Financial Data and Key Metrics Changes - Brunswick reported third-quarter sales of $1.4 billion, a 7% increase compared to the prior year, with adjusted EPS of $0.97, impacted by variable compensation and tariffs but up year over year excluding those items [4][16] - Free cash flow for the third quarter was $111 million, totaling $355 million year to date, marking a $348 million improvement over the same period last year [4][13] - Year-to-date sales are down 1%, primarily due to planned lower first-half production levels, but third-quarter sales growth was seen across all businesses [17][18] Business Line Data and Key Metrics Changes - The propulsion business saw a 10% sales growth in the quarter, with all product categories (outboard, stern drive, and controls rigging and props) increasing [18] - Engine parts and accessories segment sales increased by 8% year over year, benefiting from strong boater participation and favorable weather [19] - The boat segment reported a 4% sales growth, with strong performance from aluminum boat brands and Freedom Boat Club contributing approximately 13% of segment sales [22] Market Data and Key Metrics Changes - Brunswick's boat retail sales were flat year over year, showing notable improvement from the first half of the year, with premium and core categories performing well [3][11] - The U.S. outboard engine market share for Mercury remained stable at 49.4%, despite competitive promotional activity [11][18] - Internationally, Mercury gained strong market share in most markets, indicating robust global performance [11][56] Company Strategy and Development Direction - Brunswick is focusing on financial and operational efficiencies, including margin-accretive footprint actions and tariff mitigation initiatives [3][4] - The company announced a strategic rationalization of its fiberglass boat manufacturing footprint, consolidating production into existing U.S. facilities by mid-2026 [8][12] - The introduction of innovative products like the SIMRAD AutoCaptain autonomous boating system reflects Brunswick's commitment to integrated solutions and differentiated innovation [26][28] Management's Comments on Operating Environment and Future Outlook - Management noted that the macro environment is improving, with expectations for continued growth in 2026 driven by lower interest rates and stable dealer sentiment [8][30] - The company anticipates a modestly stronger 2026, with revenue growth projected in the mid to high single-digit percentage range [30] - Management expressed confidence in the company's competitive positioning due to its U.S.-based manufacturing and proactive tariff management strategies [9][30] Other Important Information - Brunswick's investment-grade balance sheet remains healthy, with no debt maturities until 2029 and a commitment to reducing debt by $200 million in 2025 [14] - The company has generated $1.6 billion in free cash flow since 2021, with a record $635 million over the last 12 months [13][14] - Brunswick's full-year guidance remains unchanged, with expected revenue of approximately $5.2 billion and adjusted EPS of approximately $3.25 [23] Q&A Session Summary Question: Current retail trends and outlook for 2026 - Management indicated that retail performance has stabilized, with premium and core products outperforming value segments, and expressed optimism for a flat to slightly up market in 2026 [32][34] Question: Impact of U.S. tariffs on competitors - Management confirmed that competitors are beginning to implement price increases in response to tariffs, while Brunswick continues to gain market share [42][43] Question: Clarification on Navico Group's performance - It was confirmed that Navico's margins would have improved absent the impacts of tariffs and variable compensation resets, with expectations for further margin expansion moving forward [47][51] Question: Inventory levels and expectations for 2026 - Management reported healthy inventory levels, with a focus on maintaining fresh inventory as they prepare for the 2026 season [61][62] Question: Long-term outlook for normalized boat industry demand - Management noted that elevated interest rates have been a headwind, but they expect a return to normalized demand as conditions improve [76]