Brunswick(US:BC)2026-01-29 17:02Financial Data and Key Metrics Changes - Brunswick finished 2025 with net sales of $5.4 billion, up 2% year-over-year, marking the first full-year sales growth in three years [4][15] - Adjusted earnings per share (EPS) for the year was $3.27, impacted by tariff headwinds, with free cash flow generation reaching $442 million, a 56% increase year-over-year [4][17] - The company reported a 41% increase in Q4 earnings compared to the prior year, driven by higher sales and operational improvements [15] Business Line Data and Key Metrics Changes - The propulsion segment saw a 23% increase in sales, with double-digit growth across all product categories [17][21] - 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 the year down approximately 9% in units, while Brunswick's global retail unit sales were down only 5% [3][10] - Dealer inventories remained low, with a high percentage of recent model year products, supporting a favorable retail environment [4][10] - Brunswick's market share in the U.S. outboard segment remained stable at approximately 47%, with gains in higher horsepower engines [11] Company Strategy and Development Direction - Brunswick plans to continue driving operational efficiencies and investing in new products, with a focus on maintaining a competitive edge in the market [23][31] - The company anticipates a flat to slightly up U.S. retail boat market in 2026, with expectations for improved wholesale sales to match retail [24][28] - Strategic actions include a focus on new product launches and maintaining strong relationships with OEMs, particularly in Europe [62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in improved market conditions for 2026, supported by early season retail strength and falling interest rates [5][8] - The company noted that tariff mitigation actions successfully offset over half of the gross dollar exposure, with expectations for further incremental tariff costs in 2026 [9][28] - Management highlighted the importance of maintaining a strong balance sheet and financial flexibility to support growth initiatives [12][13] Other Important Information - Brunswick's liquidity at year-end was $1.3 billion, including access to an undrawn revolving credit facility [13] - The company plans to return capital to shareholders through dividends and share repurchases, with a slight dividend increase anticipated [30] - Brunswick received multiple awards for its products and innovations at recent trade shows, enhancing its brand reputation [35] Q&A Session Summary Question: Retail performance in Q4 and outlook for 2026 - Management indicated that retail performance was flat in Q4, with continued strength in premium and core brands, and expressed confidence in a flat to up retail market for 2026 due to anticipated interest rate cuts [39][41][43] Question: Inventory levels and wholesale vs retail dynamics - Management expects pipeline units to be flat to slightly reduced in 2026, aiming to match wholesale and retail [46][48] Question: Market share opportunities and competitive dynamics - Management believes Brunswick has a long-term structural advantage due to tariffs impacting competitors, with expectations for steady market share gains [88][90] Question: Tariff impacts and financial guidance - Management provided insights on the expected incremental tariff costs for 2026, estimating a $35-$45 million impact, primarily in Q1 [73][79]