Group 1 - The investment approach focuses on long-term investments while incorporating short-term shorts to uncover alpha opportunities [1] - The analysis is based on bottom-up evaluation, emphasizing the fundamental strengths and weaknesses of individual companies [1] - The goal is to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Financial Data and Key Metrics Changes - Brunswick reported second quarter sales of $1,400,000,000, slightly up from the prior year, with earnings per share of $1.16, both exceeding the top end of guidance [6][25] - Free cash flow generation reached a record $288,000,000 for the quarter, marking the highest second quarter in company history, and a record first half free cash flow of $244,000,000, an improvement of $279,000,000 compared to the first half of 2024 [8][22] - Year-to-date sales are down 5%, primarily due to anticipated lower production levels in propulsion and boat businesses, partially offset by steady sales in aftermarket and Navico businesses [26] Business Line Data and Key Metrics Changes - The propulsion business reported a 7% increase in sales, driven by strong orders from U.S. OEMs, although operating earnings were below the prior year due to tariffs and lower absorption from decreased production levels [27] - The aftermarket engine parts and accessories business saw a 1% increase in sales, while the products business reported a 4% decline [27] - The boat segment experienced a 7% decrease in sales, attributed to cautious wholesale ordering patterns by dealers, although Freedom Boat Club contributed approximately 12% of segment sales [29] Market Data and Key Metrics Changes - The outboard engine industry retail units declined 6% in the quarter, with Brunswick's Mercury gaining 30 basis points of share on a rolling twelve-month basis [17] - U.S. retail registrations improved in July, with only mid-single-digit percent declines compared to the same period in 2024, indicating positive momentum [21] - Global pipelines are down 2,300 units over the same period, reflecting a focus on maintaining fresh inventory in the market [20] Company Strategy and Development Direction - Brunswick is committed to rationalizing and optimizing manufacturing capacity to improve profitability and cash flow while managing inventory levels effectively [9][13] - The company is focused on maintaining a competitive position despite tariff impacts, leveraging its U.S.-based manufacturing and domestic supply chain [16][63] - New product launches and technological advancements are expected to drive growth, particularly in the Navico Group and propulsion segments [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted that while the macro environment remains challenging, there are emerging bright spots, particularly in premium and core categories [14][17] - The company anticipates a significant positive cash flow impact from recent legislative changes and is actively managing tariff exposure [15][32] - There is cautious optimism for the second half of the year, with expectations for improved dealer sentiment and inventory comfort [16][17] Other Important Information - Brunswick's balance sheet remains healthy with no debt maturities until 2029 and an attractive cost of debt maturity profile [22][23] - The company is on track to increase its debt reduction target for 2025 by $50,000,000, aiming for a total of $175,000,000 for the year [22] Q&A Session Summary Question: Can you clarify the tariff impact and guidance? - Management indicated that the tariff impact has decreased, with a potential benefit of about $0.60, but guidance remains unchanged [42][44] Question: What are the expectations for Q3 and Q4 earnings? - Management noted that Q3 earnings are expected to decrease significantly, while Q4 is anticipated to see a substantial increase due to easier comparisons from the previous year [47][49] Question: What is the long-term outlook for Navico? - Management expects Navico Group to achieve low to mid-teens operating margins in the long term, with potential for mid to high single-digit CAGR [55][56] Question: How is the company managing inventory levels? - The company is focused on aligning inventory levels with production requirements, having reduced inventory by a couple of hundred million in the first half of the year [95] Question: What is the impact of tariffs on different segments? - Approximately 75% to 80% of the tariff impact is on the propulsion segment, with Navico and boats having a smaller share [71]

Financial Data and Key Metrics Changes - Brunswick reported second quarter sales of $1.4 billion, slightly up from the prior year, and earnings per share of $1.16, both exceeding guidance and sequentially up from the first quarter [5][23] - Free cash flow generation reached a record $288 million for the quarter, contributing to a record first half free cash flow of $244 million, a $279 million improvement versus the first half of 2024 [6][20] - Year-to-date sales are down 5%, primarily due to anticipated lower production levels in propulsion and boat businesses, partially offset by steady sales in aftermarket and Navico businesses [24] Business Line Data and Key Metrics Changes - The propulsion business reported a 7% increase in sales, driven by strong orders from U.S. OEMs, although operating earnings were impacted by tariffs and lower absorption from decreased production levels [25] - The aftermarket engine parts and accessories business saw a 1% increase in sales, while the products business reported a 4% decline [26] - The boat segment experienced a 7% decrease in sales due to cautious wholesale ordering patterns, although Freedom Boat Club contributed approximately 12% of segment sales [27] Market Data and Key Metrics Changes - The outboard engine industry retail units declined 6% in the quarter, with Brunswick's Mercury gaining 30 basis points of share on a rolling twelve-month basis [16] - U.S. retail registrations improved in July, with only mid-single-digit percent declines compared to the same period in 2024, indicating positive momentum [20][18] - Global pipelines are down 2,300 units over the same period, reflecting a focus on maintaining fresh inventory in the market [19] Company Strategy and Development Direction - Brunswick is committed to rationalizing and optimizing manufacturing capacity to improve profitability and cash flow while continuing to drive product cost and operating expense reductions [7] - The company is actively managing tariff exposure and has revised down its estimate for total potential net exposure, indicating a strong competitive position despite tariff challenges [14][15] - New product launches and innovations are expected to drive growth, with a focus on maintaining a strong market presence in high horsepower outboard engines [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of the year, citing improved retail conditions in July and a strong start to Q3 [16][31] - The company anticipates a significant positive cash flow impact from recent legislative changes and is focused on maintaining financial flexibility while reducing debt [13][22] - Despite challenges in the value segment, management is optimistic about the potential for recovery as interest rates stabilize [110] Other Important Information - Brunswick's balance sheet remains healthy with no debt maturities until 2029 and an attractive cost of debt maturity profile [21] - The company has received multiple awards for innovation and product excellence, reinforcing its position in the industry [36] Q&A Session Summary Question: Impact of tariffs on guidance - Management acknowledged that the tariff impact has decreased, but the overall guidance remains unchanged, indicating a cautious approach to future expectations [41][45] Question: Expectations for Q3 and Q4 earnings - Management indicated that Q3 earnings are expected to decrease significantly, with a potential increase in Q4, but emphasized the difficulty in predicting exact outcomes due to market dynamics [46][48] Question: Long-term expectations for Navico revenue and profitability - Management expects Navico Group to achieve low to mid-teens operating margins in the long term, with potential for mid to high single-digit CAGR in revenue [55][56] Question: Tariff impact distribution across segments - Approximately 75% to 80% of the tariff impact is on the propulsion segment, with Navico and boat segments experiencing lesser impacts [73] Question: Inventory management and working capital initiatives - Management highlighted ongoing efforts to align inventory levels with production requirements, resulting in significant reductions in inventory over the first half of the year [95][96] Question: Competitive positioning with Japanese tariffs - Management noted that while the impact of tariffs is not explicitly included in the outlook, it is expected to improve competitive positioning over time [102] Question: Rationalization of the value fiberglass model lineup - The company is reducing complexity in its product lineup to align with market demand, while ensuring profitability across all product lines [67][70]

Financial Performance - Q2 2025 net sales increased by 0.2% to $1.4 billion compared to Q2 2024[14, 84] - Adjusted EPS was $1.16, a decrease of 36% compared to Q2 2024[14] - Free cash flow for Q2 2025 was $288 million, an increase of $119 million compared to Q2 2024[14] - Year-to-date 2025 net sales decreased by 5% to $2.669 billion compared to 2024[48] - Year-to-date 2025 free cash flow was $244 million, an increase of $279 million compared to the previous year[41, 48] Segment Performance - Propulsion segment net sales increased by 7% to $598.2 million in Q2 2025 compared to Q2 2024[51] - Engine P&A segment net sales increased by 1% to $337.8 million in Q2 2025 compared to Q2 2024[53] - Navico Group segment net sales decreased by 4% to $202.3 million in Q2 2025 compared to Q2 2024[57] - Boat segment net sales decreased slightly by 0% to $405.6 million in Q2 2025 compared to Q2 2024[59] External Factors and Outlook - The company estimates a potential $55-70 million incremental tariff exposure for FY2025[32, 61] - The company updated its 2025 debt reduction target to $175 million, an increase of $50 million from Q1 guidance[41] - The company anticipates approximately $3.25 billion in revenue[63]

Company Performance - Brunswick reported quarterly earnings of $1.16 per share, exceeding the Zacks Consensus Estimate of $0.89 per share, but down from $1.8 per share a year ago, representing an earnings surprise of +30.34% [1] - The company posted revenues of $1.45 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 18.33%, compared to revenues of $1.44 billion a year ago [2] - Over the last four quarters, Brunswick has surpassed consensus EPS estimates three times and topped consensus revenue estimates four times [2] Future Outlook - The sustainability of Brunswick's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The current consensus EPS estimate for the upcoming quarter is $1.07 on revenues of $1.35 billion, and for the current fiscal year, it is $3.03 on revenues of $5.05 billion [7] - The estimate revisions trend for Brunswick was favorable ahead of the earnings release, resulting in a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Leisure and Recreation Products industry, to which Brunswick belongs, is currently in the bottom 27% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5]

News Release Brunswick Corporation 26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045 Telephone 847.735.4700 | Release: | IMMEDIATE | | --- | --- | | Contact: | Stephen Weiland | | | Senior Vice President & Deputy CFO | | Email: | stephen.weiland@brunswick.com | Contact: Lee Gordon Chief Communications Officer Phone: 847-735-4003 Email: lee.gordon@brunswick.com Brunswick Reports Second Quarter Results Sales Growth and Efficient Operational Execution Drive Strong Earnings and Record Cash Generation Seco ...

Core Viewpoint - Brunswick Corporation has released its second quarter 2025 financial results, indicating ongoing performance in the marine recreation industry [1]. Financial Results - The complete financial results press release is available on the Company's website and will also be filed with the SEC [1]. - A conference call to discuss these results is scheduled for July 24, 2025, at 10 a.m. CT/11 a.m. ET, hosted by key executives [2]. Conference Call Details - The conference call will feature CEO David M. Foulkes, CFO Ryan M. Gwillim, and SVP Stephen Weiland [2]. - Participants can access the call via telephone or through a webcast link provided [3][4]. Company Overview - Brunswick Corporation is a leader in marine recreation, offering innovative technology-driven solutions and operating over 60 industry-leading brands [5]. - The company is headquartered in Mettawa, IL, with approximately 14,500 employees across 26 countries [5]. - Brunswick has received recognition as one of America's Best Large Employers for six consecutive years by Forbes Magazine [5].

Core Insights - Mercury Marine has expanded its Verado outboard lineup with the introduction of the new V10 425hp and enhanced V10 350hp models, setting new performance benchmarks in the high-horsepower outboard segment [1][2][3] Product Performance - The V10 425hp model offers class-leading acceleration, being 3 seconds faster from 0-30 mph compared to a 450hp competitor, and is 254 pounds lighter than the competitor's 25-inch XL models [7] - The enhanced V10 350hp model shows significant improvements in top-end speed and mid-range acceleration, achieving 2.7 mph higher top speed than a 350hp competitor and 15% quicker 0-50 mph acceleration than Mercury's current 350hp model [4][7] Technological Features - Both new models come standard with Digital Throttle & Shift and offer optional Joystick Piloting for enhanced control and precision [5] - The V10 425hp model is equipped with a 150-amp alternator, the highest output in its class, and operates 22% quieter at cruise compared to a 450hp competitor [7] Market Positioning - The launch of these new engines reaffirms the Verado family's position as a leader in premium outboard performance, catering to the demands of boaters for greater performance while maintaining a smooth and refined experience [3]

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Core Insights - Brunswick Corporation has been recognized on TIME's list of America's Best Midsize Companies for 2025, ranking 16th in the Engineering and Manufacturing category and 94th overall among 500 companies [1][2] - The recognition highlights Brunswick's performance in employee satisfaction, revenue growth, and sustainability transparency [1][2] - The selection process evaluated companies based on over 15 criteria, with revenue ranging from $100 million to $10 billion in 2023 and 2024 [2] Company Performance and Recognition - Brunswick has received multiple awards recently, including Forbes' Inaugural List of America's Most Trusted Companies and Newsweek's 2025 America's Greatest Workplace for Women, reflecting its commitment to an exceptional workplace experience [3] - The company emphasizes its strong financial foundation, talented workforce, and commitment to innovation and sustainability as key factors in its recognition [2][3] Company Overview - Brunswick Corporation is a global leader in marine recreation, offering technology-driven solutions and operating over 60 industry-leading brands, including Mercury Marine and Boston Whaler [4] - The company has approximately 14,500 employees across 26 countries and has been recognized as America's Best Large Employers for 2024 by Forbes for the sixth consecutive year [4]