Brunswick (BC) 1 Feb 242023 Q4 Earnings call transcript

Good morning. Welcome to Brunswick Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions]. Today's meeting will be recorded.

If you have any objections, you may disconnect at this time. to Corporation. Clark, like Enterprise Vice now Brunswick Finance, would introduce Senior Neha President, I you. Thank

may You begin.

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

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

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

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

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

per the despite we good sales and Thanks, in year Neha, Brunswick earnings which in successful and delivered second highest headwinds. another share morning, company achieved everyone. adjusted market history

We our new operational initiatives, also our and costs ACES efficiency, share our including progress increase market actively controlled exceptional strategy. products, launch to gain continued strategic

guidance ordering of year. Our sales earnings as share billion below of $X.XX patterns customer range our was and full per wholesale softened late slightly the adjusted $X.X net year in

year our focus cash conversion free full of flow generation on million resulted cash $XXX in XX%. However, and diligent flow outstanding free cash of

Marine single with market line repurchases. prior full with In sales versus are up continued mid- Brunswick retail brands segments. addition, to basis year our share we retail to Mercury in capture bulk XXXX many has in outboard XX down the solid year. market executed finish share new of unit U.S. share outperforming estimates of digits, high anticipated U.S. million to market with $XXX points

on XX.X and out closed channel historical some levels, our year line norms. I'll now year. segment quarter the our with the with in manage full to we we which U.S. the for closely to selling As in season, partners the inventory the turn and hand retail is core highlights marine we weeks work with XXXX of and actively moved with of target Oakfield

business Propulsion exciting its historical consistent gains sales despite the on efficiencies slightly share products, operational and year-over-year more record, new and deliver market earnings leveraging to operating finished XXXX. second year highs Our margins best lower in versus

for gained the XXX overall basis recent investment of over retail full of in Mercury's engines U.S. outboard Mercury years. account year, share the points For XX horsepower, for majority which

the of over field in control In into orders addition, following launch outboards back [indiscernible] model a of new the the going inventory slowing early OEMs produced XXXX. first Mercury as X,XXX to were saw production off-season [indiscernible] electric the scale year. OEM

remain at boat to they and environment. entering the season cautious macro XXXX OEMs monitor expect consumer early the quarter We of as sentiment assess first shows

considerably sequential improvement engine consecutive our and continued cost accessories in improving business Our year full a the and a slightly, distribution sales for from Sales offset the steady softer up second a year parts only business in trend. versus solid the with basis products helped performance previous as down the was segment complexity flow of quarter demonstrated increased sequential year. reduction portion on prior were XXXX. OEM quarter reflecting the Navico XX% the environment. RV and focus of business quarter. Overall and slower to were the quarter, in new finish up Group the had manufacturing continued a an on marine and business market versus products integration control,

to and for stable pipeline employment grow of now at business now. premium XXXX. to XXX,XXX U.S. many Boat locations. gains Finally, to market Freedom model. Shifting central factors healthy buyers stabilize. stimulating rate the sales trips be the demonstrating a than in to has categories, closing earnings continue but Strong with above the productivity the choice with continuing healthy allowing external Fed reductions are completed their to encouraging continues XXX will in incentives in remains small are to assisting and generation. expectations, and generally lead important always and factor continuing together are healthy in sales. continue to helping entering more month is cadence inventory an demand provide of our inventory global contribution quarter, sales Overall, a to XXXX. approximately sales trending models are products, Boat levels, shows the boat XXXX, good boat share and year. consumers in January Members delivered shop slightly Club bank in with while inflation coming months. interested interest consistent levels The levels of Normalized and to the season baseline of ensure for with in be interest XXXX, the important early retail traffic Global for unit dealers

well, with ordering season technology the perform Mercury gains and they as closely year the are engine as achieving at shows new to entering Boat inventory important XX%. of the healthy in trajectory. with retail share entered at of well and boat [indiscernible] outboard cautious continued XXXX Our economic share as the start brands monitor Show, the Dusseldorf boat in recording overall their

enrolled. and leads way launched of We having convert boat Brunswick finance with than efficient more consumer Retail and process with approval financing. provides stimulate program Brunswick ability in introduce to with to XX% recently an interest finance an online demand are pleased The the already dealers promotional the program additional

more in our than In Boat platforms of addition, XXXX. drive sales digital Group brands assisted benefits digitally in our investments X/X across continue with to

through the and basis, products. to acquisitions. prevalent OEMs engines constant and a controlling new both mid fourth the On XX Mercury Asia in view horsepower full up with tow down U.S. our the rates in revenue engines basis, of quarter quarter. lower XXXX, points slightly in premium year rates with in order X% OEM solid. Shifting Pacific. in demand performance more digits versus market product full was carefully versus pontoon, full up better low outperform slightly more expectations declined to ] in retail than products Brunswick industry. industry retail for full than engine mid-single line premium softness Overall, outboard preliminary share select share, versus Outboard with on anticipated and approximately units with this with XXXX fourth saw production fiberglass the decline turned align down resulting bulk the year, the bringing basis to unit roughly performed Navico value X% are down production by a retail and now by prior sales planned X%. Mercury Group [ industry expected, brands, categories. the product Europe remaining with marketing XX% versus XX-horsepower continues in quarter of be industry we and excluding greater continues year XXXX. Overall, As retail currency gains The for retail supported Picking and particularly strong positive to global line XXXX, U.S. year lines. a quarter in period boat promotions with to on a fourth of year, and to

I'll weeks norms ended the As call and higher, line versus and manage with to outlook. were slightly XX.X XX,XXX and our inventory expectations on in turn with Ryan hand XX,XXX over we we now at International which additional both provide in is U.S. case. units bulk to units historical normally XXXX. the actively weeks financial performance on pipelines, comments pipelines with

XX% strong good extremely businesses. morning, quarter quarter fourth Dave, When an net in adjusted solid and despite $X.XX and XXXX, a demand across Thanks, of delivered compared everyone. the sales decreased to were our EPS Brunswick down fourth softer quarter wholesale XX%. of

ordering delivered discounts the cost year, we of XXXX, in by minimizing enterprise lower versus a in and and positive record XX% working partially on and implemented was offset we Operating quarter only prudent retailers, coupled to select focus usage. Sales earnings impact ongoing by OEMs containment sales offset patterns efforts. cautious spending record segments pricing dealers, quarters. on below fourth free momentum, margin of growth by year cash resulting $XXX flow higher new and a as from a net However, previous mix generating initiatives, declined cash the impact million, successful product over QX partially capital continue were increase prior with the prior as of and wholesale

the For performance. highest our sales year, adjusted second the and we delivered EPS XXXX just behind full history in Brunswick's

of flow cash our continued free second market. half flow conversion cash million strong resulted challenging cash free again, XXX%, $XXX driving in this Our in focus reflecting of on

propulsion versus cautious the OEM versus Revenue business. ordering segment, due primarily look XX% acquisition offset quarter control the QX the of share to reduced engines gains inflation. and down and at was in inflation more completed each Operating ] we'll market Board by costs continued margins by outboard with the increased XXX patterns, points starting labor Now year. and impact XXXX, partially in sales [ our the Flight and offset basis of reporting fourth than as earlier declines by cost higher were material of XXXX,

a Group pricing process the lower versus manufacturing expenses in offsetting and parts a in technologies the decrease us accessories we As in to impact flat business market channel, Dave continued and sequentially for both market-leading maintain of than base and of a our the decline, offset challenging selling sales slight to impact that operating decline while margins will but with engine business will benefit throughout the of the XXXX, of continued additional to reported QX costs of development prior year. Navico an be not overall year and the decreased be XXXX. Navico our its quarter overall exit business more dealer OEM operating X% invest continue enable the versus OEM improve abate engines. The solutions. were strategic that continuing XXXX retail down still quarter, connected sales essentially net against margins higher decrease XXXX, sales earnings primarily its will with into as until have trends primary that and manufacturing in but expand product while The both early distribution which the to sales marine environment orders earlier, will operating including gains, mentioned sell net priorities, engines in almost and continued the season the to market may the anticipate X% start million a Segment sales production quarter. and expenses. Despite in from continues versus than XXXX. Segment in as reductions levels RV high-margin for This overall the impacted products businesses as the experienced as improve result we in integrated structural to XXXX. weak the softer into strides decreased sales operating by in year, $XX progressive lower grew prior and make XX% removing improving business customer we share demand more by propulsion and costs more

earnings products premium our continuing Finally, and Boat our quarter, ending approximately capital our Boston consistent but to to with future year-over-year. Adjusted $XXX versus capital earnings successfully cost focused expenditures businesses saltwater seeing healthy in cash pipeline fish and segment, businesses, is QX XXXX. macroeconomic for the segment's enter ensure funding which million revenue were XX% business of XXXX, partially XXXX revenue growth while inventory our more of with million solid reduction in sales expectations in Whaler, projects believe earnings membership year [indiscernible] the which and operating margins and the contributing We to levels acceleration, and were delivered across capital steady by despite X% will and sales we executed we deployed had new very drive the sales returning growth strategic on in while X% our business the down in Boat of down activities. the Club, Sales growth. quarter while lower as quarter exciting levels during primarily included offset due includes another grew uncertainty. We shareholders. which strategy $XXX

mentioned, we shares million share dislocation, market took $XXX shares the Brunswick's million and Dave of approximately repurchasing as representing our or of advantage addition, of X.X company. In value X%

the dividend XXth our year. also We for consecutive increased

rating and leverage strong, X.Xx. remains healthy a investment-grade our credit of sheet balance reflecting Finally, net

continued year first with to generation investment the easing our during of capabilities, the will this has steadily extremely the strong And of our we will steady cautious cash liquidity first free to potential continuing refinance we the returns. earnings We enterprise. XXXX remain while in which the flow delivering strong driving notes a conditions. resilient financial spending EPS, on flexibility we and and entered quarter, cash flow year, a half XXXX with on be across and particularly while shareholder outlook, believe result provide focused year

a coupled levers investment uncertain Our management, environment. capital in and thoughtful cost containment disciplined and performance with prudent new operational actions growth, products and necessary and controllable pipeline strategy, business strong consumer this continued the in provide

of revenue adjusted of $X. and XXXX, $X operating of we billion adjusted billion, XX% the and EPS $X.X to XX% fiscal margins and range between $X in anticipate For between

walk cash generating Please continue and additional see more flow working million the guidance year. free guidance, We on with of a the our to units. than trends anticipate across along reduction from OpEx. The to anticipated see it positive business and fill provide the for the We regarding $XXX free our also segment driver of for metrics. cash more would appendix adjusted our short EPS to EPS conversion insight XXXX capital thought useful flow our planned be pipeline is providing XXXX main XXXX absence of XXXX

propulsion of than are as Navico. dealers tariffs, benefit of have levels and dealer between XXXX reorder our our impact fresh approximately more at exceeds remainder Group evenly anticipate increased and Boat and retailers consistent As start appropriate continue in slightly pipelines higher split If expense tax OEM $X.XX XXXX. We XXXX to a they and well interest with product the fill into a to later our rate. half provide channel more retail expectations, or from which season. and we our levels business relates demand potential to the will little A the historical that into then patterns, will impact inventory with

mitigate our throughout items as primarily X these expenses we Although minimize best are year. move will these uncontrollable, do to the we and

our take Lastly, we actions will structure. rightsize cost to to continue enterprise

normal related slightly increase year-over-year, XXXX acquisitions to compensation is variable with inflation Freedom from will back levels. Flight the and Board primarily the together Club increase and Boat target cost OpEx to resetting and Although

million boat take marine outboard categories than horsepower continuing will in categories items enterprise. Countering where costs high across countering categories in structural $XX taking headwinds engines, new share We share several also are are within anticipate these and We to by mostly the certain to control. premium less our products planning no remove growth. tailwinds while market of especially these in drive electronic

early will other be We update assumptions year. in especially the for wrap to plan some also aggressive flow cash sharing P&L, repurchases, by and financial capital the share with up strategy the year. I

enterprise capital usage for levels expect lowering generating continued year, working anticipated First, we modest match a the reflecting of sales goal while to our cash. inventory

results in to a from $XX assembly exclude additional recent with These capital favorable of slightly invested reflects exemption Wisconsin, few to our million outboard China years our Our we've which being year the XX- higher extension acquisition using discuss China similar primary depreciation our engines importation prior spring, been paying are [ facility related XX-horsepower with had in since Fond XXXX. versus amortization, prior the Lac years we we more businesses into tariffs, in year. It's our a at adjusted along to tariffs primarily but the Suzhou, from tariffs manufacturing ], du plant. produced sourced anticipate to versus components despite

minimizing plan our the higher XXXX, prudently assumptions share to as Board very of an capital XX% year. On million, fresh rate tax department financial is appropriately this And capital as approved mentioned. for to $XXX than page on good and we strategy, support effective several this of share our which adjusted tax anticipate this finally, shows which we we just accurate we of anticipate a begin repurchases, and repurchase a Lastly, footprint slightly our to And strategy effort other I earnings week, does use. earlier job tax authorization XXXX. Directors outstanding being and put

are debt minimize million impact. of resulting from to reduction expense interest higher planning will of eventual We notes, have refinancing the XXXX in the but net $XXX the also a XXXX,

used for straight have rates February versus global currently that and currencies anticipate XXth predominantly the way, we strength will neutral also on dividend On FX, few swing think a our increasing year. can by negative impact We on U.S. obviously other dollar the businesses. this of slightly but a the to the full earnings our either in year euro

reduction notice you'll year. a for CapEx in the Finally, planned

many from and remarks. will and any scale to products phase larger technology we the pass now plan many harvest plans. able in to without I growth investments years, for of funding our recent concluding over back and back future continue in call to we slightly be spending projects plan Dave growth, products to of sacrificing Although for are future

over solid, Thanks, XX launched their And first S mercury first by Mercury multiple shows ] ] also which Europe. the normalized Brands Show, in we system in in technology. introduced and featuring electric With and [indiscernible] control Brunswick Ryan. with products Printcraft, models Electronics Marine wakesurfing the of remains having exciting drive XXXX, designed the new to consumers choice contains rapid at Demand XXX the levels technology. ] Bravo at and forward-facing model horsepower SDX Mercury X in liner, vital features, the is higher styling field weeks p inventory jointly to XXXX Avatar in few The comfort. model Group and and models new Consumer Navico and early its serve products, total. and participated with it we Navico shipments SDX nearly Harris now Mercury new products and differentiate is businesses. In brands line new SDX of next-generation Silk Marine of outboard through Brunswick season the Group. Brunswick XXX products of XX% introduced going feature in Lowe intuitive [ an Four January, [ to where continues the a across launched just to X again Avatar and for flow

and XX: a excited and Savanna XXXX. very Android franchise its Simrad Freedom of We XXXX including finally, multifunction grow the locations through Hilton interface already latest X Simrad full acquisition, Spain of first are ratio wise, the display, acquisitions NSX the seamless and industry's Boat the also X And high-definition and late franchise operating organically Ultra to screen segment-leading features in new showcases the Club about aspect which in territories in system. through continues announced functionality, Head new

across Minneapolis XXXX with highlight Before I'm from to our major and XXXX. technology, continue of We XXX new be we of of wrapped early that recognized in a thrilled in in XXXX Magazine, culture. in [indiscernible] Boat Sea new teams just products, on of awards the enterprise NMMA were conclude, Innovation recognized for European the Boat on SLX of Harris won XXXX, high Power early the on accomplishments the Year Show, the Year, and the XXX our And exceptional XX to the and [indiscernible] Ray XXX the the Boat number Award people record its category. with awards Boating

In our Miami teams again we hosting these for now International our the who members team. Thank We'll questions. to Show, XXXX to us awards Show. the to the Brunswick you remarks. products our of from line you across at addition, at with talented Thank XX, technologies products you analyst on for Boat management brands Feb to Boat are as concludes and see make and our event prestigious call. investor me That join nominated but prepared awards which and the meet at the as well employees remind you possible, look Miami businesses Brunswick's and multiple upcoming latest forward all to our for joining open leads

JPMorgan. Matthew Our [Operator with is from first question Boss Instructions]

progresses, of we year and quarter XX% if drivers digits. maybe top just expected help line more visibility as in the rank full could the than year down could the just by decline delta first guide bridge mid-single between the to Dave, to today the So segment improvement the you

that helpful. I would really be think

and in think demand had that of fourth it's an it's reduced more December Yes. all And and on saw shutdowns, marine our some across Mercury really the quarter fact the to Group is similar wholesale our particularly the business OEMs we from of the orders Yes, I wholesale fact orders. production impact really extent. which Navico

meet course, to get inventory our year-end As for targets well on boat hand. and production as, reduced to that of weeks XX we

retail of -- normalized QX, which in anticipate is will our to about new And -- quarter, we be an kind marine about bulk think is season. In to based main as by continued on ordering -- selling own and during first XX% to customers, sales. is meter seeing least cautious we of of the But of OEM begin production is QX, at we're their confirmed we more orders Navico is wholesale be pick XX% customers, anticipate as Group's enter get season about encouraging their the we we early customer which sales year, will retail which retail OEM last period. I Mercury's versus that obviously XX% sign. [indiscernible] now to across continuing So boat levels the up up that end to

So back And of the is all forward. it I really normalized more getting production order and and would say in similar. the levels divisions factors wholesale QX that to affect our somewhat

And Matt, it's Ryan.

we were filling still a Just if XXXX very pipelines reminder, boats, QX engine categories you much remember. of all about even and and just

quarter more it the is quarter it a the So to out, look XXXX, of you're I comparison. if Dave 'XX, of as first fourth similar -- mentioned. challenging relatively And would should modeling

just And then Ryan. Great. a follow-up, maybe

the the potential just $XX savings opportunities As we on operating you found in that potentially the you maybe roughly end million that for Where organization think are year's elaborate And it's that you -- the at margin remarks? in there floor. your cost savings? you guide structural further additional is lower I Could efficiencies? this a of consider XX% cited see

cross of this the we're a frankly, overall is the to project mean, rightsize enterprise enterprise. Yes, I it's And that undertaking. structure just Matthew, cost

being matches need is out our in bit. The up more years. confident back structure are, to we'd If strategic very and take our kind and little a bit sure in is then as of which still we're to muted think make just expect, We shape XXXX that the a of cost targets unfolding going about getting those. But you our where same to picking that there little is 'XX that plan shape.

always, we if need to the way. in-flight actions find we are actions by more, Those

Hardiman with Citi. is question next from James Our

So to about inventory. talk want I

too good where think You that you industry inventories you said lot the I there? think difference pretty you've being Do feel what a of have sit in today. Seems like the the maybe your that finish some other OEMs? inventories those units And guess own about whether haven't? you're it we with weeks case that inventory that's And competing better in high. on players do ultimately or to guess, speaking of XXXX, does controlled hand? than guys if how you matter is you other about think to are do terms I

for see James, we other question. the of than commentary higher thank levels. you inventory Yes, noting did OEMs a about lot desired

We our are very comfortable levels. with inventory

we explained Mercury's inventory the of half we lot back think OEM customers. did changes year. December I some We see relatively of that some effort in in patterns a production had the from managing put abrupt of into in

Our industry is to ordering kind January, same back and tend difficult half a know you to, we it I what encouraging, suffering. somewhat I sales on choppy as very in levels. in I small extremely of earlier. wholesale our still the more the feel first And production difficult our month, performance of but began Mercury of retail Well, the feel in we metered change may half which commentary, like based Navico experience we the QX, be think Does and because we're don't QX. But down patterns not inventory it think, to yes, matter about did somewhat Group makes us -- the because abruptly does? good we predict yes, more despite it honestly, for

demand right right of the have to retail level have we we dealer the I think think and I stimulate level. inventory incentives, incentives

we So I'm comfortable where are. very with

than think have levels of the levels And then on but part 'XX? down end end retail dramatically, of we right end few of question this is of to a Not plan the would by was at end lower then expectations, of plan our that in the do handful be be hand, a to below hand. bit now, XXXX, The maneuver last the 'XX. your little inventory bit. weeks If outpacing weeks of year. year can little you'll on 'XX you -- a maybe how weeks continues But a

then, weren't we to that And figure as driven rate back thinking appears trying weakness what would that. Maybe necessarily it macro as I do a then starting as And out it is a would to out your is and sort of divergence come than scenario? helpful. me when snapback recession. recession of been. really quickly is, Despite maybe if in post between occurs Really of rates, knock what in I in guess gave sort you we modest guess, speak down I'm maybe to scenarios, the to to it. of somewhere as this severe recession, fact, year, don't the an this I there sort guidance, have sits the recession point X contemplate guess the I XXXX sort opportunity see more interest not to that projections and Got years being us for ago. But otherwise it previous we speak the be

I'll come that we you've the But this knew obviously, The of and interesting really fill kind out James, get we with with when start in. kind the X of Yes, things. One to question, this that scenario, is live is with it, Yes, -- perpetuity. the you it's maybe call Dave always downside can then difference on starting would point. a morning. got

dropped if world sales dropped in engines. year. some refill would really, two, had from XXXX where we little what really If you boats they we starting coming a number But had have were but came in retail $XX performed was me, is in hold anticipated, there year think -- kind where I That a one, in or excuse difference actually we better. EPS X year today, also off, as said pipeline a to, X the off fill anticipating P&A no pipeline the $XX as out would happen is a a any are And At for a Boat EPS. or we scenario a whole, time retail at in budget, off it, performed real had a that the that we XXXX. different businesses a with to the group, remember, this remaining haven't that of sit XX% little they XX% point. than we the different This wholesale although

remember, last end come scenario. X% years and of P&A high a was of into despite from really of X peak we really still over those 'XX you business CAGR X a little off gave that season bit has If the having kind downside 'XX. the a that And years, X%,

back trailing are So because P&A. Shares bit if a probably our little you the I'd we're as a ACES obviously in costs, but $X.XX little guy range the obviously in driven of a you of of -- good that. about that last million And really take kind thing $X.XX, buying to we've the categories a happy has of do got on our a more. say goodness investment propulsion, little ACES, of midpoint all an been $XXX maybe on then

the So really difference. that's

is question with from Securities. Swartz Mike Truist next Our

touch margin call, positive. mix of wanted it about like Just margins, commentary and down sounds in of step the you like assumptions. to the basis about XX% on product mix It guidance, is you're and should mix, be that XXX both the provided a just guidance more embedding which points. specifically, channel on propulsion looks kind the From

you to that help how point Just get basis us XXX decline. through walk

knew Yes, lower would volume. this one with of kind to then absorption is folks attention. It starts we due that again, just really give

facilities, on -- a is EPS. related, pipeline sales fill noted If and And a the also you of driver [indiscernible] in the the in pipeline lack obviously chunk big the on facility that lower absorption the with that hurts but volume certainly volume. of EPS bridge, look being you

doing And assembly, million Tariffs still but that goes to final to to we amount not year, a spread over there, over price and bit a #X. available -- doing PNOC, our labor of absorption cost material it position is and right is over positive to we we're terrible cover. And hard a price best $XX and things the So COGS. where the large. over although offset that, is million do price are in where our cost are other so is little input costs, as about but tariffs, elevated by the certainly input more then $XX positive if price just is input not ability so prior it's #X,

So targeted X drivers structure of comp moderating and from in as their that and to and absorbing note fantastic the that's really does gross back would is the all not the OpEx margin. I primary acquisition, obviously, inclusive Those is to goodness as all of their levels. relatively year-over-year, resetting the usual, a is and things OpEx really per are the flat be cost job they're large. which target [indiscernible], October Mercury

And helpful. second just question. maybe a That's Okay.

the how to and X lower the As range, about top bottom X mean the us end, walk get you end we get do do the of end driving think of big through earnings you I range the that. or maybe end? to higher the factors How the

issue to QX. is people Mike, QX rid previous to addition think, of point we're we because to that just -- don't one operators really the in need the I towards in QX line absorption over-indexes going get want that

that in QX in the of kind normalize will year. compounding effect through quarters the a other there's So

bottom weakness really. retail sales anticipate. the hang range, a of midpoint we of to We last get to macro difficult than would of to lot need don't of it's to the of have I bottom terms see think [indiscernible]. If in kind bottom of at the In be flat roughly market top range further tailwinds the year, above

with we've I that help going probably especially of that X,XXX on production units particularly boat in actually this benefit. we year pessimistic about think that will side. And units the on wholesale of any below I the implement in already then leverage retail cost being bit scenario think described, reductions down our terms is a will assumption market our

some bit would risk, the tailwind from be Upside is better macro say have downside So kind. a additional to market. would I

Megan from with is question next Our Alexander Morgan Stanley.

XX%-ish of But here I million to propulsion of margin answer, said kind just out, Everything versus look last did decremental of belabor makes you but don't getting [ $XX want apples-to-apples ] I tariff it, have range kind that to I somewhere could. sit on year, if if the still a follow-up in margins. take just I'm and sense. that

I XX% kind in XX% deleverage range. you've about of talked historically volume think the to

because So pretty can just understand us maybe it the just large. you there seems discrepancy help

the were a we coming the absorption said, of input is off piece There's sleep mean production becomes of a running hit in of it's Megan, the $XX here as I $XX Yes. quarter costs. as it's right. second real. where And on hard that good you're first a don't have more But -- -- could it again, and we in -- would it been about could as years, been material Lac and million, back to of for bit really calling out levels year-over-year, million, of a half of and third puzzle. that. back and year, have XX% a into quarter that little than is this little Fond du Dave then a taking scaling PNOC $XX we're past normal it facility kind more it's the to million, story -- positive. this mean that production year. I And bit spread

for think of we're to challenging. is cost I looks would world some we a some outperform can of of it's the lastly, over -- bit guidance. But kind input inflation I And we where Mercury of of think you we road that are the ability little the us So know the can these the margin a today, the land is we -- tell I that sit guidance if estimates. price a better, year. Obviously, margin middle think all just as

pipeline of quarter hard to just first cadence the And then a a of to we're embedded fill that Okay. wholesale you cautious follow-up. versus relates to what's seeing terms what segment, get particular, quarter? able beyond trying maybe Would last you've just maybe was what what just as as the in helpful. compare think of year? another on patterns, more That's sense particularly And ordering the quantify the be propulsion in it about for to first how the you're in

Yes.

whole lot is that quarter second So in the Fond will X There's the think -- to du to and no down XXX of of year-over-year, if at be below the it's kind XXX percent production Lac really is of shortage first of levels of above. and kind of that going -- be a you horsepower. XX-ish that year. And most

the bit most a little quarter first that in and the be XX% would So of second.

Kennison is next Baird. Craig Our with from question

call. helpful a been It's

guess bit. As wanted dig to I into I a always, Navico

that transaction. the And coming what to gone I so think curious on has on get take I we're be I'd has anniversary your guess, X-year Dave, gone summer not this well? of well what and

Yes, on X-year Yes. Thanks, the anniversary. Craig. going up

best that our well can a are like right the So producing coming there like else financial solutions of about move and ultrawide, marketplace, I was There which like really the talk extremely marketplace. other that well in the plays the we'd extraordinarily from a late say flow covering is -- for will our well of what's that in factors what to absolutely to in the not there directions the actually in would own. the is, time. I those that, us this performance despite and that the of I'll isn't [indiscernible] mean, continues to anything assets products very I it nothing company belief it still unique It in system. be received continued anticipated of is technology in think Navico out gone beginning electronics. has the doing to really to produce asset is in at reflect that the like subsegments And year. several originally boat company. technology fact things nobody second, a It see a well that It is well do business. some We're lot new strongly

the I We a is the think market downturn. brought us. asset it asset just for ahead right So of

think bit the Navico's about XX% vehicles than aftermarket. things, it's of specialty kind XX% kind One to if of of Marine you guess, in less I XX% probably little XX% is about mix, OEM, and a

of really years destocking experience. that a essentially decline it think foresee we were didn't experienced severe And is not is to RV the think we what in that the continues did past we that the couple also I now. troughed over really things several foresee manufacturing

have So things combat. those the we that are had to

would you XX% I was tell total that Now of margin about XXXX. Navico

that hold hold. products, margin expect the XXXX full effect also in of and of as new take takes to cost reductions combination expand We a year as

out. benefit strategic and say positives are would new coming products I So

including Some of the years. X destocking in with how past are more markets the perform X, negatives associated the generally,

from Whether solutions as OEM Yes, share that's your your very data. for lines can Navico. of all if customers could very we the it's share drill Mercury, ACES less of with strategy. clearly helpful. show your in And a the just integrate are But getting down, of you wallet those industry up you like see gains obvious I sort along larger of

of just portfolio? wallet I'm Navico share to So across your there way the is a curious, frame

Yes.

not easy tell to brand ultrawide, more that asked that market do marketplace is only look think the whether into continues share you the gained I the in question, have we takes a Simrad we extremely basis last has We broken And unique I systematic that since imagine year going hold. But that the well. can and out. as do we you accelerating which can on forward. you'll share hopefully, at you the Obviously, be gain, whole And about perform more integrated Craig, for which market a that it think as appearing. we see KPIs good it will think could can fully to we call establish you And it's about Miami. you'll that a services. whether if Fathom bunch of some of we number But and systems OEMs make question, track.

is with Xian question Paribas. BNP Our Siew next from

to I margin ask the But the wanted are engine like you bps. kind revenues expected Could through of to I flattish. there? walk drivers guidance. P&A up, think, about some XXX looks be of It is maybe EBIT

but That business, as part the quarters. be business bit little will mixed our that We still first really to. products of Happy a products sluggish, a be story. last will think of of the it a handful has bit higher-margin Yes. in distribution year, certainly the that is up really the been

price. that through a of is market generally, business remember, to going with that's that's distribution points we to -- or And a one that think the So takes a on the trailing play of product this. generally another kind side [indiscernible] X

than in well. been it's be The a a item in Indianapolis to -- other but [indiscernible] harder and or in into been should remember 'XX outside little our to beyond. better transition lift new anticipated, facility, our continues is the go the going comp 'XX It's a facility just

the guidance What benefit. a $X.XX other in it. helpful, Got bridge, XXXX exactly? also you maybe Okay. have which And that is then from is as

the and factors, didn't we margin to laundry kind gross was. offset -- than But can there's the want that is the half in more a the softness make you that are some any of of them of it I COGS of slide initiatives above think to OpEx there line and mean lot doing other busy help of the year. we're sales will first A that that of various certainly list

it. Got

it's So margin. gross like a

out are lot it's them a goodness. instead margin each A of OpEx. programs take of Yes, gross their that our and divisions at to working -- cost mostly doing of time, the on are level at lithium it's also, the same COGS

Our next Fred from question Wolfe is Research. with Wightman

for power, backlog? go-forward just that like comments given engine more you going wanted some come much wholesale? what's that to you OEM to basis? And on refill are a the that bit conversion little that of Is sort made stopped you're opportunity given talking backlog just a that who and the seeing How know Mercury stand retail guys of And muted a you of to as still opportunity but wanted I with surprised OEMs back having sort share does backlog comments. conversion transition I'm of giving about on there, to historically. have pipeline not I that the

Yes.

share So share OEMs couple across line. could clearly, There is as pick a more of not the getting start gain We existing and Ryan more up. share Mercury notables getting part that are did and I'll maybe coming of gain -- into and OEMs. of

see you a already. might Miami I in think few

So continuing to we're convert.

bringing in we do to continue do opportunity. that board we're of is that at Ryan is look the the behaving way reflected so, market mix on affecting additional the and that -- obviously, but in the the overall $X.XX somewhat others included and the in every at increase the think is start if reflected you bridge, that market, $X.XX that And OEM. share is the a I in OEMs

I margin really, just over happy in Okay. And were of would quarter think sideways. I you margin you business. up, down in X% XX% operating posted where sales. X% really if historically, guys sales shift the the a look a agnostic with down if we mean Boat to And be were could guys or almost we you

union maybe it's I sort today, historically, floor you state give you've us understanding good can a the environment performance that a just the X% to back downside is help talked going a that? digits wholesale getting mean forward? about tough margin pretty of for of of So double but that

certainly OpEx where performance. all retail, a Dave bit operational across reflects really Boat in it and start out that spur has with Group great fill of mean we brands. given where And was can our really almost Fred, out. said, we're an taking job keeping did we out it XX%, I improvements as is extra of row. Yes, down also you a X some we in XX% a take this happy of operating believe off the pretty I'll pretty hit margin, in. in volume the Yes, did are of a that's of The I to discounting environment that that happy. QX done quarters, little and the nice fourth XXXX season. But which it have quarter fourth we

volume And where would a was. I is X% for pretty so a is where nice quarter yes, say it floor

produce we're that of have still kind where handful I would years the 'XX, margins year pretty full ago think darn X%, did you've is that year lower in bit in a X%, X% seen little of number and into impossible. been the something guidance for a we for than full holding year to the a going

operating to out keeping but testament certainly the all the businesses, in a and it So taking out. focus jobs OpEx the on

Stember is next from Our question MKM. ROTH Scott with

far looking your are Fed? as sounds reductions market year. help It you for from like rate a What guys from interest this boat as flattish are some assumptions getting the

Yes.

effect is other more from but in is banks, in markets. financing reductions and kind rate And global spending effects. given Fed consumer Europe, particularly costs of the interest is confidence. the frees also other think surgery other X maybe and up budgets, One directly broadly. impacts discretionary a presence our also the central I family just

of is book hopefully, that us, if are risk. lot at will you financing that there -- from number say promotional go will online, of -- you including or if kind a I be would you look a cycle the moment when you around to see that will introduced. companies the there many shows but So promotional tailwinds begins, of but offering

moment rating So that which credit the are not I is nominal kind has of to rate say X.X%. would high. points dropped unless people probably not They're XX about lot the about a not at of that basis paying --

XX probably seeing $X. think rates. are people more $X. I XX,

cases, more see things is though, One taking rates And in buyers. promotional are people though seeing, cash closes interest cash. of we of cash deal with paying even we the the the lot continue people and a lot the to pull a

So I that the be and consumer secondary income there, and think the primary tertiary will but at effects discretionary more confidence effect of least [indiscernible].

with us remind that newer repower of some of you repower. it. the one you And guess, margin just in side is starting boat is their and the could bit capabilities the as then your the OEM? production falling are products. boats see little engine Got And on b, have last you I repower as to economy that OEM guys theories and A, question a tougher side, delta an yet? would a of back on owners between engine more

basis and share. repower actually is have share good mean big probably trails actually a year, still, I our which of a had half. Scott. repower gained pretty will share Yes, points repower half overall the our We second but nice really XXX pretty in U.S. first

We retail on OEM certainly volume. exact room the there. run than based stronger talk but there's just So dealer margin still don't to on margins, is

the is don't the in definitely not is. that So as much how side. positive comment well. very operating exactly but we repower, good But internationally But it on yes, only a on margin U.S.

remarks. turn time, Dave to would call back the like this for over we At to some concluding

strong you joining delivered us Despite second Thank best year, all you. for we the We them. thank again great again appreciate Well, questions. challenges, ever. and for really a very the

to sure us make that, to of our a continues gives Free generation cash think, I flexibility the into think particular year the which was flow and don't highlight, the go forget portfolio. demonstrate as could in half but trying we're additional I we we you second XXXX. resilience of So

to will dealer through times, be quarter. we've of ourselves the think cautious of and start we XXXX. equipped Pipelines well ordering we are of very OEM for couple a likely As noted the customers in first levels. a portion continue their appropriate at But

a products. We wealth new of have

We have digital properties. great

we're well -- costs. a we of And say thought mix -- have a of We Ryan continuing prefer a out we're this guidance. year I of increasing to year incentives. also, as mentioned, would couple times, control that

we the kind Mix is go last XX% is up improving through mix encouraging. versus we're year, I good with sales retail. Boatshow, talk exciting, down single -- about, to looking so it's digits maybe think, much show we're we but versus start up that are didn't And a off boat of which of as year, last XX% up, but year. into significantly to kind very

of XX. all in you Feb you our forward and seeing talk look introduce could things Miami we products about So at our Thank you. analyst on event those to there. We to investor new all and

will you. This Thank today's conclude conference.

time, participation. may and thank disconnect for at your this lines your You you