BC - Earnings call transcript Q3 2024

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Operator

Good morning. Welcome to Brunswick Corporation's Third 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.

You may begin.

Neha Clark

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

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

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

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

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

David Foulkes

and Neha, morning, Thanks, good everyone.

delivered market continued despite expanded resulted has with in quarter business products share from line gains, solid in recurring results the and market. of revenue challenging businesses marine new performance contribution in as Our financial the wealth expectations

year. We field pipeline, adjusted with inventory have our and the channels ending below accordingly, production units manage to units prior XXX in the XX,XXX tightly around across U.S. all continue quarter

portfolio Our business, nearly including XX% demonstrated resiliency third Group's with contributing sales Freedom our Navico and aftermarket Repower the quarter Boat businesses of our adjusted business, our of results revenue Propulsions our recurring P&A earnings. operating again channels, Engine Club QX and

estimate to versus the of XX% expectations we finish down our months full with unit year. new line of final the prior year, enter we in boat year As retail sales approximately

than leading maintain remaining elevated, behind us, segments most season boat rates, retail orders. dealer is propulsion lower core Navico impact production levels some to retail and Group discounting the selling With OEMs reordering in anticipated, OEM slower and

and Club increasing credit amendment maturity recently capital to remains the However, priority, Boat $X our billion to and our remains October as well, the revolving participation facility, and management to parts, we XXXX. executed Freedom continued an strong. Prudent perform boating extending distribution businesses a engine accessories aftermarket-based and commitments to

commercial of size committing further the billion notes increased issuance to program, paper also of the also flexibility. paper We capital our up to provide $X commercial

businesses year-to-date of our return In maintaining strong enabling commitment $XXX repurchases value share our delivered us cash million and to complete to to addition, shareholders. flow,

some to our quarter. highlights the from Turning in segments

anticipated, but As Propulsion we business and share outpace of operating the of the outboard engine quarter our quarter. market XXXX, points delivered to versus and retail sales continue in lower at XXX the third basis U.S. gained earnings

currently production OEM are off-season. below schedules bulk We the producing customers as rates at maintain retail into reduced significantly

to business engine distribution with both XX% contributing product time Brownsburg, sales. prior parts had The with year and continues record transition of facility of businesses our accessories operating provide new Our state-of-the-art accessories benefits distribution and expansion engine in international despite the slightly to quarter. modest quarter lower growth margin efficiency another sales Indiana and enabling delivery and completed parts to versus and strong the margins

retailers As Middle Europe, XXXX sales soft and delaying OEM order holiday and selling higher the in aftermarket was due Group season, East and lower anticipated, offset operating Africa and versus had until to by slightly continued the earnings of rates third Navico region. the to marine partially closer orders sales which quarter

showing bots on Group benefits, the were present exhibited. product approximately details product more Navico I'll Yachting Group's where of pace moment. festival, a of products Cannes Navico is introductions Our new in investments including on at provide recent XX%

X.X% steady sales planned consistent continues sales to with and operating year-to-date lower Finally, Freedom below production quarter days growth. our the membership to earnings Club summer third Boat with of performance business shutdowns. had due fewer XXXX manufacturing deliver and levels extended the Bulk

the and live position and year-to-date. the in invest continuing The future. introduction the U.S., full the Group Navico territory, sonar and of across in and to Asian since further fish states with price. an XX In FS expect today affordable in more is enter near solidifying larger we products consumers of operations franchise are largest fulfill Florida with to the addition, acquisition leadership South Group products networking These finders features acquisition. capability launched accelerate to Elite the we completed new Freedom's needs XX-inch market screens who than XX-inch of desire in at amongst boating introduced Navico the premium the new developed portfolio in the products

operating to of in these the opportunities. In space quarter, white reexpansion launching Eye e-commerce holiday we the of to fish a in new some new offer market margin the X, time for number the fourth Some contribute them products capability. and while launched and expect are the in we entry-level the products first Eagle sonar market quarter, opening finder third live expanded season, Lawrence

XX we're continue build launch we and quarters. exciting next X over as products rationalize product Even Navico capabilities to continuing also to additional expect to global its new footprint, development the an Group

Turning external to factors.

and benefiting and with landscape and While the solid, in escalating macroeconomic downward the inflation floor markets, of other some monitor since costs. we plan stabilizing, and geopolitical to moderate The quarter activities. in the welcome generally consumer movement unemployment election-related tensions to U.S. continuing is the financing continue rates remaining is dealer beginning costs the already is interest

stable entering in benefits in until holiday. not significant promotion anticipate Discounting point change the is Dealer retail curtailment and Ordering and anticipate current any negative. segments, the not remain most do elevated. given levels generally season, we sentiment remained However, do off-season but the XXXX. selling cautious

among these improvement our generation bulk and income However, our Despite purchase show in consideration, assets consumers. continue higher our investments digital some solid particularly household in conditions, surveys do drive to challenging lead conversion.

across the launched us to growth. all in the and exciting new products gains when and lines, continue our position technologies share we and and We many the market invest for to freshest to to have market with ensure businesses product portfolio intent returns

the and X U.S. early hurricanes. As Florida we of experienced end the Southeastern October, major all know, at and September

were few minor presence though facilities, in to our only distribution strong hurricane production it a a impact halted outages. owned in for power X direct repair also unimpacted. Boat the XXX has for approximately region the approximately supplies for and remain exiting X Of and only October. for Freedom some Florida, Brunswick Brunswick closed cases locations in While preparation in at Club infrastructure franchise a locations was Florida, and corporate days largely

impact. partners employees providing a channel financial to and communities. facilities, and Brunswick $X which, have area impact incurred to short- to combination a support, We earnings $XX the million impacts Brunswick their supplies to direct of estimate Some damage boaters million. consumers to full will with impacted year is in and needs operating modest midterm essential in

industry down industry engine quarter declined outperforming units in X.X%. to U.S. retail performance. with industry Moving at versus XX% year outboard U.S. Marine the just now prior Mercury retail third the

As gain delivering XX% mentioned, share. engine to continues Mercury outboard share market approximately quarter. U.S. in third Marine the

ship quarter the monitoring and outlook. fiberglass XX levels. I'll turn We the quarter continue to and in under comments remaining Ryan at premium XX,XXX performance but third below the retail, additional third exiting our slightly pipeline historical levels below hand call on now the well pipelines units on We financial with weeks with pipeline, year. ended U.S. to are to diligently over prior provide

Ryan Gwillim

quarter quarter below year in resulting of with third everyone. Brunswick's remained challenging marine adjusted an quarter were XXXX, and good retail the the down continued margins but adjusted to Dave, the of EPS due with morning, results net in of market U.S. operating in prior under just sales Thanks, XX% third expectations line were versus $X.XX. XX%,

portion results significant our businesses recurring the of our and a this again mentioned, of earnings revenue As our in the channels the period. contributing demonstrated resiliency quarter portfolio with operating

lower top continued annual new were impact new levels, versus as prior only quarter and products. increases lower of and ordering from remains Third down were down on remained accounts Operating controllable $XX a even dealers annual costs. cost operating versus resulting steady levels below decreased throughout adjusted with business the by ongoing performance well-received acquisitions enterprise. On are absorption impact offset XX%, earnings measures EPS expenses million sales Gross higher prior basis, of offset more as of year are combined certain impact a margin wholesale segments partially was focused year line the the product OEMs, down after in despite down absorbing price price reducing momentum of sales as an $X.XX, in increases enterprise diluted by entire year-to-date XX%. and production softness, the from while benefits the result control of lower than XXXX sales by and partially the

are production accordingly. XX% we making and all for versus decisions reminder, XX%. output production a above XX-horsepower levels down production output Year-to-date As XXXX down and our scaled inventory engines, with ensure remain field boat businesses for is have conscious appropriate to

boat segment Sales in versus manufacturers, were each segment, starting Now engine our year reporting lower rates our at in production prior OEM we'll with at the in quarter. XX%, lower Propulsion down propulsion look resulting quarter the orders business. with

to market share from control orders production, cost the As declines prior margins Dave lower despite offset and take lower absorption to earlier, below operating net and continue due the as performance. measures. year, outpace in overall impact were Adjusted mentioned anticipated, market lower of primarily sales wholesale partially by we we

XXXX. growth Brownsburg, Our business delivery quarter quarter provide earnings completed new versus which enabled the in to time adjusted transition strong year-over-year and operating our versus leading to to another growth accessories aftermarket-led operating margins, quarter had engine of benefits, The despite continues third third sales efficiency parts international facility sales. XXXX and of strong lower slightly state-of-the-art Indiana modest record with the

sales gaining share basis and highest slight only reported retail from to Our offset of new expenses. take September, decreased points just ordering the impact share match product resulting Segment sea operating partially market earnings boat partially primarily U.S.-based lower by in XX%, delivered culminating of where patterns decrease to distribution lower from XX offset growth was under business lower of sales in the sales they momentum. continues production operating to reduced single XX%. Navico sales by market by driven month their Group XX land OEMs, as ever strong levels a international months and also share, marine last

the of the cost and expectations net contributed control. impact of Club, from offset by as XX% Boat earnings reduced which declines and in impact from pricing. Freedom were incentives lower partially sales production channel was the to fewer voting to wholesale down had Segment offset order production operating higher annual XXXX, year and orders XX%, summer Boat with lower the below consistent sales manufacturing model due continues and days sales solidifying pricing in segment earnings planned deliver Florida the favorable continued its partially the quarter position growth completed operations Sales operating and our only business quarter Finally, cautiously leadership in continue the to the steady Southwest third largest its the franchise and acquisition resulting modest of of U.S. of sales were the state shutdowns. territory membership and and lower further levels by within were absorption as discounting partners

Turning to guidance.

We what appropriate, the responding production us anticipating for XXXX. change the fourth levels any in and channel are quarter to market we setting to up ensure remain for moderate conditions not continuing in are as anticipate a stronger by inventory

remaining that customers of we before boat In addition, Similar dealers and Mercury in taking Navico our we softer Group cautious early have manufacturing to resulting them XXXX to both on to knowing production own moderate show get conditions. wholesale early boat retail product anticipate XXXX especially the available season. OEM product season, in in capacity business,

earlier, Florida and Southeast hurricanes a from impacted impact discussed Dave modest earnings U.S. that As negative the the

XX% is adjusted conversion continuing approximately $X.X year. I to flow on cash result and billion the QX to including sales lastly, the Dave will continues flow of see seasonality net sales to of back billion concluding production now remarks. for with revenue expected the albeit lower slide, to despite continuing volumes; be business and $X.X steady, impacting cash with earnings EPS is this call normal be Free you guidance to the of XXXX recurring $X.XX. north free trail Our levels. The to for diluted pass remain solid

David Foulkes

for Awards, the high conclude, the Motor won the of despite thrilled continue is the Australian of I in one with surpassed our world's the we market, best-in-class in teams year. We've Ray win third the of challenging winner France. XXX the by a SPX accomplishments from the highlight Magazine Sea model. awards the quarter. awards Boat XXX third companies Design for Also, largest named of to was global our Flite its publication Motor recently Boat awards enterprise new took number we Time around marine that Brunswick a Magazine, and Newson Marc consecutive products its enterprise record Before Award on Motor for Year Boat for the Good X to major collaboration. the now world. am recognized across including best exceptional were

During off Stabilization IBEX top honorable in finally, for category Joystick Mercury Innovation received category October, same Boat mention in and new on remains its Navico Precision water for Group Lenco system. the won in Award the an its the And the IBEX safety priority. system. our Pro-control

was our Freedom X Safety Boating receive it So for for and X rewarding Awards. our to each class business boat National very X and Bayliner.

about Whaler XXX new questions. engines, we many upcoming new for all all-new [ the will debut Finally, Show, we will Lauderdale line, product Adventure the will your attention. the in will Nevan models Ray first Sea Boston ] by X in officially premium be excited the models series. which SDX are in the our now the all We'll line line and for very Boat you debuting U.S. Thank its Vantage open products. Mercury outboard Popular Vantage, powered new flagship industry-leading in new the we model launch Fort show

Operator

first [Operator with Instructions] Boss Matthew Our JPMorgan. from question is

Matthew Boss

Great.

question, or you've Dave, speak recently? just setup any to demand dealer stronger in of you the you the that any could customer first if elaborate And changes XXXX maybe on drivers seen cited? sentiment changes you in So that could

David Foulkes

to think so we I is pretty as came actually in September expected, for Thanks, a little us pacing about retail stronger. down Matthew. Yes. bit Yes, much

a be weakening weakening we not bit dynamics to some has I OEM bit gone nice because was bit are of bit quite better. which across to OEM a want board. the that pipeline seeing demand consumer we up we're of some a tends for more under the derisk Europe held have premium certainly us. level there. that market, what And little But minus So kind of we kind There's wouldn't at wholesale to of seeing. did the generally, year, see. in just is changes there But are that say of kind of of a previously. balance just That a the in XX% a

public you've in you'd companies, that mean, even the balance expect some the kind in I of seen dynamics So some for the of year. changes

significant reductions. seeing we're a while further not So production

that to think I at year of for of bit derisking that point pipelines. One this the the a is is we in this is the exercise year. do thing want a overstock more clear balance not

XXXX. of so intending And XXXX we're programming would and kind early of that not of wholesale a year-end do lot to pull into out potentially

people hurricanes Florida. So But of that on the are There modest partners will a be we would on all end there and those affected, a hurricane impacts also are that based some from of kind our considerations. some channel impact through impact that West consumers. they of were Florida we Obviously, number and went demand quickly. hope on recover Coast expect very

about? talk to want You

Ryan Gwillim

at here you? of be Matt, about year with the the the bit what the is XX only GFC. on continue were above about this so. which on are macros story it the And maybe coming of the Yes. to going in year relatively here in still be a maybe percent is on really all U.S., you XXXX basis in call, the But out unit market Obviously, was do think how election, ask interest to quarter. end think to continues little consumer, handful we similar going it We're what market. have marine positive. see XXX,XXX probably a days first our to 'XX, where units think that balance to yourself up of to the plus a or for GDP in extending next economic all, is Ryan just column. the I uncertainty unemployment, into you then in to is July the XX low. our likely days, is lower moved pretty certainly here. consumers, healthier conditions, rates, We that

biased a a few And And next lands it when to -- doable us And a add a probably would at still market upside where boats and a so looks then And what continues look say pipeline we how time tell up then market most in replacement does. much certainly there's this mid-single Brunswick things reasonable up market. think all will at into probably upside flat on. the that retail And But both year be think assume of that to in a it's this to digit, what positive year, We end be being would level, and flat definitely relatively assume again, of that about from I'd we retail low up. XX% like to you just we retail be bit is depend digit. from you single at. is little an unique wholesale think year on you the But Certainly, there. dynamics. with wholesale lastly, for which scenarios, in would even engines. that would

products share margins we Mercury don't to Engine credit it gains a business continued on market is or to XX% the stable have us. think aftermarket with We drive year. a enough horizon, continues products. on operating with and new that significant the enough talk and new recurring growth this given P&A. for next about quarter, revenue in record will continue stability drive had That I earnings

the continue year. are Dave into things from months, out just that will of next heard You've coming over next that and handful on

down back OpEx we've lot us. drive original think the to of back on of 'XX doing cash able cash. we'll then helpful also keep in be the from reset this perspective. impact this tariff a things acquisition that environment come be comp, from will balance, but And budget year, million of good I in, still environment at that's year-to-date, million cash some of about continue taken $XX I little may us were a to year, Obviously, $XX give half And and out. But out portion be we're benefits benefits including our that's cost we're $XXX of next in a that which a will will including million think things whatever certainly year. worse. And of we here absorbing a thrown

more think So on that to reasons on a year bounce, there's growth ETS. I think do us is for XXXX

'XX. easier it consumers be that's I economics a heads helps get loaded XXXX, to second as think comps based second the half still our growth little the better. at year off But of and of seem be would half a and

Matthew Boss

And Great. follow-up. just maybe, a then Ryan,

retail flat any promotional about incremental half And the to as a the for on landscape? pricing front So think versus change XX% thinking margins sales you how 'XX, are and loading. backdrop back we half about

Ryan Gwillim

would the modest and as the standpoint, Matt, third Yes. of by say leverage helped that be portfolio. very across increases, to we would certainly, the way pricing That we've than incrementals from be your a that year engines, modest that the XXXX. boats done calendarization would half, a likely pricing just discount be to still increases planning elevated I second well. of in earnings continues your But versus will consumer are end our go both better and price our the very row levels

can the discounting. even product ago have have paying lot that of price the it where of places less a equal it what you or to what So months same the was because been than XX or for consumer actually would is is

take little wholesale, very, a we will So price very but of modest. it bit will at be

Operator

with next from Citi. question James Hardiman is Our

James Hardiman

inventory to piece. think of I answers. there, in more on some the I dig great and line little a Great wanted bit questioning

playing got to fourth retail yet like ago. largely anticipated we've cut the seems days or XX so quarter. pretty out steep is you as it a So And

unit was the is expect that interpret this retail as year. does there based even what response, today? And think here to sit a one-to-one you the than of inventories assumption we wholesale on as but on general to said you is Where sort previous finish I year answer did? today? in the should number you next So discussion the lower yes, for reduction for that we some about stand the to X,XXX previously think I year

Ryan Gwillim

Ryan. this is James, Yes,

good a the start assumption of that's think year. I start to the

X,XXX about correct in are You exceeding to boats by U.S. being wholesale about global retail units X,XXX on your the

will to continue boats engines and of pipeline. out the we So take pipelines,

You're about on another trailing going wholesale to U.S., number. XX,XXX the see to see in units the just you're as going engine retail about side

we're there's anticipate. I display, think that's we said, beginning don't except really up orders get I we to entire retail going to change, folks view the our can that think, quickly. is boat real across The products just sure seeing change on expectations to is, in channel If any it outperforming ability of been them that's on the shaping So the pipelines, quarter be balancing very Dave because a get of product quickly we're make cautious We here we environment beginning boats shows the initial get as from at cautiousness our up retail in last terms have just maybe the partners the and end in of out year. the season. can as

So our all of channel, leading -- cautiousness to come once be that we'll and supply in. in the just the in ready is orders product to

James Hardiman

the question this you'll to on XXXX, it that basis. next And sounds you're year earnings up an be like confident then Understood. on

about I pretty think months you're X ago. that confident

lower $X.XX, of trying 'XX XXXX than months Now on about any I'm come impact call cut Is to it down, the today in 'XX. guess, ago? I should 'XX lowering think should that to we X Or and light that was in be any we through, has Does way? think so the view them? it, how meaningful

David Foulkes

Yes.

of end. would some have this back next sales to which retail in up situation products we'll could might that the in. promoting to what matters, about anchor it of say end, if year-over-year that is the in is issue help I get retail things. year in the a will we is pipeline, pipeline, think out Retail sales end I the if think way we occurred hopefully, one the all get complete how in year. But is how wholesale year-over-year, early those is to that bit. And we to matters. we dynamic the extent, some pick that build I And what you think a what

that really going low and down. retail than decent moment, a with have a will flat. more we certainly have retail. with been and incredibly be we with the down wholesale the but dynamic, think And more fighting I probably expectation with probably and bit we've are at down retail dynamic pipelines And the it's -- been

I as -- long the holds retail as believe we constructive in, EPS. think every be balance to is there's So reason that probability that will will that for of

Operator

next Our Megan Morgan Stanley. Alexander from question is with

Megan Christine Alexander

question to Maybe there. up just on follow James'

expecting at, where Just that to thinking last weeks tell were you think, clarify, are XX%, And is you I global still on where us you today. quarter? hand to maybe around finish year this can is which

David Foulkes

At the it's of that... came quarter the XX think the end of and out quarter, weeks, I

Ryan Gwillim

XX, yes, U.S. the in

David Foulkes

end probably U.S. the end the high XXs up a in the in of -- year. by in end the we'll XX up

difficult exact is the hand think or the implications I XXX X bit to predict units. of unit now on like more on weeks getting XXX hand because week is

bit in in that the and XXs So in the particularly pipelines I are higher a the U.S. little say probably remains regions. of it Europe, high always just would some in

So end the up we'll probably XX-ish globally. range in

Megan Christine Alexander

Right.

and changed that So hasn't last thinking quarter. around hasn't to clarify, pipelines just changed really on hand your since really weeks

David Foulkes

No, that's I correct. think

probably to XX% on through the we probably -- obviously, more through year if that we're through And retail, the every to retail, we're XX% essentially retail. to in we than continue sure I be possibly way our the for monitor. I retail trying setting we're we can. close mean, probably of that And -- we'll up rest we're And XXXX. think -- focused make derisk that continue

yes, modest to pretty are impacts on. So retail be from going now

though modulate of homogenous global weeks kind and of it's is production. which fungible. kind and point we'll be, Maybe one continue So on obviously, hand, just talk number, to about is as a isn't. not would inventory It we

historically are on still for levels inventory low We product. premium

we XXXX. there we'd premium and into still comfortable with a room up where of be. as to building some probably that be products to for we are But level with I kind value So we product, think more is core our go want to go

Megan Christine Alexander

little maybe to I has maybe high And maybe ending I be in this of think question that's it. the -- understand you're me any asked just used bit Got past. know not it XXs, if you been a more help can where worse. And

So kind on up, that in year, to you of why order you retail -- be am the be just to to wrong that help hand would so for are seems next think way? about up. retail going of in XXXX? square Like that weeks there go above imply that the ship I could wholesale or Can potential thinking ahead

David Foulkes

by wholesale Yes. we produced down Production -- year, I down XX% We is to -- XX% retail will mean, down XX%. XX%. is our about be mean, this wholesale I down XX%, is about

but So flat mean level. retail year, down. equal down reaccelerate for to to And not next would basically year, XX% we're a the that at wholesale be, wholesale. next would example, we'll need retail down I require reacceleration of

XX,XXX about year the year. to So of as at I units in think the down, pipeline have end when versus manage this we we last continue

some do. do catch we production up to to catch-up So have some [indiscernible] and

Ryan Gwillim

Yes.

in ahead in year, 'XX. unlikely. of Just comment that not That was retail wholesale to in clear, 'XX be 'XX, that wholesale be very be 'XX be next the would above Megan, could would wholesale

main out if I And would trails wholesale we is amount one as making think go wholesale by retail Dave wholesale, next point, the this said, retail that a equal mean year. year in gains. significant one for

on clear. weeks just would I year. hand not be anticipate increasing want So next to We very

Operator

Our Wightman next Wolfe with question is from Research. Fred

Frederick Wightman

touch to wanted Mercury the just share I gains. on

to out wondering or there's not? you gained there think in in onetime said call points XXX if basis I'm the quarter. anything that I you

David Foulkes

would unusual production this environment. is a balance modulates focus There in to to really would say, in protect for the a quarter it's Yes. things OEM us, I as are on -- thing dynamics I and other say we no, but points mentioned year-to-date year. good the basis inventory the XXX lot of that of

we we share. see a continuing like nice see have some and well great us competitors or since so, our product points, exciting to really XXX the it's when numbers last obviously, So do to it's launched especially line. on in basis year have products

at basis year-to-date. share on upcoming Show. We But expect the a Fort the more bit to anchor do XXX in continue would I probably points well Lauderdale Boat to

Frederick Wightman

Okay. quarter, that there? that's retailer with the shifting into of inflection? well? a I think year-over-year do sort is future I for positioned stabilized big you're that we right out we the the Navico. to But the think in That's just and said not as feel Ryan, you a should expecting fair. or Or way aftermarket have And growth fourth be from shifts know to that to be Do been things like think timing perspective holiday. that there's bottomed some up about you that And it?

Ryan Gwillim

huge that's I a No, stability I And the I don't fair. mean, think board. across some showed Navico has inflection. think Fred, it's

You marine actually the the opportunity the both rest RV sales be of earnings in has to the and pretty should in surprising really OEM side, delivering the saw some does QX down, around margin. which sluggishness be continue aftermarket given kind and to sales marginally of up be better portfolio. OEM better and stable But

to certainly confidence Navico from really an expect important continue be year-over-year quarter last not ahead to of fourth would to be and comparison products wouldn't of year. than on growth out. the this And bit success on year little a the quarter-over-quarter the immediate, line the margin top I tougher the expect. I although stability but of going that us comparison, a milestone come to But fourth a going third It's here and quarter are overnight. but some fair a out, the probably new give quarter from It's quarter. be then is obviously does same, think Friday, earnings certainly will third what from quarter fourth inflection new be of which huge for drives kind to products Navico Black not in additional

Operator

Kennison Our Baird. with Craig next from question is

Craig Kennison

you been Dave, I'm you that mentioned both consumers. the any how the you some survey if that light just intent. survey with And in conducted wondering shed details has about on past? curious purchase more I'm predictive could

David Foulkes

XXX we surveys Craig, the about boaters yes, what monthly and and around we are. do understand of demographics boaters, intending

would going higher I the fence kind demand some this at the of to stable, them we core just think what's the year, I asked exactly people in try We trajectory offhand of and income contemplating at a the that percentages contemplating things. moment. the number interest other intent remains about interest saw latent higher of boaters. clearly there's patterns value I me. uncertainty household rates, this kind of behavior. with go are and outcomes be of look Purchase behavior. say of the And and up. influencing contemplating building election don't have we that on element but rates, time, But questions So

see will the other which think So I premium demand. expect we come to I to some first on we that, once of in do is we're through would latent beginning get that see. more what And the side essentially segment,

range interest driven X.X% point sentiment previously. to XX were translated to Those down third by over boat basis positive in quarter X% cuts the So that's cut They basis more the about so possibly loans XXX are now was about rate the of in the -- X.X%. cuts. $XXX,XXX financing points to rates,

then terms we So And of there promotions things seen happening have in good financing available. additional are costs. obviously, generally

excited So it show, coming to show. good Fort how see That's that we will and a Lauderdale consumers behave are premium be up. at about

Operator

is Our from with question Truist Securities. next Mike Swartz

Michael Swartz

just quarter. operating of question. a I number talked big and engine in Maybe you've business, this think parts And accessories step the up times, about margin the but first in the

of of out just know there's I But history. company seasonality is quarterly the us give you I you margin called lot think is in can highest that of, guess, how sense a sustainable? here. a I much

XX% don't saw? maybe how sense give some that thing versus some you of that a type -- is margins I much there's of XX%, structural every onetime-ish intra-quarter expect But like us sustainable just So quarter.

Ryan Gwillim

quarter, is this strong on gross good the for highlighting lot it margins. great third operating this I think this strong of of the take that's Yes, it the And a side. do one. still operating here mix obviously, business, the business. I is pretty mean, part and obviously, distribution right a versus just I'll party. that's just milestone. distribution A distribution, business it's XX% And some really stability up Mike, year. product the of products to although margins depends business within pulled full Yes, a third-party a Obviously, pretty marched

margins business sell-through it's So where are lower. a

And things margins, I our getting dynamics to beneficial is where Brownsburg, out customers. that's cost. more the the you the thing say of Indiana those the mix around stand and depends distribution lot quicker will on versus a of from transition product are now through complete, better a standpoint. of and to international is shown a So one we world quarterly are product really product out at quicker all X right? to More being solely able go

we get it's where say to it But now XX% quarter. not every what fair going yes, they quickly so partners to value, and general at right out we there's that our know product can cost So have the certainly, need. see out that the you're get

continued growth 'XX. as anticipate should we into there you go and stability margin, So

David Foulkes

We've we're a fall in good business. in taken the summer been bit It's voting seeing would late efficient. maybe has the actually don't the say cost I I activity. even of pretty quite that and -- nice. out very really that October, weather of some

a So boost that's of possibly as well. a part

Michael Swartz

following just you this think, you've environment? much million of And before, back business $XXX should say, on, flattish mentioned taken Great. Okay. in, I a retail come about to expect year. out up Ryan, How we from costs let's that had

Ryan Gwillim

initial to more in budget, million million Yes. But of would 'XX. from right? $XX XX number and about So And our out further think so. 'XX, could $XXX absorbing is the Freedom Boat that's like versus I Flite until the $XX XXXX from cost or keep XX in million, again, OpEx stays as deals the you Club completed that of we have that and notice. think were FX

of things a back that better, like support. IT to It's or time. are marketing we things and over the add that would Now these make lot we'd whether sales other in businesses run things it's like

stay like able it 'XX really until up, general, sales the we'd and generate early to of we're like million in million back not and more it's you and So picks look $XX to $XX at out out certainly, that But forever. 'XX market can as cover those costs.

Operator

from Our next Paribas. Xian BNP Siew is question with

Xian Siew Hew Sam

driving ask pretty And potentially propulsion to in think about, XQ relative on margin. back you propulsion that quarter? historical. to step seems guess, wanted implied It just of down I'm the how I bounce to next I low back. or margin kind the be bounce the what next curious on year like

David Foulkes

Yes.

like will year-over-year. I be down XX% volumes think

So holding absorption of there. is a is margins to component big staying be at pretty I going in would mix say generally that well.

the component absorption probably is of that. So biggest

Ryan Gwillim

It were out year. one last of to this one definitely in of is. retail in we XXX-horsepower with QX year. still filling XXX- pipelines We're And

other have 'XX So does But rightfully main inventory volume. production protect want for and driver. in quarter in to because fund negative you like the that's be hard fourth to don't that and an a with the significantly ready down absorption that's that's is we to overcome, carry the level

David Foulkes

On can't to out. you It time. take headcount more out positive Yes. note, a when bit take want it exactly takes a of you little

So some here that for headwinds first next year, recur quarter when be won't of will headwinds in of out. are the the the trailing example, headcount

for worse there's been might of been it have incrementally lower instantaneously kind that transition volume. in element everything little absorption makes bit a had a So here that of corrected

Xian Siew Hew Sam

internationally, thoughts I take, to need And And we you weeks higher guess, hand there. bit destock on of mentioned a you on Any Got of are kind weakening Okay. bit do into like where to I would a saw year? it. Europe, think pipeline? of kind further international on you then next

David Foulkes

for over exactly of higher, terms controlling is right to that are the overall levels. our the Europe we in and a bit International here thing doing little pipelines we're always doing same

it. you that's -- the we Europe, product I produce case. Europe mean, close about not -- quite In sell we the to think in our U.S., a If in lot the of where

around we things. transit have lot a So and just other more inventory for just

level continuing an the unusual in take not to we're right but action. So of situation on pipelines,

Operator

with Joe James. question is Raymond next Our Altobello from

Joseph Altobello

to Just inventory to back second. for a go want

mentioned I you're in be to you and year-end, think the at high weeks XXs. expecting here XX you're U.S.

think XX I at last you year. were

it's the or weeks more sports, they at any inventory on from look you moving towards efficient dealer pushback holding that's power and you If case? other be to your all seeing RVs Are industries, partners model a hand. that, whether less seem

David Foulkes

think we levels. setting in with Joe, collaborate, partners I dealer our inventory

the at so become is other at that like other I you is around many higher quantities be are at market in low, think hand now weeks per an means what inventory more absolute that higher the threshold. a might On by essentially important. think segment about the certainly how or is much low There There's is certain much low. much -- basis, present look considerations weeks on we on market might level, hand. level But least globally of we if of just moment. because level. if A terms happening boats it you units, considerations market at which at a dealer XX,XXX have inventory it's

U.S. have We in than probably more locations X,XXX dealer the

them they them our if boats, product multiple it's then product and of to XX XX,XXX representation have So want have of good all a Many lines. boats, we lines. carry

are I fast going as they to to levels say continue otherwise. inventory would fall lower, So not as might as they become

factors cases, other efficiency, option us, stuff don't are terms a and in lot there and of in colors inventory. content but maybe at -- In of are for specifying dealers, I play industries, on other

align need orders. them to we dealer with specific So

production versus saw I dealers where COVID going the we am product in to on are on we weeks in that So of were not a anticipating kind significant change slots long-term statistically see as hand. ground selling

Joseph Altobello

Okay. follow-up promotions That's to decision on helpful. pull that Can And in a that. on made speak the QX. to you just kind of you back

you to to QX? orders wanted forward. you call Were that think I avoid an seeing in were excessive up pull actually take you indication wholesale dealers what looking

David Foulkes

pushing don't there's No, dealers think do And essentially, enough where for orders. waiting inventory, there'll them as to rather be pull mean plenty soon of into couple I is to for of them think thing at learn I we just then But to dealers of about. I versus boats behaviors get is, the it be have things whatever a were. selling don't dealers. next dealers And situation don't I'd particularly as they think feel when want other the pulp. promotion, the we

I We break have of good And is to to time habit. a now think. do that kind it,

Operator

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

David Foulkes

your questions, appreciate for it. much really very all you Thank

recover conditions, a very in I levers controllable Hurricane terms an our for we've headwind impacts given minor. hope the the that but quarter, severely business Obviously, also of businesses do to and of product fresh and were us the line think very and to position those the well XXXX. our additional QX think quickly. individuals XXXX were Saline maximizing impacted relatively used close Milton levels in market potential families hurricanes We business direct the more come I to in by and were inventory in that unwanted and our

quarter, of of experience As of senior leadership most of our the Navico aspects executed strategy. we the changes sequence you will with also the and some leaders accelerating have intention broadening senior Group the seen a in

get in are done to that pleased of with and So settling the enthusiasm. well leaders new a extremely lot

in our about next very much. I'm debut that brands that. products very XXXX. from products the Fort said, week We're up where, also much we very forward you to attending as new I keep we'll show range excited of Lauderdale investing exciting looking a So number for set a to Thank of big those

Operator

Thank you. conference. conclude This today's will

you this your may thank lines for at participation. disconnect and time, your You

Brunswick (BC) 24 Oct 242024 Q3 Earnings call transcript