Financial Data and Key Metrics Changes - Brunswick Corporation reported net sales of $5.4 billion for 2025, a 2% increase over the prior year, marking the first full-year net sales growth in three years [4] - Adjusted earnings per share (EPS) for 2025 was $3.27, impacted by tariff headwinds, with free cash flow generation reaching $442 million, a 56% increase year-over-year [4][18] - The company achieved a 41% increase in Q4 earnings compared to the prior year, driven by higher sales and operational improvements [16] Business Line Data and Key Metrics Changes - The propulsion segment saw a 23% increase in sales, with double-digit growth across all product categories, driven by strong OEM orders [18] - The aftermarket parts and accessories (P&A) business grew sales by 15% in Q4, marking the third consecutive quarter of growth [19] - The boat segment reported an 11% sales increase, with growth across premium, core, and value categories [22] Market Data and Key Metrics Changes - The U.S. retail boat market finished 2025 down approximately 9% in units, while Brunswick's global retail unit sales were down only 5% [3][11] - Mercury Marine maintained a leading U.S. retail outboard share of approximately 47%, gaining 70 basis points in the second half of the year [12] - Dealer inventories remained low, with Brunswick's pipelines down approximately 2,200 units from the previous year [12] Company Strategy and Development Direction - Brunswick plans to leverage improved market conditions in 2026, with expectations for a flat to slightly up U.S. retail boat market [23] - The company is focusing on operational efficiencies and new product introductions, including the Mercury 808 outboard engine concept [6][31] - Brunswick aims to continue returning capital to shareholders while investing in new products and technology [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improved market conditions for 2026, supported by falling interest rates and strong retail demand [5][9] - The company anticipates further incremental tariff costs of approximately $35-$45 million in 2026, net of mitigation actions [10] - Management noted that the retail financing rates have decreased to around 7.5%, down from 9%-10% at the peak, which is expected to benefit consumer purchasing power [37][55] Other Important Information - Brunswick's liquidity at year-end was $1.3 billion, including access to an undrawn revolving credit facility [15] - The company plans to retire approximately $160 million of debt in 2026, contributing to a net debt leverage target of 2.5x or lower by year-end [29] - Brunswick received multiple awards for its products and innovations, including recognition at the Consumer Electronics Show [33] Q&A Session Summary Question: What was the retail performance in the fourth quarter? - Management indicated that retail performance was flat, with continued strength in premium and core brands, and some recovery in value products [36] Question: How should we think about inventory levels for 2026? - Management expects inventory levels to be flat to slightly reduced, aiming to match wholesale and retail [39] Question: What can you tell us about repeat buyer behavior and deferred trade-up cycles? - Management noted a significant gap between new boat sales and replacement rates, suggesting potential for increased retail demand as conditions normalize [42] Question: Can you discuss the growth in sales to OEM customers? - Management confirmed that Brunswick's boat brands are gaining share, with new multi-year agreements signed with major OEMs in Europe [46] Question: How much of a benefit could come from the potential elimination of IEEPA tariffs? - Management estimated a full-year impact of $20 million-$25 million from IEEPA tariffs, which would be beneficial if eliminated [54]