Q2 2025 Brunswick Corp Earnings Call

July 24, 2025

At today's meeting will be recorded if you have any objections you may disconnect. At this time I would like to introduce Steven Weiland Senior Vice President and Deputy CFO of Brunswick Corporation.

Speaker Change: Good morning, and thank you for joining US with me on the call. This morning is David Foulkes, Brunswick's, Chairman and CEO and Brian Willem Brunswick CFO.

Speaker Change: Before we begin with our prepared remarks, I would like to remind everyone that during this call. Our comments will include certain forward looking statements about future results.

Speaker Change: Please keep in mind that our actual results could differ materially from these expectations.

Speaker Change: For details on these factors to consider please refer to our recent SEC filings and today's press release all of these documents are available on our website at Brunswick Dot com.

Speaker Change: During our presentation, we will be referring to certain non-GAAP financial information reconciliations of GAAP to non-GAAP financial measures are provided in the appendix to this presentation and the reconciliation sections of the unaudited consolidated financial statements accompanying today's results.

Dave: I'll now turn the call over to Dave.

Dave: Thanks, Steve and good morning, everyone.

Speaker Change: Brunswick delivered strong second quarter results.

Speaker Change: Power of our market, leading products and brands efficient operational execution and cost control.

Speaker Change: Continued prudent pipeline inventory management and the benefits from the resilient recurring aftermarket focus portions of our portfolio.

Speaker Change: Resulted in second quarter financial performance ahead of expectations.

Speaker Change: This is despite the challenging macro environment and uncooperative weather in many parts of the U S through the first two months of the quarter.

Speaker Change: Year to date, both unit retail sales in the value category underperformed, our initial expectations for the year.

Speaker Change: But continued overall resilience in the premium in core categories.

Speaker Change: Combined with improving retail sales trends in July is expected to provide a floor for wholesale performance in the second half of the year.

Speaker Change: Tariffs continue to directly impact our earnings and add uncertainty for both our end consumers and channel partners.

Speaker Change: But all our businesses are executing strongly on our mitigation plans, resulting in a smaller net tariff impact than originally anticipated.

Speaker Change: Against this backdrop, we are pleased to report second quarter sales of $1 $4 billion.

Speaker Change: Up slightly from prior year.

Speaker Change: And earnings per share of $1 16.

Speaker Change: Both exceeding the top end of our guidance and sequentially up from the first quarter.

Unknown Executive: Tariffs continue to directly impact our earnings and add uncertainty for both our end consumers and channel partners. But all our businesses are executing strongly on their mitigation plans, resulting in a smaller net tariff impact than originally anticipated.

Tariffs continue to directly impact our earnings and add uncertainty for both our end consumers and channel partners.

Speaker Change: Earnings were impacted by the reinstatement of variable compensation and the effects of tariffs.

But all our businesses are executing strongly on our mitigation plans, resulting in a smaller net tariff impact than originally anticipated.

Speaker Change: But were consistent year over year, excluding those items.

Speaker Change: Our continuing highlight of our financial performance is our free cash flow.

David Foulkes: Against this backdrop, we are pleased to report second quarter sales of $1.4 billion, up slightly from prior year. and earnings per share of $1.16. both exceeding the top end of our guidance and sequentially up from the first quarter. Earnings are impacted by the reinstatement of variable compensation and the effects of tariffs. but were consistent year over year excluding those items. A continuing highlight of our financial performance is our free cash flow. We had another quarter of outstanding free cash flow generation. with $288 million of free cash generated in the quarter. A record for any second quarter in company history.

Against this backdrop, we are pleased to report second quarter sales of $1 $4 billion up slightly from prior year.

Speaker Change: We had another quarter of outstanding free cash flow generation.

Speaker Change: With $288 million of free cash generated in the quarter.

Earnings per share of $1 16.

Speaker Change: A record for any second quarter in company history.

Both exceeding the top end of our guidance and sequentially up from the first quarter.

Speaker Change: This performance also resulted in a record first half free cash flow of $244 million.

Earnings were impacted by the reinstatement of variable compensation and the effects of tariffs.

Speaker Change: But $279 million improvement versus first half 2024.

But were consistent year over year, excluding those items.

Our continuing highlights of our financial performance is all free cash flow.

Speaker Change: The free cash generated in the past three quarters represents the largest free cash flow generation and any fall through second quarter period in Brunswick history.

We had another quarter of outstanding free cash flow generation.

With $288 million of free cash generated in the quarter.

Speaker Change: In summary, despite everything going on around US Brunswick was firing on all cylinders in the second quarter.

A record for any second quarter in company history.

David Foulkes: This performance also resulted in a record first half free cash flow of $244 million. A $279 million improvement versus first half 2024. The free cash generated in the past three quarters represents the largest free cash flow generation in any fourth through second quarter period in Brunswick history.

Speaker Change: But of course next never rest when we are fully committed to doing a lot more.

This performance also resulted in a record first half free cash flow of $244 million.

Speaker Change: Including progressing certain rationalization manufacturing capacity optimization actions in the second half of the year to improve profitability and cash flow in several of our businesses.

$279 million improvement versus the first half of 2024.

The free cash generated in the past three quarters represents the largest free cash flow generation and any fall through second quarter period in Brunswick history.

Speaker Change: While still driving incremental product cost and operating expense reductions and maximizing the positive impacts of our cash generation on our capital strategy.

David Foulkes: In summary, despite everything going on around us, Brunswick was firing on all cylinders in the second quarter, but of course, next never rests. and we are fully committed to doing a lot more. including progressing certain rationalization and manufacturing capacity optimization accidents in the second half of the year to improve profitability and cash flow in several of our business. while still driving incremental product cost and operating expense reduction. and maximizing the positive impact of our cash generation on our capital strata. Overall results were supported by performance ahead of or in line with expectations for each of our segments.

In summary, despite everything going on around US Brunswick was firing on all cylinders in the second quarter.

Speaker Change: Overall results were supported by performance ahead of or in line with expectations for each of our segments.

But of course next never rest when we are fully committed to doing a lot more.

Speaker Change: Our propulsion business delivered strong year over year sales growth.

Including progressing certain rationalization manufacturing capacity optimization actions in the second half of the year to improve profitability and cash flow and several of our businesses.

Speaker Change: With shipments to U S OEM customers outpacing expectations.

Speaker Change: Resulting in sequentially improved earnings despite the anticipated tariff and absorption headwinds.

It's still driving incremental product cost and operating expense reductions and maximizing the positive impacts of our cash generation on our capital strategy.

Speaker Change: Mercury's outboard engine lineup continues to take market share.

Speaker Change: Danny over 300 basis points of U S retail share in outboard engines over 300 horsepower in the quarter.

Overall results were supported by performance ahead of or in line with expectations for each of our segments.

Speaker Change: And 30 basis points of share overall on a rolling 12 month basis.

David Foulkes: A propulsion business delivered strong year-over-year sales growth. with shipments to U.S. OEM customers outpacing expectations. resulting in sequentially improved earnings despite the anticipated tariff and absorption headwinds. Mercury's outboard engine lineup continues to take market share, gaining over 300 basis points of U.S. retail share in outboard engines over 300 horsepower in the quarter. and 30 basis points of share overall on a rolling 12-month basis. Despite the heavy wholesale shipments by competitors ahead of tariffs being implemented on Japanese imports. Mercury's leadership in high horsepower outboard engines will be further reinforced by the new 425 and 350 horsepower engines launched earlier this week, with performance, smoothness, quietness, weight, and other attributes far ahead of the competition.

Our propulsion business delivered strong year over year sales growth with.

Speaker Change: Spite heavy wholesale shipments by competitors ahead of tariffs being implemented on Japanese imports.

With shipments to U S OEM customers outpacing expectations.

Speaker Change: Mercury's leadership in high horsepower outboard engines will be further reinforced by the new $4 25, and 350 horsepower engines launched earlier this week with performance smoothness quietness weight and other attributes far ahead of the competition.

Resulting in sequentially improved earnings despite the anticipated tariff and absorption headwinds.

Mercury's outboard engine lineup continues to take market share.

Danny over 300 basis points of U S retail share in outboard engines over 300 horsepower in the quarter.

Speaker Change: Our engine parts and accessories business had another strong quarter.

And 30 basis points of share overall on a rolling 12 month basis.

Speaker Change: With slight year over year sales growth and steady earnings despite a weather affected start to the boating season.

Spike heavy wholesale shipments by competitors ahead of tariffs being implemented on Japanese imports.

Speaker Change: This is primarily aftermarket based business continues to derive it success from stable boating participation and the world's largest marine distribution network.

Mercury's leadership in high horsepower outboard engines will be further reinforced by the new 425, and 350 horsepower engines launched earlier this week with performance smoothness quietness wage and other attributes far ahead of the competition.

Speaker Change: Which in the U S gained 180 basis points of market share, resulting from our ability to support same day or next day delivery for most locations in the world.

Yeah.

David Foulkes: Our Engine Parts and Accessories business had another strong quarter. with slight year-over-year sales growth and steady earnings, despite a weather-affected start to the boating season. This primarily aftermarket-based business continues to derive its success from stable boating participation and the world's largest marine distribution network. which in the U.S. has gained 180 basis points of market share resulting from our ability to support same day or next day deliveries to most locations in the world. Navico Group had slightly lower sales versus the second quarter of 2024, with aftermarket sales and sales to marine OEMs modestly lower. However, sales trends continue to improve each month in the quarter.

Oh engine parts and accessories business had another strong quarter.

Speaker Change: Medical group at slightly lower sales versus the second quarter of 2024 with aftermarket sales and sales to marine Oems modestly lower.

With slight year over year sales growth and steady earnings despite a weather affected start to the boating season.

This is primarily aftermarket based business continues to derive it success from stable boating participation and the world's largest marine distribution network.

Speaker Change: However, sales trends continued to improve each month in the quarter.

Speaker Change: Medical group earnings remained consistent with first quarter levels and were driven by enthusiastic customer acceptance of new products and steady operational performance.

In the U S gained 180 basis points of market share, resulting from our ability to support the same day or next day delivery to most locations in the world.

Speaker Change: Year to date revenue fanatical group, it's only down two 5% versus the first half of 2020 for.

Now the Ko group had slightly lower sales versus the second quarter of 'twenty 'twenty four is aftermarket.

Speaker Change: Led by steady performance from the group's aftermarket businesses.

Aftermarket sales and sales to marine Oems modestly lower.

Speaker Change: Restructuring actions continued to gain traction despite tariffs and market headwinds.

However, sales trends continued to improve each month of the quarter.

Speaker Change: In the quarter, we consolidated two production locations and transferred European distribution to a three PL.

David Foulkes: Navigal Group earnings remain consistent with first quarter levels and were driven by enthusiastic customer acceptance of new products and steady operational performance. Year-to-date revenue for Navical Group is only down 2.5% versus the first half of 2024. led by steady performance from the group's aftermarket. Restructuring actions continue to gain traction despite tariff and market headwinds, and in the quarter, we consolidated two production locations. and transferred European distribution to a 3PL.

Medical group earnings remain consistent with first quarter levels and were driven by enthusiastic customer acceptance of new products and steady operational performance.

Speaker Change: While in July we implemented a leaner organizational structure that will reduce expenses and increase agility.

Year to date revenue fanatical group, it's only down two 5%. So this is the first half of 'twenty 'twenty four.

Speaker Change: Our pulp business had lower overall sales, mainly resulting from weakness in value categories, but outperformed the market and some other key categories.

Led by steady performance from the group's aftermarket businesses.

Restructuring actions continued to gain traction despite tariffs and market headwinds and in the quarter, we consolidated two production locations and transferred European distributions with three PL.

Speaker Change: <unk> overall market share gains.

Speaker Change: And has delivered 30, new model launches year to date.

Speaker Change: In response to the types of value fiberglass market, we have rationalized our value fiberglass model lineup by 25% for the 2026 model year.

David Foulkes: While in July, we implemented a leaner organizational structure that will reduce expenses and increase agility. Our bulk business had lower overall sales, mainly resulting from weakness in value categories, but outperformed the market in some other key categories. resulting in overall market shake. and has delivered 30 new model launches year to date. In response to the tighter value fiberglass market, we have rationalized our value fiberglass model lineup by 25%. for the 2026 model year.

While in July we implemented a leaner organizational structure that will reduce expenses and increase agility.

Speaker Change: Dealer inventories remain healthy.

Our pulp business had lower overall sales mainly resulted from weakness in value categories, but outperformed the market and some other key categories.

Speaker Change: Freedom Boat club continues its journey of profitable growth launching its first club in the middle East located in Dubai.

Speaker Change: And with plans for additional expansion.

<unk> overall market share gains.

Speaker Change: Further reinforcing its position as the world's largest and only global boat club.

And it's delivered 30, new model launches year to date.

Speaker Change: Now looking at external factors, we see some areas of continued uncertainty, but also some emerging bright spots compared with the first quarter.

In response to the types of value fiberglass market, we have rationalized our value fiberglass model lineup by 25% for the 2026 model year.

Speaker Change: Interest rates remained steady with the potential for improvements.

David Foulkes: Dealer inventories remain healthy, and Freedom Boat Club continues its journey of profitable growth, launching its first club in the Middle East, located in Dubai. and with plans for additional expansion. further reinforcing its position as the world's largest and only global boat club.

Dealer inventories remain healthy.

Speaker Change: And foreign exchange tailwind should benefit our predominantly U S based business.

Freedom Boat club continues its journey of profitable growth launching its first club in the middle East in Dubai.

Speaker Change: In addition, the one big Beautiful Bill Act favorably address tax increases that were previously scheduled to take effect and.

And with plans for additional expansion.

Further reinforcing its position as the world's largest and only global boat club.

Speaker Change: And restored key pro business provisions such as full expensing of U S. R&D.

David Foulkes: Now looking at external factors, we see some areas of continued uncertainty but also some emerging bright spots compared with the first quarter. Interest rates remain steady with a potential for improvement. and Foreign Exchange Tailwinds should benefit a predominantly U.S. based business. In addition, the One Big Beautiful Bill Act favorably addressed tax increases that were previously scheduled to take effect and restored key pro-business provisions such as full expensing of U.S. R&D. We are still analyzing the impact of all these changes on a global basis, but anticipate a significant positive cash flow impact moving forward. Brunswick continues to actively monitor and manage tariff exposure.

Now looking at external factors, we see some areas of continued uncertainty, but also some emerging bright spots compared with the first quarter.

We are still analyzing the impact of all these changes on a global basis, but anticipate a significant positive cash flow impact moving forward.

Interest rates remained steady with the potential for improvements.

Speaker Change: Brunswick continues to actively monitor and manage tariff exposure.

And foreign exchange tailwind should benefit all predominantly U S based business.

Speaker Change: A coordinated team across trade compliance supply chain and finance analyzes the latest updates implements mitigation and continually refines our forecast.

In addition, the one big Beautiful Bill Act favorably address tax increases that were previously scheduled to take effect and restored key pro business provisions such as full expensing of U S. R&D.

Speaker Change: Despite recent tariff increases for some countries.

Speaker Change: Overall, we've revised down our estimate for total potential net exposure.

We are still analyzing the impact of all these changes on a global basis, but anticipate significant positive cash flow impact moving forward.

Speaker Change: Brian will go into more detail, but I will again stress that despite the negative direct impact of tariffs on our earnings.

Brunswick continues to actively monitor and manage tariff exposure.

Speaker Change: Given our primarily U S based vertically integrated engine, a boat manufacturing base and predominantly domestic supply chain.

David Foulkes: Our coordinated team across trade compliance, supply chain, and finance analyzes the latest updates, implements mitigations, and continually refines our forecast. Despite recent tariff increases for some countries, Overall, we've revised down our estimate for total potential net exposure. Ryan will go into more detail, but I will again stress that despite the negative direct impact of tariffs on our earnings, Given our primarily U.S.-based, vertically-integrated engine- and boat-manufacturing base and predominantly domestic supply chain, and the fact that we manufacture almost all our boats for international markets within those markets. We remain competitively well positioned in an environment of persistent tariffs.

A coordinated team across trade compliance supply chain and finance analyzes the latest updates implemented mitigation and continually refines our forecast.

Speaker Change: And the fact that we manufacture almost all our boots boats for international markets within those markets.

Despite recent tariff increases to some countries overall.

Speaker Change: We remain competitively well positioned in an environment of persistent tariffs.

Overall, we've revised down our estimate for total potential exposure.

Speaker Change: In addition, our leading position and scale affords us the resources and sophistication to effectively manage this complex evolving situation.

Brian will go into more detail, but I will again stress that despite the negative direct impact of tariffs on our earnings.

Speaker Change: Including through the deployment of AI tools.

Speaker Change: Given our primarily U S based vertically integrated engine, a boat manufacturing base and predominantly domestic supply chain.

Speaker Change: We see an improvement in longer term dealer sentiment and inventory comfort, which is moving closer to historical norms.

Speaker Change: And the fact that we manufacture almost all our boots boats for international markets within those markets.

Boating participation remains strong with uptick throughout the quarter.

Speaker Change: <unk> traffic is stable and we have seen a slight increase in people considering a bulk purchase in the next 12 months.

Speaker Change: We remain competitively well positioned in an environment with tariffs.

David Foulkes: In addition, our leading position in scale affords us the resources and sophistication to effectively manage this complex, evolving situation. including through the deployment of AI tools. We see an improvement in longer term dealer sentiment and inventory comfort, which is moving closer to historical norms. Voting participation remains strong with upticks throughout the quarter. Sea lift foot traffic is stable, and we have seen a slight increase in people considering a boat purchase in the next 12 months. OEM production rates were up over the second half of last year and while overall retail was down for the quarter, July is off to a strong start.

Speaker Change: In addition, our leading position and scale affords us the resources sophistication to effectively manage this complex evolving situation.

Speaker Change: OEM production rates were up over the second half of last year.

Speaker Change: While overall retail was down for the quarter July is off to a strong start.

Speaker Change: Including through the deployment of AI tools.

Speaker Change: We are using competitive incentives where appropriate to support second half sales.

Speaker Change: We see an improvement in longer term dealer sentiment and inventory conflict, which is moving closer to historical norms.

Speaker Change: And are continuing to invest in and derive benefits from the latest digital marketing technologies to generate more leads and optimize conversion.

Speaker Change: Boating participation remains strong with uptick throughout the quarter.

Speaker Change: He left foot traffic is stable and we have seen a slight increase in people considering a bulk purchase in the next 12 months.

Speaker Change: Overall, while we remain mindful of the dynamic macroeconomic backdrop and soft consumer sentiment.

William: Well William production rates were up over the second half of last year.

Speaker Change: Some reasons for cautious optimism as we progress through early Q3.

William: While overall retail was down for the quarter July is off to a strong start.

Speaker Change: Moving now to industry retail performance.

David Foulkes: We're using competitive incentives where appropriate to support second-half sales and are continuing to invest in and derive benefits from the latest digital marketing technologies to generate more leads and optimize conversions.

Speaker Change: Outboard engine industry retail units declined 6% in the quarter.

William: We are using competitive incentives where appropriate to support second half sales and are continuing to invest in and derive benefits from the latest digital marketing technologies to generate more leads and optimize conversion.

Speaker Change: With Mercury, gaining 30 basis points of share on a rolling 12 month basis.

Speaker Change: 140 basis points of share in the same timeframe on engines of 150 horsepower and greater.

David Foulkes: Overall, while we remain mindful of the dynamic macroeconomic backdrop and soft consumer sense There are some reasons for cautious optimism as we progress through early Q3.

William: Overall, while we remain mindful of the dynamic macroeconomic backdrop and soft consumer sentiment and.

Speaker Change: Mercury continues to gain share internationally with a 170 basis points of share gain in Canada over the past 12 months and strength in high horsepower sure continuing around the globe.

William: Some reasons for cautious optimism as we progressed through early Q3.

David Foulkes: Moving now to industry retail performance. Outboard Engine Industry Retail Units declined 6% in the quarter. with Mercury gaining 30 basis points of share on a rolling 12-month basis. and 140 basis points of share in the same time frame on engines 150 horsepower and greater. Mercury continues to gain share internationally, with 170 basis points of share gain in Canada over the past 12 months and strength in high horsepower share continuing around the globe. As of the latest SSI reporting for May, U.S. main powerboat industry retail was down modestly year-to-date, with Brunswick's boat brands outperforming the industry.

William: Moving now to industry retail performance.

Speaker Change: As of the latest Ssi reporting from a U S main powerboat industry retail was down modestly year to date with Brunswick boat brands outperforming the industry.

William: Outboard engine industry retail units declined 6% in the quarter.

William: With Mercury, gaining 30 basis points of share on a rolling 12 month basis.

William: 140 basis points of share in the same timeframe on engines of 150 horsepower and greater.

Speaker Change: Since the beginning of June internal Brunswick U S retail has improved.

Speaker Change: Registrations only down mid single digit percent over the same period in 2024.

William: Mercury continues to gain share internationally with 170 basis points of share gain in Canada over the past 12 months and strength in high horsepower share continuing around the globe.

Speaker Change: On a global basis first half retail remained very steady for our premium brands, including Boston Whaler Sea Ray ban.

William: I thought the latest Ssi reporting from a U S main powerboat industry retail was down modestly year to date with Brunswick boat brands outperforming the industry.

Speaker Change: And as a whole for our core brands.

Speaker Change: Retail performance for our value brands continues to be challenged and as noted we are working to optimize the profitability of these brands at reduced production volumes.

David Foulkes: Since the beginning of June, internal Brunswick U.S. retail has improved, with registrations only down mid-single-digit percent over the same period in 2024. On a global basis, 1st Half Retail remained very steady for our premium brands, including Boston Whaler, Searay, Lund, and Navan, and as a whole for our core brands. Retail performance for our value brands continues to be challenged, and as noted, we're working to optimize the profitability of these brands that reduce production volume. We have continued to diligently manage both pipeline levels, and second quarter U.S. wholesale shipments were down 9%, resulting in an 11% reduction in U.S.

William: Since the beginning of June internal Brunswick U S retail has improved.

Speaker Change: We have continued to diligently manage both pipeline levels and second quarter U S. Wholesale shipments were down 9%, resulting in an 11% reduction in U S pipelines.

William: Registration is only down mid single digit percent over the same period in 2024.

William: On a global basis first half retail remained very steady for our premium brands, including Boston Whaler Sea Ray ban.

Speaker Change: Our over 1200 fewer units versus last year.

Speaker Change: Global pipelines are down 2300 units over the same period, reflecting our continued focus on maintaining the freshest inventory in market.

William: And as a whole for our core brands.

William: Retail performance for our value brands continues to be challenged and as noted we are working to optimize the profitability of these brands that reduced production volumes.

Speaker Change: Lastly, as I indicated earlier according to internal data July retail for essentially all of our businesses has accelerated and is trending positive versus July 2020 for.

William: We have continued to diligently manage both pipeline levels and second quarter U S. Wholesale shipments were down 9%, resulting in an 11% reduction in U S pipelines.

Speaker Change: Giving us and our channel partners positive momentum to start the back half of the year.

David Foulkes: pipelines. or over 1,200 fewer units versus last year. Global pipelines are down 2,300 units over the same period, reflecting our continued focus on maintaining the freshest inventory and market.

William: Moreover, 1200 fewer units versus last year.

Speaker Change: Before turning the call over to Ryan I want to highlight the diligent efforts across our enterprise. The resulted in record free cash flow. Despite some inventory banking for tariff mitigation and continue to support our investment grade credit profile.

William: Global pipelines are down 2300 units over the same period, reflecting our continued focus on maintaining the freshest inventory in market.

David Foulkes: Lastly, as I indicated earlier, according to internal data, July retail for essentially all our businesses has accelerated and is trending positive versus July 2024, giving us and our channel partners positive momentum to start the back half of the year.

William: Lastly, as I indicated earlier according to internal data July retail for essentially all of our businesses has accelerated.

Ryan: Our strong Q1 cash performance continued into the second quarter.

Ryan: And in the first half of the year, we delivered $244 million of free cash flow.

William: <unk> positive versus July 2024.

Ryan: Up $279 million versus the prior year.

William: Giving us and our channel partners positive momentum just thought the back half of the year.

Ryan: We have delivered $1 5 billion of free cash flow since 2021, and a record 502020 $2 million in the last three quarters is very dynamic and challenging market conditions.

David Foulkes: Before turning the call over to Ryan, I want to highlight the diligent efforts across our enterprise that resulted in record free cash flow, despite some inventory banking for tariff mitigation, and continue to support our investment grade credit profile. A strong Q1 cash performance continued into the second quarter. And in the first half of the year, we delivered $244 million of free cash flow up $279 million versus the prior year. You've delivered $1.5 billion of free cash flow since 2021 and a record $520.22 million in the last three quarters in very dynamic and challenging market conditions.

William: Before turning the call over to Ryan I want to highlight and diligent efforts across our enterprise. The resulted in record free cash flow. Despite some inventory banking for tariff mitigation and continue to support our investment grade credit profile.

Ryan: Our balance sheet remains very healthy with no debt maturities until 2029, and an attractive cost of debt maturity profile.

William: Our strong Q1 cash performance continued into the second quarter.

Ryan: And in the first half of the year, we delivered $244 million of free cash flow.

Ryan: Given our continued strong cash performance, we're increasing our previous debt reduction guidance for 2025 by $50 million.

Ryan: Up 279 million versus the prior year.

Ryan: So a total target of $175 million for the year.

Ryan: You delivered $1 5 billion of free cash flow since 2021 and a record 520 to 22 million in the last three quarters is very dynamic and challenging market conditions.

Ryan: With this increase in our 2025 debt reduction target by.

Ryan: By year end, we are on track to retire $350 million of debt since 2023.

David Foulkes: Our balance sheet remains very healthy, with no debt maturities until 2029, and an attractive cost of debt and maturity process. Given our continued strong cash performance, we're increasing our previous debt reduction guidance for 2025 by $50 million. to a total target of $175 million for the year. With this increase in our 2025 debt reduction target, by year end, we are on track to have retired $350 million of debt since 2023. We remain on the path of returning to our long term net leverage target of below two times EBITDA. We're accomplishing this while maintaining significant financial flexibility, as evidenced by a commitment to our investment grade credit rate.

Ryan: Our balance sheet remains very healthy with no debt maturities until 2029, and an attractive cost of debt maturity profile.

Ryan: We remain on the path of returning to our long term.

Ryan: Net leverage target of below two times EBITDA.

Ryan: We are accomplishing this while maintaining significant financial flexibility as evidenced by our commitment to our investment grade credit rating.

Ryan: Given our continued strong cash performance, we're increasing our previous debt reduction guidance for 2025 $50 million.

Ryan: So a total target of 175 million for the year.

Ryan: At quarter end, we will have $1 3 billion liquidity, including full access to our undrawn revolving credit facility.

Ryan: With this increase in our 2025 debt reduction target by.

Ryan: By year end, we are on track to have retired $350 million of debt since 2023.

Ryan: I want to thank the entire Brunswick team for their disciplined focus on execution driving efficiencies working capital management optimization of capital expenditures and many other actions that together allow us to return capital to shareholders, while maintaining financial flexibility and opportunistically reducing leverage.

Ryan: We remain on the path of returning to our long soon.

Ryan: Net leverage target of below two times EBITDA.

Ryan: We are accomplishing this while maintaining significant financial flexibility as evidenced by an commitment to our investment grade credit rating.

Ryan: <unk>.

Ryan: Our cash generation profile and investment grade credit rating are important to our business and also differentiate brunswick and our industry and sector.

David Foulkes: At quarter end, we'll have $1.3 billion in liquidity, including full access to our undrawn revolving credit facility.

Ryan: At quarter end, we will have one $3 billion liquidity, including full access to our undrawn revolving credit facility.

Ryan: I'll now turn the call over to Ryan to provide additional comments on our financial performance and outlook.

David Foulkes: I want to thank the entire Brunswick team for their disciplined focus on execution, driving efficiencies, working capital management, optimization of capital expenditures, and many other actions that, together, allow us to return capital to shareholders while maintaining financial flexibility and opportunistically reducing leverage. Our cash generation profile and investment grade credit rating are important to our business and also differentiate Brunswick in our industry and sector.

Ryan: Thanks, Dave and good morning, everyone.

Ryan: <unk> second quarter results are suddenly ahead of expectations.

Ryan: Sales were up slightly over second quarter 2024, as steady wholesale ordering by dealers and Oems together with modest pricing benefits offset the impact of continued challenging consumer demand market conditions.

Ryan: <unk>.

Ryan: Our cash generation profile and investment grade credit rating are important to our business and also differentiate brunswick and our industry and sector.

Ryan: Operating earnings and EPS were ahead of guidance expectations, but down versus prior year as the impacts of tariffs reinstated variable compensation and lower absorption from decreased production levels were only partially offset by new product momentum the benefits from the slight sales increase and aren't.

David Foulkes: I'll now turn the call over to Ryan to provide additional comments on our financial performance and outlook.

Ryan: I'll now turn the call over to Ryan to provide additional comments on our financial performance and outlook.

Ryan Gwillim: Thanks, Dave, and good morning, everyone. Brunswick's second quarter results were solidly ahead of expectations. Sales were up slightly over second quarter 2024, as steady wholesale ordering by dealers and OEMs, together with modest pricing benefits, offset the impact of continued challenging consumer demand market Word Document MSWordDoc Word.Document.8 Operating earnings and EPS were ahead of guided expectations, but down versus prior year as the impacts of tariffs, reinstated variable compensation, and lower absorption from decreased production levels were only partially offset by new product momentum, the benefits from the slight sales increase, and ongoing cost control measures throughout the enterprise.

Ryan: Yeah.

Ryan: Thanks, Dave and good morning, everyone.

Ryan: Project second quarter results are solidly ahead of expectations.

Ryan: Those were up slightly over second quarter 2024, as steady wholesale ordering by dealers and Oems together with modest pricing benefits offset the impact of continued challenging consumer demand market conditions.

Ryan: <unk> cost control measures throughout the enterprise.

Ryan: Lastly, as Dave mentioned earlier, there was a historic second quarter from a cash generation standpoint, with Brexit generating a record $288 million of free cash flow.

Ryan: On a year to date basis sales are down 5%, primarily due to anticipated lower production levels in our propulsion and both businesses only being partially offset by steady sales in our aftermarket lead engine P&A and <unk> businesses.

Ryan: Cost control measures throughout the enterprise.

Ryan: Year to date adjusted operating earnings and EPS are also ahead of expectations, but below prior year as expected due to the same factors from the second quarter.

Ryan Gwillim: Lastly, as Dave mentioned earlier, it was a historic second quarter from a cash generation standpoint, with Brunswick generating a record $288 million of free cash. On a year-to-date basis, sales are down 5%, primarily due to anticipated lower production levels in our propulsion and boat businesses, only being partially offset by steady sales in our aftermarket-led engine P&A and Navico businesses. Year-to-date adjusted operating earnings and EPS are also ahead of expectations but below prior year as expected due to the same factors from the second quarter. Year-to-date free cash flow of $244 million is a first-half record and is the result of Focus Inventory and other working capital initiatives started in the second quarter of 2024.

Ryan: Lastly, as Dave mentioned earlier it was a historic second quarter from a cash generation standpoint, with friends with generating a record $288 million of free cash flow.

Ryan: Year to date free cash flow of $244 million is a first half record and is the result of focused inventory and other working capital initiatives started in the second quarter of 2024.

Ryan: On a year to date basis sales were down 5%, primarily due to anticipated lower production levels in our propulsion and boat businesses only being partially offset by steady sales in our aftermarket lead engine P&A and abaco businesses.

Ryan: Now, we'll look at each reporting segment, starting with our propulsion business, which reported a 7% increase in sales, resulting primarily from strong orders from U S. Oems.

Ryan: Year to date adjusted operating earnings and EPS are also ahead of expectations, but below prior year as expected due to the same factors from the second quarter.

Ryan: Operating earnings were below prior year, primarily due to the impact of tariffs lower absorption from decreased production levels and the reinstatement of variable compensation, partially offset by cost control measures and the benefits from the increased sales.

Ryan: Year to date free cash flow of $244 million is a first half record and is the result of focused inventory and other working capital initiatives started in the second quarter of 2024.

Ryan: Falchion segment sales and operating earnings both grew sequentially versus the first quarter of 2025.

Ryan Gwillim: Now we'll look at each reporting segment, starting with our Propulsion business, which reported a 7% increase in sales, resulting primarily from strong orders from US OEM. Operating earnings were below prior year, primarily due to the impact of tariffs, lower absorption from decreased production levels, and the reinstatement of variable compensation, partially offset by cost control measures and the benefits from the increased sales. Compulsion Segment Sales and Operating Earnings both grew sequentially versus first quarter of 2025. Our aftermarket-led engine, parts, and accessories business had another solid quarter, reporting a 1% increase in sales versus the same period last year due to slightly stronger distribution sales.

Ryan: Now, we'll look at each reporting segment, starting with our propulsion business, which reported a 7% increase in sales, resulting primarily from strong orders from U S. Oems.

Ryan: Our aftermarket lead engine parts and accessories business had another solid quarter reporting a 1% increase in sales versus the same period last year due to slightly stronger distribution sales.

Ryan: Operating earnings were below prior year, primarily due to the impact of tariffs.

Ryan: Sales from our products business were down 4%, while the distribution business sales were up 4% compared to prior year.

Ryan: Lower absorption from decreased production levels and the reinstatement of variable compensation, partially offset by cost control measures and the benefits from the increased sales.

Ryan: Segment operating earnings were slightly down versus second quarter 2024, due solely to the enterprise factors discussed earlier.

Ryan: Propulsion segment sales and operating earnings both grew sequentially versus the first quarter of 2025.

Ryan: Note that first half engine PMA earnings and sales are essentially flat to 2024, despite the challenging marine retail market conditions and overall unseasonable weather for a significant portion of the early year.

Ryan Gwillim: Sales from the products business were down 4% while the distribution business sales were up 4% compared to prior year. segment operating earnings are slightly down versus second quarter 2024 due solely to the enterprise factors discussed earlier. Note that first half engine P&A earnings and sales are essentially flat to 2024, despite the challenging marine retail market conditions and overall unseasonable weather for a significant portion of the early year. This performance reinforces our well-stated view that our continued focus and investment in this aftermarket recurring revenue and earnings business is critical to driving stable financial and shareholder return.

Ryan: Sales from the products business were down 4%, while the distribution business sales were up 4% compared to prior year.

Ryan: This performance reinforces our well stated view that our continued focus and investment in this aftermarket recurring revenue and earnings business is critical to driving stable financial and shareholder returns.

Ryan: Segment operating earnings were slightly down versus second quarter 2024, due solely to the enterprise factors discussed earlier.

Speaker Change: <unk> group reported a sales decrease of 4% versus Q2 of 2024 with sales to both aftermarket channels and marine Oems down modestly partially offset by benefits from new product momentum.

Ryan: Note that first half engine P&A earnings and sales are essentially flat to 2024, despite the challenging marine retail market conditions and overall unseasonable weather for a significant portion of the early year.

Speaker Change: Segment operating earnings decreased due to the lower sales tariffs and the variable compensation reset.

Speaker Change: Finally, our boat segment reported a sales decrease of 7%, resulting from anticipated cautious wholesale ordering patterns by dealers, which was only partially offset by the favorable impact of modest model year price increases.

Ryan Gwillim: Navico Group reported a sales decrease of 4% versus Q2 of 2024, with sales to both aftermarket channels and marine OEMs down modestly. partially offset by benefits from new product momentum. segment operating earnings decreased due to the lower sales, tariffs, and the variable compensation receipts. Finally, our boat segment reported a sales decrease of 7% resulting from anticipated cautious wholesale ordering patterns by daily. which is only partially offset by the favorable impact of modest model year prices. Freedom Vote Club had another strong quarter, contributing approximately 12% of the segment sales, including the benefits from recent acquisitions. segment operating earnings were within expectations as the impact of net sales declines and the variable compensation reset was partially offset by pricing and continued cost control.

Ryan: <unk> group reported a sales decrease of 4% versus Q2 of 2024, well sales to both aftermarket channels and marine Oems down modestly.

Speaker Change: Freedom boat club had another strong quarter contributing approximately 12% of the segment sales, including the benefits from recent acquisitions.

Ryan: Partially offset by benefits from new product momentum.

Ryan: Segment operating earnings decreased due to the lower sales tariffs and the variable compensation reset.

Speaker Change: Segment operating earnings were within expectations as the impact of net sales declines and the variable compensation reset was partially offset by pricing and continued cost control.

Ryan: Finally, our boat segment reported a sales decrease of 7%, resulting from anticipated cautious wholesale ordering patterns by dealers, which was only partially offset by the favorable impact of modest model year price increases.

Speaker Change: This slide shows an updated view of our 2025 tariff impact should the current tariff rates continue for the remainder of the year.

Ryan: Freedom boat club had another strong quarter contributing approximately 12% of the segment sales, including the benefits from recent acquisitions.

Speaker Change: This slide shows the approximate percentage of Cogs affected by tariffs currently in force along with our anticipated 2025 net tariff impact for each category. After planned mitigation measures are considered.

Ryan: Segment operating earnings were at the end expectations as the impact of net sales declines and the variable compensation reset was partially offset by pricing and continued cost control.

Speaker Change: The largest tariff impact remains China, and while less than 5% of our Cogs could represent 20% to $30 million of tariff expense at current rates for product and component importation into the U S.

Ryan Gwillim: This slide shows an updated view of our 2025 tariff impact should the current tariff rates continue for the remainder of the year. This slide shows the approximate percentage of COGs affected by tariffs currently in force, along with our anticipated 2025 net tariff impact for each category after planned mitigation measures are considered. The largest tariff impact remains China, and while less than 5% of our COGS could represent $20 to $30 million of tariff expense at current rates for product and component importation into the U.S. These incremental tariffs are in addition to the approximately $30 million of Section 301 tariffs that were included in our initial guidance for the year.

Ryan: This slide shows an updated view of our 2025 tariff impact should the current tariff rates continue for the remainder of the year.

Speaker Change: These incremental tariffs are in addition to the approximately $30 million of section 301 tariffs that were included in our initial guidance for the year.

Ryan: This slide shows the approximate percentage of Cogs affected by tariffs currently in force along with our anticipated 2025 net tariff impact for each category. After planned mitigation measures are considered.

Speaker Change: Mexico, and Canada supply account for approximately 15% of U S Cogs, but most of the supply from these two countries are imported under the U S MCA, meaning that our tariff exposure here. It remains small assuming they continued U S MCA exemption.

Ryan: The largest tariff impacts remains China, and while less than 5% of our Cogs could represent $20 million to $30 million of tariff expense at current rates for product and component importation into the U S.

Speaker Change: Finally, there are other smaller tariffs on rest of world imports.

Ryan: These incremental tariffs are in addition to the approximately $30 million of section 201 tariffs that were included in our initial guidance for the year.

Speaker Change: Not included in this analysis or other impacts or potential impacts both positive and negative to the enterprise including potential.

Speaker Change: Potential retaliatory tariffs from the EU, and Canada, and U S manufactured boats and possibly engines and parts.

Ryan Gwillim: Mexico and Canada supply accounts for approximately 15% of U.S. COGS, but most of the supply from these two countries are imported under the USMCA, meaning that our tariff exposure here remains small, assuming the continued USMCA exemption. Finally, there are other smaller tariffs on rest of world imports.

Ryan: Mexico, and Canada supply of counsel, approximately 15% of U S Cogs, but most of the supply from these two countries are imported under the U S. M C. A meaning that our tariff exposure here. It remains small assuming they continued U S MCA exemption.

Speaker Change: Tariffs on boats imported into the United States by our European OEM partners that use mercury engines and parts.

Speaker Change: Mercury engine competitors, which are paying tariffs on the importation of engines from Japan or other non U S manufacturing locations.

Ryan: Finally, there are other smaller tariffs on rest of world imports.

Ryan Gwillim: not included in this analysis are other impacts or potential impacts both positive and negative to the enterprise including potential retaliatory tariffs from the EU and Canada on U.S. manufactured boats and possibly engines and parts. tariffs on both imported into the United States by our European OEM partners that use mercury engines and parts. Mercury engine competitors, which are paying tariffs on the importation of engines from Japan or other non-US manufacturing locations.

Ryan: Not included in this analysis or other impacts or potential impacts both positive and negative to the enterprise, including.

Speaker Change: And maybe most importantly, the continued disruption of the capital markets and the corresponding impact on our consumer.

Ryan: Potential retaliatory tariffs from the EU, and Canada, and U S manufactured boats and possibly engines and parts.

Speaker Change: As everyone is aware this is an extremely dynamic situation in the entire Brunswick team is committed to minimizing the overall impact of tariffs ultimately have on our enterprise.

Ryan: Tariffs on boats imported into the United States by our European OEM partners that use mercury engines and parts.

Speaker Change: My last slide shows our updated full year guidance take into account the anticipated net tariff impact and continued market and consumer uncertainties, but also our strong operational performance and the recent market momentum.

Ryan: Mercury engine competitors, which are paying tariffs on the importation of engines from Japan or other non U S manufacturing locations.

Ryan Gwillim: And maybe most importantly, the continued disruption of the capital markets and the corresponding impact on our consumers. As everyone is aware, this is an extremely dynamic situation and the entire Brunswick team is committed to minimizing the overall impact that tariffs ultimately have on our energy.

Ryan: And maybe most importantly, the continued disruption of the capital markets and the corresponding impact on our consumer.

Speaker Change: Despite a slightly softer marine market than initially anticipated to start the year, we remain confident in our ability to deliver our full year plan with the result, being us holding the midpoint of our guidance with anticipated sales of approximately $5 2 billion.

Ryan: As everyone is aware this is an extremely dynamic situation in the entire Brunswick team is committed to minimizing the overall impact of tariffs ultimately have on our enterprise.

Speaker Change: And adjusted EPS of approximately $3 25.

Ryan Gwillim: My last slide shows our updated full year guidance, taking into account the anticipated net tariff impact and continued market and consumer uncertainties, but also our strong operational performance and the recent market momentum. Despite a slightly softer marine market than initially anticipated to start the year, we remain confident in our ability to deliver our full-year plan, with the result being us holding the midpoint of our guidance with anticipated sales of approximately $5.2 billion and adjusted EPS of approximately $3.25. However, given our exceptional first half cash generation, we are raising our free cash flow guidance by $50 million to greater than $400 million for the full year.

Ryan: My last slide shows our updated full year guidance take into account the anticipated net tariff impact and continued market and consumer uncertainties, but also our strong operational performance and the recent market momentum.

Speaker Change: However, given our exceptional first half cash generation, we are raising our free cash flow guidance by $50 million to greater than $400 million for the full year.

Ryan: Despite a slightly softer marine market than initially anticipated to start the year, we remain confident in our ability to deliver our full year plan with the result, being us holding the midpoint of our guidance with anticipated sales of approximately $5 $2 billion and adjusted EPS of approximately $3 25.

Speaker Change: This will allow for increased debt reduction efforts, which we discussed earlier and should enable us to repurchase no less than $80 million of shares at a time when we believe that our share price remains severely dislocated from our performance in a challenging market.

Speaker Change: As Dave mentioned earlier retail conditions in July have improved from the early part of the season, giving us more confidence and steady wholesale for the remainder of the year.

Ryan: <unk>.

Ryan: However, given our exceptional first half cash generation, we are raising our free cash flow guidance by $50 million to greater than $400 million for the full year.

Speaker Change: With Q3 expected to deliver sequentially slightly lower revenue and earnings driven by the annual seasonality of our businesses.

Ryan Gwillim: This will allow for increased debt reduction efforts, which we discussed earlier, and should enable us to repurchase no less than $80 million of shares at a time when we believe that our share price remains severely dislocated from our performance in a challenging market. As Dave mentioned earlier, retail conditions in July have improved from the early part of the season, giving us more confidence and steady wholesale for the remainder of the year, with Q3 expected to deliver sequentially slightly lower revenue and earnings driven by the annual seasonality of our business.

Ryan: This will allow for increased debt reduction efforts, which we discussed earlier and should enable us to repurchase no less than $80 million of shares at a time when we believe that our share price remains severely dislocated from our performance in a challenging market.

Speaker Change: I will now pass the call back over to Dave for concluding remarks.

Dave: Thanks Ryan.

Speaker Change: As we wrap up I want to highlight some of our recent exciting new product launches announcements and awards.

Speaker Change: Now the co groups <unk> brand recently launched auto truck technology for its Halo radar portfolio that enables automated tracking multiple targets and provides unrivaled situational awareness the voters.

Ryan: As Dave mentioned earlier retail conditions in July have improved from the early part of the season, giving us more confidence and steady wholesale for the remainder of the year.

Ryan: With Q3 expected to deliver sequentially slightly lower revenue and earnings driven by the annual seasonality of our businesses.

Speaker Change: Our boat brands across the globe have been busy launching many new products, all featuring Mercury power and medical group technology.

David Foulkes: I will now pass the call back over to Dave for concluding remarks. Thanks Ryan.

Dave: I will now pass the call back over to Dave for concluding remarks.

Dave: Thanks, Brian.

Speaker Change: Harriss pontoon brand launched the 2026 online a series with the very stylish and contemporary new exterior and interior.

David Foulkes: As we wrap up, I want to highlight some of our recent exciting new product launches, announcements, and awards. Navico Group's Simrad brand recently launched AutoTrack technology for its Halo radar portfolio that enables automated tracking of multiple targets and provides unrivaled situational awareness to boaters. Our boat brands across the globe have been busy launching many new products, all featuring Mercury Power and Nautical Group technology. Our Harris Pontoon brand launched the 2026 Sunliner Series with a very stylish and contemporary new exterior and interior. The Sunliner is affordable but also aspirational, with many thoughtful features, premium finishes and uncompromised quality.

Speaker Change: As we wrap up I want to highlight some of our recent exciting new product launches announcements and awards.

Speaker Change: <unk> liner is affordable, but also aspirational with many thoughtful features.

Speaker Change: <unk> finishes and Uncompromised quality.

Speaker Change: Ah Ray glass brand in New Zealand unveiled the all new protector or addition range.

Speaker Change: Our boat brands across the globe and busy launching many new products, all featuring Mercury power and medical group technology.

Speaker Change: Bold evolution of its iconic high performance ribs, leading with the 330 Targa our edition.

Speaker Change: First vessel in New Zealand powered by Mercury Racing's 400 of the 10 outboard engines.

Speaker Change: Harriss pontoon brand launched the 2026 online a series with the very stylish and contemporary new exterior and interior.

Speaker Change: And theory launch, it's all new SPX to 30 lineup available in Stern drive output and surf configurations.

Speaker Change: Sun lineup is affordable, but also aspirational with many thoughtful features.

Speaker Change: With assist version featuring the innovative next wave surf system design.

Speaker Change: Premium finishes and Uncompromised quality.

David Foulkes: Our Ray Glass brand in New Zealand unveiled the all new Protector R edition range. A bold evolution with its iconic high-performance revs, leading with the 330 Targa R edition. First vessel in New Zealand powered by Mercury Racing's 400R V10 outboard engine. and Cire launched its all-new SBX-230 lineup, available in stern drive, outboard, and surf configuration. with a surf version featuring the innovative Next Wave Surf System. Designed to create consistent, rideable wakes for every skill level. The system integrates an exclusive Siri interface with Mercury's smart tow system. Bravo 4S drive and dual SIMRAD touchscreen displays offering easy control and visualization.

Speaker Change: Oh Ray glass brand in New Zealand unveiled the all new protector or addition range.

Speaker Change: Designed to create consistent ratable wakes for every skill level.

Speaker Change: The system integrates an exclusive theory interface with Mercury smart tow system Bravo for us drive on dual Sim rent touch screen displays offering easy control and visualization.

Speaker Change: Bold evolution of its iconic high performance ribs, leading with the 330 Chaga our edition.

Speaker Change: First vessel in New Zealand powered by Mercury Racing's 400 of the turn.

Speaker Change: <unk> outboard engines.

Speaker Change: And theory launched its all new SPX to 30 lineup available in Stern drive outboard and surf configurations.

Speaker Change: Freedom Boat club recently announced an exciting new franchise in Dubai, our first location in the attractive middle East boating market.

Speaker Change: The flagship location will open this fall and feature many Brunswick boats with additional locations to follow in 2026.

Speaker Change: With assist version featuring the innovative next wave system design.

Speaker Change: Besides to create consistent ratable wakes for every skill level.

Speaker Change: At a time when several other smaller book clubs are experiencing difficulties freedom continues to grow and thrive glue.

Speaker Change: The system integrates and exclusives theory interface with Mercury Smart Soc system, Bravo Forest drive and dual Sim rent touchscreen displays offering easy control and visualization.

Speaker Change: Globally supported by the ready availability of Brunswick's broad portfolio of boats of Mercury engines.

Speaker Change: <unk> availability of P&A and accessories from a global PMA and distribution businesses.

David Foulkes: Trader Boat Club recently announced an exciting new franchise in Dubai, our first location in the attractive Middle East boating market. The flagship location will open this fall and feature many Brunswick boats with additional locations the following 2026. at a time when several other smaller boat clubs are experiencing difficulty. Freedom continues to grow and thrive, globally supported by the ready availability of Brunswick's broad portfolio of boats of Mercury Anchor. Rapid availability of P&A and accessories from our global P&A and distribution businesses and a variety of financing, insurance, marketing and IT services also provided by Brunswick. In return, Freedom generates substantial synergy sales while showcasing our exceptional products.

Speaker Change: Freedom Boat club recently announced an exciting new franchise in Dubai, our first location in the attractive middle East boating market.

Speaker Change: And a variety of financing insurance marketing and services also provided by Brunswick.

Speaker Change: The flagship location will open this fall and feature many Brunswick boats with additional locations to follow in 2026.

Speaker Change: In return freedom generate substantial synergy sales, while showcasing our exceptional products.

Speaker Change: And finally Mercury reinforces <unk> position as the industry leader in the high horsepower outboard market. This week with the introduction of the new 425 horsepower and refreshed 350 horsepower outboard engines.

Speaker Change: At a time when several other smaller book clubs are experiencing difficulties freedom continues to grow and thrive glue.

Speaker Change: Globally supported by the ready availability of Brunswick's broad portfolio of boats the Mercury engines.

Speaker Change: Rapid availability of P&A and accessories from a global P&A and distribution businesses.

Speaker Change: Delivering performance smoothness, quietness and lightweight far ahead of the competition.

Speaker Change: A variety of financing insurance marketing and services also provided by Brunswick.

Speaker Change: During the quarter, we received significant recognition for our people products and commitment to innovation.

Speaker Change: In return freedom generate substantial synergies sales, while showcasing our exceptional products.

Speaker Change: Putting us well on track to surpass 100 awards again in 2025.

David Foulkes: And finally, Mercury reinforces position as the industry leader in the high horsepower outboard market this week with the introduction of the new 425 horsepower and refreshed 350 horsepower outboard engine. delivering performance, smoothness, quietness and lightweight far ahead of the competition.

Speaker Change: And finally mercury reinforced its position as the industry leader in the high horsepower outboard market. This week with the introduction of the new 425 horsepower and refreshed 350 horsepower outboard engine delivery.

Speaker Change: Among the highlights Brunswick was named by time magazine, one of America's Best Midsized companies the second year in a row.

Speaker Change: We also earned six boating industry magazine top product awards.

Speaker Change: Delivering performance smoothness, quietness and lightweight far ahead of the competition.

Speaker Change: These awards highlight the marine industry's best new and innovative products and our awards underscore the breadth and depth of our innovation.

David Foulkes: During the quarter, we received significant recognition for our people, products, and commitment to innovation. putting us well on track to surpass 100 awards again in 2025. Among the highlights, Brunswick was named by Time Magazine one of America's best midsize companies for the second year in a row. We also earned six Boating Industry Magazine Top Product Awards. These awards highlight the marine industry's best, new and innovative products. And our awards underscore the breadth and depth of our innovation.

Speaker Change: During the quarter, where you see significant recognition for all people products and commitment to innovation.

Speaker Change: On the topic of innovation the experiential design authority also honored US with an award for our impressive and engaging exhibit at CES 2025.

Speaker Change: Putting us well on track to surpass 100 awards again in 2025.

Speaker Change: Among the highlights Brunswick was named by time magazine, one of America's Best Midsized companies.

Speaker Change: For the third consecutive year, Newsweek named Brunswick America's most trustworthy companies.

Speaker Change: Second year in a row.

Speaker Change: We also earned six boating industry magazine top product awards.

Speaker Change: <unk> is in the top 10 within the manufacturing and industrial equipment category.

Speaker Change: And we were recognized for the first time on Music's list of America's greatest workplaces with parents and greatest workplaces for women.

Speaker Change: These awards highlight the marine industry's best new and innovative products and our awards underscore the breadth and depth of our innovation.

David Foulkes: On the topic of innovation, the Experiential Design Authority also honored us with an award for our impressive and engaging exhibit at CES 2025. For the third consecutive year, Newsweek named Brunswick one of America's most trustworthy companies. placing us in the top 10 within the manufacturing and industrial equipment category.

Speaker Change: Reflecting our commitment to being an employer of choice.

Speaker Change: On the topic of innovation the experiential design authority also on it does within award for our impressive and engaging exhibit.

Speaker Change: Congratulations to all those who contributed to these awards.

Speaker Change: Finally, this quarter, we released our 2020 for sustainability report, which describes our work to reduce our environmental impact, while making up businesses more efficient and supporting the communities in which we live and work.

Speaker Change: CES 2025.

Speaker Change: For the third consecutive year, Newsweek named Brunswick, what America's most trustworthy companies.

Speaker Change: Placing us in the top 10 within the manufacturing and industrial equipment category.

David Foulkes: And we were recognized for the first time on Newsweek's list of America's greatest workplaces for parents and greatest workplaces for women, reflecting our commitment to being an employer of choice. Congratulations to all those who contributed to these awards.

Speaker Change: And we were recognized for the first time unused leaks list of America's greatest workplaces with parents and greatest workplaces for women.

Speaker Change: That's the end of our prepared remarks, we'll now turn it back over to the operator for questions.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: <unk>, our commitment to being an employer of choice.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Congratulations to all those who contributed to these awards.

Speaker Change: Information tone will indicate your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys, we ask that you. Please limit to one question and one follow up question one moment, while we poll for questions.

David Foulkes: Finally, this quarter, we released our 2024 Sustainability Report, which describes our work to reduce our environmental impact while making our businesses more efficient and supporting the communities in which we live and work. That's the end of our prepared remarks.

Speaker Change: Finally, this quarter, we released our 2020 for sustainability report, which describes all work to reduce our environmental impact.

Speaker Change: Making up but this is more efficient and supporting the communities in which we live and work.

Speaker Change: That's the end of our prepared remarks, we'll now turn it back over to the operator for questions.

Unknown Executive: We'll now turn it back over to the operator for questions.

Speaker Change: Our first question is from James Hardiman with Citigroup. Please proceed.

Speaker Change: Thank you we will now be conducting a question and answer session. If he would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question. Kim You May press star two to remove yourself from the queue for participants using speaker equipment, it may be necessary to pick up here.

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James Hardiman: Morning, Thanks for taking my call.

Speaker Change: Question so.

Speaker Change: Obviously, the tariff impact came down I get to about a 60 benefit versus last time.

Unknown Executive: For a participant choosing speaker equipment, it may be necessary to pick up your handset before pressing the star keys. We ask that you please limit to one question and one follow-up question. One moment while we poll for questions.

Speaker Change: Guidance is unchanged and so.

Speaker Change: Right way to think about this.

Speaker Change: Handset before pressing the star keys, we ask that you. Please limit to one question and one follow up question one moment, while we poll for questions.

Speaker Change: With the tariff guidance came down by about that amount.

Speaker Change: And.

Speaker Change: Ultimately from here, how should we think about it is there more risk of upside versus downside just based on sort of the changes you've made there.

James Hardiman: Our first question is from James Hardiman with Citigroup. James Urlain is Check it here. Go ahead, James. Sorry, AirPod fail. I apologize. Morning James. Morning. Thanks for taking my question. So You know, obviously, the tariff impact came down, I get to about a 60 cent benefit versus last time. Guidance is unchanged. And so it's the right way to think about this. You know, but the X tariff guidance came down by about that amount. And, and ultimately, from here, how should we think about it? Is there more risk of upside versus downside just based on sort of the changes you've made there?

Speaker Change: Our first question is from James Hardiman with Citigroup. Please proceed.

Speaker Change: Hey, James It's Brian Good morning, Yes, I mean, so if you'll remember back to April we gave a tariff that impact potential of 100 $125 million.

Speaker Change: James Your line is live.

Speaker Change: Please check out here.

Speaker Change: And then when we translated that to the EPS Bridge, we only put a dollar on the bridge and it was for really two reasons one.

Speaker Change: And we will move on to the next question you hear me.

Jamie: There you go go ahead Jamie.

Speaker Change: Alright.

Speaker Change: Air pod fail I apologize.

Speaker Change: We anticipate probably mitigate better than anticipated and indeed, we have and second if you remember when we reported earnings back in April It was literally the height of all <unk>.

Speaker Change: Good morning, James.

Speaker Change: Good morning, Thanks for taking my questions. So.

Speaker Change: You know obviously the tariff impact came down.

Speaker Change: Tariff rates, China was at a 145% others were at extreme high levels, we didn't know.

Speaker Change: Get to about a 50 cent benefit versus last time.

Speaker Change: <unk> is unchanged so the right way to think about this.

Speaker Change: Canada, and Mexico would be receiving U S. MCA exemptions so really.

Speaker Change: You know what the tariff guidance came down by about that amount.

Speaker Change: The dollar of tariff impact that we put on the bridge hasn't really changed that much I think maybe it's maybe it's lower on the margins a little bit but on balance I think what we saw in April has kind of come through that the tariff impact.

Speaker Change: And ultimately from here, how should we think about it is there more risk of upside versus downside just based on sort of the changes you've made there.

Ryan Gwillim: James, it's it's Ryan. Good morning. Yeah, I mean, so if you remember back to April, we gave a tariff, that impact potential of 100 125 million And then when we translated that to the EPS bridge, we only put a dollar on the bridge. And it was for really two reasons. One, we anticipated we'd probably mitigate better than anticipated, and indeed, we have. And second, if you remember when we reported earnings back in April, it was literally the height of all tariff rates. China was at 145%. Others were at extreme high levels. We didn't know if Canada and Mexico would be receiving USMCA exemptions.

Hey, James It's Brian Good morning, Yeah, I mean, so if you'll remember back to April we gave a tariff that impact potential of 100 $125 million.

Speaker Change: We think it's going to be certainly lower than we thought but that dollar was is still relevant is still pretty reasonable the market's unfolded a little bit softer than we thought although premium kors holding up so no I wouldn't I wouldn't think that the rest of the vessels quote unquote was down.

Speaker Change: And then when we translated that to the EPS Bridge, we only put a dollar on the bridge and it was for really two reasons one we.

Speaker Change: <unk> and that's what we're guiding is just really the years coming coming in relatively similar to what we thought in April with 325 still being the midpoint of.

Speaker Change: Balancing the risks and opportunities.

Speaker Change: Ara right, China was at 145%, others, where extreme high levels, we didn't know F.

David Foulkes: Yes, Dan it's David I would add that.

Speaker Change: Given the dynamics of the.

Speaker Change: Canada, and Mexico would be receiving U S. MCA exemptions. So really you know the dollar of tariff impact that we put on the bridge hasn't really changed that much I think maybe it's maybe it's lower on the margins a little bit but on balance I think what we saw in April.

David Foulkes: Are all around us it is.

Ryan Gwillim: So really, the dollar of tariff impact that we put on the bridge hasn't really changed that much. I think maybe it's lower on the margins a little bit. But on balance, I think what we saw in April has kind of come through, that the tariff is still pretty reasonable. The markets unfolded a little bit softer than we thought, although premium core is holding up. So, no, I wouldn't think that the rest of the business, quote, unquote, was down 50 cents, and that's what we're guiding. It's just really the year's coming in relatively similar to what we thought in April with 3.25 still being the midpoint of balancing the risks and opportunities.

David Foulkes: Very difficult at the moment to take things to the bank.

David Foulkes: Really nice to see that.

David Foulkes: Trajectory in July and we're very hopeful but that's.

David Foulkes: It is a four or five week trend.

David Foulkes: We just need to see a little bit more.

Speaker Change: It's kind of come through the tariff impact.

David Foulkes: Of that.

Speaker Change: We think it's going to be certainly lower than we thought but that dollar is still relevant is still pretty reasonable the markets unfold in a little bit softer than we thought although premium kors holding up so no I wouldn't I wouldn't think that the rest of the brands is quote unquote was down.

David Foulkes: Before I think we could flow through.

David Foulkes: Got it it makes sense.

David Foulkes: And then as I.

David Foulkes: I think about sort of the phasing that you've laid out here and it looks like we should be expecting.

David Foulkes: A significant decrease in Q3 earnings and then a significant increase in Q4 remind us.

Speaker Change: And that's what we're guiding is just really the years coming coming in.

David Foulkes: If memory serves I thought that Q3 was the big inventory reduction quarter, a year ago, which would've created a really easy comp this year, assuming we werent again under shipping Q3.

Speaker Change: Relatively similar to what we thought in April with $3 25, still being the midpoint of bat.

Speaker Change: Balancing the risks and opportunities.

Ryan Gwillim: Yeah, James, I would add that, you know, given the dynamics of the are all around us. It is very difficult at a moment to take things to the bank. You know, really nice to see the Trajectory in July and we're very hopeful, but you know, that's, you know, that is a four or five week trend. We just need to see a little bit more. of that before I think we can floor. Yeah, makes sense.

Jamie: Yeah, Jamie it's Dave Yeah, I would add that you know.

David Foulkes: I guess is it safe to say that we're now going to be again under shipping in Q3, and maybe I don't know maybe there was a shift between shipments between Q2 and Q3, because obviously Q2 was with an outperformance quarter. So how do we think about all that.

Speaker Change: Given the dynamics of the.

Jamie: All around does it is very.

Speaker Change: Very difficult at the moment to take things to the bank.

Speaker Change: You know really nice to see the.

Speaker Change: Trajectory in July and we're very hopeful but that's that.

David Foulkes: Yes, that's pretty hard James to delineate between Q3, and Q4, I certainly wouldn't read much into it again as Dave said, giving guidance in a dynamic environment. Like this is pretty challenging I would say as a reminder, production was down in the third quarter last year, and then even more so in the fourth or both.

Speaker Change: That is a four or five week trend.

Speaker Change: We just need to see a little bit more.

Speaker Change: Of that.

Speaker Change: Before I think we can flow through.

Speaker Change: Got it it makes sense.

Ryan Gwillim: And then, as I think about sort of the phasing that you've laid out here, it looks like we should be expecting a significant decrease in Q3 earnings and then a significant increase in Q4. Remind us, if memory serves, I thought that Q3 was the big inventory reduction quarter a year ago, which would have created a really easy comp this year, assuming we weren't, again, under shipping Q3. So, I guess, is it safe to say that we're now going to be, again, under shipping in Q3? And maybe, I don't know, maybe there was a shift between shipments between Q2 and Q3, because obviously Q2 was an outperformance quarter.

Speaker Change: And then as I.

Speaker Change: I think about sort of the phasing that you've laid out here it looks like we should be expecting.

Speaker Change: Propulsion and in our both businesses. So there will be pickup there goodness. If you wanted both our wholesale shipments in both of those businesses together with a very consistent P&A business, which obviously continues to perform extremely well in this environment. So no I think we're looking at Q3 end.

Speaker Change: A significant decrease in Q3 earnings and then a significant increase in Q4 remind us.

Speaker Change: If memory serves I thought that Q3 was the big inventory reduction quarter, a year ago, which would've created a really easy comp this year, assuming we weren't again under shipping Q3.

Speaker Change: And I think we're off to a good start with July certainly.

Speaker Change: So I guess is it safe to say that we're now going to be again under shipping in Q3, and maybe I don't know maybe there was a shift between shipments between Q2 and Q3, because obviously Q2 was a with an outperformance quarter. So how do we think about all that.

Speaker Change: But I wouldn't read much into the difference between Q3 and Q4, although the production increased in Q4 versus Q4 of last year will be greater than the production increase in Q3, but again.

Ryan Gwillim: So, how do we think about all that? Yeah, it's pretty hard, James, to delineate between Q3 and Q4. I certainly wouldn't read much into it. Again, as Dave said, giving guidance in a dynamic environment like this is pretty challenging. I would say, as a reminder, production was down in the third quarter last year, and then even more so in the fourth, both in propulsion and in our boat businesses. So there will be pickup there, goodness, if you will, in both wholesale shipments in both of those businesses. Together with a very consistent P&A business, which obviously continues to perform extremely well in this environment.

Speaker Change: So there's a lot of timing impacts either go in there and then we're still thinking about a pretty strong second half of the year.

Speaker Change: Yeah, it's pretty hard James to delineate between Q3, and Q4, I certainly wouldn't read much into it.

Speaker Change: Makes sense thanks, guys.

Speaker Change: Again, as Dave said, giving guidance in a dynamic environment like this is pretty challenging.

Speaker Change: Our next question is from Cyan Sue with BNP Paribas. Please proceed.

Speaker Change: Would say as a reminder, production was down in the third quarter last year, and then even more so in the fourth.

Speaker Change: Both the propulsion and in our boat businesses. So there will be pick up their goodness. If you wanted both our wholesale shipments and in both of those businesses together with a very consistent P&A business, which obviously continues to perform extremely well in this environment. So no I think we're looking at Q3.

Speaker Change: Your line is I. Please check if you have yourself muted.

Speaker Change: Okay.

Speaker Change: Okay, we will move on to the next question, which is Craig Kennison.

Ryan Gwillim: So, no, I think we're looking at Q3, and I think we're off to a good start with July, certainly, but I wouldn't read much into the difference between Q3 and Q4, although the production increase in Q4 versus Q4 of last year will be greater than the production increase in Q3. But again, there's a lot of timing impacts that go in there, and we're still thinking about a pretty strong second half of the year. Makes sense. Thanks, guys.

Speaker Change: With Baird. Please proceed.

Speaker Change: Hey can you hear me, yes, yes, Greg good morning.

Speaker Change: And I think we're off to a good start with July certainly.

Speaker Change: Good morning, Thanks for taking my question I wanted to start with Navajo.

Speaker Change: But I wouldn't read much into the difference between Q3 and Q4, although the production increase in Q4 versus Q4 of last year will be greater than the production increase in Q3, but again, there's a lot of timing impacts either go in there and then we're still thinking about a pretty strong.

Speaker Change: Just big picture when the market normalizes whenever that is and then your innovation pipeline matures.

Speaker Change: Should <unk> revenue and profitability settle it feels like that's a big needle mover. When you think about some of the out year earnings potential.

Speaker Change: Long second half of the year.

Speaker Change: Makes sense thanks, guys.

Craig: Yes, Craig. Thank you for the question Yeah I think.

Xian Sam: Our next question is from Sian Su with BNP Paribas.

Craig: Our.

Speaker Change: Our next question is from Science Hill with BNP Paribas. Please proceed.

Craig: Expectations.

Craig: Long term for <unk> group is still in the.

Craig: Kind of low to mid teens operating margin range. So we've got quite a bit to go.

Xian Sam: Your line is live.

Speaker Change: Your line is I. Please check if you have yourself muted.

Xian Sam: Please check if you have yourself muted.

Craig: And.

Craig: We should with a little bit of tailwind.

Speaker Change: Okay.

Craig Kennison: Okay, we will move on to the next question, which is Craig Kennison.

Craig: <unk>.

Craig: Okay, we will move on to the next question, which is Craig canceling.

Craig: Top line CAGR is in.

Craig: <unk>.

Craig: Kind of mid to high singles.

Craig Kennison: with Baird. Hey, can you hear me? Yes. Good morning. Thanks for taking my question. I wanted to start with Navico. You know, I guess big picture when the market normalizes, whenever that is, and then your innovation pipeline matures, where should Navico revenue and profitability settle? It feels like that's a big needle mover when you think about some of the out year earnings. Yeah, Craig, thank you for the question. Yeah, I think, you know, as our Expectations, you know, in the long-term for Navico Group are still in the kind of low to mid-teens operating margin range.

Baird: With Baird. Please proceed.

Craig: So there's a lot of potential in that business I think we're doing a lot of great work.

Baird: Hey can you hear me, yes, yes, Greg good morning.

Craig: And refreshing the.

Speaker Change: Good morning, Thanks for taking my question I wanted to start with NAV of co.

Craig: Product lines, which are now regaining.

Craig: Sure even against the very strong and capable competition. So we're very excited about that but also just getting the structure of the business.

Speaker Change: Just big picture of when the market normalizes whenever that is and then your innovation pipeline matures.

Craig: Resets or right size, if you like and optimized for a market that is certainly smaller than we originally anticipated and.

Speaker Change: Should never called revenue and profitability settle it feels like that's a big needle mover. When you think about some of the out year earnings potential.

Craig: And as you can see and as we gave some examples in the.

Speaker Change: Yeah, Craig. Thank you for the question Yeah, I think you know.

Craig: The release and the slides we are continuing to work our way.

Speaker Change: Our.

Speaker Change: Expectations.

Craig: Through that.

Speaker Change:

Craig: All of our businesses had some headwinds this year as you know from the reset of variable comp, which we didn't.

Speaker Change: Long term for for Novocure group is still in the kind of low to mid teens operating margin range. So we've got quite a bit to go.

Craig: Really pay any.

Craig Kennison: So we've got quite a bit to go. And we should, with a little bit of tailwind, have top-line keggers in the mid to high singles. So there's a lot of potential in that business. I think we're doing a lot of great work, both in refreshing the product lines, which are now regaining share, even against the very strong and capable competition. So we're very excited about that. But also just getting the structure of the business. reset or right sized if you like and optimized for a market that is certainly smaller than we originally anticipated and as you can see and as we gave some examples in the release in the slides we are continuing to work our way through that that all of our businesses had some headwinds this year as you know from the reset of variable comp we we didn't really pay any Meaningful Variable Comp last year.

Craig: Meaningful variable comp last year tariffs bit of absorption in the first half.

Speaker Change: And you know we.

Speaker Change: We should but with a little bit of tailwind.

Craig: But if you net those out I think we're in a really getting ourselves in really good shape and never Ko group are very excited about the trajectory of the business.

Speaker Change: Topline K goes in the.

Speaker Change: Mid to high singles.

Craig: And the reception of the new products pretty much everything that we have brought out there has been a hit to the marketplace.

Speaker Change: So we have there's a lot of potential in that business I think we're doing a lot of great work both in refreshing the product lines, which are now regaining share.

Craig: So we're very excited for that business and it will be an engine of growth for us in the medium term.

Speaker Change: Sure even against the very strong and capable competition. So we're very excited about that but also just getting the structure of the business.

Speaker Change: Great. Thanks, David Brian If I could ask you just on the tariff question on Slide 17 is super helpful. As it relates to 2025, but it's been such a noisy environment that it's hard to get a feel for the true run rate have you done any work to look at 2006 if.

Speaker Change: Resets or right size, if you like and optimized for a market that is certainly smaller than we originally anticipated.

Speaker Change: And as you can see and as we gave some examples in the.

Speaker Change: Current policy persists, how we should think about the full year kind of run rate for tariff policy as it stands today.

Speaker Change: Our release and the slides we are continuing to work our way.

Speaker Change: Through that.

Speaker Change: All of our businesses had some headwinds this year as you know from the reset of variable comp we didn't really pay any.

Speaker Change: Yes, great Great. Obviously, we anticipated getting the question. This morning. So we have played around with what 2006. It looked like the answer is still pretty uncertain given all the variables. So.

Speaker Change: Meaningful variable comp last year tariffs bit of absorption in the first half.

Craig Kennison: Tariffs, a bit of absorption in the first half. But if you net those out, I think we're in a really, you know, getting ourselves in really good shape in Navico Group. I'm very excited about the trajectory of the business and the reception of the new products. Pretty much everything that we have brought out has been a hit in the marketplace.

Speaker Change: But if you net those out I think we're in a really getting ourselves in really good shape and never Ko group I'm very excited about the trajectory of the business.

Speaker Change: Not only are we paying the tariffs right you pay the cash tariffs, but it flows through the various financials in a different way right. It goes onto the balance sheet as inventory costs and inflows out through the P&L over time, and then there's counteraction drawn duty drawback in substitution and benefit.

Speaker Change: And the reception of the new products pretty much everything that we have brought out that's been a hit to the marketplace. So I'm very excited for that business and it will be an engine of growth for us in the medium term.

Ryan Gwillim: So yeah, very excited for that business and it will be an engine of growth for us in the medium term. Great, thanks, Dave. And Ryan, if I could ask you just on the tariff question, slide 17 is super helpful as it relates to 2025. But it's been such a noisy environment that it's hard to get a feel for the true run rate. Have you done any work to look at 26? If like, current policy persists, how we should think about the full year and a run rate for tariff policy as it stands? Yeah, Craig, obviously, we anticipated getting the question this morning.

Speaker Change: That we get the counteract those terra so.

Speaker Change: Great. Thanks, David Brian If I could ask you just on the tariff question Slide 17 is super helpful. As it relates to 2025, but it's been such a noisy environment that it's hard to get a feel for the true run rate have you done any work to look at 26 with like current policy persist how we should think.

Speaker Change: Big basket of.

Speaker Change: Things that we think about our supply chain team trade compliance finance.

Speaker Change: Everyone's kind of.

Figuring out what the best course of action isn't it changes right because of the tariff change every couple of weeks and then our response sees a change I would say as we sit here today.

Speaker Change: About the full year.

Speaker Change: Don't see.

Speaker Change: Run rate for tariff policy as it stands today.

Speaker Change: Okay.

Speaker Change: Huge change over next year.

Speaker Change: Yes, great Great. Obviously, we anticipated getting the question. This morning. So we have played around with what 26 have looked like that the answer is still pretty uncertain given all the variables. So not only are we paying the tariffs right and you pay the cash tariffs, but it flows through.

Speaker Change: It's probably somewhere in the same magnitude this year, we had a 10 month.

Ryan Gwillim: So we have played around with what 26 would look like. The answer is still pretty uncertain, given all the variables. So, you know, not only are we paying the tariffs, right, you pay the cash tariffs, but it flows through the various financials in a different way, right? It goes on the balance sheet as an inventory cost, and it flows out through the P&L over time. And then there's counteractions on duty drawback and substitution and benefit that we get to counteract those tariffs. So it's a big basket of things that we think about our supply chain team, trade compliance, finance, everyone's kind of figuring out what the best course of action is, and it changes, right, because the tariffs change every couple of weeks, and then our response needs to change.

Speaker Change: Impact, Brian, but some of that was at higher rates. We also had some of the cost being hung up on the balance sheet by the end of the year by next year, we will have a little bit more duty drawback and some of the other financial benefits. So tough to tell I don't think it will be greatly different from the 22006 impact, but I definitely need to get.

Speaker Change: The various financials in a different way right. It goes onto the balance sheet as an inventory costs and in flows out through the P&L over time, and then there's counteraction on duty drawback in substitution and benefit that.

Speaker Change: Closer to the end of the year to really see what a run rate looks like and certainly we'll provide that guidance.

Speaker Change: Once we once we get to the January call, but certainly I don't I don't see a huge step change at this at this stage.

Speaker Change: We get to counteract those tariffs so.

Speaker Change: Big basket.

Speaker Change: Things that we think about our supply chain team trade compliance finance.

Brian Willem: Yes, Thanks, Brian.

Speaker Change: Everyone's kind of figuring.

Speaker Change: Yes, maybe just add Greg I think we clearly we are working to onshore.

Speaker Change: Figuring out what the best course of action isn't it changes right because the tariffs change every couple of weeks and then our response needs a change I would say as we sit here today I don't see.

Speaker Change: Much as we can at the moment. So the rates are one component of what the tariffs will be and certainly better balance sheet.

Ryan Gwillim: I would say as we sit here today, I don't see a huge change over next year. It's probably somewhere in the same magnitude. This year, we had a 10-month impact, right, but some of that was at higher rates. We also had some of the costs being hung up on the balance sheet by the end of the year. But next year, we'll have a little bit more duty drawback and some of the other financial benefits. So tough to tell. I don't think it'll be greatly different from the 2026 impact, but I definitely need to get closer to the end of the year to really see what a run rate looks like, and certainly we'll provide that guidance once we get to the January call.

Speaker Change: Other implications here, but broadly our basis should be going down significantly as we.

Speaker Change: A huge change over next year.

Speaker Change: It's probably somewhere in the same magnitude this year, we had a 10 month.

Speaker Change: As we move.

Speaker Change: Supply onshore into the U S and we're doing that at a pretty rapid clip as you can tell from the way that our exposure even this year is reducing wood.

Speaker Change: Impact right, but some of that was at higher rates.

Speaker Change: Also had some of the cost being hung up on the balance sheet by the end of the year, but next year, we'll have a little bit more duty drawback and some of the other financial benefits. So tough to tell I don't think it will be greatly different from the 2026 impact, but I definitely need to get closer to the end of the year to really see what a run rate.

Speaker Change: I would say, though and it was a little bit difficult to say this earlier.

Speaker Change: And we did state that we are in competitively a pretty advantaged position in the U S market is by far the biggest.

Speaker Change: Like and certainly we'll provide that guidance.

Speaker Change: Marine market, we are very largely a domestic.

Speaker Change: Once we once we get to the January call, but certainly I don't I don't see a huge step change at this at this stage.

Ryan Gwillim: But certainly, I don't see a huge step change at this stage. Thanks, Ryan.

Speaker Change: Company here with a very large manufacturing footprint with a lot of vertical integration.

Speaker Change: Yeah. Thanks Ryan.

Speaker Change:

David Foulkes: Yeah, maybe just to add, Craig, I think we clearly we are working to onshore as much as we can at the moment. So the rates are one component of what the task will be. And certainly there are balance sheet and other implications here. But broadly, our basis should be going down significantly as we as we move supply onshore into the U.S. and we're doing that at a pretty rapid clip as you can tell from the way that our I would say though, and it was a little bit difficult to say this earlier, that, and we did state it, we are in competitively a pretty advantaged position.

Speaker Change: Yeah, maybe just add Greg I think we clearly we are working to onshore.

Speaker Change: And we believe that.

Speaker Change: Even even though will be impacted by tariffs directly our competitive position based strengthening.

Speaker Change: As much as we can at the moment so the rates the one component of what the tariffs will be instantly better balance sheet.

Dave: Thank you Dave.

Speaker Change: Other applications here, but broadly our basis should be going down significantly as we can.

Dave: Our next question is from Noah <unk> with Keybanc capital markets. Please proceed.

Speaker Change: As we move.

Noah: Hi, Thanks for taking my questions.

Speaker Change: Supply onshore in the U S and we're doing that at a pretty rapid.

Speaker Change: I guess first just on the decision to rationalize the value fiberglass model lineup for 2026 by 25% how should we think about maybe structurally.

Speaker Change: Clip as you can tell from the way that our.

Speaker Change: Exposure, even this year is reducing.

Speaker Change: I would say, though and it was a little bit difficult to say this earlier.

Noah: Yes.

Speaker Change: And we did state that we.

Noah: Boat group, whether from a margin perspective or volume potential perspective.

Speaker Change: We are in competitively a pretty advantaged position in the U S market is by far the biggest.

David Foulkes: The U.S. market is by far the biggest in the world. Marine Market. We are very largely a domestic company here with a very large manufacturing footprint with a lot of vertical integration. And we believe that, you know, even even though we'll be impacted by tariffs directly, our competitive position is strengthened. Thank you, Dave.

Noah: Given that rationalization. Thanks.

Noah: Yes. Thank you yes. Good question, so really the amount of complexity that you can tolerate.

Speaker Change: Marine market, we are very largely a domestic.

Speaker Change: Company here with a very large man, you're fucked fracturing footprint with a lot of vertical integration.

Noah: In a product line depends on the volume.

Noah: And with volumes, reducing we can tolerate less complexity so.

Speaker Change:

Speaker Change: And we believe that you know, even even though will be impacted by tariffs directly.

Noah: So we take out those models that are obviously selling less and that's the kind of rationalization process, we want to leave ourselves with a.

Speaker Change: Pat it's a physician base strengthening.

Noah: But the good progression.

Pat: Thank you Dave.

Noah: In the product portfolio, but not excess <unk>.

Noah Zatzkin: Our next question is from Noah Zatzkin with KeyBank Capital Markets, please proceed. Hi, thanks for taking my questions. I guess first, just on the decision to rationalize kind of the value fiberglass model lineup for 2026 by 25%, how should we think about maybe structurally, you know, the boat group, whether from a margin perspective or volume potential perspective, given that rationalization? Yeah, thank you. Yeah, good question. So really, you know, the amount of complexity that you can tolerate in a product line, depends on the volume. And with volumes reducing, we can tolerate less complexity. So we take out those models that are obviously selling less.

Our next question is from Noah <unk> with Keybanc capital markets. Please proceed.

Noah: Complexity and that's really what we've been.

Noah: Doing.

Noah: Hi, Thanks for taking my questions I guess first just on the decision to rationalize the value fiberglass model lineup for 2026 by 25% how should we think about maybe structurally yeah. The boat group whether from a margin.

Noah: There are other actions that we are taking that we'll be able to talk about a bit later in the year to further.

Noah: Ensure that we have stronger profitability in that part of the.

Noah: Market, but that's really the way to think about it reducing complexity in a market that is.

Noah: Smaller I would say, though.

Noah: Dave or volume potential perspective, given that rationalization. Thanks.

Noah: I think everybody understands this that the.

Noah: The profit contribution of all of our Brunswick boats.

Noah: Yeah. Thank you yeah. Good question so really.

Noah: The amount of complexity that you can tolerate.

Noah: In a product line it depends on the volume.

Noah: The boat group margin is only one component of it all of those value both sub mercury engines on them a lot of them contained medical group technology and.

Noah: And with volumes reduce thing we can tolerate less complexity.

Noah: So we take out those models that are obviously selling less and that's the kind of rationalization.

Noah: So this the margin stack, even in our value product lines remains pretty good.

Noah Zatzkin: And that's the kind of rationalization process. We want to leave ourselves with a good progression in the product portfolio, but not excess complexity. And that's really what we've been doing. There are other actions that we are taking that we'll be, you know, able to talk about a bit later in the year to further Insure that we have stronger profitability in that part of the Market, but that's really the way to think about it. Reducing complexity in a market that is I would say though, I think everybody understands this, that the profit contribution of all of our Brunswick boats The boat group margin is only one component of it.

Noah: That's what we want to leave ourselves with a good.

Noah: And so we want to make sure that we.

Noah: Good progression.

Noah: Thoughtful as we approach this.

Noah: In the product portfolio, but not excess.

Noah: And that we consider the entire Brunswick margin impact.

Noah: Complexity and that's really what we've been.

Noah: Doing there are other actions that we are taking that will be.

Noah: Really helpful. Maybe just just one more quick one any color on the tariff impact in the quarter.

Noah: Let's talk about a bit later in the year to further.

Noah: And then apologies if you already said this but how should we think about maybe the distribution of that impact across segments at a high level. Thanks.

Noah: Ensure that we have stronger profitability in that part of the.

Noah: Market, but that's really the way to think about it reducing complexity and in a market that is.

Noah: Yes, I can take that no I mean again, it's a bit different because the cash tariffs paid obviously much greater than one that's.

Noah: Smaller I would say, though.

Noah: I think everybody understands this that the.

Noah: Thats, what well do the P&L through the P&L is somewhere in the mid teens for the quarter millions.

Noah: Great contribution.

Noah: All of our Brunswick boats.

Noah: Hum.

Noah: But again, there is all kinds of offsets and duty drawbacks that they kind of net against that number and then about 75% to 80% of the tariff impact is on Mercury is on the Mercury segment I'm, sorry on propulsion, mostly a little bit on engine P&A.

Noah: The boat group margin is only one component of it all of those value boats up Mercury engines on them a lot of them contained ethical group technology and so this the margin stack even in a value product lines remains pretty good.

Noah Zatzkin: All of those value boats have mercury engines on them. A lot of them contain Navico Group technology. And so the margin stack, even in our value product lines, remains pretty good. And so we want to make sure that we are thoughtful as we approach this and that we consider the entire Brunswick margin.

Noah: And so we want to make sure that we are thoughtful as we approach this.

Noah: West navigator, having kind of the rest of it in boats, having a very small amount well one other item just and obviously this is a late breaking from from earlier this week or late last week, we're obviously monitoring the.

Noah: And that we consider the entire Brunswick margin impact.

Noah Zatzkin: Really helpful. Maybe just just one more quick one. Any color on the tariff impact in the quarter? And then apologies, if you've already said this, but but how should we think about maybe the distribution of that impact across segments at a high level? Yeah, I can take that, Noah. I mean, again, it's a bit different, because the cash tariffs pay, obviously, much greater than what's on with that's what's blown through the P&L. Through the P&L is somewhere in the mid-teens for the quarter millions. But again, there's all kinds of offsets and duty drawbacks that kind of net against that number.

Noah: Really helpful. Maybe just just one more quick one any color on the tariff impact in the quarter.

Noah: 15% tariffs coming from Japanese imports as Dave mentioned, we are the only U S engine manufacturer with our main competitors, primarily manufacturing and in Japan, and almost none in the U S and so one thing we will be monitoring and this is not.

Noah: And then apologies if you already said this but how should we think about maybe the distribution of that impact across segments at a high level. Thanks.

Noah: I can take that no I mean again, it's a bit different because the cash tariffs paid obviously much greater than what is on but thats, what well do the P&L through the P&L is somewhere in the mid teens for the quarter millions.

Noah: In the tariff number and obviously our benefit is the impact of that on Mercury sales and our ability to continue to.

Noah: Take market share as obviously, we believe our products are already market leading.

Noah: But again theres, all kinds of offsets and duty drawbacks that they kind of net against that number and then about 75% 80% of the tariff impact is on Mercury is on the Mercury segment I'm, sorry on propulsion, mostly a little bit on engine P&A with navigate having kind of the rest of it in boats having them.

Noah: This is just another pinpoint for the for the cost profile.

Noah Zatzkin: And then about 75-80% of the tariff impact is on Mercury, is on the Mercury segment. I'm sorry, on propulsion, mostly a little bit on engine P&A, with Navico having kind of the rest of it, and boats having a very small amount.

Noah: Okay.

Noah: Thank you.

Noah: Yeah.

Speaker Change: Our next question is from Tristan Thomas <unk> with BMO capital markets. Please proceed.

Noah: A very small amount well one other item just and then obviously this is a late breaking from from earlier this week or late last week, we're obviously monitoring the.

Tristan Thomas: Hey, good morning.

Noah Zatzkin: Well, one other item just, and obviously, this is late-breaking from earlier this week or late last week, we're obviously monitoring the 15% tariffs coming from Japanese imports. As Dave mentioned, we are the only U.S. engine manufacturer with our main competitors primarily manufacturing in Japan and almost none in the U.S. And so, one thing we'll be monitoring, and this is not in the tariff number, and obviously, a benefit is the impact of that on Mercury sales and our ability to continue to take market share as, obviously, we believe our products are already market-leading. But this is just another input for the costing profile.

Tristan Thomas: Did you did you update your full year industry retail assumption for for boats.

Speaker Change: 15% tariffs coming from Japanese imports as Dave mentioned, we are the only U S engine manufacturer with our main competitors, primarily manufacturing and in Japan, and almost none in the U S and so one thing we will be monitoring and this is not.

Tristan Thomas: No I don't think we didn't specifically do that I think that the.

Tristan Thomas: The trend that we are seeing really the we called out is.

Tristan Thomas: Solid performance in premium and core which is <unk>.

Tristan Thomas: 75% or more of what we make.

Tristan Thomas: Weaker performance in.

Speaker Change: In the tariff number and obviously our benefit is the impact of that on Mercury sales and our ability to continue to.

Tristan Thomas: And the value part of the segment, which is.

Tristan Thomas: Early part of the market, which is down about 20%.

Tristan Thomas: See a really strong reason to.

Speaker Change: Take market share as obviously, we believe our products are already market leading.

Tristan Thomas: Yeah.

Tristan Thomas: To deviate from that kind of profile I don't think we specifically updates at any numbers yet.

Speaker Change: This is just another pinpoint and for the for the costing profile.

Tristan Thomas: Okay and then.

Speaker Change: Okay.

Noah Zatzkin: Thank you.

Speaker Change: Thank you.

Speaker Change: What are your channel inventory weeks on hand, how are you expecting to manage that or what's your target by year end.

Speaker Change: Yeah.

Tristan Thomas-Martin: Our next question is from Tristan Thomas-Martin with BMO Capital Markets.

Speaker Change: Our next question is from Tristan Thomas with BMO capital markets. Please proceed.

Tristan Thomas: Thanks.

Tristan Thomas-Martin: Please proceed. Hey, good morning. Um, did you did you update your full year industry retail assumption for for both? No, I don't think we didn't specifically do that. I think that the The trend that we are seeing really, that we called out is you know, solid performance in premium and core, which is, you know, 75% or more of what we make, and weaker performance in In the value part of the segment, which is the value part of the market, which is down about 20%, I don't see a really strong reason to. to deviate from that kind of profile.

Tristan Thomas: Channel inventory levels, yes, so on the boat side, we are in the low thirties today weeks on hand by the end of the year or it's going to be around 40 give or take.

Tristan Thomas: Hey, good morning.

Tristan Thomas: Did you did you update your full year industry retail assumption for for boats.

Tristan Thomas: But really you remember then that is looking at.

Tristan Thomas: No I don't think we didn't specifically do that I think that the.

Tristan Thomas: Backwards looking retail so rolling 12 backwards.

Tristan Thomas: The trend that we are seeing really the we called out is.

Tristan Thomas: If you look at just pure units right now we are basically in the lowest inventory position, we've been outside of Covid assets, the GSC and by the end of the year, both global and U S.

Tristan Thomas: Solid performance in premium and core, which as you know, 75% or more of what we make.

Tristan Thomas: And a weaker performance in.

Tristan Thomas: And the value part of the segment, which is the value part of the market, which is down about 20% I don't see a really strong reason to.

Tristan Thomas: Field pipelines will be kind of at historical lows. So we're going to take out a couple of <unk>.

Tristan Thomas: So both in the U S.

Tristan Thomas: To deviate from that kind of profile I don't think we specifically updates at any numbers yet.

Tristan Thomas-Martin: I don't think we've specifically updated any numbers yet.

Tristan Thomas: And about that globally, as well, maybe plus or minus depending on how the back of the of.

Tristan Thomas-Martin: Okay, and then what are your channel inventory weeks on hand? And how are you expecting to manage that? Or what's your target by year end? Thanks.

Tristan Thomas: Of the year shapes up.

Tristan Thomas: Okay and then.

Tristan Thomas: Just.

Tristan Thomas: Are your channel inventory weeks on hand, how are you expecting to manage that or what's your target by year end. Thanks.

Tristan Thomas: Brian dialysis.

Speaker Change: Just remember this is this is all value stuff, we're talking about here.

Tristan Thomas-Martin: General Inventory Lists. Yeah, so on the boat side, you know, we are in the low 30s today, weeks on hand. By the end of the year, it's going to be around 40, give or take. But really, remember that that is looking at backwards looking retail, so rolling 12 backwards. If you look at just pure units, right now, we are basically in the lowest inventory position we've been outside of COVID since the GFC. And by the end of the year, both global and U.S. field pipelines will be kind of at historical lows. So we're going to take out a couple of, you know, thousand or so boats in the U.S.

Speaker Change: This is our pipelines in premium.

Tristan Thomas: The channel inventory yeah. So on the boat side you know we are in the low thirties today weeks on hand by the end of the year, it's going to be around 40 give or take but really.

Speaker Change: Lower than that.

Speaker Change: Yeah.

Speaker Change: Alright, and then the 1000 without our full year target or is that a second half target so that'd be a full year target.

Tristan Thomas: And that is looking at a backwards looking retail so rolling 12 backwards.

Speaker Change: Great. Thank you.

Speaker Change: Our next question is friends and two with BNP Paribas. Please proceed.

Tristan Thomas: If you look at just pure units right now we are basically in the lowest inventory position we've been outside of Covid since the GSC in and by the end of the year, both global and U S.

Speaker Change: Hey, guys, sorry about that earlier.

Speaker Change: Okay.

Speaker Change: How has it gone.

Speaker Change: On propulsion and was up 7%, including I think 11% outboard engines versus retail.

Tristan Thomas: Field pipelines will be kind of at historical lows. So we're gonna take out a couple of.

Speaker Change: For outboard a bit.

Speaker Change: Down like six and then I guess like what like what's kind of going on there you mentioned kind of the Oems playing orders ahead of tariffs on the Japanese SATA or you're kind of matching that and should we kind of expect things to kind of moderate from here or is it just kind of the market share gains that are kind of offsetting.

Tristan Thomas: Or so boats in the U S.

Tristan Thomas-Martin: and about that globally as well, maybe, you know, plus or minus, depending on how the back of the year shapes up.

Tristan Thomas: And about that globally, as well, maybe plus or minus depending on how the back of the of.

Tristan Thomas: Of the year shapes up.

Tristan Thomas-Martin: Just got broke. Just remember, this is all value stuff that we're talking about here. This is our pipelines and premium low-ethanol. Okay, and then the thousand, was that a full year target or is that a second half target? Oh, that'd be a full year target. Great, thank you.

Tristan Thomas: Just one.

Tristan Thomas: Okay.

Tristan Thomas: But just remember this is this is all value stuff, we're talking about here.

Speaker Change: I guess retail weakness.

Tristan Thomas: This is our pipelines in premium.

Speaker Change: It's actually a little bit of pipeline. So it's something we haven't really talked too much about how we have a little bit on the engine side, but.

Tristan Thomas: Lower than that.

Tristan Thomas: Yeah.

Tristan Thomas: Alright, and then the thousand without a full year target or is that a second half target so that'd be a full year target.

Speaker Change: Over the last call it six quarters or so we have taken out substantial pipeline inventory on the engine side call it 25%, maybe plus or minus even more on high horsepower and that's at a time when might you said some of our competitors were pushing engines into the U S.

Tristan Thomas: Great. Thank you.

Xian Sam: Our next question is from Xian Su with BNP Paribas. Please proceed. Hey, guys, sorry about that earlier. How's it going? On propulsion, it was up 7%, including I think 11% outboard engines versus retail for outboard a bit down like six. And then I guess like, what's kind of going on there? You mentioned kind of the OEMs pulling orders ahead of tariffs on the Japanese side? Or are you kind of matching that? And should we kind of expect things to kind of moderate from here? Or is it just kind of the market share gains that are kind of offsetting, I guess, retail?

Speaker Change: Our next question is friends and two with BNP Paribas. Please proceed.

Speaker Change: Hey, guys, sorry about that earlier.

Speaker Change: Good morning.

Speaker Change: How's it going on propulsion, it was up 7%, including I think 11% outboard engines versus retail for outboard of debt either.

Speaker Change: Whether it's in advance of tariffs or other but that is certainly the wholesale trend.

Speaker Change: So what youre seeing is now kind of a matching of our continued retail share gains with our OEM customers that are actually producing a little bit more of this this time of year than they were last year at this point, even even in June of last year May and June a lot of our OEM partners, we're taking fewer engines because they hand them in.

Speaker Change: Down like six and then.

Speaker Change: I guess like what like what's kind of going on there you mentioned kind of the Oems plane orders ahead of tariffs on the Japanese SATA or you're kind of matching that and should we kind of expect things to kind of moderate from here or is it just kind of the market share gains that are kind of offsetting I guess retail weakness.

Speaker Change: Stock and they were going to produce your votes and the and the outlook months and that ended up happening. So today at a time, where production is pretty stable and pipelines lower theyre needing engines and we're fulfilling them.

Xian Sam: It's actually a little bit of pipeline. So it's something we haven't really talked too much about. I know we have a little bit on the engine side, but over the last, call it six quarters or so, we have taken out substantial pipeline inventory on the engine side. Call it 25-ish percent, maybe plus or minus, even more on high horsepower. And that's at a time when, like you said, some of our competitors were pushing engines into the US, whether it's in advance of tariffs or other, but that's certainly the wholesale trend. But so what you're seeing is now kind of a matching of our continued retail share gains with our OEM customers that are actually producing a little bit more this time of year than they were last year.

Speaker Change: It's actually a little bit of pipeline. So it's something we haven't really talked too much about it and we have a little bit on the engine side, but you know over the last call. It six quarters or so we have taken out substantial pipeline inventory on the engine side call. It.

Speaker Change: We've done like a entire review of all of our OEM customers, there and we are not losing share in any of them any of them that are kind of dual source. If you will.

Speaker Change: 25 ish percent, maybe plus or minus even more on high horsepower and that's at a time when like you said some of our competitors were pushing engines into the U S. Whether it's in advance of tariffs or other.

Speaker Change: And we plan to continue to gain retail share for the full year just as we've done the past several years. So it is really a pipeline. It's a pipeline game and Thats right now at a really healthy point will probably be able to add engines here in may.

Speaker Change: But that's certainly not the wholesale trend.

Speaker Change: Make sure that wholesale exceed retail.

Speaker Change: Over the over the coming quarters.

Speaker Change: Okay got it that's super helpful. And then maybe so then on that point, where does the pipeline kind of N for engines and by the end of the year and how do you think about kind of the margin progression from here.

Xian Sam: At this point, even in June of last year, May and June, a lot of our OEM partners were taking fewer engines because they had them in stock and they were gonna produce fewer boats in the outlook months, and that ended up happening. So today, at a time where production's pretty stable and pipeline's lower, they're needing engines and we're fulfilling them. We've done like an entire review of all of our OEM customers. We are not losing share in any of them, any of them that are kind of dual source, if you would. And we plan to continue to gain retail share for the full year, just as we've done the past several years.

Speaker Change: Last year at this point, even even in June of last year May and June a lot of our OEM partners, we're taking fewer engines because they have them in stock and they were going to produce your votes.

Speaker Change: Propulsion.

Speaker Change: Yes.

Speaker Change: The outlook months and that ended up happening. So today at a time, where production is pretty stable and pipelines lower theyre needing engines and we're fulfilling them.

Speaker Change: As we currently said by the end of the year pipeline will be down about 25% from the beginning of 2024.

Speaker Change: And it's kind of in the mid Thirty's down percentage wise on engines greater than $1 75.

Speaker Change: We've done like a entire review of all of our OEM customers, there and we are not losing share in any of them any of them that are kind of dual source. If you what and we plan to continue to gain retail share for the full year just as we've done the past several years. So it is really a pipeline.

Speaker Change: And a lot of what it does from there is dependent on kind of the OEM patterns as we start all the way into 'twenty six.

Speaker Change: And the next retail cycle, but as we sit now I don't think we're going to take much more out I would say the second half. This year second half is not anticipating a whole lot of takeout. So what you what we've taken out as kind of.

Xian Sam: So it is really a pipeline, it's a pipeline game, and that's right now at a really healthy point where we'll probably be able to add engines here into the, you know, make sure that wholesale exceeds retail over the coming quarter.

Speaker Change: <unk>, it's a pipeline game and that's right now at a really healthy point won't probably be able to add engines here ended up.

Speaker Change: Make sure that wholesale exceeds retail.

Speaker Change: As where we'd set.

Speaker Change: Over the over the coming quarters.

Speaker Change: But a little of that depends on where our retail lands.

Xian Sam: Okay, guys, that's super helpful. And then maybe so then on that point, where does the pipeline kind of end for engines and by the end of the year? And how do you think about kind of the margin progression from here? Yeah, as we currently sit by the end of the year, pipeline will be down about 25% from the beginning of 2024. and it's kind of in the mid 30s down percentage wise on engines greater than 175. And, you know, a lot of what it does from there is dependent on kind of the OEM patterns as we start all the way into 26 and the next retail cycle.

Speaker Change: Got it Super helpful. Thank you guys and good luck.

Stephen Grambling: Our next question is from Stephen Grambling with Morgan Stanley. Please proceed.

Stephen Grambling: Hi, Thank you you mentioned the initiatives to improve inventory and working capital and I know you've talked about it a little bit on the call, but maybe you could just expand on what some of the initiatives are and how specifically investors should think about the impact of free cash flow conversion longer term, particularly if the retail cycle does start to turn here. Thank you.

Speaker Change: Propulsion.

Speaker Change: As we currently set by the end of the year pipeline will be down about 25% from the beginning of 2024.

Speaker Change: And it's kind of in the mid Thirty's down percentage wise on engines greater than $1 75.

Speaker Change: And you know a lot of what it does from there is dependent on kind of the OEM patterns as we start all the way into 'twenty six.

Speaker Change: Yes, maybe we can tag team. It so a lot of work going on particularly with our supply chain and it's been a very dynamic time obviously.

Speaker Change: We've been a time when we have done some banking of inventory, but essentially it has been.

Speaker Change: And the you know the next retail cycle, but as we sit now I don't think we're going to take much more out I would say the second half. This year second half is not anticipating a whole lot of take out. So what you what we've taken out is kind of as where we'd set.

Xian Sam: But as we sit now, I don't think we're going to take much more out. I would say the second half, this year's second half is not anticipating a whole lot of takeouts. So what we've taken out is kind of where we'd sit. But a little of that depends on where retail lands. Got it, super helpful, thank you guys.

Speaker Change: Very diligent.

Speaker Change: Management of incoming.

Speaker Change: Supply chain.

Speaker Change: To make sure that we.

Speaker Change: We aligned the.

Speaker Change: But a little of that depends on where our retail lands.

Speaker Change: Weapon overall inventory levels with with.

Speaker Change: Got it Super helpful. Thank you guys and good luck.

Speaker Change: With the production requirements.

Speaker Change: That is not an easy process. It does require us to work very closely with the supply base and our team has done a wonderful job of doing that and managing to make sure that we have.

Stephen Gramling: Our next question is from Stephen Gramling with Morgan Stanley.

Speaker Change: Our next question is from Stephen Grambling with Morgan Stanley. Please proceed.

Stephen Gramling: Please proceed. Hi, thank you. You mentioned the initiatives to improve inventory and working capital.

Stephen Gramling: And I know you've talked about it a little bit on the call, but maybe you could just expand on what some of the initiatives are and how specifically investors think about the impact of free cash flow conversion longer term, particularly if the retail cycle does start to turn here. Thank you. A lot of work going on, particularly with our supply chain, and it's been a very dynamic time, obviously. We've been a time when we've done some banking of inventory, but essentially it has been very diligent management of incoming supply chain. to make sure that we aligned the WEP and overall inventory levels with the production requirements.

Speaker Change: Very healthy supply base, but that we don't oversupply ourselves I think.

Speaker Change: More room to run there and we continue to see.

Speaker Change: Benefits from that and we have very clear targets.

Speaker Change: Both in the short term and long term for our inventory levels, but that those inventory levels have come down I think a couple of hundred million dollars in the last over the first half of the year end.

Speaker Change: Yeah, maybe we can tag team itself. So a lot of work going on particularly with our supply chain and it's been a very dynamic time obviously.

Speaker Change: We've been a time when we have done some banking of inventory, but essentially it has been.

Speaker Change:

Speaker Change: Ronnie.

Speaker Change: The significant reductions in production in the second half of last year and balancing the incoming inventories really.

Speaker Change: Very diligent.

Speaker Change: Management of incoming.

Speaker Change: A helpful driver of that in the businesses as Dave said have done a really nice job.

Speaker Change: Supply chain.

Speaker Change: To make sure that we we aligned the weapon overall inventory levels with with the production requirements.

Speaker Change: Ensuring the balance and that will then move forward as we look at the second half financials.

Speaker Change: Financials and gives us a nice benefit because we will be producing in wholesaling more in both boats and engines.

Stephen Gramling: That is not an easy process. It does require us to work very closely with the supply base, and our team has done a wonderful job of doing that and managing to make sure that we keep a very healthy supply base, but that we don't oversupply ourselves. I think there's more room to run there, and we continue to see benefits from that, and we have very clear targets. both in the short-term and long-term for our inventory levels, but those inventory levels have come down, I think, a couple hundred million over the first half of the year, right?

Speaker Change: That is not an easy process. It does require us to work very closely with our supply base and our team has done a wonderful job of doing that and managing to make sure that we are.

Speaker Change: Got it thank you.

Speaker Change: Our next question is from Joe <unk> with Raymond James. Please proceed.

Speaker Change: A very healthy supply base, but that we don't oversupply yourselves.

Joe: Thanks, Hey, guys good morning.

Speaker Change: There's more room to run.

Speaker Change: Go back to the engine commentary for a second if we assume a 15% tariff.

Speaker Change: We continue to street see benefits from that and we have very clear targets.

Speaker Change: On Japan, I would think the impact here is pretty straightforward right and that would obviously significantly improve your competitive positioning. So I guess first is that showing up yet in OEM orders and second is that baked into your outlook at all.

Speaker Change: Both in the short term and long term, where our inventory levels, but that those inventory levels have come down I think a couple of hundred million unless and over the first half of the year end.

Speaker Change:

Stephen Gramling: The significant reductions in production the second half of last year and balancing the incoming inventory is really a helpful driver of that and the businesses as Dave said have done a really nice job of ensuring the balance and that will then move forward as we look at the second half financials and gives us a nice benefit because we will be producing and wholesaling more in both boats and engines. Got it. Thank you.

Speaker Change: Hi, Joe.

Speaker Change: The significant reductions in production in the second half of last year and balancing the incoming inventories really.

Speaker Change: Yes.

Hum.

Speaker Change: Yes, no window really well first of all it's not baked explicitly into our outlook.

Speaker Change: Helpful driver of that in the businesses as Dave said have done a really nice job.

Speaker Change: Although obviously, it's it's going to be helpful to us.

Speaker Change: Of ensuring the balance and that will then move forward as we look at the second half.

Speaker Change: It is not particularly showing up yet because of the amount of engines that was shipped in the second quarter in particular.

Speaker Change: Financials and gives us a nice benefit because we will be producing in wholesaling more in both boats and engines.

Speaker Change: I don't think so.

Speaker Change: Something like this was not a surprise.

Speaker Change: So I think that our competitors still have stock of pre tariff engines.

Speaker Change: Got it thank you.

Joseph Altobello: Our next question is from Joe Altobello with Raymond James. Please proceed. Thanks. Hey, guys. Good morning. Go back to the engine commentary for a second. If we assume a 15% tariff on Japan, I would think the impact here is pretty straightforward, right? And that would obviously significantly improve your competitive positioning. So I guess first, is that showing up yet in OEM orders? And second, is that baked into your outlook at all?

Speaker Change: Our next question is from Joe <unk> with Raymond James. Please proceed.

Speaker Change: But obviously over time.

Speaker Change: Those will kind of bleed out and we have not explicitly baked.

Joe: Thanks, Hey, guys good morning.

Speaker Change: Go back to the engine commentary for a second if we assume a 15% tariff.

Speaker Change: An uplift in mercury share into our forecast at the moment.

Speaker Change: But obviously, it's going to give us good momentum.

Speaker Change: Okay very helpful. Maybe.

Speaker Change: Secondly, you referred to as certain rationalization and manufacturing capacity optimization efforts, maybe could you elaborate elaborate on that what businesses it sounds like <unk>.

Joseph Altobello: Hi, Joe. I kind of, I guess no and no, really. Well, first of all, it's not explicitly into our outlook. Although obviously, it's, it's going to be helpful to us. It is not particularly showing up yet because of the amount of engines that were shipped in the second quarter in particular. I don't think something like this was not a surprise. So I think that our competitors still have stock of pre-tariff engines. Um, but obviously over time. Those will kind of bleed out. And we have not explicitly baked a an uplift in mercury share into our forecast at the moment.

Joe: Hi, Joe.

Speaker Change: Hum.

Speaker Change: And both as part of that but maybe are there others as well.

Speaker Change: No window really well first of all it's not baked explicitly into our outlook. Although obviously, it's it's got to be helpful to us.

Speaker Change: Yes, I think it's certainly.

Speaker Change: We need to.

Speaker Change: We continue the process of ensuring that we have good productivity and efficiency.

Speaker Change: It is not particularly showing up yet because of the amount of engines that was shipped in the second quarter in particular.

Speaker Change: And overall capacity is aligned with our expectations for the market we've been continuing to work on that and I gave a few examples in the and the commentary that we previously provided but there is more work to do.

Speaker Change: I don't think so.

Speaker Change: You know something like this was not a not a surprise.

Speaker Change: So I think that our competitors still have stock of pre tariff engines.

Speaker Change: But obviously overtime.

Speaker Change: And honestly, Joe will be able to share a bit more.

Speaker Change: Those will kind of bleed out and we have not explicitly baked a and uplift in mercury share into our forecast at the moment.

Speaker Change: Explicitly probably in the third quarter call on that or maybe none of them.

Joseph Altobello: But obviously, it's going to give us good momentum. Okay, very helpful.

Speaker Change: Some kind of intermediate base.

Speaker Change: Basis, but there are various things that we're continuing to progress that will I think materially address.

Speaker Change: But obviously, it's going to give us good momentum.

Speaker Change: Okay very helpful. Maybe.

Ryan Gwillim: Maybe secondly, you referred to a certain rationalization and manufacturing capacity optimization efforts. Maybe could you elaborate on that? What businesses? Sounds like Navico and Boats is part of that, but maybe are there others as well? Yeah, I think you know, right, it's certainly We need to continue the process of ensuring that we have good productivity and efficiency and that our overall capacity is aligned with our expectations for the market. We've been continuing to work on that, and I gave a few examples in the commentary that we previously provided, but there is more work to do.

Speaker Change:

Speaker Change: Fixed costs in those in those businesses.

Speaker Change: Okay understood. Thank you.

Speaker Change: Our final question is from Jamie Katz with Morningstar. Please proceed.

Speaker Change: In boats as part of that but maybe are there others as well.

Speaker Change: Yeah, I think it's certainly we.

Jamie Katz: Good morning, Thanks for squeezing me in.

So I'm curious about the second half projections for both sales and then implies basically that we're returning to growth and I'm wondering if part of that is just mix from.

Speaker Change: We need to.

Speaker Change: Continue the process of ensuring that we have good productivity and efficiency and.

Speaker Change: And overall capacity is aligned with our expectations for the market, we've been continuing to work on that.

Jamie Katz: Higher price pilots or if you guys have seen.

Jamie Katz: Interest of ryzen commitments from dealers that may.

Speaker Change: A few examples in the.

Jamie Katz: Help us see if we are at the trough.

Speaker Change: Commentary that we previously provided but there is more work to do and honestly, Joe we will be able to share a bit more explicit.

Jamie Katz: Yeah. Good morning, Jamie I think it's kind of two things one goodness in July has given us some some momentum here as we get into the back half of the year and we believe well continue to spur our dealer orders, but.

Ryan Gwillim: And honestly, we'll be able to share a bit more explicitly, probably in the third quarter call on that, or maybe on some kind of intermediate basis. But there are various things that we're continuing to progress that will, I think, materially address. Fixed costs in those in those businesses. Okay, understood. Thank you.

Speaker Change: Explicitly probably in the third quarter call on that or maybe some kind of intermediate.

Speaker Change: Basis, but there are various things that we're continuing to progress that will I think materially address.

Jamie Katz: But certainly the year over year comps versus the second half of last year.

Jamie Katz: Really on a bit of a driving factor we took substantial production out in the second half of 'twenty four in order to keep inventory fresh and at the right levels. This year just.

Speaker Change: Fixed costs in those in those businesses.

Speaker Change: Okay understood. Thank you.

JB Katz: Our final question is from JB Katz with Morningstar.

Speaker Change: Our final question is from TV Katz with Morningstar. Please proceed.

JB Katz: Please proceed. Hey, good morning. Thanks for squeezing me in.

Jamie Katz: To match retail and wholesale the wholesale will be stronger right in the second half and so.

TV Katz: Hey, good morning, Thanks for squeezing me in.

JB Katz: So I'm curious about the second half projection for boat sales. And it implies basically that we're returning to growth. And I'm wondering if part of that is just mixed from higher price boats, or if you guys have seen, you know, interest or rising commitments from dealers that may help us see if we are at the trough. Yeah, good morning, Jaime. I think it's kind of two things. One, goodness in July has given us some momentum here as we get into the back half of the year, and we believe will continue to spur dealer orders. But certainly, the year-over-year comps versus the second half of last year really are a bit of a driving factor.

TV Katz: So I'm curious about the second half projections for both South and then implies basically that we're returning to growth and I'm wondering if part of that is just mix from.

Jamie Katz: Yes premium and core we plan on being up more than more than value as Dave and I have said on the call, but really if you go back and look at production rates, it's just matching wholesale and retail in the comparison versus a extremely light back half of 'twenty four.

TV Katz: Higher price poets or asking you guys have seen you know.

TV Katz: Interest of ryzen commitments from dealers that may help.

TV Katz: I hope I see if we are at the trough.

Jamie Katz: And then can we just focus on value. Obviously, there are some value products that are moving do you guys have any insight into like what consumers.

TV Katz: Yeah. Good morning, Jamie I think it's kind of two things one good goodness in July has given us some some momentum here as we get into the back half of the year and we believe well continue to spur our dealer orders.

Jamie Katz: What is facilitating conversion of those sales and then maybe what we should be looking for.

TV Katz: But certainly the year over year comps versus the second half of last year.

Jamie Katz: Two.

Wang: Determine Wang.

Wang: The sales may return outside of interest rates perhaps.

TV Katz: On a bit of a driving factor we took substantial production out in the second half of 'twenty four in order to keep inventory fresh and at the right levels. This year just to match retail and wholesale the wholesale will be stronger right in the second half and so yes premium.

JB Katz: We took substantial production out in the second half of 24 in order to keep inventory fresh and at the right levels. This year, just to match retail and wholesale, the wholesale will be stronger in the second half. And so, yes, premium and core, we plan on being up more than value, as Dave and I have said on the call. But really, if you go back and look at production rates, it's just matching wholesale and retail and the comparison versus a extremely light back half of 24.

Wang: Yes, a couple of things.

Wang:

Wang: Just broader economic sensitivity in that buyer population, if you like so any uncertainties about inflation.

TV Katz: In core we plan on being up more than more than value as Dave and I have said on the call.

Wang: Inflation employment other things tend to.

Wang: More and more acute in that population it is.

TV Katz: Really if you go back and look at production rates, it's just matching wholesale and retail in the comparison versus a extremely light back half of 'twenty four.

Wang: <unk>.

Wang: An area, where we see more financing.

Wang: At the point of sale, so more sensitivity to interest rates certainly I think we're doing a pretty good job in that segment, but it does require more promotions you need to provide a reason for somebody to make that purchase we try and do that by adding the freshest.

JB Katz: Okay, and then can we just focus on value? Obviously, there are some value products that are moving. Do you guys have any insight into like what consumers, what is facilitating conversion of those sales? And then maybe what we should be looking for to... determine when those sales may return outside of interest rates, perhaps. Yeah, a couple of things. Obviously, you know, there's just broader economic sensitivity in that by a population, if you like. So any uncertainties about, you know, inflation, employment, other things tend to be more acute in that population. It is an area where we see more financing at the point of sale.

TV Katz: And then can we just focus on value I think honestly there are some value products that are moving do you guys have any insight into like what consumers.

TV Katz: What is facilitating conversion of those samples and then maybe what we should be looking for them too.

Wang: Inventory the newest products and other things in the marketplace, but in the current environment.

TV Katz: Determine when the sales may return outside of interest rates perhaps.

Wang: Takes a bit of.

Wang: And economic push as well.

Speaker Change: Yeah, a couple of things.

Wang: So I think.

Wang: Hopefully, we'll begin to see some interest rate reductions.

TV Katz: Obviously.

TV Katz: Just broader economic sensitivity in that buyer population. If you like so any uncertainties about you know inflation employment other things tend to.

Wang: In the back half of this year that will provide a bit more momentum, we'd hope to see something earlier in the year, but those didn't materialize.

Wang: But I would say that those interest rate reductions are probably going to disproportionately benefit.

TV Katz: Be more more acute in that population it is oh.

Wang: The buyers of.

Wang: While your entry level product.

TV Katz:

TV Katz: An area, where we see more <unk>.

Wang: Thanks.

TV Katz: Financing.

TV Katz: At the point of sale, so more sensitivity to interest rates, but certainly I think we're doing a pretty good job in that segment, but it does require more promotions that you need to provide a reason for somebody to.

JB Katz: So more sensitivity to interest rates, certainly. I think we're doing a pretty good job in that segment, but it does require more, you know, promotions. You need to provide a reason for somebody to make that purchase. We try and do that by having the freshest inventory, the newest products and other things in the marketplace. But in the current environment, it also takes a bit of an economic push as well. So I think hopefully we'll begin to see some interest rate reductions in the back half of this year that will provide a bit more momentum. We'd hope to see something earlier in the year, but those didn't materialize.

Speaker Change: We have no further questions at this time I would like to turn the conference back over to Dave for some concluding remarks.

Dave: Well thanks for your questions everyone. Much appreciated it was another solid quarter for Brunswick lots of new products very diligent operational work, leading to a performance really across all of our businesses and segments.

TV Katz: To make that purchase.

TV Katz: Try and do that by having the freshest inventory the newest products and other things in the marketplace, but in the current environment. It also takes a bit of and economic push as well.

Dave: Things probably stand out our cash performance and also the fact that our revenue was slightly up over the second quarter of 2024, it was nice to see that.

TV Katz: So I think hopefully we'll begin to see some interest rate reductions.

Dave: Inflection.

Dave: So great to see.

TV Katz: In the back half of this year that will provide a bit more momentum, we'd hope to see something earlier in the year, but those didn't materialize.

Dave: As we noted we're continuing to work hard and in a smart way to mitigate the direct impact of tariffs, but as we discussed in some of the.

JB Katz: But I would say that those interest rate reductions are probably going to disproportionately benefit. The bias of a value or entry-level product.

TV Katz: But I would say that those interest rate reductions are probably going to disproportionately benefit.

Dave: Questions here, our footprints in vertical integration do provide us with a fundamental competitive advantage in the presence of persistent tariffs.

TV Katz:

TV Katz: The bias of a value of entry level product.

Dave: We are still we are working really tirelessly on further actions to re expand margins in the business and we really have very tangible actions.

Unknown Executive: Thanks.

TV Katz: Thanks.

Unknown Executive: We have no further questions at this time.

TV Katz: We have no further questions at this time I would like to turn the conference back over to Dave for some concluding remarks.

Dave: Lined up to achieve that.

David Foulkes: I would like to turn the conference back over to Dave for some concluding. Well, thanks for your questions, everyone. Much appreciated. It was another solid quarter for Brunswick, lots of new products, very diligent operational work leading to our performance, really across all of our businesses and segments. A couple of things probably stand out, our cash performance and also the fact that our revenue was slightly up over the second quarter of 2024. It was nice to see that inflection. So, great to see. As we noted, we're continuing to work hard and in a smart way to mitigate the direct impact of tariffs.

Dave: And then finally, although we are beyond the midpoint of the selling season, we do get a real sense that the market wants to rebound.

TV Katz: Well thanks for your questions everyone. Much appreciates it was another solid quarter for Brunswick lots of new products very diligent operational work, leading to a performance really across all of our businesses and segments.

Dave: With just a little more.

Dave: The normalization of the macro backdrop maybe.

Dave: Maybe later in the season, some tailwind from interest rates. So as we enter the second half we do enter it with the.

TV Katz: A couple of things probably stand out our cash performance and also the fact that our revenue was slightly up over the second quarter of 2024, it was nice to see that.

Dave: Some cautious optimism.

Dave: Thank you very much.

Dave: Thank you that will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

TV Katz: Inflection.

TV Katz: So great to see.

TV Katz: As we noted we're continuing to work hard and in a smart way to mitigate the direct impact of tariffs, but as we discussed in some of the.

David Foulkes: But as we discussed in some of the questions here, our footprint and vertical integration do provide us with a fundamental competitive advantage in the presence of persistent tariffs. We are working really tirelessly on further actions to re-expand margins in the business and we really have very tangible actions lined up to achieve that. And then finally, although we are beyond the midpoint of the selling season, we do get a real sense that the market wants to rebound with just a little more kind of normalization of the macro backdrop, maybe later in the season, some tailwind from interest rates.

TV Katz: Questions Seattle footprints in vertical integration do provide us with a fundamental competitive advantage in the presence of a persistent tariffs.

TV Katz: We are still we are working really tirelessly on further actions to re expand margins in the business and we really have very tangible actions.

TV Katz: Mind up to achieve that.

TV Katz: And then finally, although we all beyond the midpoint of the selling season, we do get a real sense that the market wants to rebound.

TV Katz: It was just a little more kind of normalization of the macro backdrop.

TV Katz: Maybe later in the season that some tailwind from interest rates. So as we enter the second half we do enter it with some cautious optimism.

David Foulkes: So as we enter the second half, we do enter it with some cautious optimism.

Unknown Executive: Thank you very much. Thank you.

TV Katz: Thank you very much.

Unknown Executive: That will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.

Speaker Change: Thank you that will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

TV Katz: Yeah.

TV Katz: [music].

Q2 2025 Brunswick Corp Earnings Call

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