -- remember in single we on sold, think for XXXX prepared five or I well wait four Obviously, people now. that delivery I products Whalers are show. to into can't until those

Ryan Gwillim

laid are wholesale the out plan if And executing I'll And that's our Boat of reiterate we on that plans. light to those just businesses are a great much not, call of supply and some we January headwinds. the in lot of production very effort -- with the by

and -- wholesale hopefully definitely, the inventory can we need additional close this next year, So of if we the some units year think gap about XXXX again believe, with we you plus in will believe, produce to units to which the XXs, fill. we low XX,XXX into get and that you it on

Operator

you. Thank

Scott C.L. next Stember with question & proceed with comes your Associates. Please from question. King Our

Scott Stember

this the bigger really purchases big the markets. Club, with My some of Freedom surrounding in questions had Boat some are some news quarter of

and remarks, just to and decided Number can prepared of Would all rented and number then any and trying that locations you've you models these folks one. lifestyle overall let's with you after the about the newer tell other seen them, Just with fleets just low-hanging could upfitting outlined regards to you the the in because in have boating reasons two, signs of early engines that love these rather also, that owned the some you a fruit you just of boat. own for throughout decided go the just the Thank -- Brunswick the your they talk your brand all stuff they buy, strategy? country they and say, you.

Dave Foulkes

thank you question, much Well, very for Okay. yes. the

to and potential greater that the number of we electing clubs think is repurchase than territory the we members. is the the answer territories So are of where current significantly

existing boats, like the of the and would is difficult But it's great do to higher franchisees as that. are So A job very every be able growth that you market Island lot as New for Long believe of -- and to want and we the fast our doing versus magnitude of to number York, accelerate to we look don't region. be to repurchase capital the the market members and potential of order Manhattan we territories. franchisees to the our growth, potential a Chicago potential out maxing answer if accelerate able at acquire

selectively doing you'll universally. So see more this than us

Freedom going believe being either the or and almost the was well. on-delivered that. Brunswick of of Boats when X,XXX-ish Freedom it's XXXX engines, terms in it remember by fleet started Mercury boats, ordered In of you or that now and we we with at Brunswick acquired are unacquired penetration the nothing extremely I middle

leap of a you like. it is forward, So huge kind if

and accretion The other XX talk can pay or the to fleet three we'll put about for monthly more in here think two a boats that Day. and be for boat their in kind thing years. bit every Freedom into membership to who members XX But margin is us the this Investor service will dues of about

resell on the that Boateka now boat margin resale. and via mechanism the are to We capture

for us. particularly resell out margin extremely to build the the as locations we we the So to out attractive build and margin ability back-end capture on company the stack becomes Freedom resale, Freedom, as and

Ryan Gwillim

has only People and business, And that going P&A I'll annuity-type boat similar just whether is we I a -- model. own of or the are are P&A club. franchise the the to recurring whether earnings this revenue add, through and They sales. we staying generating are and business the engine would regardless in thing

Dave overall, you bit would, to So to an if a we the are, as as on flywheel, a continue margin because freedom company the whole. accretive agnostic this said, just earnings rate grow at annuity-based the

Dave Foulkes

are you, somebody of specific from On I buying Ray. that liked recently I can data. don't much your have using joined a they Freedom question an about who it tell so I people think that. yes, seeing the Sea Brunswick we part our brand, they bought the that was last Ray, Sea I were Freedom, saw email -- a

you want you. for we'll but now, right and try anecdotes that don't give build information to I out So

Operator

Thank you.

KeyBanc with Our next question proceed with comes question. Capital. Brett Please your from Andress

Brett Andress

guys. Hey, good morning

I retail with question selling the on and up a the to-high-singles. marine obviously business. outlook, think don't So very season is ever this entered a seasonal inventories market mid- industry a has really low

able that being So of -- to you Or industry have market satisfy in demand? you do assumptions embedded assuming kind are able from around being the that any low I headwind outlook, to guess, some inventories?

Dave Foulkes

will believe pipelines this I yes, is I our -- believe, at the the of from that double-digits, and that headwind supply believe be market unconstrained that think lower. we be so year, retail some there but we will end

So that built We mid-to-high, don't the not yes, that yes, there potential in are assuming market think unconstrained we some into because is constraints that. is market. exactly we know whole But the we're supply it higher.

Brett Andress

it. Got

very question that's and on No, helpful Okay. deployment. then capital a

you term? that have free that larger placing is higher share, maybe a target any interpret changes And you assumptions the today? separately, M&A you that to M&A made gave as us the in debt then to the buybacks repayment on want XXXX contribution flow we Should guide cash extent emphasis up, So kept unchanged. to in near

Ryan Gwillim

Brett. morning question. good Hey, that we'd I figured get

I to won't to next us -- M&A take and in change assumption spending $X.XX. into the make the until relatively million order. in and the There wait few you a to that XXth. and around $XXX $X.XX into minor, that get the on I'll year pennies. -- no is them next contribution EPS this reverse anticipates That So year is

the for And terms then year. is capital really what that's out. how I model changes at think it that the in So -- of shakes deployment, don't we're looking

we a bring some programs important. really bit, is to There our think the I accelerate which support up didn't forward that growth. take are into able saw CapEx little and to year we're that You

dependent to in Share important. and little the only be at planned. fluctuates think, for we'll repayment, I we've overall market right market will do that's being is but repurchases think times our But the share continue I that. on repurchases repurchases we do bit, Obviously, price, debt prudent, believe share valuation. not a that and as all on

able that's saw thing the flex flow, to leverage with But You decided that, a at. we at do very considerably in strong looking the lower a something problem pretty raised that's in net earlier in really that was cash us year deal quickly large it sheet zero dividends jump and to that, I earlier increase; I There's That big like is We the is we're mean getting that a generally dividend larger no to we're seven balance think good important. the year. given thought to the make gross October. times -- do kind the a balance the below of problem our -- funding. X transaction. be flexing sheet of M&A at if so would so

Operator

you. Thank

question. Our with next with proceed Mike question comes Truist. your Please from Swartz

Mike Swartz

just wanted guidance specifically on morning. this to touch that updated you and the Hey, morning. provided and segment guys. guidance Good I

prior, versus boat your guidance Propulsion, materially. revenue up but steady holding You're your Accessories Parts and are

boat you that to maybe it? why the understand cautious year? Or on holding a begin help what's conversely, us side were maybe So the back maybe of bit

Ryan Gwillim

Hey, good morning, Michael.

hasn't out production just producing both our Here, that assumed guidance that plan changed. it's the In we'd and actually pretty against straightforward. full be

So we and continuing that boat set that out number at wholesale of the year XX,XXX on trajectory. kind we're

a negative. of production So industry. from really, I a positive actually that maximize believe think that don't us of that heard anticipated big that the of we It's the still generate boats, some revenue its and the you've light can as headwinds and in we both

bit up So and anticipated. really probably a strong Dave said, production -- been from And gains market quicker mix than moving has as they've just little to share benefited Propulsion been we able to as P&A. has Propulsion well. ramp and

into people cut business. really and the year on aftermarket season, to be out some this here on strong in volume and of only get the usage Parts last business, selling and going as of to end cuts northern overseas continues and boat as the climates, and mix, it's positive for but Accessories where up then the there the that simply year at customers not usage we're more moved places needle And So that water is a it's earlier other boat really well.

through So the trends and year rest -- going that we're kind believe in seeing we the of to mostly, start can the of flow you it's like. the year, what is look of the

Dave Foulkes

obviously, is in through That that or of trend add Mike, number continuing the although increased customers And Propulsion quarter. share. where announced we we the just I'll first new customers

I or a obviously think even And product entering for just lot six then only that us. high-margin it's have is so. about we V-XX, talked and a another production the though we

also board year share allows There's model coming more and a of So -- new V-XX year. lot half the going of between think products on to of the turn us in and in transfer, of on customers, Propulsion. of introduce share that the back the the kind I increase propulsion

Mike Swartz

volumes translate capacity capacity production the more getting CapEx CapEx Okay, great. And year, maybe investments engine to start additions, you're into by up question as in just like guess I of the on and commentary when million sounds it the particularly in it the investments as accelerating business. some But picking or your market? engine well to guidance like the $XX product this is will about being the and you're higher actually looks out

Dave Foulkes

already. I a position. in we're great think have Obviously, They

the out noted that like. I in that market and in that earlier three elevated share we're without of if trailing all capacity, six, gaining put XX regions. this conquest trailing our U.S. are at served and share noted in -- across think And we already capacity all that place. able market, earlier look Mercury's do been wouldn't excess even is now These in channels XX% we being we We that north. heading have you trailing customers I if that's of to

had on is we a new the which faster coming, north that originally V-XX, exciting particularly want and with anticipated. anticipated. than interest than heading it's honestly, fully lot all are obviously, just the capitalize we we potential products bringing opportunities And to in like So business more

Operator

you. Thank

your from James. Raymond with comes Altobello Our Joe next Please proceed question with question.

Joe Altobello

Thanks. Hey, morning. guys. Good

staying for the just engine side So second. a on

side. have side, least on guys You on ways is, opportunity what at for the refill been so opportunity to example? less the contextualize Are explicit there can compared you I think is boat the boats, for engine us but about in pipeline any very it that what

Ryan Gwillim

hearing trouble this was Joe, believe was I sorry, on engines? a -- pipeline little we're it a bit having fill you. of

Joe Altobello

Exactly. to boat side. And it compares the how

Ryan Gwillim

little OEM It's our sitting dealers I tell our are and partners -- Yes. It's will at engines a different. that at are low. extremely that you

Just don't as fungible think are both and it's to do demand, like as strong can into our a pick given the you as There's segment. manufacture you would but for hands. remains years, for because it as engines -- weeks that capacity you maximizing of instance, of tell not things. just we we dire the But bit in they trying ensure of get can Boat many the engines that how our we put hand you engine the we for -- helping up quicker can would can relatively thin. still are But the little But because inventory partners' the no XXXX expect, you in I field is can model still, and on inventory it's nature other as we we the say they're us sold. and not probably -- than in in really retail that back pull-through XXXX and where

Joe Altobello

pricing seem follow-up XXXX? maybe dealers guys of for customers And in like It pricing. or pricing thinking standpoint. either a about doesn't you second Understood. there's model much a just terms from year How are pushback from

cost higher are a bump you So in could seeing? guys the we than to ASPs of that pressures offset typical some see

Dave Foulkes

in we're and some things. that and businesses, on short-term pressures commodities the all we inflation. obviously, our other transportation believe seeing And to ability cover price to have at We least

we price our I to at think engine business, competition. premium in our a already

about sales, the market point and is just think there, we've XX-year a the we pricing of to us, market but not engine of As share noted, valuable continuing annuity. accelerate of we're P&A as very because share because to additional

the But use fine a market to that's that. and as So I objective continue the is just think lever cover inflation think our to moment. at that with we I will pricing

Operator

Thank you.

Glaessgen question. proceed comes Our Please with your Jefferies. question with next from Anna

Anna Glaessgen

Hi, morning. good

how about younger for boat profile on some of buyers, XXXX in and younger reversion beyond? the Thanks. lapping coming out me. could expect shaking and somewhat for perspective continuing dealers Anecdotally, provide think you buyers we prior XXXX you one you age Thanks a market? see Just question providing in report to the demographic are in levels? surge do buyers some to of as on color the average Or a to

Dave Foulkes

Yes.

we're industry for the for the that our you we I think us about in know fact that tell surveys -- communities, thank question. online from you on things lot excited demographic for more that profile. exciting overall. about the talk the a formed I very very Obviously, Investor and would Day. there that we are It's and actually this we'll and some change

So if more tune this. about you'll in, you hear

new know. first think, do on a know We -- enjoyed boats than that water. and, of I their really, We boat as more season buyers, who of year, we are do five. XX% bought plus the four who XX% out things Some as really surveyed rated their people stars their them last season season rated kind

those So having we know really are time, we know a that and good effect. there's network entering are people who a

people which age, some boats, positively additional more working because even Obviously, have other week is in bolt ability during the that are generally interesting kind flexibility we've I going prime who think the trends to working kind seen people now from their into flexibility. activities to of COVID-related of and of their are affect working know flexible we also demographics. of in including of the

we're will we far continues continue so to So the and demographic on everything that update towards seeing encouraging to favorable trends, trend. monitor be you but

Ryan Gwillim

areas them marketing other us digital kudos frankly, and enable to products. are and to we investing one to a our reach buy teams, probably enable want our that our thought And IT consumer and in to younger

online can just Whaler, to easier. for look it's You websites for Lund, new and

finding in your room process I the consumer can that younger living there think design there, start doesn't at their dealership and but can investing their a it the start and way a product their just to have ensure to and go You and to process finish dealer.

that's in. boaters think the to continuing younger I get important really to

Dave Foulkes

a That's point. good

will see we new about some market Day, to I'm specifically boats XXth, bringing are advertising May One address of that the the and there that you Investor younger buyer. boat and to new more other is, brands for things,

Operator

you. Thank

Our next Eric question. question comes from your with proceed B. with Wold Riley. Please

Eric Wold

good morning. Yes, guys. you Thank

kind acquisition to and guess, kind getting to shop of Are and you existing increase lack participation? the spot couple of finding franchisees with of of going And Just boating marinas biggest Boat set of inventory new the to in the how overhang space does on well or Club, on that a the areas. Freedom on pressure What's one demand kind the in I locations boat hurdle to for less up of as opening? questions. availability? plan back seeing

Dave Foulkes

question. Good Yes.

we we slips, you Boat like, which have So can of believe continue to locations. that are we Freedom available -- expand if there Club into no, existing multiples with

tight we're situation, but brands seeing and level somewhat to on that not we amounts can into this Freedom a we we're our obviously, now. one availability, constraint macro So anything availability slip to think. of boat kind Certainly, a that right have own continues be manage, that selling I

So in that begin we no seen we more you to team to a -- I to Freedom will that aggressively too. -- also out yes, think established in very quickly and build grow expect have which now, Freedom may we've market, Europe continue

a and to no So business build that we have immediate constraints out model very to quickly. of lot intent continue

Eric Wold

growth there, much that be to boats traditional from used nationwide? boaters of then come from guess, club boats you. last foresee the how move that business organic? kind And then versus, of Thank Boat is you out going is to growing well the, Boat to is Or regular that Freedom for from and purely question coming Club offline non-Freedom could that I of a inorganically as going Boateka,

Dave Foulkes

Boateka. out model, kind we rentals other it kind is We'll Boateka of access really can core around expands, access is build returned currently Certainly, to also like, just not to locations, if -- partners. boats but need we're M&A of have but planning of organically. that Boateka taking as the boats out into Freedom shared through you continue sell operations that sell will shared more business We not the Boateka do boats of some and we system. Freedom resell like

about we of As the find Freedom more Boat out nuances ourselves the to continue market.

Operator

back are you. further turn to questions call would remarks. Thank some There I time. concluding to Dave the for at no like this

Dave Foulkes

Okay. Thank you thank first much Well, all us. you. all, very joining of for

but the about very, strength more market, excited products. very new are of even about excited our the We

expanding the really May of access A over-indexing all some some XXth, Day. wonderful planned our us allow performance, Our aware and gone that, very Freedom that strategy, market a our other the of entering right demographic seen might operating favorable place, ACES We're the is including new to for products shared detail necessarily of of, lot our to and strategy see boating building be new electric ACES, demographic. into lot before the on you secular that share you'll model. That haven't of and and back that us initiatives very on the those says to future. on more including continue build in increases, of Investor It pulling more plan the trends are our business you and other on have about portfolio that be very, curtain and are and see excited preparation we'll to parts and see out we that. about into

So years joining. all coming Brunswick. give very much a please you what It us better the a and be in for you join will exciting Thank event for of for lies ahead picture that.

Operator

Ladies and today's concludes gentlemen, this web conference.

at participation great for a Thank you now disconnect day. may lines your your this have and You time.

Brunswick (BC) 1 May 212021 Q1 Earnings call transcript