BC - Earnings call transcript Q1 2022

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Operator

00:04 Good morning, and welcome to Brunswick Corporation’s First Quarter 2022 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. 00:21 I would now like to introduce Brent Dahl, Vice President, Investor Relations.

Brent Dahl

thank joining and morning, Good you us. for XX:XX this Dave CFO. Foulkes, me on CEO; are call the Gwillim, With Brunswick’s morning and Ryan XX:XX during our to Before looking statements will with I results. forward we like future would include prepared certain remind call, this remarks, that about our comments everyone begin that actual could differ keep from these Please our in materially mind results expectations.

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

our presentation, call of of at unaudited During and XX:XX All the measures consolidated of documents will Brunswick.com. certain the to presentation on turn are GAAP in reconciliation to to appendix results. financial Reconciliations I now will website our we financial over non-GAAP these available non-GAAP are information. Dave. statements referring provided sections today's the the this be XX:XX financial to accompanying

David Foulkes

XX:XX and everyone. Thanks, good Brent, morning

strong delivering and businesses to EPS. Our first-quarter earnings, start a sales, operating had XXXX, record

dislocation, on and economic twin delayed in the The Northern for the pace XX:XX in dominated enabled debt XXXX for with sales is evidence geopolitical XX% quarter of favorable guidance spring in already and strengthening call, than consequently, opportunity percentage Despite be operational have down at financial to the XXXX target Global at is retail for boat shaped interest wholesale success our Canada, currently XXXX our supply annual repurchases market enterprise time Continued repurchase rates boats in US zero deliveries of by US at macro-economic no to Field US, further at very and boats. driving inflationary backdrop, at or many the current businesses and cancellations. the is the XXXX, be and capacity issue there show all-time encouraging performance will there of a $XX XX:XX million. million retail retail-sold promotional advertising activity. of continues share that chain in and boat long-term chain be took supply-side which levels field and near recurring-revenue likely any boat details exaggerated continues the inventory in production to and inventory share to little we high. first start disruption. end the field is investments levels by lower and significantly in the innovation, challenges registrations updated were are our our resulting very or quarter, of XX:XX Later of larger further slower provide low first retail-sold the X% continues in to is and an supply Early in our increasing are complete or same factors efficiency With and focus levels, environment. XXXX. portfolio production the inventory our you to $XXX of increased and Ryan technology, the behind the and,

external factors our boater a quarter, the geopolitical people's basis. the of a are face of many currently some in on influences I'd minutes performance and macroeconomic wanted I at sentiment the look the pressures the to a address talking to managing, forefront spend taking minds. at Before and First, we few and like segment monitoring about XX:XX for daily issues

be increases than of around remain impacts on just you that basis. financed the to intention Clearly, and through our less not our the versus XX% to boats surveys boats essentially sell a XXXX, XX supply-side product cover to retail internal price to immune up Our overall continue inflation that cost a boat businesses to been challenges of and sales. are pacing boats know, unchanged of environment take can XX:XX and our on for long-term been view cost. dollar inflationary strategy a have years. has buy to our We $XX,XXX, As and indicate

recent low. Additionally, forecast remain despite basis increases, and rate interest on a historical rates

estimate had rise the XXXX for will average and costs, business. or than in that to Brunswick conflict the direct since and In seasonal by boater, early geopolitical to events, our chain disputed tragic cessation $XXX. the of Turning prices terms of fuel in territories increase financial Crimea Ukraine the bills Russia, operating supply in fuel business our XX:XX impact boat Belarus, we significant has less no their

freight China continues wholesale is to and ago constrained, than Spring transportation be However, by Northern slower in impact and season a delays, US most associated and and and sales growth the Canadian off start now a lockdowns the to production boating markets. supply of year notably the getting

long-range are which segments monitoring that P&A the currently I'll second May, first forecasts boat increased some show the improvement during quarter. weather into our translate greater some performance highlights usage We sales of on quarter. provide the XX:XX should in aftermarket in now and

fourth since on the Fond which different in remains just significantly market capacity results XX versus announced historic horsepower quarter including Verado du with Mercury increased top-line expansion points increased in more months, basis delivered enabled completion expand customers retail strong engines to engines had business a now year horsepower. XXX of gaining outboard Mercury outboard previously the capacity over unveiling over X,XXX basis in propulsion XXX for points be Lac, for VXX schedule Our gains XX first share, last continues engines propulsion the ago. OEM has growth high production. by XXXX, over XX:XX quarter Wisconsin horsepower to of Marine XXX Production its XXXX. than will a facility, in share the by

and accessories season. aftermarket businesses tightness chain ever Group, growth as headwinds. highest continued and the of cost quarter healthy performance, delivered continued channels exceptional the robust prime top-line quarter, delivering their first with in and revenue their with for despite both XX:XX parts Systems collectively Advanced Our prepare OEM Our Navico, the addition supply margins boating

double-digits for the in sequentially business the Our outstanding second operating slightly top-line below quarter. increasing consecutive margins boat posted growth and with quarter,

Fishing a Our while robust brands revenue margins, Aluminum had category Fiberglass also growth strong outsized Recreational quarter. operating and our posted

sales and would constant Europe, business and I and world XX,XXX memberships of now headwinds, network plans with level by production to the Club busy generating year pipeline for XX our synergy at an over wide, strong XX:XX meeting levels are remaining substantial with region review marine has very on portfolio. across XXX our excluding has start inventory currency exceptionally Boat to the locations at Freedom in our Next, growth while basis, despite year had acquisitions. the Finally, We weeks. the US a incredibly performance like low XX:XX the global the sales

in the substantial historical were versus quarter the delivering satisfy XXXX, quarter us unit. were capacity quarter XXXX, in region against saw regions and a when demand also but year enterprise, the Canada XX% posted the XX:XX prior first expected, achieved our growth backlog in sales level a versus reminder, compared international propulsion QX sales initiatives in X%. that international strong sales Asia the with Pacific strong increase As better growth the in and products. the to US for Overall, XX% segment, versus XXXX. allow especially immense across when up As business most quarter will sales Sales every first Europe and grew

industry our more at with half retail, discussed retail the second supply January continued to of a we significant pronounced more strength the than environment. in earnings call, leading chain during XXXX, As inventory-constrained experienced anticipated disruptions

sales On additional retail the to during performance, X% broadly deliveries reflected more deliveries As basis, share, in points over positive XX:XX essentially the improves, overall pipeline. Mercury reported delayed share lack discussion for in trend at XXXX horsepower out first unit than of our when products We the XX:XX with additional brands XX-month the call being and fiberglass retail turn pick XXXX. and first the expected, we being the are in to view and comments all registrations greater boating product. retail continues quarter this categories. markets engine outperformance reporting. provide will outboard the capturing to Ryan continued driven market future gain sold of XXX this transitory, last for expected are sold mentioned, of up a of financial now which in a were the with XX:XX first weather I'll generation, retail our very with indicators his pontoons. on northern commentary point was consumers US Ryan XXX in the quarter with of sentiment, our US into As as production in will some significant and declines out suggest the dealer consistent SSI for market indicators the remain quarter basis industry Brunswick's leading by to recreational wholesale performance rolling other performance. down XXXX. slots be industry. months XX over some end lead on

Ryan Gwillim

to good and operating increased earnings and of everyone. morning, basis increasing sales sales, on XX:XX on Sales increased Dave, partially adjusted in rates, another an fantastic and operating earnings each and in currency $X.XX EPS continue by compared year, with initiatives. our When unfavorable Brunswick by and yet XX.X%. to prior sales adjusted XXXX adjusted as XX%, implemented offset quarter growth-related were EPS. quarter, operating supply exchange prices Thanks, net volumes, while impacted first record the quarter higher to up spending segments. pressures and segment's of Turning XX:XX margins by each Operating delivered XX%. changes earnings first first XX:XX inefficiencies since with chain of foreign from quarter segment benefited increased be XX% inflationary

markets accessories XX:XX product majority and were occur continued and top-line more XX% the Our XXXX increase product of be been Navico, levels. XXXX. sales caused in lines, increases higher Note, absorption manufacturing certain a propulsion versus by strong acquisitions strong Operating offset sales businesses and saw point first of by increase due operating to development. first parts business the all XXXX by quarter taking increased XX% of strong inflation, in basis costs, have in Revenue than XX:XX and earnings, another margins versus RELiON categories a with adjusted in although Semahtronix. slight price Our and propulsion large yet the and the in the primarily as production favorable capacity were delivered a product global forward enabled demand this in that points price increase continue XXX investments of from a by X% increased for growth, to quarter higher lower year. quarter historically as part earnings and we of

acquisitions, slower with in being start northern against by tough and to markets from sales leading increased by impacted Excluding impact earnings the despite sales P&A backlogs, together X% supply due XXXX season weather conditions. revenues a to boating to comparison, organic grew a constraints the chain very unfavorable

begins nearly deferral Dealer the decreased environment. supply-constrained XXXX quarters. including receiving pipeline Flagler year challenges, over prior and supply where half is just end input quarter. and Business Sales typically Increased on operating a delays the shipping the about the actually adjusted XX:XX achievement operating current we cost XX,XXX increases As available the to brands which X,XXX in dealers costs by units Turning XXXX, disruption sold, first Freedom certain units Our freshwater, primarily boats Whaler's units, inventory were earnings the global X,XXX Supply US of for of pontoon remainder are enabled units pipeline chain resulting continues be in we average, inefficiencies brand, increases ramp-up dealer. by XX:XX units margins X% acquisitions recreational quarter inventories as quarter, were down in to and delivered in operating including to most fiberglass XX:XX contributed the than margins only per when hand with disruptions, included were which with Boat the higher when exceeding boat with to and subsequent X,XXX and in are XX% by did sold and having held Inventory quarter Club, costs impacted product completed on manufacturing of solid and including of in was inflation. first Boston than produced for the volume basis, of components, in quarter. anticipated, to first the a one of supply the the trailing top-line quarter northern growth, to less XX.X% quarter also weeks were result which growth to given chain the operating costs. of compared recent wholesale pipelines, XX-month those certain adjusted the of certain strong the United facility. The of the second already particular quarter five located of of from measured aluminum up continued XXXX, delivered inventory despite low in earnings the quarter increased of our and remarkable revenue more these a boats our due Whaler, XX% of of translates which of sale. in XX:XX only Drilling with up of from to boating pricing States, historically boat by compared are is XX,XXX to at This solid first stand businesses, quarter. weather inventories led improve. during to fiberglass impact in levels Boston the customers our due earnings segment's in deeper, by strength about with units. differ X% at also approximately markets, Acceleration, boat first more than segment a Sales retail on chain US XX brands.

despite these of in As in Moving outlook Dave to experienced despite remainder on guidance, issuance. a I to a the result similar of of a discussed, EPS accounting first the XXXX that dynamics, we our the interest current that and have production inventory to full-year XXXX, debt outperformance additional our year. trajectory in hand XX:XX us follow $X.XX to quarter expect raise increased and after last operating for the for will weeks QX our headwinds year, related expense even puts position

in benefits XXXX, share and raising for guidance. included meaningful full-year been Note, accelerated the adjusted us EPS highlighting guidance here of original slightly and results for I'll capital These year. top-line cash addition, have incremental this beyond. In XXXX additive view strategy $XX.XX. a in has and repurchase with XXXX in $X.XX when that revenue small full-year completed morning with provides providing a by a and benefits, the finish our and and together taken outlook, my certain versus XX:XX improved more assumptions our strategy growth, benefit to that P&L, April announced contribution in M&A diluted this between changed XX:XX very earnings flow full-year comments our

has additional issuance increased of earlier, mentioned $XX estimate Dave the expense long-term of As in our the full-year debt to interest approximately quarter net million. first

for term XX:XX also debt our remaining loan, as $XX part million retired increased our our As to likely the we of of share. year. the In we $X.XX of dividend debt now offering, the which completes XXXX February, retirement activity per

market shares year Our share diluted decision will to increase repurchase average and target given our between result for the million shares. to to current dislocation million XX.X outstanding the decrease in XX

quarter businesses for first than anticipate usage our levels. to slightly our XX:XX we ensure no cadence. we we first consistent million $XX to anticipate activity greater levels far As $XX working quarter and million in related year, Additionally, holding capital of inventory second primarily the reminder, and higher aggressive shares be thus a to another of quarter production less in April, the repurchase repurchased

to million facility primarily to the to XX the by to will exclusions estimated concluding has certain in engines XXX produce our impact China horsepower Dave to but still anticipated to being tariffs. improved an XX:XX tariffs we now the back Our results remarks. XX due subject turn in call horsepower for I March, due in $X being earnings China reinstated million $XX still headwind, due

David Foulkes

Ryan. Thanks, XX:XX

the Freedom also our Nordics, Club opened anticipated, is throughout advance strong United very location our a its more held in session a greater had As will and Freedom updates. to Freedom to Business Atlanta expansion with March a of its which continued the fortify wanted I has location the virtual access, plans in the Acceleration our to boating a Denmark, busy a start Before XX:XX the community. team global to region. center XX:XX we first morning, Q&A consecutive X, XXXX. transition Day Boat follow-up in marine Boateka. and portfolio continued corporate XXXth acquired in subscription-based by area, J&R acquired leave key to locations States, Acceleration support second recently club markets of footprint Spain. boat assets close the branding also out Business southern of Boating-as-a-Service marine a the in Marine, its locations you and Atlanta four the strategy models, investor we that this area, including shared expand with with establish few and regional Investor comments launched eco-system its acquiring operating On

successful achievements, highlight can our XXXX. Sustainability year. record Dubai, you found the the Koenig, through Chief done innovation encourage continued Top The annual the Brunswick's shows also XX:XX for Beach, materials, Employers the these would Industry enterprise in Officer, award-winning XX:XX thank boat XX:XX businesses commitment display, company's Diversity all that our Brenna I portfolio. employees expansion company's which late CNBC, more Miami, its ongoing continued is Forbes Jennifer at high of to share winning despite XXXX. and continued performance record environment. on product haven't first first additional Before advancing deliver view a enterprise-wide hiring for Thank company's for vertical Navico March, received outstanding since external engines business joining to global DEI, to season we If the security, its early so published we on it Preisser company's facility, materials increase deliver integration awards and capacity again, Sustainability string sustainability to addition and industry-leading than products. in already, XXX brunswick.com. Next be once on major leadership Brunswick our supply announced Brunswick strategy Wave create advance Mexico XX:XX also third and to from capacity and receive its very Report, the In to applications. increased strategy our included highlighting finish, I growth, furthering Products featured expansion by consecutive Mercury who, captured spanning October announced saltwater and Best Boating of I demand at strategies. seven third the to Palm horsepower governance and for highlighting social, environmental, will Ensenada, XX:XX in and particularly to jobs volume production was of to as fulfill the want recognition necessary outboard recognition our which Navico's The expected in you. dynamic you

for the We will line now open questions.

Operator

XX:XX Thank Instructions] ahead. a will question Our from [Operator go BNP we this and session, Paribas. time Siew gentlemen, Please first you. comes be at question-and-answer conducting And ladies Xian with

Xian Siew

XX:XX Hi, guys. Thanks for the question.

acceleration You mentioned to about I slower poor business saw with and into trends the weather, April, evolves organic exiting think, the was season start a maybe you and was how maybe on up, I the kind can you a X% the of example, quarter curious for into like that basis. for April? but talk any only if an parts quarter,

David Foulkes

Yeah. the an X% huge XX:XX question. Thank the for but Obviously, comp was up earlier last against you spring. it and year

business that profile. year, performing, So, week, all we the weeks So their about sales then question P&A against say, there get for we're of out a little which year, is there's be we're two it's and I little you a the will phasing And the a the business occurs facing extremely and and bit is that is. people winterization year. spring. it profile there's later is pretty whatever season, phasing, would as XX:XX P&A every stocking. with weeks huge bit way comfortable way are a think spring to of back, a comping with It's a It's last then, a of a two usage -- where just of this but forward, Certainly, need profile the comfortable The issue. boats starts.

I for positive So, as it very a us. environment see

Xian Siew

think there? then talked seeing And XX:XX I consumers backlog really about is some Okay, the but can is hard essentially 'XX any Thanks. And us got orders? you're cancellations, on pricing the for you some how And over Thanks. for color out, year as maybe retail is? have taking maybe help cancel it. to you been the it going pause also, how the give within course taking and you sold up if how more solid not are XX:XX the you're you retroactively have information, that, take more both are you're all that of costs taking -- the pre-sold? color up, you customer price but

David Foulkes

Yes. XX:XX

type individual and even in of cancellations, mean, a on terms boats extent. I the little depends So, of to it bit some on dealer the

risk. are risk. large can you a If is, that boat, you a to But not around that at of deposit you're orders -- a reality pre-ordering probably really sometime might XX% there's future, is be the in intending the potentially if

we a Our momentum boats. retail there But just, I of wanting cancellation which is really, smaller believe -- for more the anything wholesale with level boats? of boats, please here cancel thing is one other I in on something terms no the is, to going have boats, and who cancellation. or sign or more encouraging is pretty get It's retail cancellations it say of or something, a In associated get I us more is anybody forfeit question me level. the need for isn't all. not that for unable And no would direction penalty can to either kind at modest. seeing dealers XX:XX think level, that I really at are at I

we possibly pass it's trying a than want the price. adjust on at before, we appropriately, but terms least I retail have of all but people up trends through think, pricing, would up lot more get frequent done. that. us monitoring we're how at not wholesale explained in handling have dealer, as some retail Obviously, that's control to historically about can their I basis retail how to the XX:XX they of think is, as to pricing. directly it's pricing, don't Which contracts the and In inflationary we've themselves we to to allowed a boat. dealers tightly flexibility And moment, are we handle normally, the

Operator

you. XX:XX Thank

with Our Citi. next from comes Hardiman Please go ahead. James question

James Hardiman

morning. good XX:XXHey,

pricing total we There dig everybody elasticity. actually sort segments, last wanted that of those the power as a were we your and little demand price that at look are is maybe reintroduction in of to terms I in being of bit. just would pricing realized significantly I been where first, into see number where that have about But to see increases, maybe, you promo eliminated. a levels concerned speak if point Where So, versus of segments? would respective we'll it different the And can price 'XX? to of Obviously, we last? three see

Ryan Gwillim

morning. XX:XX pre-COVID, It's price I'll a relatively start take asked that obviously date that three Ryan. are Yeah, for bit the We maybe of all James. years, look of low up. see Propulsion, they to that segments. you -- to If of say Good Outboards, been and normally it's we'll we'd have up Propulsion, versus I is mid-single-digits couple do. comments then kind just just remainder year. Dave maybe talking more at slightly because XXXX-XXXX, mid-single-digits follow can over think a this little US in price -- to to minor pre I said really we at here what certainly in looks which point, the the taken We

of number will gone XX:XX this the OEM house. more it, of at kind I XX:XX of single-digit on Certainly, on probably depends mid after I call looking call. accessories aftermarket has a probably also little if OEM less And with with the to it, is think I or date call that, parts than horizon has again this and then, Aftermarket to then where business, up the side. call side So, low OEM the to it's double-digits the mean, been kind boats, more up, than look I whether we've clear high probably bit. move aftermarket If increase the pretty increases that or looked, on so. go

years. in If XX:XX cumulatively, long-term anticipate a are is model you're of know be about you question, going pricing. game XX%, model little Elasticity years, good XXXX. what would to into this we price you mid-teens at kind look then but And always if two-plus and of ability as a would probably for year to the move couple you is say, what more the look probably a bit we to somewhere of going I'm

attempting in out-price we We that we prevalent know are to consumers. But also don't environment. are which our cover cognizant the end price use is we want inflation, all to to

So, prudent pricing the in the of relatively as touched not necessary. we ecosystem across boating the arises, parts the and every than we're -- boat, all these being but more cover and segments it price part between the the just so phasing about inflation taking engine, to

David Foulkes

Just additional it about than less that over XX%. XX:XX comment. costing our couple long to of just of for boats said but months XX% a and it used time one a checked We've be and $XX,XXX XX%, we was ago

a aimed this still have huge over our affordable. So, portion middle-income period, whole of we extremely portfolio squarely at consumers still and

like, forced idea kind some we've of the good been to even [indiscernible] pricing. though a you looks certainly of pricing gives still that what So, elevate

the for this in are term. We long

James Hardiman

more share relative speak stock pretty And whether to not what even value think if maybe color. to big then me. signal be intrinsic you one just stock continues to might be million or trading into your is, depressed? the great in to and $XXX a Thanks. repurchases now projected lean from that, seems where you further XX:XXThat's The about that is

David Foulkes

XX:XX trading by sectors that believe had obviously, Yeah, of James. we significantly thanks, are we're value. I Yeah, and we discount at a and significant measure pullback obviously, any intrinsic a think, the discounted

So us good this for deploy to is time capital. a

yeah, We we develops see flexibly. more to but a into shares to place it. target that we think be able and now, right to We lean lean capital put into to will a the is our for and we dollars. it, and be that the continues sheet whether are absolutely, very a this think that's And repurchasing could that very more good year value how strong deploy great time have certainly balance could we

Ryan Gwillim

to fair though That's only likely very go asking. it say if up, would, down, XX:XX James, not what you're that's

James Hardiman

Appreciate Perfect. XX:XX color, guys. the

Ryan Gwillim

Thanks. XX:XX

David Foulkes

Thanks, James. XX:XX

Operator

Our Mike from go Please Swartz ahead. comes with Truist. XX:XX question next

Michael Swartz

are year just the supply growth understanding issues year us what wholesale but said, give retail on and your fundamentally for wanted retail of, all? changed Good guys. and your XX:XX touch guess, separated outlook of chain low for if as you the time outlook think the to that morning. Hey, some single-digit a maybe pertains just I being, that it has view seen? you the How, your for and outlook prior at of to or I I you've retail

David Foulkes

XX:XX Yeah. Michael. Hi,

early I think the discussed we do -- anything, think for it's the moment but should very at this in is, we situation whether I the us year.

Our production remains strong.

you time I of if inflection point. phasing an of a season, think, which some issues, the We kind is of around have like, specific bit this

to don't information So, information developing moment. -- enough enough in update different just that. But we that obviously, a right just to direction simply we at was the see that If something modifying another one we or we be we'll call felt able don't now. direction, that have do new in have

Michael Swartz

being Okay, year, I you then, production well, fair should pro out I the for is called something that know number else? XX,XXX units, guidance think took on if missed previously just expectations enough. you boat but pricing this right think is the XX:XX about I the -- and up And still apologize we the on and that increment the about -- as had I maybe -- maybe, so or as just here,

David Foulkes

for XX:XX number Yeah, us. that's still right the

expect job I year. great quarter the think a individual our continue of in balance a great and brands have done year. they'll the first job the teams and the the plants in I to Boat in do of the Group

number. So, a yeah, good that's

Michael Swartz

months final XX:XX just how at high to relative us looks question, maybe the or And chain level, then, some qualification two today Okay, just great. just just maybe give a a ago? of supply maybe very color

David Foulkes

migrates. it Yeah, XX:XX

very the it's inflation. most are lockdowns think availability. that There clear disruptive is the There in other have areas in the as improved we But I expect potentially there, we've COVID-related that. the out is China. performance, our that way. area uniformly, terms improved continue that generally are is has disruptive, and of far, our some base, as still improved China we new a supply world. the in our moment, -- find And new to as I the are with find Obviously, disruption. to engineered there around inflationary generally, of But pressures diminished for least the components manage throughout events at coming domestic to -- so associated generally COVID focusing source we're XX:XX seeing always, there's performance. continued particularly of way potential through a way not attention, at but think, on It's but biggest

Michael Swartz

Thank you. XX:XX Okay.

Operator

XX:XX Thank you.

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

Anna Glaessgen

maybe two Hi, And historical boater. fuel giving on for maybe you has given average thanks on benefited the give over morning. of years? usage, the participation averages taking question. Could Thanks the XX:XX costs you're expected in good some what in color assuming our change versus perspective for past for terms the

David Foulkes

XX:XX Yes.

Anna. hi, So,

So, yes, it's a good question.

with So did calculation data well from of we kind of really the -- on kind that's our sources. along average some boats average boats based third-party established

by the an at range this our which at boats data earlier you if boat you here that. year, XX is boat and publishes is shorter. range, $X.XX the earlier in kind So, seasonality every look season fuel in that hours Obviously, on, EPA for as a hours in like something last between example, year in are the usage in the horsepower the XX:XX they horsepower, for year, consumption, the average about So, it's the of is northern that and well say you average delta multiply used the is which there season. fuel outboard, markets, price XXX look

about out come You with $XXX.

about our That two-third power generate usage But was dimension done fishing higher, low. also fuel be aluminum more to of we the tend it’s do boats to are for and thought of kind use have boats, for average a on boat, calculation. very fuel we you Obviously, we in to more make, it lot going -- useful you to they engines I of would usage just behind is will really profiles. a more or XX:XX is we and that that know see Wake round put our if boat, And torque leverage boat the to remember -- them. You well-established up big another the a it at third-party sports the estimate so that because average if with be was powerful bit, The delta boats. that a $XXX. but they have use average to there wake boat, other it

of a way it. a annual so of that's about to Just the about thing, think quarter usage it's another another fuel compact car,

Anna Glaessgen

the really track are on glad capacity That's XX:XX then hear And still Great, thanks. XQ. helpful. to Mercury expansions for

and can that think horsepower, incremental on as to that about perspective we higher the product capacity As impact ramping? shift see you give we some and and mix channel margins

David Foulkes

can you it's I for already. XX:XX Yeah. all first Well, all, spoken tell of

exciting. very which So is

good. really that's So

at to before, above, being horsepower XXX I engine is think XX% that aimed in very higher we're we've that excited horsepower, bring able the those and horsepower upwards. nodes capacity moment, XXX and said ranges, board. it's horsepower the additional customers of adding horsepower around in on we're at about on and track all from set so It

Ryan Gwillim

XX:XX are to chunk enable receiving -- of fourth Anna, our often that pretty that's of in certainly additional what large engines and enable from dealer The a Those available at expansion, obviously back you margin aren't also, quarter perspective, up, us inventory. of to as channels to certain year, a been is the the often which will so even you're we've strategic in half 'XX bit internationally have then OEM then sell margin plan, today. the the to and margined XXXX. the channel up maybe little capacity that other looked into And seeing that a will we take big clear customers engines that customers repower more

Anna Glaessgen

XX:XX Great. much. Thanks very

Operator

you. Thank XX:XX

go from ahead. Please comes with question next Kevin Heenan Our Morgan. JP

Kevin Heenan

your for outlook? track. in or retail softer is a is side on XX:XX bit Thanks with segment full-year demand? Hey, revenue, underlying question. your taking year-to-date, driving in guys. I coming I more production revenue the pricing that the my confidence Is the guess, in on what increase guess boat

Ryan Gwillim

Kevin. Hey, XX:XX

thanks and Let's for say a -- the it's questions, question. good actually,

uncertainties. January, today was Now numbers, more in and when full-year even segment looking chain, of sitting we're a of whole like. January There's in uncertainty at the were and at there we look inflation, a when supply certainly, year lot looking And at we -- output. is terms of in we're than there

is just we production that one I -- up now over we that think in quarter year. continuing. And fundamental last we no in and except changes anticipate assumption, are are

as little getting wrapped do business Dave the to But gotten like easy be manufacturing as a boat Dave before to a could -- -- able this of production that. been and hit light business supply the their on has for like quarter to mentioned, probably sent the inefficient dealer. year. finished boat that said, better, it's in one completed pace a of chain XX:XX it and is in be it The boat that literally has seems due parts be and on over to most as As two getting that or just not with it first a we despite need the share up and to we're

a we're the to more closer and and just can the dialed bit months So, business -- in end the what three of year we're deliver. little

Kevin Heenan

to sustain XQ, online? CAGR consider the to there follow-up trying outlook can't XX:XX growth that And the as into coming on in is Thanks, guess, longer-term, double-digit mid-teens helpful. of the Or out comes Propulsion year the on year capacity capacity that's the X% on expansions Got else there it. I in something bridge gap segment, just just the Anna's kind question is you've any this you reason a between dovetailing trajectory? next revenue Thanks. laid with the with

Ryan Gwillim

No. XX:XX

is you and be puts and could and chime in what The production on is, is, looking are so question coming it exactly ability market year a to did But of only a takes, out, pricing the and years outperformance? where estimate. four engines is this and year there engine those as When question and the Another will in capability, Dave and out do and more yes, we certainly but year, can answer not average, we the ahead, be. many good mix what this it long-term projection, out there absolutely well. that year could have look as there better potentially the If performs. with goes, CAGR stripe

Operator

you. comes your our Wolfe Fred question XX:XX Thank state from question. next Wightman Please Research. And with

Fred Wightman

Europe off give on out discretionary How bit guys. are retail of perspective, you? Hey, Could to the of products? these some of willingness on rubbing a you're just seeing situation more XX:XX a you what on spend people's from detail any little geopolitical

David Foulkes

Yeah, question. you XX:XX for the thank

I categories. far, well are all in Europe think up across sales of so our holding

the But engines, be obviously just our that have holding immediate is things is particularly far, to US, to are than XX:XX to think in Europe countries a for geographically the be and we've We so despite likely sentiment more inflationary I from there somewhat continues the fact differential pressure able in in more obviously there as of between issues others. removed than up satisfy. some the that we Europe. been -- demand conflict

have products to We have through. the similar similarly, we a get on that and get of that significant backlog we need backlog P&A through, we side, a to need

going the because in the got So, antenna we're we've the region, on obviously, softness up. not our moment, but seeing -- of at what's

Fred Wightman

getting how more sort little we Is how XX:XX something should going transaction, one-off, of allocation Makes more J&R just should can strategy? with channel and there into your about bit that? that forward, to fits of then the to talk expect capital sense. it think longer-term And sort we a a is about you involved dealership the go

David Foulkes

XX:XX Yeah, really is the very think I things of made area One about. enough other Freedom then clubs is potential with on area not we two and think And couple nearly populated -- to boat with Lanier. is a one Lake Atlanta the transactions, was -- high the that clubs. that, for that Marine, was a J&R

a those potential. only area, more. an Marine us heads more of lot get would Atlanta growth two as, J&R So, all, opportunity four for first significantly about And two think clubs had to then, transactions in them. There's Freedom clubs of mariners, I in the boat

we build at within and more boat more us as into deliberately on call are things emphasize Freedom, great, us on Freedom to an as side, with Investor our boats you've now Around get first more the a about and One great you've margin Day our Service boats it’s Build great, all, it's to ecosystem XX:XX the use What a -- sometimes establish Boateka other Freedom platform the growth seen sales out Freedom, P&A the we feeding pre-owned even Freedom engines and is Boateka. of front is, seen we in seen stand-alone. The talked more you've strategy, Boater. the do Boating acquisition. opportunity us exit business, but and So that margins was

prove So, bit but for growth add there XX:XX around detail, on more prove that some the we add ecosystem. But strategy muscles, and the build specific an it. can it extension exploring it's to opportunity of world of concepts. Boateka. out we exactly we that majority allows We'll margin And operational begin do evolve And we needed in to -- need to which a J&R that's us and as we'll and forthcoming those our Service a details. marine synergy specific more, ecosystem share the other concepts. out as the to is some in have some real synergistic a been tremendous -- ways it's And to we be essentially to more of of on those Boating

Ryan Gwillim

done, XX:XX in in of And modest strategy line kind bolt-on with strategy deals existing maybe a our out, year kind it’s embed it the year for small in the and play, it's year. capital capital we've of your point, on Fred,

So, that's think you how of a it should from spend perspective.

Operator

you. Thank XX:XX

go Please next comes ahead. James. question Raymond Our with from Altobello Joe

Joe Altobello

next you're QX at ask, almost industry that trying XX, retail guys what XX:XX is is guess, say if inventories this where given this point? much down it your question, to first, we guide are, year? is I guess, there maybe your and field for to independent Hey. year? Thanks, retail for is outlook in financial about industry, or to the thinking where And, I'm Good want saw the guys. trends the And morning. how on I persist how you coloring I the forecast downside

David Foulkes

sold high backlogs and XX:XX were our as on high. that No, those we’ve and very P&A not year boats really. are the engine At mentioned, for levels, backlogs very are

that overall get are And the So, have as we'll expansions the obviously, thoughts of not at say we're our doing it's on moment, XXXX, year, all. but developing capacity to that what XXXX of a further for strategy. at extremely most we like really that into the or we any I anything coloring initiatives we literally robust developments. be the view part Yeah, that were looks would other on our not changed foreseeable

Ryan Gwillim

the note dealer gave the waiting sitting SSI. XX:XX on pipeline we so in in today, are there hands, X,XXX our -- I'd color Those additional of And, be or are some also still dealer boats that that in I not sold retail slide Joe, mean, are to delivered.

SSI always dislocated is at So is seeing. the this to it as fair of year from probably more is even it is what say, true time the that retail

if believe -- the that shake earlier, be out, said no Now Dave as but retail doubt the knows who is is how that there that's wholesale we going there, well. to there will as

Joe Altobello

we've at of what follow flow-through, be just higher QX chain standpoint? that. in flow-through seems from Okay, lack of Does reflect a -- guess, the on interest Are guidance, Why I lack look very anything a expecting to If it’s helpful. maybe this worse earnings there to kind just of that seen earnings to And I XX:XX supply up get expense? you versus your historically. quarter?

Ryan Gwillim

from going out, a there of the an lot no we XX:XX and given took this extra that's more back-half No, given Yeah. interest anticipated. the attention just second the view that shy just we on from will debt obviously, because way math of a repurchases, the -- We're loaded, $X.XX Joe, our like works. little share January. cover to $X.XX not got more benefit of incur that morning the bit obviously this than is in quarter change

strength than it's uncertain assumptions getting absolutely to is you're of ability there should flexibility. of really, the little the second But bit changed room January. and our ourselves for anticipated. have we've And you not more environment deliver -- a from an market, XX:XX given no, quarter, to underlying So, not fair, still be interest the perform and the

Joe Altobello

great. Thanks, Okay, guys. XX:XX

Operator

XX:XX Thank you.

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

Eric Wold

morning. Good XX:XXThanks.

guess, and I board cover lag comments those lockout evenly majority around Do pricing that follow-up lag to you strategy lower of boat my kind Just the the sell. somewhat not on price, somewhat of increases, the not kind could or end cost does point? by to buyers obviously, of is price or to boats what strategy tend the with you below, across points? that is $XX,XXX price you change all the going to on

David Foulkes

XX:XX Well, buyers what is the price. I the think, retail in experience end,

So typically, of if lagging reasonable very the is -- think So, on entirety our is some sometimes, large overall pricing a technology as the so boats, pricing, it there's much boat we more about are so a that I some any other probably bit given about costs, boat materials bit are earlier, but our costs generally, more would price think boat. helpful of larger are controlling orientated of XX:XX Certainly, are levels, we engine. trying not Propulsion, it. say, you means a would little for is other I smaller, areas. controlling we it natural is cover tightly at aluminum a I a you than component lagging of of in boats. small that, the obviously is little kind of good than Propulsion, less say, to the cost demand bigger than built immediate bigger we the has do certainly, what think small components -- of -- because so portion just Mercury part And engine which total able boat boat. thought fishing it the on there's large and for cost that if by costs mentioned of if engine far, to you the of strategy. been and hold of like, an the highest is beyond large of probably control is Ryan are value boats, On more there of And is the much a of boat inflationary a really but a

Operator

And Foulkes next - MacGregor David Longbow questions. from with David Research. XX:XXYes, you. question good Please my go comes Thank taking A for morning. our XX:XX ahead. Thanks

dilutive margins? Just to and with the Accessories you the say how can to the were acquisitions -- just respect how Parts business,

Ryan Gwillim

XX:XX Dave. Hey,

David Foulkes

on? talked we acquisitions These XX:XX

Ryan Gwillim

year. P&A from The XX:XX last

David Foulkes

from year. XX:XX last Both

Okay.

Ryan Gwillim

-- has margins quite for with operating Brunswick. slightly the to gross and we consistent margins David, strong our Yeah, overall dilutive XX:XX still guide that the Navico segment, the to year, accretive are although quite

would seen better forecast. in anticipated, And to the a organization. you've You'll the even better our of SG&A there there what but think I see that where quarter, year. rightsizing continue into than certainly we But are certainly Semahtronix next throughout still probably overall slightly are how match the certainly first but at it. OpEx in pockets XX:XX than -- be saw where rest dilutive the and you internal kind operating of to year can come is the even Navico place some is margins. Navico, is, RELiON, we accretive Brunswick, P&A to we collectively to that's look improve,

David Foulkes

your not dealer partners, $XX,XXX. And have get through it. to any are Thanks boats purchase? XX:XX of if sort you guess, credit credit sense Okay, less the today into based but of back just got then, whole sales this the access of that. incorporate or XX% on for around data I discussion are than of to what I'm sure percentage

David Foulkes

the we XX:XX with the but we're are Of not that be financing XX% about scenes of behind goes that that on there the can aware XX%. may credit. credit transactions of some But that bought see, the see, ones about we of,

Operator

Please BMO next Thank you. XX:XX ahead. go from comes our Markets. with question Derrick Capital And Johnson

Derrick Johnson

morning. Hey, you. good XX:XX Thank

some talked to an not definitionally you want just it's registered. retail that deliveries, they're markets, not sold what about so you mean? the Northern because when I boats does So, exactly delayed said SSI, in

are these are getting cancellable? at, So I'm just what deposits, and really these

David Foulkes

are that bought, XX:XX boats in but put water. No, these not the have been

up for fully so water, a And won't so, Minnesota, them not Canada, the cancellable, the there's yeah, until They're that, water. in ice sold, just boats, on they're large extent still they that yet. in paid register fully paid not up registered and example, are in they boats to completely go

Derrick Johnson

Okay. XX:XX

that Great. outperforming Okay, terms you about continue? aluminum -- and got the freshwater recreational in talked And quarter. and behind of it. fiberglass that, boat should your Reasons aluminum business, then fish

David Foulkes

portfolio we I And behind reason that I has our think a very aluminum been in the very it, category. solid. strong XX:XX have boat production think

aluminum the really boat, think So, like of world, is freshwater the across product aluminum just our lines, if if like. aluminum you almost premium really Lund a Boston you Whaler

in a category Boat that and has particularly XX:XX is backdrop. high been and to of part very been be. the our That strong demand really pontoon, is a which productivity have well. have say good sales would strong aluminum Group of And our extremely that So continue we I as despite also been with

product that good area, lot So, we makes a in very We've range. of have our product a which product done fresh. development

been has capability sustained production well. Our very

So operating performance, fresh a combination and good just I product yeah, of think.

Ryan Gwillim

side, And job a Ray would manufacture to done specs, XX:XX right finance product in then, not both meet say, interested also as Derrick, a more but cost. that the from their of at and it to ability have the I'm I'm consumers product the I want, manufacturing manufacturing that -- Sea -- Bayliner design I'll out and call fantastic only to

So some in we've you've has of resulted those fiberglass the expansion from which of goodness good growth both seen that good margin discussed. topline and brands,

Derrick Johnson

interior like I and how could say, maybe going? that shows other Cleveland thanks. you like Palm but Minneapolis, or shows, if about talked the shows Okay, in shows ask And one XX:XX Beach, like just Miami more, what about are

David Foulkes

XX:XX Generally good.

we dealers and couple shows dealer are which a -- our ahead. why amount one last And have the recently, inventory. I of shows, year, when of huge this year a really ahead, don't is, show reason bit ahead show regional but the shows, our sales the looked, not because a is last were emphasize reasons: lot a of Our biggest any sales fairly --

dealers to sell. sometimes, have nothing a even they So won't attend show because

not the to going OEMs our shows show of of are show they're there, another they part go a dealer more XX:XX one of dealers, presence those are see additional they kind will biggest lot The of boats the unless boats, regional much are show. to organized, you Miami, bigger and to from not boats. much I like whether on depending the are variability mean, So, money, -- make regional

but picture consistent do. depending than environment has a inventory. provide more in much got more who shows, We So, this them they XX:XX on shows more you'll just talk about see variable the can regional regional

Operator

you. to some And concluding time this Thank I Dave XX:XX the call to turn for would like at remarks. back

David Foulkes

joining for much all XX:XX us Thank the questions. great you for very and

but as launches, XX:XX very In an new plan, the expansions, from to QX, continue of but with the years, in expect the exceptionally operating I well growth degree recurring built to capacity position the year. product seen, you've of that we think high our portfolio several support and the high also of M&A. strategic be continues as XXXX and progress we environment, dynamic our you've this revenue, the dynamic potential, the certainly seen structurally margins over extremely higher perspective, have, both to balance initiatives have we're us perform the with that for business despite QX businesses external environment we making including the well, that great the

plans So, we're we're very the and with our for about remain very for year, excited we XXXX, plans on our -- extremely on the year, track excited. completely with track

Ryan Gwillim

you. Bye-bye. Thank XX:XX

Operator

a great may now parties All you. disconnect. Thank day. Have XX:XX

Brunswick (BC) 29 Apr 222022 Q1 Earnings call transcript