Brunswick(US:BC)2025-02-14 19:23Financial Performance - Net sales decreased by 18.2% in 2024 compared to 2023, totaling $5,237.1 million, down from $6,401.4 million[196] - Gross margin fell to 25.8% in 2024, a decrease of 210 basis points from 27.9% in 2023[196] - Operating earnings dropped by 57.6% to $311.6 million in 2024 from $734.9 million in 2023[196] - Net earnings from continuing operations decreased by 65.5% to $149.3 million in 2024, down from $432.6 million in 2023[196] - Diluted earnings per common share from continuing operations fell to $2.21 in 2024, a decline of 63.9% from $6.13 in 2023[196] Segment Performance - Propulsion segment net sales decreased by 25.0% to $2,074.2 million in 2024 from $2,763.8 million in 2023, primarily due to lower OEM production rates and engine orders[209] - Adjusted operating earnings for the Propulsion segment fell by 49.4% to $255.2 million in 2024, down from $504.2 million in 2023[209] - Engine P&A segment net sales decreased by 3.3% to $1,160.8 million in 2024, with volume decline contributing to a 3.9% drop[213] - Adjusted operating earnings for the Engine P&A segment increased by 1.3% to $224.7 million in 2024, compared to $221.8 million in 2023[212] - Navico Group segment net sales decreased by 12.5% to $800.2 million in 2024, driven by reduced sales to marine OEMs[216] - Adjusted operating earnings for the Navico Group segment fell by 42.3% to $52.7 million in 2024, down from $91.3 million in 2023[216] - Boat segment net sales decreased by 21.9% to $1,553.5 million in 2024, attributed to lower wholesale orders and higher discounting[219] - Adjusted operating earnings for the Boat segment dropped by 57.9% to $74.0 million in 2024, compared to $175.9 million in 2023[219] Expenses and Charges - Restructuring, exit, and impairment charges increased to $121.7 million in 2024 from $54.7 million in 2023, with estimated annualized cost savings of approximately $24.0 million[202] - Selling, general and administrative expenses as a percentage of net sales increased by 160 basis points in 2024 compared to 2023[201] Cash Flow and Liquidity - Free cash flow decreased to $284.3 million in 2024 from $473.4 million in 2023, primarily due to lower net earnings[226] - Net cash provided by operating activities of continuing operations was $449.5 million in 2024, down from $745.2 million in 2023, reflecting lower net earnings[228] - Total cash, cash equivalents, and marketable securities decreased to $269.8 million as of December 31, 2024, down from $468.6 million in 2023, representing a decline of 42.4%[233] - Total liquidity as of December 31, 2024, was $1,266.8 million, an increase of 4.8% from $1,210.5 million in 2023[233] Debt and Financing - The company plans to reduce debt by $125 million in 2025 and maintain capital expenditures at approximately $160 million[238] - Total debt as of December 31, 2024, was $2,340.6 million, a decrease from $2,430.4 million in 2023[233] - The debt-to-capitalization ratio was 55% as of December 31, 2024, compared to 54% in 2023[233] - Net cash used for financing activities was $442.7 million, including $613.2 million in long-term debt payments and $200.0 million in common stock repurchases[231] - The company had $997.0 million available under its Credit Facility as of December 31, 2024, compared to $741.9 million in 2023, reflecting a 34.4% increase[234] Impairment and Goodwill - The company recorded an $80.0 million impairment of goodwill for the Navico Group reporting unit during the year ended December 31, 2024[254] - The company recorded impairment charges of $5.0 million for the Navico trade name in 2024, $16.6 million in 2023 (including $13.0 million for Navico), and $17.4 million in 2022 related to capitalized software intangible assets[257] Foreign Currency and Risk Management - Approximately 25% of annual net sales are transacted in currencies other than the U.S. dollar, with significant exposure to Euros, Canadian dollars, Australian dollars, and Brazilian real[193] - The estimated reduction in fair market value from a 10% adverse change in foreign currency rates is $69.3 million for 2024 and $91.7 million for 2023[264] - The company uses foreign currency forward and option contracts to manage exposure to foreign exchange rate risks, primarily related to the Euro, Canadian dollar, Australian dollar, and Brazilian Real[261] - The company manages foreign currency exposure through derivative financial instruments to offset gains or losses on underlying assets or liabilities[261] Interest Rate Management - Fixed-to-floating interest rate swaps are utilized to convert a portion of long-term debt from fixed to floating rate debt, aiming to offset changes in fair value due to benchmark interest rate fluctuations[262] - The company does not engage in financial instruments for trading or speculative purposes, focusing instead on hedging transactions to mitigate market risks[260] Accounting and Reporting - Recent accounting pronouncements have been adopted during the year ended December 31, 2024, with further details available in the consolidated financial statements[259] - Impairment tests for indefinite-lived intangible assets are conducted at least annually, comparing fair value with carrying amount[257] - The company employs models to evaluate the sensitivity of financial instruments to market risk, assuming instantaneous, parallel shifts in exchange rates[263]