BRUNSWICK CORP Q4 FY2024 earnings call

• 2024 had solid finish with significant cash generation, outboard engine market share gains, new product launches, and optimal operating performance.
• Managed boat field inventory and production for well-balanced levels exiting 2024, with 36.8 weeks on hand in U.S. dealer pipeline.
• U.S. new boat retail sales down high single-digit percent in 2024, Brunswick performed better than industry in premium segments.
• Continued focus on cost containment, robust capital strategy execution, and working capital management led to 92% full year free cash flow conversion.
• Completed $200 million share repurchases in 2024.
• Segments: Propulsion had lower Q4 sales/earnings but market share gains; Engine Parts and Accessories had lower Q4 results but full year growth; Navico Group had flat Q4 sales but Aftermarket strength; Boat had sales/earnings consistent with expectations; Freedom Boat Club had strong quarter with expansion.
• External environment: Interest rate relief since September could benefit 2025 season; uncertain tariff environment with annualized impact of ~$35 million in 2025; dealer sentiment solid, early season boat shows encouraging.

Propulsion: Reduced production led to lower net sales and operating earnings in Q4 2024 vs 2023, but gained 110 basis points of U.S. retail outboard engine share in 2024 and saw share increases at 2025 early season boat shows. Engine Parts and Accessories: Fourth quarter net sales and earnings slightly lower, but full year earnings and operating margins grew, led by products portion and efficiencies from Brownsburg, Indiana distribution center. Navico Group: Sales essentially flat vs Q4 2023; Aftermarket net sales higher, solid holiday season performance, sequentially higher sales and adjusted earnings vs Q3. Boat: Sales and earnings in quarter consistent with expectations, managed healthy pipeline inventory levels. Freedom Boat Club: Strong quarter, over 600,000 annual member trips for second consecutive year, added many new locations in U.S., Europe, Australia, New Zealand.

• 2025 adjusted EPS guidance between $3.50 per share and $5 per share.
• Factors influencing earnings: volume growth primarily in back half of 2025, ~$1.25 per share cost reduction efforts offset by ~$1 per share variable compensation reset, tariffs and foreign exchange rates creating headwind of just under $0.80 per share.
• Anticipate net sales between $5.2 billion to $5.6 billion, free cash flow in excess of $350 million, Q1 similar to Q4 2024 with improvement in wholesale ordering patterns throughout the year.

• Uncertain tariff environment with annualized impact of ~$35 million in 2025; current tariff rates and potential new laws pose risks.
• Foreign exchange rate fluctuations, particularly the strong U.S. dollar impacting non-U.S. operations, creating transaction losses.

Q: Can you help us unpack that $1.25 cost savings in the EPS bridge?

A: Dave Foulkes said savings from run rate savings, staff reductions, re-optimized production lines, supply chain projects, operating efficiencies, and value engineering work, with ~50-50 split between already enacted and future savings.

Q: How should we think about the guidance range and how to get to low and high ends?

A: Ryan Gwillim said high end could be market outperforming flat, FX back to normalized levels, no incremental tariffs; low end could be market flat or worse, FX not improving, additional tariffs.

Q: What's the thinking behind share repurchases being down?

A: Dave Foulkes said balancing capital strategy needs, watching debt leverage, cash utilization, with $80 million baseline and potential for more if cash generation outpaces expectations.

Q: What needs to go right for Navico to come in towards higher end of guide?

A: Dave Foulkes said continued investment in new products, Navico's topline growth and margin expansion while investing in business, with no more significant one-time charges like the goodwill impairment in Q4.