BC - Earnings call transcript Q2 2024

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Operator

Good morning, and welcome to Brunswick Corporation Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's meeting will be recorded.

If you have any objections, you may disconnect at this time. I would now like to introduce Neha Clark, Senior Vice President, Enterprise Finance, Brunswick Corporation. Please go ahead.

Neha Clark

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

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

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

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

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

David Foulkes

With anticipated, combined bulk sales beginning margins, rates new versus be new full XX% morning, our slightly increased unit dealer month momentum, peak the months, to expect retail sales spending, selling purchases Thanks, is main slower continuing OEMs consumer the suppressed orders. With costs, approximately propulsion as causing year to and impacts wholesale ordering we and flat. of forecast and of the the bulk ongoing good the of turn, continued carrying this of rates year the did Navico with peak budgets profit catalyze to and in through introduction Neha, at channel sales we our expectations. Without Group discounting patterns, boat partner model to on of conservative original maintain retail resulting strong In and high products even interest for in and products. below have quarter discretionary not higher slower sales new season season production lower important OEM June retail now year everyone. model levels were with pressure results second had pressure down

inventory, our continues to than hand field adjusting inventory to efforts inventory key field very focused on recurring units QX diligently our new earnings of And and demand our Navico year fresh channels, of below end maintain is aged sales leveraging weeks on adjusted XX% and at As with with Group's clearing gain Engine appropriate the focus our levels more with operating prior revenue of stimulation demonstrated our more on Repower contributing heightened managing while levels year. Despite or categories current. businesses Club our approximately and in P&A share remaining the a of production result below products field being is levels business, and guidance, being aftermarket XX% including Boat and earnings. Freedom Propulsions portfolio and business, our resiliency sales, units

strong businesses our and repurchases on shareholders. cash value In solidifying delivered to for million returning be further flow, to deployed year-to-date share enabling addition, our $XXX focus

market. to engines, than highlights delivering from lower our Turning in U.S. XX% share operating in we outboard business gain some of XXXX, quarter. and continue outboard the the the versus share segments sales second to year-to-date, with propulsion Despite of quarter overall more our earnings

of and margins period rigging a propeller controls, product propulsions had quarter, with operating addition, the In ahead categories strong XXXX. in same

global Our in quarter continuing solid month engine, facility of completed state-of-the-art sales new distribution and transition participation to its to the sales XXXX with of P&A and up Brownsburg business Indiana. we flight also engine full operating versus and quarter markets, boating strong a our be earnings second the strongest in had business [indiscernible] our June. With in had very parts major ever accessories our

first reduced sales RV Navico rates XXXX improvement sales quarter aftermarket stability anticipated, Group overall to consistent with and and operating of continue sales had to slow but order sequential marine with persistently second and earnings As lower show the in quarter results. orders, versus OEM and due earnings

Freedom more business member Boat flagship prior two lower an a on Denmark continued year growth while the locations conditions, production in solid had consistent membership trips environment. the impressive quarter quarter. Expanding below adding and recording U.K. levels. sales deliver earnings and external Club with given in and planned the performance our sales Finally, Boat with operating the to market steady XXX,XXX

a the With a higher XXXX. Dealer selling expectations of in and rate the probability marine be majority this due will underperforming sequentially is and high September, of interest season tailwind the be is evident it market of our on relief XXXX will XXXX environment. season after retail the while is behind selling have there for the sentiment minor to impact beginning interest main potential initial likely more rate is retail a continuing improving. U.S. us, now that And versus

However, year products to the stimulate and continues levels. levels environment more orders the [indiscernible] inventory retail wholesale model particularly as weaker conservative promotion elevated, slower pacing for of movement. on remain Discounting prior retail

XX% Our drive Freedom of the changing remainder external boats season. Despite to partners digitally the these of recurring QX we through foresee do challenging brands of conditions, significantly with participation, OEMs supporting to levels investments our in continues in resilient stimulus, revenue see businesses. sales now membership absence boating Boat continue to in assisted. and the And our channel environment. digital the strong we to not of platforms this to pattern adjust Club continue close being production benefits to moderate across

in lines. many all invest across products new and exciting technologies to continue and and We businesses our launch product

intent to portfolio have With growth. when to gains and to returns for ensure the share the market freshest us we market the position

North on most Right ] Well agenda. XXXX, regulatory Finally, [ the previously Speed delayed administration's Restriction was proposed Vessel current and Rule November Atlantic the to

now retail week second industry by weaker the significantly declining in U.S. the declined retail unit quarter boat U.S. quarter X% market We new Moving versus quarter prior QX versus year. outboard a sales second engine units with performance. anticipated driven XXXX, U.S. the in of saw particularly U.S. June. industry than of to retail a

exceeds of up XX%, And from XX%. holding share Mercury around As outboard market XXXX. engines mentioned, Marine slightly at our overall year-to-date above and U.S. is share XXX-horsepower

in more for normal periods, modulate manufacturing engine shutdown the cases, brands some across remainder extended requires of which, expect than As customer production, year. share noisy the market we may data and boat OEMs be

additional Although we share anticipate some in areas. gaining

year-end ending to pipelines in During prior quarter on pipeline, full we fewer a year the with we the pipeline hand versus wholesale unit [indiscernible] XX,XXX than the X,XXX on U.S. year. currently X% prior above and approximately levels. retail around slightly monitor XX weeks a which diligently basis internal plan to represents reduction We units also continued in quarter, units year. ended inventory sales, manage

guidance share. I and $X of between per components through Before walk wanted quickly I our $X.XX over turn to the to Ryan, adjusted it EPS updated of

believe main see, lower anticipated all partners across correspondingly related selling in the from market two about market to the planned the than of just we to directly an wholesale is the will sales resulting combined to persisted can and businesses. originally the down for year costs market lowered where dynamics, to absorption ship market our with since slightly factors continuing you thousand all production flat who experience have next environment Mercury demand. The levels. boats related take despite softer fewer production due all manufacturing slower First, in channel to fewer As inventories April resulting of of to view the we and be this And through the will the lower the be pipeline decline several lower that conditions season. April we weaker retail remainder are most conditions is our to to significant impact OEM XXXX. The and are consistent higher engines plan also share, change wholesale to experiencing businesses have our We anticipate

spending our to comments operating this outlook. continue a market to capture continue finish to decisions in use returns Ryan not objectives. Despite these over expenses. down as OpEx hoped to make drive while call the with and our We performance projects and to prudent additional almost on year position. keep to our sales on while key initiatives to as still and growth our upside and is focus to anticipated, on combined turn XXXX balanced from strategic fully retail as provide inventory anticipate now ending unfolding possible. Offsetting controllable strong down levels planned XX% financial we the and Second, initially expect when to and advance to we discounting growth. I'll we had promotions driving fresh the year factors protecting the preparing

Ryan Gwillim

flow second the down conversion flow in the were below Thanks, of than results operating $XX in resilient. despite million approximately resulting were XXXX, morning, margins slightly and Brunswick's and anticipated XXX%. everyone. an environment of cash quarter $X.XX. operating versus net free XX%, of market QX softer Gross but remained than XXXX, resilient Dave, continue a U.S. of adjusted better adjusted cash retail were much and sales down expenses remain second quarter free quarter XX.X%, good with expectations, challenging macroeconomic performed with to Adjusted EPS of marine anticipated. Versus margins

operating entire costs, of prior below prior down and increases of enterprise. On XX%. impact an result were sales net dealers which earnings annual are benefits expenses, cost significant operating diluted impact focused versus were manufacturing measures EPS well-received down partially XX%, million the sales by partially lower quarter related year-to-date by year are on certain wholesale of control was in to levels. lower offset primarily remains lower coupled from basis, business products. resulting enterprise versus of and in down higher the first and a price with reducing from by sales offset XXXX Second segments, absorption discounts the new OEMs, higher The ordering throughout Adjusted a $XX down of year as adjusted only production, continued as half $X.XX,

depreciation production operating been assumptions higher slightly Finally, downside expense elevated in of impacted unique propulsion and absorption discounting, lower has by volumes. negatively year-to-date increased the scenarios, capacity primarily in across including projects deleverage of our related midpoint factors, due XX% lower to remains our recent enterprise the than to but

at impact Propulsion starting production, business of were by at but and versus Propulsion sales control cost including operating adjusted operating measures. business. props lower margins each in inventory higher rates OEM primarily a manufacturing segment performance. Adjusted sales lower With prior margins prior slightly fewer high-margin engine down net up look costs, had the lapping year, in shipments prior capitalized rigging quarter, strong and QX we'll unfavorable higher were in to Now the by accelerated slightly lower XX%. Sales variances manufacturers, lower while for production and reporting controls, orders repower of aftermarket led offset our with resulting segment, due partly year absorption The below the than boat were XXXX. our quarter,

a Our and quarter, aftermarket-led sales, versus accessories and operating business second XXXX. earnings quarter with engine up strong of had parts margins

by international and distribution the product a to sales primarily Brownsburg in offset production to to the service they to was Indiana as markets. Navico by in X%, expenses. while the was lower retail and momentum product lower only decrease levels now some increased the reported both to trends. around to With earnings Group sales year-over-year transition of partially as reduced balance OEMs customers and RV driven Segment activity partially this match leading adjusted strong decreased sales from able U.S. patterns, facility offset operating business the complete, impact globe slow new increases discount sales marine operating sales improvement ordering by

points results model-year by segment as Boat our of within impact gains. margins sales pricing steady favorable delivered its the from control. Freedom The partially XX% modest the quarter offset operating orders had absorption order despite shaping despite would time units included offset of thought than more the planned the retail very boat retailed quarter, years uncertainty. We continued That the was market. size growth financial when as business the Finally, States. of billion aftermarket declines to investors $X.X moment in approximately acceleration, that than remind continue noncore similar lost revenue seeing tripled outboard adjusted take and Boat in over share XXX,XXX pricing softer net in P&A the membership and steady sales United engines. portfolio performance a reduced macroeconomic last strikingly expectations resulted by channel share wholesale of has than to despite [ last more approximately Brunswick Since the a boat in while of segment's the another cautiously, Club, partners and XX basis production our is a different gained how we delivered Boat business businesses contributing more were of impact and year, during share. ] was the XXXX partially $X.XX its the very Brunswick which business, solid lower has cost the divested X,XXX had of year, and

this business was earnings it wholesale similar much global And as evidenced today versus than strongly profitable Our boat significant XXXX business year being orders. is and losing in leaner healthier by XXXX. on in this

we that $X our several keenly downside are is the years slightly below out we case ago. current guidance aware Finally, laid

over of that still ordering within patterns more air benefits share the are the post-COVID elevated we'd impacting Although [ better exercise, the businesses in larger promotional business, and efforts despite after gains all for we're by guidance from argue destocking cost of wholesale Boat deleverage our and Mercury main in reasonable which of the margin reset period. ] higher repurchases well share discount a components market P&A this type more cautious our the the offset and than activity and during our businesses

at Through free the power. strategic growth to cash an flow. The while The and likely continue market year main interest retail guidance and season in beginning of billion it that realities, delivering market this balance and and probability regarding partners year, of the keeping remainder Boat the flow engine including have plan, parts channels, of fully in our match flow Please to capital season. In levels repower would season $X.XX, sales underperforming Navico our occur behind With In cautiously, and cash to foresee is adjusted our versus U.S. XXXX. initial is for and products challenging on of future our resilient environment, demonstrating focusing customers relief items gains is these marine season while do launch in and share support and diluted and cash expectations the in many Group result $X appendix historical this level between and by is a and continue changing retail similar our pattern update XXXX tailwind recurring following selling exciting results, excess peak additional guidance million. these XXXX. year strategy certain we the investing guidance through not end us, to anticipated September, range will billion see XXXX executing $X.X Freedom $XXX flow the norms, to majority expect propulsion the metrics. I for EPS inventory of but and the in are uncertain. order the we line revenue segment of accessories, materially updated earnings in up since to our environment a significantly now on with evident wrap full to immaterial of long-term is this the year-end after have our EPS April potentially will for sharing resilient their the P&L, with Club impact financial remains and aftermarket conditions, the rate the will two provide cash that call. higher $X.X assumptions initiatives deliver other unit channel OEM while And the new there and macroeconomic of likely only sales changed net our including selling businesses updated this to

continue the expenditure in the and spending capital remains for year of our continue businesses allows and This still their maintenance far $XXX for to now growth levels CapEx anticipate million capital moderate excess First, our of spending year. to we initiatives. with key amount

remarks. around repurchases, now Dave the of million revised balanced and on second to the our to between flexible share targets. I for repurchase gradually for achieve have furthering completed our call million and the concluding leverage $XXX million consistent balancing debt going million repurchases with our and plan We capital assumptions XXXX, debt Second, each shares over approach strategy, have quarter back initial pass we plan $XX to and $XXX quarter. will $XXX spend desired our to through our to reduction year in forward

David Foulkes

designed continues I'm launched slim product excited LT to maneuverability. introduction for board the products and by close of expand new recently the our and prepared other lightweight Ultra [indiscernible] remarks some ], high E-foil highlighting developments. line a its exciting with to [

are we boat The in XXE Avatar launched all-new Sandi for quarter, XX engines suited powering [ award-winning ] well of models inflatables. Among so rigid electric features freshwater the opened new [ most features updated SPX-XXX a for outboards. and the or and brands, Avatar CRA innovative and [ featuring the class-leading world's and ] Recon book and in including ] and introduced. X vessels family pontoons, Navico new a models the order exciting which remote. runabouts saltwater powerful the far outboard CRA and XXXX including Brunswick the for the motor joystick SPX-XXX During new electric from anglers variety many ICAS were Simrad language been unique and products and Group both trolling design Laurence attended showcased the developed fishing show several steer has largest new the

also to second all-in-one chirp to consecutive Freedom along solution, Brunswick sea-map end remarks, combining our not Boat from Lawrence EagleEye outdone, be In in the transducer prepared questions. the London. That's addition, live brands Club one flagship Boating the highly accessible a for expand near continued with additional quarter, the And and XX detailed Copenhagen launched the down brand scanning line Industry in announced top magazine of awards now and sonar recently we'll product [ ], locations geographically year. open the for with won charting. In

Operator

comes the Instructions] with of Research. question Wightman line Fred Our first Wolfe from [Operator

Frederick Wightman

what sort what X, the target? you've you we've the or SSI, confidence gives from and what just updated in of maybe from that but I seen past XX% I'm a wondering getting the seen high registrations you've some retail what month of internal given with macro seen and just if been you're you that there's could between on now? level number how know your us give update to disconnect the state

David Foulkes

it's here. Yes. Fred, Dave Yes.

the know, internal do to It something, a months down will expected And about May. the maybe internal about and ahead over time, few normally through takes normal because a our SSI our multiyear saw But retail as was X% changeover think of was which then that. Through retail projections is in of the some and in XX%, have flat, in some align. happen. as products. we we down market. you SSI. The models freshwater was our yes, states our about kind new in retail, is we with -- report that XX%, June slightly catalyze QX, was were late -- that weaker particularly but we market of anticipated it June So I that increase QX, the to the Midwest hoped And states happening SSI difference June. with of share in didn't What we essentially would for that some line in, that the of are highest the

with pretty the with moment what's aligned at going we're So SSI those caveats. on with

of down, the down is, think our it singles at the the to in I could be. moment, something reasonable. July singles level but through to through the kind we time to maybe us XX% of By high high mid- the get end high give So still moment, the is that yes, could better June. of is singles, high XX% July, singles Still retail. market year. uncertainty at be than XX% would really But given we're XX% probably at

the diminished after much is that to of So end July. shift endpoint ability the

Frederick Wightman

X% at thinking How high about you there wholesaler retail you think think That you target about that target in about think the and a about guys setup? needs to of inventory thinking dealer Do for get there's do a and you makes is year-end, do if that sense. XX% sort you And you this level, decline. happen? XXXX, restocument think line? hit you I'm talked and

David Foulkes

conservative to though XXXX conservative, a I But point as view mean, at various the -- XXXX. what of that talk have at we we year-end derisked on about end Well, I any necessary inventory, XXXX. for during maybe I be could say call. across we is our with of on will a think scenario with reasonable segments some approaching feel for going think low we're the when And I And the inventory. we're level

levels balanced across If everywhere. inventory they're segments, look the you across various very

Premium the the but we of end and of end kind relatively value year, lot performing be the really aluminum because be better. a that's by relatively in year, necessary up our are down. of a fiberglass were versus will will inventory last bit products under of those So segments

a better that's at think. this be think I in to bit conservative I So time, point

Operator

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

Michael Swartz

year? high I last accepting high dealer dealers to about Maybe the think that the in and just just timing product broad inventory. your commitments what year 'XX about the model this level, at know start is looks there what some to more changeover brush for initial way may like level there But when this think your are versus to at is be way probably volume like? differences any time, strokes, model, any very thinking of there's looks about year

David Foulkes

of than planned more Mike, production us. accounted at normal yes, for is orders XX% for with is for the moment, our relatively which QX

So Boston to some smaller way with like Whaler, XXX% the boats all the dollar boats, With have a that's well. normal brands few aluminum of its as thousand pretty brands for. down accounted where we

the position we're the for at quarter. less third orders about I with We QX moment. comfortable the So pretty we're in know think for

Michael Swartz

reduction it just And million like range. equates Okay. to on to million to in it guess seems understand, the program, something the I'm trying $XX I then cost $XX

come like just if of how much much that's is meaning trying annualized and would XXXX. And production It variable, sounds that how of number? that then comes Just that for an understand, back? when to actually back is

Ryan Gwillim

would we reset low we would then expense, that compensation pieces given $XXX By back, that, obviously start or this the right, about we want obviously, environment. be Mike, to delayed to chunk X/X of more to -- spending are complete until be say, to is at we able that end be 'XX back very But that pretty a obviously were market term better would the certainly is would if million, market that, this. pretty that bit million it's for XXX% being a also $XX Yes, going for XX%. or take back are there's year, improved near I'll to down to given of we about which to $XXX That and to is close where we targets. will not that versus little a would takeout conditions say XXXX. And -- our growth. added a Of is in at all, the keep of come somewhere when expect million, that and come and out spend fair portion year, to OpEx which 'XX,

David Foulkes

X/X the XXXX well. really think I is for as

So higher. the impact of would on rate XXXX that on run a X/X basis be

Operator

Our line next of Boss Matthew with is the JPMorgan. question from

Matthew Boss

So Dave, looked maybe just could across premium if broke down you cycles? picture, you to elaborate it into in back the that the channel, how the on at you're more versus trends prior progression seeing value recent larger XXXX, If you marketplace? and anticipate best

David Foulkes

certainly. Yes,

So seeing, market kind of our products other fishing some value general the I and end seeing more And is seem say somewhat at Boston aluminum part our general we're value. premium all performing way the at Whaler purpose more all relatively guess thing what core But fishing from of of that high is be that to somewhat I stronger products than to the still the through fishing-related weaker. we're generally are a would the kind recreational saltwater of strong.

pontoons the be moment. value, like at fiberglass, things down are definitely the than more would that runabouts, market So

break at So ways those to are a the down couple it moment. of kind of

indexed strongly being in fortunate are products. we're think X/X fishing, about probably fishing-related of products to our I

going favor us to So part of the I continues think forward. the market strength that of

fishing who year trade to like be boating, it's versus spending one for activities be people seem other who another. are may just those So but boating, for not are inclined activity this to a yes, prioritizing others committed more off bit versus to more -- their

Matthew Boss

flow-through over industry what's Ryan, time, to made incremental about that XXXX, reductions operating side? just the or for we think best you've consider then, EBIT And given Great. margins as recovery the expense just on rate

Ryan Gwillim

to would go good a there tackle at a about to But this maybe up the And that lever can ], if more. year-to-date question. for or at discounting, pace maybe we 'XX, [ And XX% about views right on short we answer at 'XX delevered -- just it's I'll we've below. But consumer, being obviously think normalize but I'm is begun same going low, to just that resolute. our get year being believe even is stability uncertainty XX% for there number bit absorption that incrementals little in slightly GDP starts rate result employment through us, healthier going be assuming always environment we'll November 'XX market. it about probably ring, conditions, we're still come but some as a marine down, into first, way XX% your throw economic the the some relatively to given that that always would still The Obviously, the the ahead you and and we do. hopefully, has question. frankly, Yes, look

environment. GFC, about we're X% Just much the year, is that likely of as units, macroeconomic a main we was a segment sign, finish the powerboat tougher XXX,XXX which to is above where were out coming

think year assume floor to yet, a approximately call market the is market a obviously 'XX reasonable I this loss low but retail that think year for to and this and that level not a market assume a kind a which get flat a of reasonable -- the even or it's level of to I making mid-single would of with is we replacement represent would some also market it's for the U.S. XX% consider market. would into upside half back digits, what

continued dynamics, not But by our and Mercury. accompanying wholesale get boat thing back, units little in on count market the from across softer. only is one a that landscape, X,XXX the with the Dave at go which, the on about units market keep the So but flat you retail, you is to a earlier. that which together retail way, OEM It's gaining But engine we boats market matching touched share share wholesale can gains. you always understand -- then, we in

stability again, continued that a is is growth but if a up, aftermarket side, If know more a to to specific share I on engine a of is growing it recurring take the get And slightly today showing you coming, XX% benefits what again, with market is assume P&A. quarters, you too. Then down. bit to world continues in dynamics, now units exactly built couple look engine products you then at a is wholesale where Mercury retail new sales are with P&A subject then been at year that year. next business up in want next year the that to sore can this Engine new X-ish and the quarters, for it's and or why than greater we it of Brunswick's

in improved of which gains, Navico OpEx Engine from see we going continued start going repurchases takeout debt share some positive then P&A. I have and we strategy to some about work side. the happen and possibly, a with at you the margin about on benefits has -- the earlier an say project RV some new just to where So likely significant as you're there stability have do. overall and day and interest XX%. And lower improvement would products to cash in from impact drive it cost really talked sales expense touched both remember, actions, is The market, capital resulting Navico we're to

like end control. on tailwinds more 'XX of certainly we than So there's -- closer can lands both as that to the market get we'll it the lot for here at to but items but the year look sure headwinds the seems way see where Brunswick the a

Operator

Our next with question Hardeman Citi. is from James

James Hardiman

part kind of was out Q&A. in of in the and I early

retail. XXX Slide with that for are let's in any correction, say, ] apologize. you bridge I the get in, one-to-one back [ this, X, do of that -- the market answered already flat wholesale of market that mean a and you But You sake to pipeline on

other back? You're that about You going curious ] big XXX ], negative. but XX I'm to talked about [ that the [

Ryan Gwillim

do, U.S., We assume [ by in more and do. retail, our flat engines. to James. And we exceed, get X,XXX-plus benefit putting up, then plus. slightly on year boats you associated if engine could you're the wholesale to. in percent assume multiple then the ] then in engines with again, XX-plus with of this a world XX% retail the wholesale if can even where also yes, We you back could market, but the And a wholesale benefit boats, And get our matches

yes, can get getting you of you're a -- back. big a definitely that chunk So --

James Hardiman

Ryan, this bear spin I on And barest the even the work is interest and still view has industry. spin are. Got seen a another seen would sort that could for of retail that healthy big back these demand a to a secular you couple just We've over would decline, Fed guess the not yet. be, it. or That obviously, then, what missed the levels just guess bullish this expectations forward. GFC think time be wait everybody's that. recession I last you the we're market down, by rates this in interest-sensitive your of your means to reflate. I'm basically Thoughts right? on a picture, I I curious haven't on touched amount big thoughts declines. to of sort of relatively is decade good retail. come for that's need mean, put of years. that bear a at a rates notion purchases a environment, on obviously, once and The this on we underestimated And don't everybody how massive macro in begin this interest And we going

David Foulkes

Yes, James.

So think. I a good question,

fact And is, that mention budgets purchases environment. that think are of pressured you of range that's that purchase couple particularly like you finance and get just couple to -- more demographics interest mentioned purchases. course do supportive there. any rates a through cumulative look Not of layers mentioned, items. fact wealthy to But before, just financing think do for I us on of that for kind what mentioned issue expensive. interest some as a impact And I you our there's the It's that it we're consumers. on studies are about these discretionary this core other course, broadly, of suggests are is that are. of sensitive is a the It's are of rate the going XXXX, of rates, they more at wealthier. things of interest by we've and confidence there the seeing the other of inflation -- other and is here. One to I think generally, interest overall, the a rate not

discretionary various beyond think the dimensions there influencing purchases simply moment are that So financing at are increased costs. the I

average cumulative with couple next impact And The increases. to think year. the over over going of would we've that of time. had certainly, years, of time, is anticipate last seen what out of I kind relatively inflation we've kind small we

Boston that we So I secular do are interest that our to of that, barriers trend or have to engine negative think anticipated. outperform there impacts are wealth year-to-date some we've Cumulative kind there's here. Sea inflation, here. We a play larger believe always Ray no gained of I But trend. do to obviously, generally, share number of the support inhibitors factors reason think also side, brands. that like are of And particularly, with had that there's a but that market. in secondary Whaler than accumulation and tertiary the that plan on rates the continued and bulk which

Ryan Gwillim

and And the continue James, just stat shared one all look that carefully growth which alone. freedom. in to I the U.S. they're would the the we participation models, also of you that boats $XX at were registered of the then pretty industry in add, million top way in have across leading north on be

for see Dave people caution in something I I main they secular the the said. are are trend. as taking sales product participation participation cracks past So And calling have But than on that more metric reasons out We would been the strong. sales if much, any boating in boat years. don't when as there all new say remains not softened would new

Operator

next from with Our Managers. Stanley question the is Megan Morgan of line Alexander Investment

Megan Christine Alexander

time Propulsion particular. a bit on spend the segment, to of want in I little

top a question I'll So on the first on the maybe and line the follow-up margin. ask then

to bulk the the the coming like of seem does guide from reduction it year the top on So is propulsion. this line

said know math industry right, you looking the retail in in prepared think XQ. down to was if I the saw first curious, engine the for us some units the impacts in X% doing in I'm we I what retail the was the perhaps half. I of you of for in maybe segment? guide then in Mercury that? kind how think you updated half back retail declines remarks, you similar Was wondering if than about a And from parse to that out let lower should how line taking of kind of could think and out top the perspective, just channel compared expected the

David Foulkes

Yes. yes.

I seeing the propulsion that a the are on think you're So impacts couple at of moment. things

down of share year-to-date. others? Well, much Mercury up is is In versus terms how our

this market. Mercury, believe we're share gain anticipate to through we less So that reason we to will that in down no won't. would obviously than And the continue year, we

but I a obviously, news at to the the that, had anticipated, action conditions, prompt support that. market in pretty think to good propulsion than which adjust is on we moment we've taken we've lower down production are

seeing destocking other retail customers. though production, significant balance. they that we you're is OEM across at of now look and and The a trend outboard thing at every wholesale back And are in that segment

-- is flow past. are product always that that's think of to case take on they means OEMs I in not for to that know trend in we increase the situation going So to It production or back back don't They pretty a was think a retail are is have any Mercury. But going the a the just any wanting good in us. it's we in which which not growth to in available, directly XXXX. boat go

many areas, want more So to and what are you going other kind sure their are that use ordering to patterns smaller they of quantities in up? match frequently follow making as they be. Did

Ryan Gwillim

lot just still this engines be, the to XX% going down of that in of is units half. back of which just you're is is half roughly year, pretty XX%. in first I'll down We're schedules. -- But to the would close what boats kind a be production to going wholesale see which more for because about Yes. good

inventory. enough have We

because slow at thought. other than quickly partners As we did OEM providers first engine And slowed of not choosing of our just again, because OEM orders Dave couple their the through but quarters. said, production quicker

half, don't in the track started we it you're in in XXXX. can't bit all middle propulsion. you're Both boats same you're again, year will the but from start know -- we position seeing later wholesale taking really say be under-shipping down would is I we just track in as the in closely, out engine be just us But retail, happen to nice seeing back year. really last that little the start a of seeing So again, year. the dynamic in which, off engine we will that pipeline And do of quicker the a because pipeline

Megan Christine Alexander

or are And What levels, That's has line. on the you still a a super then And it. guiding ahead. I you're understand solidly margin think propulsion around can more that provide maybe decently sales color below impact Got Okay. well XXXX for it's production perspective, yet on just some from just for some margin the the helpful. that. But tie decrementals -- pretty XX% months you've back in I changed does you this of the relative it what X in has kind it then but guidance, I think talked a year, a last margin imply the lot -- just know about ago, And follow-up segment. talked steep about? to half with

changed about kind to much? things normal environment? of realistic more think still that have in a Or too is So

Ryan Gwillim

And XX% depreciation production I then conditions and overcome normal because to the that of reason market in absorption Yes. take the yes. can -- at a one. you normal that's of good overall, or that There's And and just call not absorption bad And really margins. first it business there. it's enough hurting. hit that's production capacity is year on question, answer the also that reverse, we've pretty is can't volume the projects It there. out this there's operating a optics volume the for back north let in it, propulsion would is and million. down. The be that little a Currency driving larger half, a fair bit tell guy the me no significant, there most but remember quick $XX of game of year margin impact you the in simply the put is is at above all full a capital lower

So a they're getting will companying which eventually. that head get without we sales, of impact

mismatch So you're kind a there. of getting

you're to one-timers, of normalize in we normalized the certainly a worse out the teens So but you absorption take It's if kind volume. at still upper we and agree. anticipated, than mid-

looks You a you're and to more XX%. bit to getting a better that just back volume retail get a little bit back market that little close

Operator

with of question Our the Management. Paribas Xian Asset BNP Siew next is from line

Xian Siew Hew Sam

about a XX%? retail inventory relative enough weeks much think to X%. you think down implies I I was Like don't just of your reduction? curious it Because reduction target that's for hand on do

David Foulkes

Yes thanks the question. Xian, for

trying I we think obviously, kind retail. about have mean, on I We target to we're number considerations hand. weeks when of think -- of a

the field. segment units that too about low, think When We we we there representative across our is an a if lot, per talked go dealers. a down just of can't also we product a carry line units of issue about dealer, our in the we've think which -- about bulk

So we're to of trying balance a here. factors number

each a factor, one you supply and we are Ray. under product I inventory is another end fact our I chain think those -- going particularly the to is number believe versus slightly going hole Boston to were a answer the after working with years we we might consider still of slightly we way out still have Sea area the that factor. and last products of decent through And units catch last the lines, get premium the are on end in significantly if Whaler several of crisis. at our up couldn't this year different increase But one year, because are going where up we ship to to retail dealer. Really

those ways, good balanced to feel in it in it about we thinking XXXX. be So derisk different I position think is and a

Xian Siew Hew Sam

Or of just down Okay. are able then to there all? hold boat correlated your sales. kind to also is Do the you sales? has of to Or kind that are under price with volume in boat been you on mix down? think Got intact? And point, kind it. coming it's benefit. Really still Is propulsion, or are like segment big more then pressure has a the at are structural the helpful. wholesale -- new becoming that's and pricing tailwinds volume declines been that of new maybe line And

Ryan Gwillim

I'd Xian, volume. just No, Yes. say it's

OEM In think overall, that's be first volumes strong year. that to to sales XX% continue the still but XX%. the on we're pretty the seeing that sluggish, We issues the just about the it's not half during fact, repower price any But of are because of really Obviously, where engine high products is can only extremely for XXX, XXX-horsepower most the certainly, are we're best-in-class. it's [ our kind for in we mix. anything, all XXX the price take of and our horsepower share robust, town ] our above volume we where of believe XX%

So we're and see don't still able that changing. premium a to get there

Operator

of Craig Kennison Our the with next question line is from Baird.

Craig Kennison

You would mentioned wondering floor face us help to are I'm today the just that point plan frame rate costs gross profit it's whether versus can interest just there for their the prior they you metrics dealers. percentage that if of or additional periods? expense,

Ryan Gwillim

rate Craig, the a are right? our out rate, Yes. BAC, plus SOFR benefit So our our plus a having that's SOFR tough. can with mean the of I -- paying, of track bank percentage. paying dealers you they're obviously, the there

several any kind you or aged take healthy. up reports and challenges of every rate. But floor having all, are the floor and obviously, dealer extremely plan think network XXXX, are their remains We average of since all times plan of there the get on our So and dealers -- can average in in boats I couple paying that that field that amount points that's covering the weeks sales.

So we're not seeing any concerning trends.

but across liquidations good well around aged a down. we're been -- anything aged has really fact, summer, has now gone on more In the throughout seeing inventory than Brunswick portfolio the inventory And year old. BAC's of all way,

plus So do all, pretty all but the just rates, math the SOFR environment. in a change in the still taking healthy can you by

Craig Kennison

get I then current back just like guess, profile has let's control, wondering the XXX,XXX what it been of this discussion but a think the just a lot you you And say, for if don't Navico. macro, seems I'm of to, self-help boats? where the opportunity -- there at gears, of expectation business, shifting is course, And we that which, margin -- is margin

David Foulkes

reduced diligently and we on cost obviously, about sales. seriously. of very working terms And right. including diligently, that significantly facilities very there. in XX% We head of we're you're take working the it think We've I very on Yes, and closed we're Craig, of the count footprints.

we're So it's will we through, -- that of those is quite some flowing along but because to of which some sales It with a doing because yet the not cost we inventory of products, flow to of start reductions. work today. have stream new prior still highlighted

environment marine doing RV things tough we're earlier. all it Navico OEM environment obviously, a I and is the yes, OEM bit a But flowed one. right Group. on So had through the wish the

of that, aftermarket better coming the why which great some and quarter. have both doing is flat aftermarket new we up is However, for through products by the the OEM kind on you side. And making side revenue see and

Operator

to this time, question-and-answer I turn remarks. at to Dave? Dave for Ladies our like this some and And the session. back gentlemen, concluding call concludes would

David Foulkes

very much, you joining thank and us you all for questions. for Thank and your

grown is terms but memberships. for on memberships that up. different recurring Boat QX didn't pleased meet up, our X% well, also Repower, of anticipated. I a very holding time, are P&A once continues we about though with particularly season Although to is than in with question it at initial the we sales holding to year. Club. our but year even Freedom our businesses this the share It's are peak Mercury, way didn't very, came guidance. back the expectations, we get pretty originally is close half performing But revenue We looking our clear it the of grow this very way am that a market

which earnings lot really is driving strong a very great robust flow. and of there, So cash performance

of we're well to part by we very about very, want employer focus clearly just And very do ourselves on to end of positioning continue excited an for saying So choice. the are business. that XXXX. I we being that

Brunswick a perspective, we which from corporate companies, that business personnel think run a best engineering great at you in #X how from a is to perspective. the team have a recently category we driving And a ranked Time's from We in and everything the manufacturing were midsized perspective hear testament about. responsibility that's financial I and

you So all much. thank very wanted Thank I'm all of to delighted our I with that, employees.

Operator

Thank concluded. Brunswick you has now for your participation. The you. Corporation of conference Thank

now your lines. You disconnect may

Brunswick (BC) 25 Jul 242024 Q2 Earnings call transcript