Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to Brunswick Corporation’s Fourth Quarter and Full-year 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 questions, you may disconnect at this time. I’m sorry if you have any objections you may disconnect at this time.

to Corporation. Clark, like Enterprise Vice now Brunswick Finance, would introduce Senior Neha President, I

Neha Clark

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

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

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

at documents All available of these are on our website Brunswick.com.

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

now will I Dave. to the over turn call

David Foulkes

for concluded environment. Thanks by adjusted net and everyone. and almost XXXX $X.XX billion macroeconomic and a exceptional cost operating delivering control performance record earnings full-year, Neha, morning of in and of $X.X history of sales the challenging good billion strong continuing our We performance operating

Accessories Boat year. our Our and full-year divisions segments robustness prior strong and with per and first adjusted our highlights All the of delivering leaders profile. and portfolio earnings segment operating time top-line the growth contributed for and operating of versus our to margins of the our Propulsion $XX.XX exceptional strength full-year earnings adjusted in Parts exceeding the the XX% And businesses company history. earnings performance, and share

XXXX, than the more global material inventory no the levels quarter exiting same and XXXX were indication is lower fee cancellations. recovering, of units but versus wholesale there units Boat are time in fourth

chain despite above engine production challenges. and continuing supply boat finished prior Our year levels some

repurchases As the million. continued, our repurchases full-year of dislocation share sector executed the to share we $XXX overall quarter, million fourth in bringing $XX market

fourth business exceptional quarter Each shortages versus the fourth highlights. supply some as of to favorable XX% and the earlier year. actions chain the segment our with the top-line the XXXX. pricing in earlier segment quarter, delivered adjusted Propulsion compared in results operating enabled the growth margins XXXX, to Despite mix contributed to in taken by Turning product quarter robust fourth quarter,

captured share approximately with has XXX boat been significant and points for points gain XXX U.S. our our retail horsepower in has than share engines, XXXX, the Mercury December market XX in engines since in a of basis more over which focus key investments. area percentage

met received continue above launched the marketplace the new and to demand. outboard in perform with expectations with recently extremely being VXX Our strong well products engines

du capacity for project and beyond. primarily production OEM enable is in The repower and in XXXX increased recently channels, together with complete outboards, international Fond expansion new our for existing and higher underserved will and customers Lac, WI materially campus, horsepower

XX.X% earnings prior and for adjusted Each category for top‐line outstanding top‐line year delivered operating quarter, expansion the fourth business earnings posted boat company with reaching history. first compared the margin Our growth full‐year product in delivered quarter growth operating and time the period. the same strong in

at healthy continues to global XX% manage Our pipeline remain units, which XXXX XX,XXX levels. boat business diligently or levels below

membership Ian. Hurricane had impacts the have now All from hurricane the quarter, locations Southwest strong reopened. sales operations store recovering its Freedom Boat Club despite same of increases impacted Florida in

boat of its synergies announced of opening recently and grow has fleet to with all approximately our Mercury XXX X,XXX continues Marine locations location brands. in a expanding than size Australia. also Freedom Freedom globally and and boats now more first while the

in the redesigned pricing margin to impact the organization earnings benefits and operating our seasonality businesses the and the currency and negative offset businesses Our quarter. P&A earnings Navico parts return adjusted delivered initial and quarter. of operating solid Operating fourth the across in optimized contributions more were of growth accessories Group broad‐based more the than normal as

impact by Sales basis, than were and revenue slightly excluding including certain down record was a the XXXX. versus on performance; currency less leading X% full-year currency, headwinds, top‐line impacted of lower however, acquisitions to a

have transactions are the the with pleased lapped P&A of and we one‐year of integration the anniversary very now Finally, businesses. the

we on to revenue, deliver versus continue sales quarter. twelve growth and all to XXXX. quarter, the acquisitions. a Shifting In sales excluding currency percent sales regions increased constant regions year XX% prior the across international grew fourth quarter versus fourth increased U.S. basis, Overall,

basis, currency by boat segments. basis, in led full‐year our a gains propulsion compared on to a increased sales twelve XXXX On excluding percent constant and acquisitions,

gains production and Finally, capacity customers, markets via horsepower channels. with increased high international in share anticipate repower new further we engines, outboard

we delivery and and require management impacting in Turning for efficiency overall continue factors, to lines. and see improvement but persistent with issues some very active product productivity stability to external to some supply chain continuing

become value Despite of returned these for has challenges, interest mainly and historical continue teams to work and inflation have production. essentially to to diligently buyers a cadences cost product. we consideration have our optimize creatively moderated, and Higher price Input rates increases. pricing

Consumer interest related with search mostly remains and engagement activity boating strong

with in‐line the encouraging appropriate Early and many sold have prior boat shows shows with and attendance been low‐season. levels out above pre‐pandemic for season year levels.

brands horsepower also and well lead close notably strong to show generation. outboard of outside the solid shows seeing at attendance at strong the at Mercury the sales International show very was XXX as Europe, above where Dusseldorf the U.S., in share We activity largest reported XX%. Show, as engines our recent are

a material partners with stocking dealers standpoint, levels appropriately aware healthy order the From remain factors, cancellations. are of dealer are signs and channel while no wholesale our macro of

Moving retail approximately industry XXXX down engine and powerboat with the U.S. XXXX, mid‐teens than industry U.S. down did to finishing XXXX X% registrations market. X% ahead than XXXX, XXXX. from percent lower favorable, full‐year with XXXX. versus results, more was main Outboard X% Fourth boat change data quarter of less segment and activity now not the materially

fourth of the Mercury gain share engines quarter XXXX. in points in remained fourth XXX XXX quarter high‐horsepower, in especially in with horsepower performance quarter fourth plus the strong, retail versus

higher with fiberglass products and the quarter fourth pontoons shifted with to overall premium aluminum product in recent where we lines and margin performance margin at of outperformance product. full‐year focus market consistent value to recreational and unit broadly maintenance unit underperformance in and retail boat continue in successfully was and value of the aluminum, Brunswick’s some expansion, on share performance, production expense have the

Freedom confident continuing working more boating also registered we look As with million U.S. participation Club, XXXX, we driving participation more each being have in more arrangements. the participation rates models, remain still people by in post‐COVID to in diverse demographic. are than flexibility year XX and boats consumer Alternative a including Boat their to

Great of by sales to sales outlook. Crisis. industry Over end positive shortages show CAGR recent generally and a in macro‐economic softness Financial boat factors, inventory increased and mid single-digit at a combination Despite of a industry have XXXX retail retail the XXXX history, caused since the low

Unlike boat were subsequent and dislocation elevated between in and sales inventory inventory although industries, some XXXX, prevented constraints somewhat spike sales in demand. a COVID other true

sales units. start are boats we to to and similar boat of of assuming with a typical close potential constant whereas park would XXXX life XX levels, rates XXX,XXX useful XXX,XXX the XXXX, boat million approximately suggest industry to As in U.S. units a sales XX-years, replacement fairly XX-years

in hands levels U.S. X,XXX units remains unit On almost units inventory than the dealer XXXX inventory in XX%, at of XX% or fewer the end Fiberglass levels. even below of remains XXXX with lighter, subject pipelines, XXXX.

and our fantastic are XXXX is ahead very very U.S. dealers similar Boat to prime products brands inventories our Dealer the dealers exciting getting weeks‐on‐hand job our inventory at of season. levels. fresh done at the have a new many selling outside

production As will and continuing to adjust monitor always, accordingly. we are inventory levels

rebuild wholesale to generally plan for necessary to premium year match in it the initial with where levels. is Our fiberglass current from low categories retail, is still except

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

Ryan Gwillim

adjusted operating EPS history. record any compared net quarter for good Thanks quarter, everyone. basis and in When and excellent points. morning fourth up prior earnings delivered XXX to Dave, sales fourth were operating margins an our XX.X%, XX.X%, Brunswick up of year, fourth quarter with with sales,

Operating an new changes resulted quarters, of from in XX%. demand, in by as increased basis increased partially by and pricing foreign Sales offset $X.XX diluted rates. steady performance, earnings previous exchange and product unfavorable growth by XX% EPS currency on adjusted adjusted implemented

All segments elevated on efforts, partially initiatives, pressures growth, inflationary continued new earnings prudent growth technology. with cost with net and growth strong quarter coupled of and the XXXX, spending operating ACES, contributed offset by margin product containment fourth to and the the versus sales

to Lastly, equates conversion we quarter, delivered cash XXX% free fourth a flow of which FCF million in $XXX the of

a also $XX.XX. $X.X On EPS has over delivered sales basis, full‐year Brunswick record including of diluted results, billion adjusted net of and

testament We a XXXX, to our operating margins record external in operate a ability environment. to a our challenging efficiently also increased adjusted versus

products deployed future and XXXX, which in $XXX exciting We earnings million capital projects our with we our funding capital in across to on new expenditures and will executed the growth. million cash, drive shareholders. and returning businesses revenue our for ending strategy believe over We growth while $XXX successfully of year businesses, capacity capital

market repurchasing of company. share Brunswick In addition, or as value six our of Dave X% mentioned, we advantage of and $XXX shares dislocation, representing the million shares, approximately million took

also our XXth We consecutive dividend increased year. for the

healthy grade times, of there where net a Finally, our back‐half reflecting at rating XXXX. balance until debt and remains material is sheet strong, no X.X investment leverage credit are maturities the

and generation spending flow provide to strong the and investment addition, liquidity In flexibility continue capabilities across our cash enterprise.

favorable as continued business in increased earnings, our top‐line, the gains higher year. driven mix, were and yet fourth volume, another XX% global operating Revenue to delivered to Propulsion margin versus quarter as product by prices segments, prior XXXX outstanding performance. of Turning our compared sales and of quarter higher sales

earnings and offset capacity operating increased XX expansion. inflationary were enabled basis points investments products margins each operating higher new XX%, lower and by sales in Operating expenses, and up up and costs slightly the by

and the is Note capacity higher XXX they facility, underserved retail international, at that expansion repower, enable adding which XX% in consumer the while engines complete the will need categories, markets also Fond for increased more previously Lac, XXXX and and is materially horsepower discussed ensuring OEM the have partners to season. du capacity our Wisconsin sales the than

down the operating leveraged business quarter being impact now P&A fourth anniversary lapped earnings the down there to currency a constant versus XXXX accessories basis. and on Note the we parts as that sales or margin drive despite is have of quarter growth acquisitions. the X%, of performance XXXX strong in acquisition X% no Our

and later revised impact P&A channel, while seasonality from RV the customers, into marine in Group periods businesses, to normal in Navico the deferred negative match the quarter purchases of Aside production the currency, more sales their return to schedule. fourth primarily distribution OEM showed

restocking the sale to to On retailer side, improve. trail trends here but Navico retail continue of point continues Group performance,

impact Finally, area. the Southwest Ian in our by Hurricane in the did distribution businesses caused Florida destruction

business. P&A For XX% the than than reinforcing and sales our boat XXXX this percent, being total full-year, higher despite all acquisitions, the of net business and impact were once market the XX% U.S. down you XXXX, down of higher still currency annuity‐based the stability remove X% retail less mid‐teens or than

delivering quarter, third growth, together fantastic another margins straight operating had quarter. double‐digit strong top‐line for segment the and boat Our earnings with

business history. the earlier, time Dave earnings As XX% the margins mentioned the increase increase quarter. double‐digits segment reported in XX% adjusted in in of boat The net boat adjusted and operating Brunswick’s sales in a first XX.X%, a reported for operating reaching full‐year

growth sales in efficiencies by enabled offset Segment during the by the of quarter. cost included mix, margin Freedom positive operating approximately boat the segment’s Club, were earnings and increased contributed partially discounting. with revenue and limited together is operational Business inflation Acceleration, X% and volumes, Boat which continued

Moving extremely leading executing by a XXXX, our the we the the created in enter year and XXXX to marine remain our plan strategic and industry momentum outlook, and with we on growth innovation. focused strong

our uncertainties in consumers we that the macro‐economy recognize however; and impact the which participate. markets may do in We

XXXX still allows conditions guidance biased XXXX worsen. should for more versus variable economic to outcomes but growth Our remains

between slight As operating of a result, expenses margin on operating of XX%; adjusted sales we a sales; $X.X increase and adjusted the of $X.X approximately anticipate diluted $X.XX $XX.XX. a as in EPS net range percentage a continued to with focus billion; and

and more XXXX various We to in free to flow generation factors anticipate be cash on in our I discuss excess few of also will slides. generating continue plan emphasis million. cash the $XXX a in

XXXX, of $X.XX we regarding to anticipate providing where versus slight EPS first and growth sales directional guidance flat in Lastly, we first the quarter, with are the net $X.XX. between quarter also

anticipate Turning next XXXX that segment each our of success. outlook, play to we role in will a our our businesses

the demand propulsion from the looks and to while still for grow having market the share Our around new satisfy OEM world customers, business leverage engines and to existing new capacity high‐horsepower minus products recently available growth is mid underserved channels. versus. high plus XXXX. result top‐line anticipated reach or operating the percent, to in market The single-digit the with bps to margins XX

early towards a top‐line headwinds sees propulsion that segment for with a and Similar part with P&A margins and a is of bias steady P&A slower to flattish to XXXX, market a look continued currency we flat that operating share market, slightly to pricing benefits the offsetting Our our channel up, RV the from gains, outlook, believe growth. marine year.

boat upsides look our and comes Lastly, of boat XXXX, value in will its to segment in products. sales line and XXXX similar boat possible premium products against record Freedom, a balanced off believes top growth reductions with potential in

As units prudent and Dave very into be with mentioned unnecessary earlier, pipeline we XXXX can plan reach believe to we adding goals market. without our the inventories

believe environment. segment in we our can current double‐digit we maintain also Finally, margin the

XXXX of conclude generating will during of the half focus certain I will We trend P&L capital the but of an and levels. the and year inventory usage the on our with flow for half keen enterprise‐wide anticipate items impact continuing second‐half first have update moderating back cash on year, that in a working XXXX. working the capital

be cash in expected tax will similar amortization and tax with we taxes, federal a changes acquisition new XX%, rate. to on and On years material rate approximately products tax reflecting XXXX to of capital than to a the be the federal and with lower recent assuming increased slightly legislation, no amortization spend effective higher capacity, XXXX. Depreciation anticipate

liquidity. with in strategy the we and years, leveraging XXXX, our execute expect to consistent cash Lastly, capital balanced strong a several past position

reduce that ability million businesses. the us, cost the projects the spend With Mercury decrease in capital versus dictate. will should significantly resulting spend we have to project our for investments, of our believe year, and new year all expenditures $XXX during conditions this the capacity economic used product mainly primarily reduction for XXXX, behind automation in Note CapEx we capital

already around dislocated I conditions that share spend increase million market to aggressive. XXXX, aggressively to note create of to month. plan share but be similar or this million will $XX $XXX price We have have almost ability the figure on repurchases, more to opportunities we we should a shares purchased this

fixed have of debt million due profile additional do debt $XX low to approximately plan long‐term our We and year. the of in during cost XXXX, we retire coming not debt but given debt,

approximately Our million. be $XXX net interest expense is to estimated

AUD continue that rate unfavorable favorable Note exposure perspective, recent From than movements FX by will be CAD, rate and headwind offset to will moderation. EUR a JPY more despite currency be a comparisons.

benefits will hedge less trailing In strength. due lower effective addition, to hedging our be impact the which rate a reflects favorable of USD

volatility. hedging systematic which effectively We continue to strategy reduces execute our year‐over‐year

for turn now back will to call I the Dave concluding remarks.

David Foulkes

Ryan. Thanks

wanted In a awards enterprise; of recognizing more I updates. XX XXXX, awards business we out, product, we to year. close few we individual in received won Before share across and exceptional a recent performance calendar number our the have highest

of I’m organization, industry commitment and talent extremely which moving recognition to reflects the Company proud extraordinary our this forward. and inclusive our culture, across our our

innovation. of company business of with signifies the brand, Vegas a refresh commitment new that began Rests, and Electronics in a and at to a major a Consumer year exciting our Next very technological Las Never XXXX We the launch Show model the long‐term exhibit new Brunswick including tagline,

launched huge the our from officially Veer. and brand, Avator dealers. interest Avator generated new boat channel engine and show, and Mercury outboard partners At Veer we the consumers, X.Xe electric

at earlier cruise. As our and introductions running the an early in has XXXX XXX in XXXhp businesses. class all‐new lightest introduced a competitor XX% the quietest their outboard I than November, new extraordinary been the leading Mercury period and XXXX previewed product VXX In quieter for and across Verado engines, engines smoothest, year,

Demand in generator addition, the In with dual‐mode to the Show. Boat to System, outstanding to Group’s many Miami we with Fathom onboard the come see has been upcoming pair Navico system. boaters a new providing II XX and eliminate opportunity marine, alternators, optional at first volt/XXvolt engines the e‐Power new expect seamlessly

the at of with the the are launch beginning consumer quality, as electric products, high. family, very all Avator unveiling Mercury Mercury customer‐focused designed now engines year, the outstanding same outboard we These of began which features, I has durability the is X.Xe production. As and Avator the begun the mentioned, Mercury interest mass and with

all‐new and boat launched we to access January, electric designed in support to boating. an Also Veer, expand brand propulsion

Avator Mercury systems durable propulsion a model, multi‐purpose and electric designed VXX, be vessel fishing conventional The first and by is rotomolded powered built Mercury the to XX‐foot outboards. polyethylene from

Dusseldorf In MXX, DNA Ray addition fishfinders, and Live two the system, and Boat Boat Ray is will the Show. with excitement II be the upcoming SPX Fathom new the Sea design new International Miami to last HDS generation Group week at at and launching new our finally, Show. Sea Navico the And Bayliner the Lowrance new more launched the we XXX, the ePower Pro, over, launched next we not products HDS

you look Analyst February and Boat brands you So, across the and our our of International we XXXX see team. and Show, at products meet like before Investor would on to as to members our I I with Miami Event technologies well remind hosting to latest XX, our close, about management businesses forward as from where

prepared Thank call. you joining the for our remarks. That concludes

We will now open the line for questions.

Operator

with from first comes Our line Instructions] question. question Xian [Operator of BNP Please proceed your the with Paribas. Siew

Xian Siew

or first, elaborate like modest Hi low then digits, Can low end, single-digit between down the on that on decline for and digits, that the and mid-single declines wide the better is helpful. single-digit, high little of in low range question. maybe would retail, be means maybe color on end guys, top you talked end about on retail a the bit that Maybe single guidance, XXXX. maybe maybe within pressure low or high difference the the you end and thanks a what just any

David Foulkes

HI for was certainly with much. lot Dave. a Maybe on internal question discussion I range that Thanks the Xian, of that. has very will is the - start it for guidance

where outsized results, think, some years certainly, I I played several extremely couple to we and a have been in we coming factors our resilient. although an reflected in is think there. business think of role, overall extent, external things off are I One have

end top But significant factors our through of even range. to It the down. kind us would the end support would get Ryan of slightly much more to there walk be We lower are external range to of need the that involved Retail if flat is top to for market to of on some those. the can we not you something top of to be get end end, and access counting range, our can

we even significantly laid of think investor I so that or range lower though, kind XX-months note, that worst-case would our presentations. is end of out of scenarios I in ago above some our the the

to I not can and much up the spend too it be we hopefully, lower year So the think range. balanced of walking about we wanted and talking that end

for In year what going year, is has terms call to shape of XXXX up is in of in the this is been economists say what early the level, because a year is retail would even of call to at and down the the quite of I year. kind I think on it macro been a versus versus difficult bit difficult XXXX shape retail. the

what would me have take taken you I ago, two-months ask If for, it. would I absolutely

I boat a facing think show strong really consumer then and pressure. been highlights purchasing. is have interest are also consumer under attendance in that But some we of the

be be call So of in if with flat I would some to sure our high, end still I market say top it slightly right could will But now. the the would fiberglass just guidance reinforce and even underperformance how aluminum in down. access that that performance to we is in currently we aluminum premium not continued strong down, of but can mid, believe the could see down of kind underperformance we really

Xian Siew

within of a gains, bit the of horsepower, you time, and is capacity it maybe kind maybe revenue some Okay lower, is is because share and have pricing for little the at you mix mix higher would a Is maybe the your more Maybe that hold. guidance you expansion and bit how the organic same with maybe think it? so then of that and you I benefit of that down a benefit, volume then propulsion. can kind little expectations are price the volume, and is mix and but thinking on volume break flat

Ryan Gwillim

high a is certainly extremely Yes, for Mercury’s one This Xian, high story. the is really engines horsepower engines, world. you. over I The will horsepower strong take horsepower demand for this high all

for our And capacity a now have just have conquest with gotten haven’t there the new really current and markets, that the service international ones we not go quite OEMs, bit. out marked behind us, frankly up, reach materially repower commercial gotten and chance to units

will the margin. if this you So overall I the horsepower tell in be all is and much it look than our horsepower, three higher both obviously nodes, on revenue of you, greater greater up, would mixed be a of may across which volume, not on year, but

you of the there in probably baked the increases little generally low price a anticipated. of half is means And digits it normal Dave of at is the then are And Mercury that said, like low price bit that side. year, single back kind know on

but high certainly mix, not stuff horsepower. XX flat on the be and lot of on lots small a whole could price up of So volume certainly horsepower, under down horsepower, high slightly to

Xian Siew

helpful, is luck. thank guys. That Great. very you good

Operator

with Our next Please Citi. Hardiman from of proceed with the question line James question. your comes

James Hardiman

Hey Thanks taking wanted David, into I it little to to good my you a for dig - bit. so alluded call morning.

darn to to You had I of that it are was versus scenarios, $X, $X we us a pretty seems end that some XXXX, and given guidance has the close industry, It sort the scenarios I cut year-ago, of low the at $X to year, downside I to this think, the range believe. changed? $XXX, guess, getting XX% what like $XXX, is get your the potential

will that of nine stock that higher trying the end to as downside I’m at But just shape get some get to like but I scenario, trading changed there scenario, the I at say at case here bad scenario. and is It a even understand unfortunate seems that there want earnings sort here least the times case power up be us sit whole the is speak. to lower your to end What even goal guide. towards don’t of $XXX we is to incremental million. - that worst-case ultimately so

David Foulkes

a things Thank different. think are the of I Yes, maybe - for James, well, you, couple question.

over couple the say, Although XX%, something that not the probably market we year. singles high and kind XX% would down would year probably plus, I of think years this to mid singles is the say I mid-teens but of in a maybe maybe last in

we that is basis, - what think unit have that, I obviously. a

had We strong that years remains top the strong. talked the market fact pretty haven’t of really pricing two of the premium have we fiberglass end about very of that the particularly end

we by So to benefiting really on deliberately than of we mixing that we side of from top the used lower are And mix. focusing boat in some responded terms weakness product up have kind value the some of to of producing more and end end. fewer on of the

market Another anything with think share you last is I boat to factor although the even we the year, saw was our share gains, anticipate gains though is, the I online. engine we you and what know as think, market it so that, outboard continuing essentially down, capacity get happening but, is as is flat those

about excited Avator. of the even I’m introduction And

to profitable of units them make expect thousands we be year, Avator We well. of this as to and expect

So I market. real a think of ours was which outboard are down strength big with the not engines in

a we I is pretty we were in seen but constant on flat the voting to robust. currency that being acquisitions pretty And talk about, our basis. business bit pretty P&A which participation, can then fourth a much which led what we down quarter, have robust know

So continue participation. good to that we see

market favor, mitigated impact, developed horsepower, think I some high our that of and response it So that that extent. our changing. of and lot think a particularly in the way in premium some the story don’t more I foresee occurred to product components has downside has But we that to

Ryan, I don’t have other if know you . any

Ryan Gwillim

really has been two will of think throughout implications to would cost counteract our this proven some and watch points Maybe people is XXXX. to ability I our be control, remind I we market OpEx the the and year, disciplined continue

right in profile really call, The comes talk a margin on at that floor higher kind the about to product we every that than the and continues item manufacturing at be for on every design a certainly is able new propulsion the is to out one it of and stronger replacing cost focus keep P&A. other

the very $X.XX held at by at in if of despite lower look that - which assume the find be you you we really and that today, continue of the we with if propulsion to of environment down seeing pieces, an all worst boat look kind to go guidance and up value. our James, has business are to the unlikely case, happen certainly P&A healthy

James Hardiman

one for Got me. it and then more question

about a and a You units, most what these sort of remaining looking an wholesale is except is. you versus fill, is delta I can that that sort that think to year, are about is much segment. us if that premium about numbers there we adds at. And guess, way inventory if to how, how that big of from that Maybe perspective? match in wholesale talked And to cases, think I exception going how ultimately, for quantify this retail help retail earnings

David Foulkes

second I continue Yes. can ramping and will to Whaler, dots, would say last Boston help might constrained. wholesale factor through facility essentially large here if significant so I year, is ask from all and I know were retail we don’t right. Whaler all be connect a Boston the I a up

So a Ray. last Boston off sold could Whalers, we year, lot have we with more were Sea better

now continues to inventory Whaler Boston being facility be low. very So running up That is productive. and and

So currently, will for Sea not least unless at to do that ray. running that Whaler anticipate might we This pretty I at we materially changes. Boston capacity much facility fully are get be equilibrium. anticipating year, still something we

do have Ryan, anything? you

Ryan Gwillim

side. it James, our rest. kind But unit dollar to flops from or it. third I a being mean, way you a with is of the that flip good that know Yes, premium more a value on the less of is put perspective, the volume overall

Lund going and pontoons, think all are you so relatively of And we have of still some Sea got be to premium areas, are Whaler, low. on our those Ray, we strong pipelines

wholesale units bit could with the where premium thousand same. a in up is on about a be from a of little couple total so And down wholesale pipeline staying

on bigger on We have putting field. inventory to outsized we Sea have in working do certainly Rays, on more work we year. But will and putting the throughout the be and interest certainly that in no do - Whaler

James Hardiman

That guys. helpful. it. is Thanks Got really

Operator

from Our next Wightman line Wolf of with comes with question. proceed the question your Fred Please Research.

Frederick Wightman

clarification. Hey just guys. have I one quick

You original project in-line complete. sort the capacity is Was delay referring that to versus with materially keep is timing? engine guys planned just there the or a of

David Foulkes

No, original the timing. it with is in line

I the were It were Some year. different point, one is just planned project, said XXX project projects. to parts I really this there at already into spill of a think

access the that all of to the of you some going volume that be that citing needed was now. actually And on need visited completed. to we we in essentially, have facility But

did in when or had in do only mention - facility up that the We not we at capacity. in call the sorry, get that deck I’m the least to to the we

had also capacity. up the get supply We base to to

look would some we but we at a bit more a if get up liked. if to - now, than slower little to time have QX, bit start get of suppliers. took you with have that If we full speed We a

between to We have anticipated that QX what fourth did which gap cost be behind the is, in we be in most us honest, of and year. now, producing quarter what but propulsion, to is revenue well some extremely lines, that very we satisfy up us revenue But running in all to we across to now Things and ended as this supply need up good are being. them speed volumes shape. the base product it are

Frederick Wightman

wind from Makes Did that impacting numbers. sense some a was happening? of there sort a anything headwinds that there would be into up on baking expirations you are earlier thought exemption and fear guys basis? that guidance Is then tariff there XXXX year-over-year that I

Ryan Gwillim

to are are. take for but will get I right expire we XXXX, talking kind exclusions of advantage hoped certain call you without tariffs, this Fred, have The midyear-ish we get they but we of a through had there taking tariff now. to

are flip that side subject that slightly components we to that, tariffs from from. don’t the more of more taking components, we the China On are exclusions have

our year-over-year net-net, So impact is same. about tariff the

the probably bit $XX million little no a a despite five-ish. is a impact quo and from pieces the mean P&L tariff little the is the from the it a fact versus kind It are maybe I is the dollars of worth dropped year-over-year dollar a total it by to guidance It million reason of But world. couple still overall worse tariff that kind of we bit, is status different. slide headwind

Frederick Wightman

Got it. Thank you.

Operator

comes next Please Securities. Truist line question. proceed the your Schwartz with of Mike Our question from with

Michael Swartz

a just business. the boat question guys, Hey on

are term think a boat any and you I is in conference do maybe that supply risks some are if mentioned and you you of kind contented with make is But some are to the hiccups I the kind of of think, to think and are prioritizing are the the of any are premium the business be. lines premium demand or heavily seeing. then you’ve probably of that about that that? has you about second longer market call now resource you models, allocation potential to understanding boat there for, more row the think those chain needs side as and to more Boat shifting Obviously, business, it there up towards model where the usually value

David Foulkes

Mike. Yes. Yes,

something lines or fiberglass shifting categories. move wholesale model necessarily really So aluminum kind those to mean from shifting a It like is that. within different to doesn’t of

we them So facility facilities the Lund fishing, aluminum know, in as boats. we the $XXX,XXX $XXXX But you fishing premium aluminum same where we make cost small jumbos. aluminum both make make

does more facility lines higher shift premium type the some means certainly, with and you within of if it of and it producing within like that Crestliner margins, essentially that. has product So less resource or like a of and to from way something those facilities, kind products isn’t allocations involved wholesale emphasis, commoditized like a

value in market the is small in major happened none kind I seen with the gaining really that of were What really kind has players is share. would dominant of really kind of more guess, have are that let’s of of of during aluminum value kind - some market. scrappy, have segment we I aluminum the players What that by the supply chain come challenged COVID taken and aluminum life in and some in value to really share value, the say, back and

reallocate can more and resources of lines, product interested premium aluminum that when to kind Pontoon are We just in lines. not chasing product Lund particularly we much,

you volumes emphasis. a pools product the and is line versus more of So unit see between in are where major resource huge difference the shift in about allocations and is there really what a of marketplace terms it profit

Ryan Gwillim

pontoon, But of points. would lot to chain, we share those in-source A value. will think, pain the where the be I we yes, really along fencing in-house. RVs that furniture surprisingly, on of with at Whaler, hard us. of brought maybe I running not we have say they are these, supply and get is chain when with hot, is Several kind it And supply coming examples efforts Mike, some concerted to that made

been on of for them been well. start Mercury has lot famous the a taken points vertical doing and always as boat have pain our has business we concentrating integration it and ourselves. their But

where take their are working our we supply very challenges, But to it they or happy chain So ensure to are not the we in-house. when to see we task. with are up

Michael Swartz

think And be follow-up that XX something suggest your then points but I and walk us flattish gross minuses big Maybe through maybe just about one not currency as specifically? guidance, Great. the to the about or on things down of moving parts, thinking pieces we that margin is basis think some maybe a may we the pluses sure Okay. one, the are nature. would of other moving I’m gross margin.

Ryan Gwillim

is No, where is year, Mike. the ballpark, the at and to year, certainly in everything And Currency primarily are challenging. the of to hard are first it of the point the bad it land. judge is going it where Yes. is a guy, this you comparisons half

a we the then versus elevated as and better by ability margins would getting slightly have or think the to really inflation, good up mix a continues gross I flat say down little about gross be other slightly But some things, throughout portfolio. - be pretty the to to that year,

have said heavier as there we but of revenue, lighter mix product said. a which little have premium, in also So the more is bit we our both just angling is and mix little boats in overall within a lines, P&A propulsion

that on margins help gross buoyant. those have So . pretty keeping will

Michael Swartz

you. thank Great, Okay.

Operator

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

Anna Glaessgen

question. just wanted taking thanks I on to touch morning, for good my Hey the retail outlook.

Marine We what you the market? morning, the and Max with one seeing between to have flattish is slightly had what kind down in the water this are driving reports retail of from delta

David Foulkes

part is the year trying year of shape the the extremely this in the is to that earlier think I difficult. understand Anna, of

outlooks. So see I to all relatively range would of at not surprised be a wide

Certainly, are shows this see, I exactly, would early mixed but of some time continuing encouraging at them reference wouldn’t of we signals boat more - the there than anticipated. call different I points year, are to say, we

more over than global were for than and We somewhat XX% certainly Sea anticipated, like are where Boat very ago. We a Dusseldorf up Show, saw two-years Ray stronger we that - example, footprint of we higher for a strong sold up revenues, MarineMax. about obviously something the brand example, our or

honest, a But there just be mix set of an be isn’t of there think, moment. at might the points data So I there. in element to common

I one a that Boston significant bit think we a delta part a market. Whaler of thing the of - as is I is earlier, mentioned remains

portion you that holding Boston Whaler been a And say volume probably has of bit. could market back that little the

will to So that, we more over obviously, will going be the a but - in up more, I there, on free not is up as too. index volume we think it bit probably market

Anna Glaessgen

versus and there tailwind? do does I at Navico delta the quarter improvements last when stand the provide the guess on business. call, And P&A bring how could where narrowed about a you we overall Great. that talked

David Foulkes

of efforts. see And operating see line in and fourth through. you mid-third again quarter, being we in I I nice where to QX, quarter did the We the top really the had a integration despite down Well, began margins think flow the it bit. think, a bump margins consolidation first kind in we

But go. there is more to

go this, integrated are to - we through essentially of as integration Navico size like group. that kind have doubling we we a when We big the of

more is we there on are hard beyond and we accomplished, take done at be in it work have to we what right already So to have now. chunks. But considerably that yes,

Ryan Gwillim

backwards, I in seems four-years, the not three-years, revenue run growing cost And know be of for starting model assumed only by year been to Navico the looking case, Yes. XX-months. is kind now it the but for portfolio rate and synergies first it to seems the five. a deal

in in the work innings of is proof quarter. nice Like only to the and point early do. So there we fourth are really kind Dave said, really there

And that is production sales And being in obviously the they RV we did a Navico lot itself the first shutdown whole are to at a about we XX% didn’t as - get also time. is industry, there here a supplier of RV. quarter.

from that believe but . always see and So business. on you right there XX% tense, is is strong will that integration we track, a

Anna Glaessgen

that for questions. thanks Great, taking

Operator

B. Our Please with question. from with Securities. of your Eric next Wold question comes Riley the line proceed

Eric Wold

Thanks.

other someone margin would expansion. OEM more how have maybe become terms has be access my lot customer just pricing or us in didn’t of a coming does to year established be more before, of think kind established that points, time. kind would at Just on it question the - do higher and than an new or for be which I assume some Mercury these they to been higher of customer normalized. years margins in the into then will about multipart that we an assumption are the that then that the you How are who play coming over following price in of visibility kind update customers, on of for a customers and from Can brands competing new orders

If that to is of the that? kind offset you case, how work do

David Foulkes

Eric, very Thanks, for Yes. question. the much

or ramping were QX, so increase, think I reflect XX% So of Fund the of kind this - doesn’t up QX we rate our last du guess. QX. of XX% I were terminal and in kind volumes over obviously, Luc that unit production of And up, the course

going that in are we above rate QX. facility exercising the So to be

conversions, satisfy clear could needed earlier, our and Some we it. make what order we be mentioned OEM sure we for And we to supply to could that needed - of supply on when do in have us OEMs. we to the to we them as the existing also could the

existing liked of have some we to able from year to more be the product were than OEMs would honest, this provide. And us

volume existing So from for OEMs, on the we need, to new then board the will that require which and OEMs. they we have products will bring get us additional

where high you June a OEMs - particular materialize those be say conversion would as changeover. see of model is point conversions I the typically do will And of the which in will changeover point the really year model year point,

and obviously, We into very few the for in example, right no to a VXXs, to or international have repower opportunity, have so going now, do made there certainly going or dealers aftermarket markets it lot of are far.

through work will course channels you way in the see of out various begin their the to those year. So the

use anticipate year the a we up we through get substantial capacity that ramping half to as be the additional changeover. of we and to will So first of continue the portion that

Ryan Gwillim

is adding capacity right stands. At go, capacity we number are going XXX-horsepower - away, quoted to the we of the where is able and XX% but all and be use Yes. have is it that Eric, to project that Does that full use it above. and mean

Eric Wold

Thank it. you Got both.

Operator

Our with Scott next question comes from question. the Stember Partners. Please with line of your MKM proceed

Scott Stember

taking questions. Good thanks my and for morning

to P&A, quite supply over powerboat with the we OEMs and is business, now. obviously, are the seeing Moving market different RV the in notably than right

being business it is to I to So was the the out, assume flesh if the with you safe guess, business RVs P&A to were Navico flat? closer that

David Foulkes

it you safe think Oh, is mean. assume to I see that - what I

Okay. Yes, overall, I mean.

Ryan Gwillim

-. closer get get RV, our you a don’t Currency lot

Scott Stember

adjusting currency, yes. meant Yes, I for

David Foulkes

probably right Yes, yes.

Ryan Gwillim

percent has distribution business. also to high of the RV single-digit business going our Land kind and sea,

So an small. albeit relatively impact, is it

Scott Stember

that repower Okay. been into you market. do be to able midyear, of the engines. on shape more advantage know for take that up from your will have does you put I XXXX that of market? last constrained the you And being production able question to by then part more How think engine of

David Foulkes

fully. of why we others. we existing some been OEMs Yes, the year, ramping supply that ramping But middle might don’t capacity shortening our I and market the that get the why take I we through shouldn’t of yes, I time don’t market. sure in demand of we that to any reason can’t make mean now It that demand have think up bit see a we will. see I the in by some the to satisfy generally for period. us part have

Scott Stember

again. Thanks it. Got

Ryan Gwillim

Thank you.

Operator

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

David Foulkes

questions. us. Well, for Thanks all joining for you the great thank

group EPS getting very margins do up as those some operating the Revenue our XX%, dynamic this delivered promising external all have have for to XX%, to our another you very environment, over for up I I well. time. want we think been strong group into double-digit despite are seen, that congratulate year. we boat businesses

be into Despite new full-year now excited - The coming to product there propulsion that things a economic online, other year electric XX the the on. into lot experiencing in XXXX. first engine year and in kind market the we beyond, about going next put and is of market muted lines and backdrop, capacity products that new a new last lot coming of

above at unusually years earlier, where window, the a we because as well we kind low to talked reflected be that about large But As XX-months we guidance an outsized end set our did sure the even external an we high But not about the earlier, chance of is so will we the we that we ago. of XX-months mentioned or we wanted we bottom guidance because worst in of think role had talked events really several cases guidance. there’s make has played guidance.

retail an guidance And scenarios none anticipate the of up market.

is market. So call exactly, difficult It the to get what can encouraged end the no a is interest, top sales. an with but - shape of shows, certainly we year boat we to real consumer access get by help indicated the from this early of basis need which which to season that I we lot the have is to of that how am

new event the chance get exciting and to and February new will for introduced, investor to Miami will a and at products look those us. be will management Just team technologies on at us you our XXth. products Show, please at speak a Boat join be There which reminder with our very

I see So to there hope indeed. very and for much, now. Bye all thank you you

Operator

at lines and may this participation. you this for And conference, you your today’s concludes disconnect your time. Thank

Brunswick (BC) 2 Feb 232022 Q4 Earnings call transcript