Brunswick (BC) 29 Jul 212021 Q2 Earnings call transcript

Good morning, and welcome to Brunswick Corporation's Second Quarter 2021 Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer period. Today's meeting will be recorded.

If you have any objections, you may disconnect at this time. I would now like to introduce Brent Dahl, Vice President, Investor Relations. sir. ahead, go Please

thank this joining Brunswick's morning CFO. Ryan and on CEO; With the Gwillim, call are you morning us. for me and Good Dave Foulkes,

to our comments differ our include materially results in certain future expectations. I Before mind this about will prepared statements from Please begin that during these with would we could like results. remind forward-looking that everyone call, actual remarks, keep our

today's our on release. the consider, recent factors SEC press to and details For please filings to refer

of our All are at website on these available documents brunswick.com.

Reconciliations results. over to sections During reconciliation GAAP our I will Dave. be are to will financial to presentation, appendix the provided today's the in of non-GAAP now we turn the certain this referring non-GAAP in presentation the consolidated financial information. financial call to measures accompanying of statements

Brent, morning, Thanks, good everyone. and

performance businesses first another demand, as result the of Our continuing record material challenges. half of operational success quarter. closed retail results outstanding by delivering supply and a and had strong labor in mitigating We XXXX outstanding

businesses exceptional growth quarter. of delivered All during the our

share Propulsion market realize continued leveraging the in to industry. strong outward product business the strongest Our lineup gains,

demand from base Boat facilities lowest consecutive on to capacity levels our inventory increase by margins Accessories Our our orders replenish the hand. aftermarket of posted driven benefit to progressing pipeline. field level And for the are supply nine continued several chain, elevated decades we efforts driven has significant across half despite satisfy quarter challenges. second the business to our our retail year boating and products labor the our from businesses And demand, at its in Robust customer of of approximately begin weeks global to efficiently double-digit participation. operating robust to Parts and adjusted first and transportation in

by brand you expanded the in Systems front. product to marine electronics. we've Navico, and leader agreement quarter, months many a of the of busy As the few end its Advanced signing Group announcing a definitive also At significantly portfolio on purchase had know, industry the of M&A an our

July into has these I'll expanded In we later through discussion. our touch announced acquisition in early Fanautic addition, the that Club. in on both exciting of Freedom transactions Spain

together usage prime demand XXXX drives improved strong of unique visibility outlook and through sales, continued our deliver extremely with consequently, the we increased boat P&A for our season, against remainder inventory favorable the environment, have we on the which ability to XXXX. And an Given guidance. have

XXXX through the the share wanted half first we of in results with industry. the the XXXX you favorable age with we we buyer trends seeing Brunswick's the for not in I earnings average quarter, that and change to demographic updated happy with XXXX during Before boat I'm metrics be comparisons insights discuss our the significant some in versus average. two years quarter in to you report younger than are we April. the to any call shared industry first continues experienced

our younger first-time Brunswick's demographic boat younger be years buyer to industry. and three buyers overall than than Additionally, boat the continue

Freedom member the to they base. years are than female the points. and our younger Club, boat Freedom our over-indexes In XXX and in member of Boat trending First-time Freedom boat than typical to by industry XXXX, approximately customer buyers Brunswick more three almost make continues approximately buying be did basis up XX% female average members

employing VXX a awards, second to us including trends XXX-horsepower younger provide of boating MXX and These X, Sahara a MotorGuide's Verado highlighted come. and the the points. Brunswick engineering top that boat, strong XiX entry-level received more the MkX Mercury Brunswick We we industry share during in the our recognized BEP's buyers, in in for to more US XXXX Outboard X,XXX people wanted based Battery the entire were of Bayliner years recently, also the pump, continue first-time that but winners one very thousands strategic second working also only Motor. on in you the as industry. Ray and honor. received for also Marine Attwood's marine the an of extremely XXX awards future and by for outperform bilge Hub, the for to secure list Smart overall the for positioning diverse automatic The US and our companies for Kayak XXX has employers survey growth with row and Sundancer Brunswick chosen industry strategy Brunswick for women their considered boat from important attracting category. companies Forbes are operations companies I were and healthy a in best product at second employees for some ranked year proof are XX,XXX Element validation been to quarter made Trolling final that for Sea manufacturing also least the favorable of

employees and Freedom Club Bev Waves Rosella, Women with Industry three Boating had recently a Magazine. Brunswick Finally, Boat from honored Making a franchisee, Award

leaders. proud We these of women are very

and As provide highlights segments and our quarter our market. are opportunity, on overall the inclusion of second you diversity cornerstones some know, equal marine now culture. I'll

the recent gain Propulsion we have of Our levels years. higher continues share in in higher investment retail outboard horsepower business categories, to engines, market focused in significant especially where

gained outboard shipping class history excess year, of the V-XX production remainder outsized June, of we entire will in during out sold more Verado with began sell demand that the in category this extremely share late estimate above the And For XXX-horsepower anticipated, I'm half just Mercury that the industry. engine engines XXXX, announce strong. for that has XXX-horsepower. back XX-horsepower, XXX-horsepower to first of been pleased slots in outboard horsepower sold each We're we V-XX as also over nodes in of and the XXXX. new the in of the gains we half in essentially was the of prior has

capture investments new and Mercury current market at du Lac, product primary further environment Fond to maximize in and the in Wisconsin, its ability its launches in share. Given manufacturing center capacity the planned accelerating the coming order serve to years, additional in surging demand the is

experienced Systems significant Our topline demand as significantly in Advanced has Group, OEM weather to QX Parts customer shutdowns. in aftermarket the its The a by benefited and larger plant robust many Accessories serves areas. result expectations which COVID-related quarter and conditions also earnings prior growth segments, component comparisons elevated due favorable overdrove and driven to boating XXXX of non-marine outstanding certain and execution, year and business businesses from participation a

ASG strong realized significant result, to that delivered were product and margins categories a operating As the accretive across growth segment. all overall

earlier, Systems and product This Advanced and brand will and the Group believe ACES strengthened our systems its in in capabilities to our ability We scale a Finally, will Navico. OEM our action announcing customers. significantly as complete XXXX. offerings strategy of consumers June, the definitive transaction half our accelerate I to purchase its will agreement signing innovative comprehensive portfolio provide mentioned integrated expanded further to close late to and second digital enhance solutions and this our of by

due quarter our adjusted segment strong Boat supply consecutive retail with consistent while products. outstanding uncertainty, second year. levels We demand the pipeline Our second for margins consistent double-digit another ended output the had delivering chain our quarter, plans to historically low operating for inventory production with its quarter significant despite posting of

the production dealers' product, for desire year, our the to continued take XXXX five are model all Given slots continued available and demand XXXX out sold sold our completely robust with out calendar through now retail the year. brands

Boat sum wholesale our of year revenue. Group In projected year XXXX product fact, for roughly equal the orders XXXX our full to wholesale model is already

stated We continue and to expand employees at Palm up to hire track We to Reynosa with on our additional at our production most Portugal. facilities with new and plan. staff the consistent our production plans remain facility and operations maintain Coast ramp

Club identified our we've approximately to both and growing also should diverse be units to capacity required. acquisition volume customer and product a options production Freedom capital-efficient investment Additionally, continues this exceed to with organically young annual of base. XX,XXX expectations, by through raise XXXX, further Boat

into Fanautic not Freedom votes and announced XXX and manage sometimes businesses increasing that percentage operational The Brunswick overall discussing performance mitigate and on basis. in recently challenges with product. the on Freedom closing without a now network-wide, in X,XXX daily Club to acquisition external our and I've has has fleet, been been expansion locations of the is continue XX,XXX Spain, and an memberships outstanding With of financial some

quarter, we Winter States Our resulting have increases well. performed are supply power transportation second storms while first chain semiconductor oil-based challenges, products shortages late and continued the raw which tight cost quarter the and foam supply, to and disrupted outages extremely present United and managing. resulting in of Southern resin in teams particular, disruption Central throughout and actively material supply in

and our lower the our industry, unique that result, but industry. are marine reach us across generally and want partners as chain for manufacturing together production well track our our operations supply XXXX. necessary continuing these I thank for The have network together normal, the our these integration, continuity at work our far implemented on mitigate robust to ensure as end in are plans businesses to market As increases keep vertical we and keep and higher us supply to of our price global the of enabled to challenges mitigate have challenges our with a so satisfy supply enabled our the believe to to teams demand. purposeful than those implemented third-party scale

our in successfully talent in increase to and which teams teams, tight Finally, labor many we as add But acquisition remained our have been and conditions to hard product. we manufacturing manufacture other talent working locations production.

like constant region to Next, review our business performance acquisitions. a on of the sales by currency excluding basis, I'd

posted prior and Domestic sales quarter all XX%, the significant versus sales year. sales grew up growth in XXXX with versus expected, regions As international both, XXXX. XX%,

an strong extremely international still are with performance Asia Pacific all in regions, comparison We growing across seeing strong XXXX. despite

the to of U.S. XXXX we'll into color We demand propulsion through the product certain on performance XXXX recent the table This provides of same the more first around globe, for periods XXXX. XXXX. And marine and products. half especially continue backlogs retail categories working be remainder the through of robust XXXX in to in comparing experience market, and

the Outboard line market growth year-to-date with up in rate, earlier. discussed generally half in versus growth XXXX. period significant XXXX. more performance unit with XXXX, first retail growth with categories. XX% time the doubling year, were May continue. half in in main of as segments XXXX than is the same but compared in Mercury's usual resulting I the in strength the outboard Brunswick's gains, boat and are market All powerboat when in half With As registrations market SSI difficult first the categories year-over-year in versus and market there's Despite is for continuing month-to-month data, XXXX gains noise up positive time first trends of XXXX up in comparisons still from the reported the half first this of June, and significant retail momentum the XXXX. boat XX% more engine unit share rates X% of

As XX% half very we enter manufacturing all year, dealer the three facilities sentiment positive. leaving leading the historical approximately times second the of retail of remain which Approximately are sold, lead our and other is boats indicators averages. generation, U.S.

slots Whaler, our I'll production of give these five Ryan, continuing have addition, to model in already our additional selling strength In high and financial for call XXXX complete sold. XXXX. the year confidence XXXX the All comments all the retail into as now brands, turn performance. including on over us season some we move factors

to XXX%. XXXX to both included fantastic up When of as-adjusted second earnings provide of the compared on quarters the and past we Thanks, certain everyone. over an to pleased results with and basis in the performance net with outstanding Dave, years. from share spending any margins we Adjusted demand strong which another the while quarter in follow, again comparisons morning, and setting places available in XXXX perspective and few and businesses currency the increased were and have XXXX, in earnings partially variable you each that I'm Sales global XX%, operating earnings exchange by our second compensation sales slides have by To marine quarter. also in and products, was foreign increased order good favorable for all-time production quarter highs in absorption from sales changes initiatives. each rates, growth and records. factory offset segment in marketing favorable $X.XX, EPS by operating for and other increased ACES costs adjusted XX.X% once impacted from new benefited positively for were with highlight higher

$XXX conversion of the flow cash free in second with had we cash a quarter, Finally, free of XXX%. flow million

a up half very are half comparisons from a robust first XX% XXXX, half and through Net $X.XX compared the operating of the first XX%. XXX sales improvement as This in first with of basis of EPS XXXX equally and were First XXXX. of favorable. half of operating resulted XX% margins or point when leverage

all independent share as our operating across strong factors segment, when OEM second categories. XXXX. quarter due in strong with allowing strong quarter, quarter benefiting to earnings business international basis production. the all continue all with component for also the very significantly and of better points significant to across demand investments builders product our the business the and on operating also of to boaters channels. boat second XXXX second the quarter which positively revenue affecting the to capacity XX% first than each augmented Adjusted sales manufacturers theme product growth robust categories the category Turning of XX% Propulsion technology the were flexible the leisure time, business, prior XX from across product OEM sales of benefit compared second and schedules increased operating and Consistent from increase driving were in from earnings. earnings and water, This Sales In XX.X% more growth the leveraging demand increase our enabled versus quarter being and adjusted of businesses. more sales was margins aftermarket-driven continues by with segments, in up both year to to work market continue to when in production up XXXX. in product Sales Parts up from the operating advantage quarter, second continued take to is as the they experienced increased the Operating XX% quarter of strong adjusted were XXXX, the Accessories annuity-based increases of was compared quarter, gains. growth increased versus our increased of margins the revenues to elevated ramp categories all

the second that aggressive the the basis to Boat were positively impacted operational this When shutdowns be quarter. sales X% of were foundational the double-digit increased Boat were quarter have As has quarter anticipated, the a overall due XX% retail strong been Club, sales quarter XXX the levels and the made discount success to continues most of operating in segment further compared had margins straight margin plan XX%, in contributed in delivered profile production and production operating last business margins the to Operating contributed with second up lower quarter, COVID-related their were XXXX. and is for the business. which Freedom XXXX, results year's benefited and segment ramp-up. Each were executed the improvements this points, up second brand the margins. acceleration, compared when also XXXX to plant and versus segment's included to earnings up the our performance, Sales illustrating segment. of approximately accretive and segment's revenue by that XX.X%

in our X,XXX quarter, an wholesale Despite up XX,XXX more Turning first outsold units. units the consistent dealer by the inventories to almost units, X% retail with quarter, to approximately replenishment during low plans units from XX,XXX production to the pipelines, our approximately than ramp year. bringing X,XXX to all-time boat producing of continues is produce which

ended under same brands XX weeks by a year. boats basis, units boat in time measured with of the XX-month on Our hand, versus on field with trailing XX% lower last June

believe that our single-digit be retail by hand market retail XXXX we for year, weeks. our resulting the production Given the year-end industry outpace lower our will high on be in percent view several than targets up that year-end to will weeks

XXXX the up facilities, generation will another automation, our returns, and capital actions Reynosa and marine by flow We a related capacity the near-term of the earlier to substantial which is increases in year of end margin pronounced work including benefits and providing unlock initiatives, Portugal robust shaping earnings labor year our be capacity with additional select in begin Palm to announced year. to and Coast, resulting to shareholder our operating market. through performance outstanding continue with from healthy cash brands free the

clarity benefits to be Navico the $X. and marine potential full the following enhanced ability than XXXX. million; quarter, XXXX; of for providing the we to periods, our the retail year transaction, EPS billion; incurred growth versus single-digit free approximately drive regarding flow earnings including from updated of industry in on the earnings XXX offset adjusted we are anticipate $X.XX we XXXX directional growth providing basis neutral Navico acquisition, net Navico's points; growth billion We're diluted guidance US of of Without Given once to the guidance sales high mid-teens grow deal. single-digit $X.XX adjusted in cash as percent and expenses the $XXX of anticipate unit will high as XXX that percent lower excess and sales result XXXX; we of where between operating margin to post-closing remain demand anticipate between percent. as EPS the interest a revenue growth closed, of operating Note upcoming that believe and third incremental the to we also a percent

to our half performance half Next, like by more XXXX will than XXXX results. first look The and in I'd like perspective provide XXXX XXXX and did revenue XXXX. cadence some and for looking it at second on against XXXX XXXX

every has holiday and as half shutdowns. model of The production second includes first additional changeover the days half year

months six These mix pressures supply the far variable headwinds favorable in inflationary currency compensation higher was foreign in additional business. the to due our during this earnings expenses the XXXX impacted and first first customer improved of in year. XXXX comparing with plant favorably outweighed from comparisons the This experienced of from COVID-related tailwinds first materially XXXX businesses production changes However, and of half half challenges, in by shutdowns. higher absorption, resulted chain all favorable our to very volumes, of factors Propulsion

in also year performance half metric. first this every XXXX exceeded Our

of we comps challenged we face the half to increasing chain XXXX, as the be over and supply last company continue the costs. period into head input with second more will to we and freight As same record-high XXXX recorded will difficult year, and constraints EPS

impact. mix the towards increases also Although, sales and ACEs increased P&A overall other business from typical growth business; a and are a in of sales tariff higher core businesses, percentage absorption; the in we and smaller spending propulsion trending benefits anticipate more on our customers, taking moderated we price across initiatives; and with higher more growth OEM Boat currency seasonality

with our on return certain strengthen cash and continues an revolving expanded the provides now rate that our borrowing profile. financing increase by and XXXX, our taken despite effective the However, XX%, however, Similarly, have this restructuring be The half of slightly credit have is changed. $XXX with percent overall which XXXX, top-line than and branch the to steps lower will materially update second for call. for half $XXX earnings extended as million effect past now meaningful anticipate challenging several which million. which second the our approximately greater of to July higher and story. to aside for double-digit now versus effective estimate through some shareholder believe We Navico in Due our the than half in not of and related flow fantastic will putting XXXX our April comparisons, P&L update items of more capacity, assumptions from weeks, few our expanding capital second units, transaction, than In remainder We our growth will our year. tax XXXX strategy is be more we to be agreement, which rate to a the liquidity of we the relates the for work well. will tax conclude I year. impact an only business team by tax XX%

return in I Directors the now in moves authorization systematically This growth shareholder to for to our primarily slightly consistent continue now These Board substantial Mercury to in discussed to back this spending on our of initiatives initiatives. Dave over million approved we throughout with capital to month, $XXX we our strategy. spending in organization. million and over to cases, our expenditures continue accelerate anticipate addition, balance In share the now support our We that April which our increased year growth repurchases, turn as related earlier increases desired we Dave dividend earlier. XX% is $XXX and outlook have the and investment million comments. repurchase increased increase will plan in deploy approved capital $XXX to some capacity planned expansion call follow

be Ryan. on of our for execution At combination deliver year XXXX felt year we all has the and operating our that demand our by the to of and of the operational April Thanks, an first continued to during solid call, was against retail squarely priorities. outstanding robust And up track half businesses. our businesses us setting strategic

engine share, continues international demand and Our segment for top repower in saltwater, channels. market new satisfying expanding customers from priority the Propulsion dealer, be to existing especially and outboard and OEM

accelerate in the new industry-leading and We the of also are into earnings recently to continuing product incremental propulsion to and heavily will enable growth decision introductions far invest capacity. project we introduction line future. top And solutions that the taken we've

the and beginning segment strategy. and thoughtful battery our leverage position operating to global Navico focused business. Parts to in on products integration of strength into Accessories optimizing look systems distribution its closing We areas its of deal Our in model, forward of ACES ASG and support digital the connected technology, and remains

of wave executing Accessories, company's in half recent continue releases. and Day I Investor retail you and our on and look May in plans virtual margins, successes, to first operating parts towards build highlighted new by today, our robust the on M&A we've opportunities on the update made our for segment to build progress improving operational environment. as during leave The to and the technology excellence, will portfolio. expansion products, wanted in refilling the capacity will with systems focus we an to strategy, further its out focus continuing We very pipelines, press activity launching Boat next

through the Freedom already start discussed, which proof and shipments Boat Android and by of entire X,XXX to X.X V-XX boat and of of star addition in friction leading-edge, reception Whaler which And HXX reducing and model, than weeks the included, in Ray+ brand doubling apps Apple this younger launch against I've well promising, appealing strategic products of created initial signaling of on the fast-growing the rating transactions, few We're for out a sold Sea points The launch out already a experience, the My quarter Club model the advances five. Wake the more mid-XXXX. to is ACES is including the accounts new Connectivity a with outboard, the extremely the This May. Navico XXX-horsepower the In wake-surf journey. these goals, improving ownership the tracking outlined demographic. ownership a users, strategy all in of first our Next Wave of across and down initiatives Heyday electrification the boat,

want I and during our global employee Finally, still communities. population families a our for effort again time to offer their once challenging dedication, to for what thanks all heartfelt and sacrifices, is

profit We'll plan us strategic enabled execute seamlessly open outpace our growth for the expectations. and questions. our has and significantly work hard now initial to Your line

Instructions] first from with Hardiman [Operator question comes your proceed Our Please Securities. question. with Wedbush James

Thanks my taking call. for

said year two out my second very XX, But ruler trying this are Ryan, versus that of first there. then, may but operating year-over-year second half I flat half I'm year. to First, income of about higher second just last is slide, earnings it clarifications. brief its think, have half looks like half, versus here, thought the you I take The

you previously clarification So, is guided it how versus for there. maybe XXXX? had production then up And just a

up Yes, earlier a lot supply production, EPS of with up earnings to anticipated. And are And half. despite in tell other nights greater track then second exactly over earnings producing would earnings, we guided up operating on year. the than half a indeed what we're right is second we and work as to operating is themselves late our operating had little hard and I indeed the but you are chain XXXX. in folks,

from I are, And going broader it's limiting me I cases, to flow the supply quarter supply the earnings plants. question those chain so sports this of theme full the my at is, been, - but what to heard and which think already power in their of your chain we'll think, the not lot bottlenecks plants that we've necessarily second their utilization, think a be leads as has of and to parts season. peers, Obviously, that is continue about some clear components of because I into be are

assumptions that's production seem necessarily your an issue consistent, the accurate part like a for cost pretty And it it's of to supply issue? you is guess and rather seem characterization issue be situation? that Given that availability of doesn't a than the more I that guys. current

Yes, Dave. good deal that's it's every James, kind and Hi, say challenges the of we I would every say with week. would that a pretty characterization. day I new

And industry, are would to been we I increases though. at our but lower mitigate we've to able that. so far, impact, cost, I price but of cover the increased that are believe certainly we And are enough pricing impacts very them that say there did is to I end cover successfully. the productivity would say note certainly the to the cost. us really

not wait line, in kinds boats always production for impact. and other kind we're those on off far, productivity back the the of some maintaining just we I bring the that say that there production Those are things line. production, that have we of continue have - so is but able some But would take impacts. We manageable schedules parts, with our to of disruptions mean to some

given top the don't than for expediting big impact guys cost all moving and the you or seem although smaller sorts possible, know those line is just this some there's How inflation of do all you those even me, And parts. obviously, impacts, to I Again, then that margin for and associated lastly if things. a of year? this of guys for with is be expenses all just you think

Clearly, in understand if are don't don't cover this if do of to really But we productivity, we year, of necessarily I kind everything. kind we or an now. the halfway I we're ready, pricing of dollars. to on to Ryan, plan Obviously, Ryan, know idea. have a you Yes. is don't translate but good know our basis, as don't that. into annual so right I it through continue measure I have inflation would it understand points you…

No, the you've creep continues the margins. would James, only to guidance the deliver I thing on up. seen And business Boat obviously is mention,

year the rest an for has - number the full the XX I XX%. for guidance think official appearance, made the at

like over said, but So with it a certainly bit of we're Dave is headwind. covering price, a

with your Exane next with Our Xian question. question Siew BNP Please proceed Paribas. from comes

It's Xian Siew. Thanks for the question. taking

quarter-on-quarter. availability is it it's if the the retail was - quantify how industry bit that still like, enough Do guess, have not retail that? could higher seems enough fully there down on has supply? been maybe any much Is pipeline, way to so could there. been there think like I have of a And Just you availability

In last that that Well, on retail what question. is believe we annual points buying - an - would up, that It be I we in are in thanks the retail very produce for we several the year. this can constraints. would basis, your at the likely clear call, did people more indicate point without

that to next couple to prime we expect. build the are the Now market we selling through inventory will season assuming of the - develops months, we get again, as begin be planning as over we

identify what several points would exactly to expect don't of know the year, end the points the So now certainly are. - from But there's and probably constrained low But it by the demand free I the of under to be is if right we'd supply. the weeks free through now, most nine under kind I a say marketplace. could I year. mid-teens of

acquisition And in then the on on Europe. Freedom, congrats

received, Europe how clubs And Any US? differences learnings in how received those be wondering models Europe? the kind concept of boat Just those in versus are could of kind the Any there? between opportunity those big internationally? initial

is Yes. say I the marketplaces. would that the appeal equal in right

join with have before is people So Spain, the we inflection Club in bought concept Portugal, France, a where enough when those for earlier. But UK, example, a little years boat US. you around couple The it than think parts club. capability all some Europe reached is an Freedom Portugal, really just time strong Boat and certainly Southern probably financial it in of had a very in about Italy, the boating, was to you it, point, long of in a interest earlier areas really, are

knowledge using the of toolkit we the Brunswick a shore as both with is Mediterranean recreational the the professionalize in as and near that boating, that for is very, potential and whole, really in we that space as the we're Europe US, long becomes history biggest kind of second market of very model think same Atlantic. our Obviously, So wider substantial.

of working is the So kind quickly right professionalize we'll We space. begin the and techniques, where some to very potential tools think of are we establish well marketing, very, the be to now. beyond substantial,

with CL Please with question. & question from Associates. Our King Scott next proceed Stember comes your

Yes.

accelerated any the I you Have just continue answer this, lead to the cancellations wanted guys on think times I seen relief based just boats? would the I to sure, on extended commentary. have you supply ahead of probably know side? get of But make rates to customer on the - any

anything and up for customers boats, haven't we third has kind second of even partners that mind. seen change customer have all. We No, of signed in case our know of lead the some channel potential at a

increased in So cancellations. not anything seeing of terms we're

I And on, give just All out retail it's you like, further what want one probably initial on for that right. whether thoughts guys look little and bit XXXX from could know a but both. perspective a guidance to your

think So if it be so, much? you And how up do could here?

next do call Investor but on premature That's as market call. think a Day will well, quarter still. as that talked about Scott, probably well We yes, belief on grow the first next we it's bit do year. a our year, to retail

Day on figure, $X.XX going gave add our update then or was earnings $X.XX guidance, Navico call. to to for net that that's Navico said anticipate the to the terms guidance costs. And not the we so and Obviously, of Investor that financing would we're outlook we anticipated $X.XX less we Navico In a that XXXX. additional

little though, you, none jumping it's has So the and in be XXXX tell point for I like would obviously, going that nice is strong. coming looks off higher to XXXX of to continue - that because a that changed.

So at view all no real our XXXX. on to changes

by be? that and e-power Can new you to could XXXX. talked significant of about the last install of just talked about you how internal for Fathom quarter, about ASG, systems you guess Last combustion I that And XX,XXX the generators, plans question. talk within about timing

Yes.

that applications, XX, for that. represented Fathom-type it things So marine generators actively we're track represented on generator with really, That the and in replacements we're and of XXX plan. replacements two Fathom plus the vehicle doing recreational applications,

become as installing some Yeah, RV are ASG number somebody this you RV to manufacturers, instead being as option systems generator. changing a standard, of change, include located much team up. the advanced manufacturers that battery a their system track. our content very we're popular so have and an being members And site that soon from to to move they of on go battery deliberately on so at the standard volumes We of has

which half and business Our might manufacturers builders with was to that vehicle Systems first the boat the our systems that of Advanced specialty in the up RV remember part Connect, business, works of Group both you ASG manufacturers is Connect XXX% year. ASG and integrate

So it's advantage we behalf. and great service, and their to of on this portfolio of people that our technologies are it integrate a very in-demand taking have ability

Our question. from Please Research. Wolfe question with comes your with proceed next Wightman Fred

question. my a planning wondering taking Anything for you to is for? the Thanks horsepower? bit dig you into could I taking would super was that capacity of you that capacity sort had hinted Is little if Where what be you mid-horsepower, Mercury of of more that incremental of high outlined. sort there provide last my sort at type quarter? that are you targeted uptick helpful. it What could

for Yes. Thank the question. Yes, sure. you

strong say, incremental products. Lac is to very and that demand engines horsepower prior it's capacity most is mid- for additional also high it we all high incremental talked roughly the to is as and Fond to driven our XXXX overweighted produce of horsepower our it incremental engines being XXXX. mainly supports yes, during our we'd would and what we yes, So base is it. which the capacity facility, where It in I du and it's by about, same in And in the put supply originally that

is for existing support existing means or the and vast customers of Mercury. connecting very a to as few kind And for supply But the We have just right of that existing are that same what We're priority, now things. means discussions engines our I'm just new our earlier and said connecting our to internal add that their from production us. the to the how year as more careful dealers second now be as have don't half also means Ryan about of engines we we have like That up base scaled our customers obviously, to active We remain is profitable a us. for very need we other make is sure which ramping they with example, OEM about many new kind customers. and provide our of in something potential facilities. is right It we customers. would - that all channel with our - repower, majority of for

and is up. top and up up existing customers our are going serve priority So to whose demands

engines to international new that customers, have us can channels, the it's continue tend and we add so their bring board we dealer have satisfy some OEM so more on that high-margin of the and et demand. big those commercial enough also after as we time cetera, channels, fall right now tend so that And to satisfy for to capacity to OEM can customers repower

question capacity And on just side. another boat the

in XXXX of mentioned at you by you XXX that now. think capacity I units terms XX,

that was I low-XXs past were something targeting. number think that the in the you in

Are of story? sort hit? secondly, apples-to-apples? up XXXX? Or is that when And then something a numbers show in those it later to a really two-part Is could that could So those question. start XXXX

Yes.

So this is new again.

we're the to high that to is XX,XXX - year, - if XX,XXX around capacity along like. plans kind units, we now way we're which have executing. XXs detailed had way last that from that earlier along we implement we had the So fact, up of And you or in

really our that that the Lenovo plant then XX,XXX, is is a Coast sometimes to we facility That the reopening So that where drives XX,XXX or expanding where very with and up it Flagler they demanding but really, more Palm and expanding demand with it be boats, it, and that more in not - and clear pipelines Boat are Portugal. call Reynosa Club, might with the and retail Freedom like enough. might quickly things and is, that

a we'll share we we the introduce what is XX,XXX which making crazy. the units, around I XX,XXX and is, our a sure up incremental to working we like increment XX,XXX can, not currently the to existing growing so will kind footprint to And lose begun as can to might, mostly most cases, a Freedom, footprint of investment, that don't on cases, series land. would quickly require need not that we want - as XXXX it short be of but know and that certainly, - that market would we in target. want that I XX,XXX is significant couple yeah, of there In but additional inside to say that steps but is is this don't But increases. signs I XX,XXX have are if is we'll know modest I

it's effectively this that optionality. build out think additional cost time at So we prudent to

question Please with your comes from question. Jefferies. next Our proceed Anna with Glaessgen

my Thanks questions. for taking

versus out this Verado through sold contextualize XXXX, with performance First, engine? maybe preliminary you expectations production your of were the that on could the what

- V-XX you Thank going Yes. Yes. very the is high. for The is question. the demand for

I put a portfolio think of put boats. it's It's number lot builders to where inboard boat attracting their causing a engines interest. in have rethink of they on outboards might in bigger and

demand So original yes, our certainly than the is higher expectations.

work year. through second the half So, of we'll this our way kind of

other indicate is earlier that without higher the the different. there was marketplace, were very earlier, this but being in numbers horsepower we some made to explicit I engines about comment think

the earlier, industry. the engines in produce entire As we we'll I this XXX-horsepower above year, the of than outboard back mentioned of history produce half in expect we'll prior more

this horsepower is than substantially this of seeing interest, very yeah, originally we're and and else. demand level a higher higher engine scale And it the certainly is at So lot anything robust we anticipated. of than

And capacity then, turning unit reach XX,XXX back investments number. to boat that the to

to you as I I decision kind to would to investments? kind So, are to that think that of be you've identified ramp Or up committing of have to the guess in XXXX? that. those was presented in order by the to when made deck, ability ramp it

are overtime. pieces this are to we'll funding as investments And as next relevant. over marketplace. There phased any but monitor be early years. that are developments early will can couple even of we the the it some year, other And the spread So that continue investment, be of

Our comes proceed with JPMorgan. Matthew Please with next from your question Boss question.

rank on again strong quarter. This the digits. wanted is wondering if about margins, quarter Boat sustainability And thinking a about we as the drivers out for the strength. this the you're drivers those of strong Heenan Congrats Boat Kevin could you to in was I of maybe environment? move the margin how pandemic Thanks. Matt. EBIT of segment on segment double order ask just the I

better much Hi factors. straightforward, to those the to for volume, It be Kevin, need lower of network or bit do order honest. product. quarters, more certainly discounting But in that for environment, It the given efficiently general, it support operating of sell is dealer is facilities. not it the a allows in we to question. throughout pretty support last is to provide in the absorption. which It's is improved thanks least And couple at volume,

margin you've us now out And for the are to coming years Mercury side are I The for of being manufacturer out same as coming margin those And that are roll products that is, we about from replacing. products drivers they products the Boat other to the Day, Investor we for has would that's business. mention new XXX new on heard going at new the the be refreshed higher end a moved talked all or that that on really out something are but thing engines, us. designed new products, philosophy

think both I drivers mean, the to very U.S. the long-term about the the ability could to globally? your how P&A could in that a on follow-up here, opportunity side, $X And just guess, much. I best billion and think you've about scale this you're talk ask and adding remaining one I now Thanks I for in you business Navico? of if cited opportunity market U.S.

Thank yeah. great question, you. No,

enables for plenty think to to I $X an say our our the have Navico but that us out currently are as of XX% addition the is of there opportunities products to was It recreational and into brands. And build us in marine things, of other our marketplace, important do that and So portion portfolio sells portfolio. would a Advanced only of its we billion about Systems our vehicle. noted, P&A. Group specialty I vehicle lot

some successful technology modified other more a installing systems that become same vehicle, So feel advanced areas vehicle. battery as or recreational to leveraging right more systems in, for win as those we and the a and example, and We and specialty of we use specialty into marine. RV in

say, to run in certainly, in plenty So room run room but run that marine, marine, I spaces also in of well. to to room there's would adjacent as

still business business One growth provides. out obviously four we're and aftermarket then billion in the the And in proving is XXXX, Kevin, P&A it be strength that, out or of a times XXXX. annuity is revenue of growing one times the earnings XXXX, thing, this. just starting bow the of organically that This was five on coming downturn which and is larger going than thing approximately to $X our that to put and

of that and business. to continues the reminder towards the aftermarket portions businesses a countercyclical trend our just our So mix positive and of

Our next with question proceed question. with comes Swartz Truist. Mike from Please

the demand Boat backlogs that the with market some play longer-term? term question elevated out about strategy and portfolio supply have business, about into you strategy, and in mean issues and the the a maybe just today within near maybe XXXX. we given constraints how until and Just chain how broader maybe your I and capacity dynamics does think launch product in development of strategy just

- over new long good Mike. run, think question, wins. I the always that product We believe

in least, pause by programs. ways know of our suppliers into So pausing terms unique - we we any connectivity, with new part. new one somewhat into lag and our intention new the attracting - this are what people We to we over can wholes, at introductions, where of a you some new situations is form or not one development our in providing long-term, our key new But something, new either or we have is, that parts boats this we of the we not new in and But intentionally can't providing will product because activities. factors, product except the continue pausing new not exceptional invest wins product of attracting - technology, up just marketplace, is by marketplace, can't development solutions. models of situation, a says, pre-owned they content new production new get really are get

design new some we will that. pre-owned product perspective, content excited and technology to have So and I and a to from think differentiate continue we perspective the stuff from about that's I'm a do product, of from continue particularly aesthetic both to reception already as the we've that's great. has The been been really growing. the it's HXX really at Heyday wake I really market you It's seen look them. out, value has - coming been the sports portion of from mean market, - that

that so new sold excellent. already really areas that it's can evaluate portfolio our ability through selectively we we And the a we to marketplace been difference. into And XXXX, expanding put where a into make out think product will

So that's philosophy. our essentially

spaces the to more we where We product And product into white from product. moving. and get long-term. need base differentiate pre-owned wins customer over more the new is we'll think New

the maybe favorable on guess, half And back I a commentary Ryan, in around the mix, the of year. less being just some of question for product

premium your of brands backlog. with some about talked boat You've extended

launch V-XX the in up that year. engine the back will half of of You've talked about the the here pick pace

exactly So just business? weighing the on within what mix engine OEM just I the OEM product it mix? guess, Is is -

again, just chunk these exhibits network a potentially bit be mix consistent terms headwind. really more But forecast a And of the two bit to a year, earnings. rest of of the overall, quarter, fourth P&A the in of customers margin. things, really that's little as the be the richer revenue our be in of Boat the of business just It's which seasonality Mike. a and look kind a little normal It's a in second last half getting half. engines we're a and core more even had the company comping ever the the still or growing topline as this of against And for OEM company dealer the second that looks percentage to Yes. the story, year to kind - then tend kind than growth We're international way earnings. best our are markets, and is continues

we again, more year. trending around to still to a fantastic feel 'XX, little it's we So, into a detail story, bit is wanted give another positive going very be but which, it,

with comes from your Raymond Our Please question. next Joe Altobello question James. proceed with

First year. And flattish second into it rather compares to bit singles issue given on in of question, the retail be industry Is I revised I wanted based inventory seems as the well for first the to is we'll that like it industry kind up which the half; tougher as delve supply your situation half. roughly aggressive, little now? implies demand bigger outlook, that the high today think facing than a right the as you

first mean I very a strong shaking Yes. I Joe, numbers that's out. are mean, how half. the

Your a year leaving back half, right, boats of kind math back is strong post-COVID. from to flat is are our again, the sales flattish last facility. just which a obviously, half, But retail very up

facilities going keep think and continue buoy But XX% exactly are thought the retail that's that of which land. leaving our our boats to where number process. is So it yes, it's sold, we to

hand some also do the the year. end - now through from would we Joe, on of build expect weeks we to

As mid-teens. now to and kind hope I low in mentioned, of right to in the we're nine be

a season through obviously, a inventory the of bit. demand drops where seasonally building are we So, the that naturally part

but to bit going in get think tricky, a up to the trying yes, singles. So it's the high right is balance end we

there for few supply, additional over impressive should shifting just from outboards, we in have or could gains in the your next now. the obviously additional gains or have the that capacity half? It does sound see largest And on second like of weeks. say, pace your been an Might impact market to share coming I your share years very impact competitor

share the that gains, that And sure A Well, we're - when to described share talk at about forward up. our seeing of gains already make continuing OEM what you about drive just we're we OEMs. we're lot talking those mostly. really if gains we and prioritize OEMs we our from signed that I we that share look think

are capacity. commitments say said, to more and in have OEMs. contrast they I not adding from come competitors we our would some who So that, have of out

in says you're environment, have to are capacity. looking you go your want business with out if who they're and that capacity, add come they OEM growth the more has We of a And demonstrated I an person and to adding do. said, to we think a indeed, would future going

- to continued very I we and our a strong have momentum. will story we think product I And around lead think compelling have gains. and that very So is share capacity very

Thank for gentlemen, At to that you. Ladies the today and for remarks. we like call time concluding this Dave the questions. all to some turn is back time, we would have

us. make hard all partners half. we've ACES to to And when that Brunswick COVID the and with performance team, operational and look very continue chain appreciate Navico financial on sure deal thank to opportunities work two on variants. you this We're the very also business. Wave been to going about the points, Well, year. between issues, mitigate employees excited and we establish the forward of joining second supply very our probably Next excited our proof we'll able businesses. very early to it. much to really delivering continue busy significant We're a welcoming be about to close we the the continuing that for very including of We're Delta much strong things and the like our It's X,XXX I later strategies. Obviously, synergies

for performance, through look for developments, work way you strong more out quarter. we much. next out our all more exciting look the Thank very very, So some as

concludes Ladies this webcast. and gentlemen, today's

this you at Thank participation. a day. And for time. disconnect now lines may You your your great have