Brunswick Corporation Q1 FY2026 earnings call

• Delivered excellent start to the year with first quarter results ahead of expectations despite geopolitical and tariff environment. Global and U.S. boat retail flat on unit basis but premium sales up. • Strong OEM order patterns drove gains for Mercury Marine and Nabico Group. • Disciplined capital allocation strategy with $20 million of share repurchases year to date and 14th consecutive annual dividend increase. • High exposure to insulated markets like US and Canada, balanced portfolio, lean channel inventories, and operational discipline. • Exciting developments in Freedom Boat Club, including acquisition of a franchise club, growth in locations, trips, and enterprise synergies. • Introduction of innovative new products across portfolio. • Brunswick and its brands secured nearly 50 awards in first quarter.

All segments delivered year-over-year sales growth for the third consecutive quarter. Propulsion sales increased significantly, with Mercury's global and U.S. outboard unit orders up over 15% year-over-year and record share at boat shows. Engine P&A business had higher sales and margin due to healthy boating participation and distribution gains. Navico Group had revenue growth and margin improvement from new product launches and operational improvements. Boat group segment grew sales and margin as wholesale shipments aligned with stable retail, with boat show revenue up despite weather impacts and Freedom Boat Club adding locations and completing an acquisition.

• Updated outlook for 2026: Confident in operating plan and portfolio resilience. • Full-year incremental net tariff impact landed near lower end of original $35 to $45 million estimate. • Adjusted EPS guidance increased to $4 to $4.50 reflecting lower tariff impacts and first quarter overdrive, with some caution due to macroeconomic environment. • Retail environment expectations consistent across guidance range, with wholesale to retail alignment in boat and engine segments.

• Heightened geopolitical volatility introduces uncertainties, especially impact on consumer health outside U.S. from prolonged Middle East conflict. • Tariff environment remains dynamic with potential impacts. • Aluminum prices remain elevated, though scale and sophistication enable hedging programs for other commodities. • Diesel prices impact boat and other transportation costs, with some surcharges implemented.

Q: Craig Kennison from Baird asked about Mercury's capacity utilization, ability to handle additional volume, and incremental margin framework.

A: Mercury has best product line, well-capacitized after 2019 - 2021 investments, no major additional investments needed soon. Absent tariffs, approaching 30% operating leverage in quarter.

Q: James Hardiman from Citi asked about demand trends, outboard industry outperformance, etc.

A: Monthly volumes differ, premium outperforms value, outboard industry outperforms boat industry due to higher attach rate, repower market, and Mercury's share gain.

Q: Chang Su from BNP Paribas asked about competitive landscape and repower market.

A: Pricing muted, Mercury and Japanese competitors have price increases, repower market still about 15% - 20% of engine sales, share of repower lower than OEM share but growing.

Q: Anna Glaskin from B Riley Securities asked about guidance, tariff impact on EPS, etc.

A: Guidance reflects cautiousness with world activities, tariff impact in Q1 and Q2, EPS beat based on improved revenues and leverage.

Q: Garrick Johnson from Seaport asked about boat group trends and operational efficiencies.

A: Boat group has strength in Lund and Harris brands, operational efficiencies in Navico Group and boat group with rationalization and value engineering, but full benefit not seen this year.

Q: Molly Baum from Morgan Stanley asked about operational efficiencies and IEPA tariffs.

A: Boat group rationalization a headwind this year but will see benefit next year, Navico Group continues to rationalize footprint. IEPA refunds estimated at $50 million, expected to be recognized as cash received.

Q: Tristan Thomas Martin from BMO Capital Markets asked about value builder and normalized boat demand.

A: Value builder market affected by macro pressures, Freedom Boat Club offers alternative, normalized boat demand expected to stabilize and return to growth with used market and trade-in dynamics.

Q: Noah Zatskin from KeyBank Capital Markets asked about guidance range and shipment tailwind.

A: Guidance range due to overlay of caution on external volatility, wholesale to retail alignment in boat and engine segments.