BRUNSWICK CORP

Previous wording

Net sales decreased 15 percent during the second quarter of 2024 when compared with the second quarter of 2023, as the impact of continued lower wholesale ordering by dealers and OEMs, coupled with higher discounts in certain business segments, was only partially offset by annual price increases and benefits from well-received new products. Despite our Propulsion segment delivering lower sales and operating earnings versus the second quarter of 2023, year-to-date we continue to gain share in outboard engines, with more than 48 percent overall share of the U.S. outboard market. In addition, Propulsion's controls, rigging, and propeller product category had a strong quarter with operating margins ahead of the same period in 2023. Our Engine Parts and Accessories (Engine P&A) segment had a strong quarter, with sales and operating earnings up versus the second quarter of 2023, and we completed the full transition of Engine P&A distribution to our new, state-of-the-art facility in Brownsburg, Indiana. As anticipated, our Navico Group segment had lower sales and operating earnings versus the second quarter of 2023, due to reduced marine OEM order rates and persistently slow RV orders but continued to show stability, with sequential improvement in aftermarket sales and overall sales and operating earnings consistent with first quarter results. Our Boat segment had a solid performance given market conditions, with sales and operating earnings below the prior year quarter, consistent with lower planned production levels. Our international net sales decreased 8 percent and 6 percent in the second quarter on a GAAP and constant currency basis, respectively.

Current wording

Net sales decreased 20 percent during the third quarter of 2024 when compared with the third quarter of 2023, as the impact of continued lower wholesale ordering by dealers and OEMs, combined with higher discounts in certain business segments, was only partially offset by annual price increases and benefits from well-received new products. As anticipated, our Propulsion segment delivered lower sales and operating earnings versus the third quarter of 2023, but we continue to outpace the market at retail and have gained 420 basis points of U.S. outboard engine share in the quarter. Our Engine Parts and Accessories (Engine P&A) segment had another strong quarter, with record operating margins of 26%, and with both the Products and Distribution businesses contributing to margin expansion, despite slightly lower sales. The completed transition of engines parts and accessories distribution to our new, state-of-the-art facility in Brownsburg, Indiana continues to provide efficiency and delivery time benefits, enabling modest international sales growth versus the prior year quarter. As anticipated, our Navico Group segment had lower sales and operating earnings versus the third quarter of 2023 due to continued soft marine OEM order rates and retailers delaying aftermarket orders until closer to the holiday selling season, which was partially offset by slightly higher sales in the Europe, Middle East and Africa region. Our Boat segment had sales and operating earnings below the third quarter of 2023, consistent with lower planned production levels and fewer manufacturing days due to the extended summer shutdowns. Our international net sales decreased 13 percent and 12 percent in the third quarter on a GAAP and constant currency basis, respectively.

Previous wording

Net sales decreased 19 percent during the first half of 2024, when compared with the first half of 2023, due to the same factors described above. Our international net sales decreased 14 percent and 13 percent in the first half on a GAAP and constant currency basis, respectively.

Current wording

Net sales decreased 19 percent during the nine months ended September 28, 2024, when compared with the prior year, due to the same factors described above. Our international net sales decreased 13 percent in the nine months ended September 28, 2024 on a GAAP and constant currency basis.

Previous wording

Operating earnings in the second quarter of 2024 were $158.3 million and $180.8 million on a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the second quarter of 2023 of $194.4 million and $234.9 million on a GAAP and As Adjusted basis, respectively.

Current wording

Operating earnings in the third quarter of 2024 were $98.4 million and $125.9 million on a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the third quarter of 2023 of $196.1 million and $230.1 million on a GAAP and As Adjusted basis, respectively.

Previous wording

Operating earnings in the first half of 2024 were $268.9 million and $322.3 million on a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the first half of 2023 of $430.5 million and $497.3 million on a GAAP and As Adjusted basis, respectively.

Current wording

Operating earnings in the nine months ended September 28, 2024 were $367.3 million and $448.2 million on a GAAP and As Adjusted basis, respectively. This compares to operating earnings during the nine months ended September 30, 2023 of $626.6 million and $727.4 million on a GAAP and As Adjusted basis, respectively.

Previous wording

The following table sets forth certain amounts, ratios and relationships calculated from the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended:

Current wording

The following table sets forth certain amounts, ratios and relationships calculated from the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended:

Previous wording

The following is a reconciliation of our non-GAAP measures, adjusted operating earnings and adjusted diluted earnings per common share from continuing operations for the three and six months ended June 29, 2024 when compared with the same prior year comparative period:

Current wording

The following is a reconciliation of our non-GAAP measures, adjusted operating earnings and adjusted diluted earnings per common share from continuing operations for the three and nine months ended September 28, 2024 when compared with the same prior year comparative period:

Previous wording

(A) We incurred non-recurring costs related to the 2023 IT security incident during the six months ended June 29, 2024 as well as during the three and six months ended July 1, 2023.

Current wording

(A) We incurred non-recurring costs related to the 2023 IT security incident during the nine months ended September 28, 2024 as well as during the three and nine months ended September 30, 2023.

Previous wording

Net sales decreased 15 percent during the second quarter of 2024 and 19 percent during the first half of 2024 when compared with the same prior year periods. The components of the consolidated net sales change were as follows:

Current wording

Net sales decreased 20 percent during the third quarter and 19 percent during the nine months ended September 28, 2024 when compared with the same prior year periods. The components of the consolidated net sales change were as follows:

Previous wording

Gross margin decreased 60 basis points in the second quarter of 2024 when compared to the same prior year period, driven by higher manufacturing costs including absorption (210 bps), material and labor inflation (65 bps) and depreciation (15 bps), partially offset by unfavorable timing of capitalized variances in the prior year (170 bps), favorable foreign currency exchange-rate fluctuations (20 bps), sales-related drivers (20 bps) and acquisitions (20 bps).

Current wording

Gross margin decreased 170 basis points in the third quarter of 2024 when compared to the same prior year period, driven by sales-related drivers (200 bps), lower absorption from decreased production levels (100 bps), depreciation (10 bps) and foreign currency exchange-rate fluctuations (10 bps), partially offset by favorable material and labor costs (130 bps) and acquisitions (20 bps).

Previous wording

Gross margin decreased 120 basis points in the first half of 2024 when compared to the same prior year period, driven by higher manufacturing costs including absorption (120 bps) and depreciation (20 bps) as well as foreign currency exchange-rate fluctuations (20 bps), partially offset by sales-related drivers (25 bps) and acquisitions (15 bps).

Current wording

Gross margin decreased 130 basis points in the nine months ended September 28, 2024 when compared to the same prior year period, driven by lower absorption from decreased production levels (100 bps), sales-related drivers (60 bps), depreciation (10 bps) and foreign currency exchange-rate fluctuations (10 bps), partially offset by favorable material and labor costs (30 bps) and acquisitions (20 bps).

Previous wording

Selling, general and administrative expense as a percentage of net sales increased 130 basis points during the first half of 2024 when compared with the same prior year period, due to lower sales (280 bps), partially offset by cost control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensation (150 bps). Research and development expense decreased in the first half of 2024 versus the same period in 2023.

Current wording

Selling, general and administrative expense as a percentage of net sales increased 250 basis points during the third quarter of 2024 when compared with the same prior year period, due to lower sales (300 bps), partially offset by cost control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensation (50 bps). Research and development expense decreased in the third quarter of 2024 versus the same period in 2023.

Previous wording

Selling, general and administrative expense as a percentage of net sales was flat during the second quarter of 2024 when compared with the same prior year period, due to lower sales (230 bps), offset by cost control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensation (230 bps). Research and development expense decreased in the second quarter of 2024 versus the same period in 2023.

Current wording

Selling, general and administrative expense as a percentage of net sales increased 170 basis points during the nine months ended September 28, 2024 when compared with the same prior year period, due to lower sales (290 bps), partially offset by cost control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensation (120 bps). Research and development expense decreased during the nine months ended September 28, 2024 versus the same period in 2023.

Previous wording

We recorded Restructuring, exit and impairment charges of $7.9 million and $21.4 million during the three and six months ended June 29, 2024, respectively. We recorded Restructuring, exit and impairment charges of $13.9 million and $23.4 million during the three and six months ended July 1, 2023, respectively. We estimate the first half 2024 actions will result in approximately $14 million of cost savings. Refer to Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

We recorded Restructuring, exit and impairment charges of $12.2 million and $33.6 million during the three and nine months ended September 28, 2024, respectively. We recorded Restructuring, exit and impairment charges of $16.3 million and $39.7 million during the three and nine months ended September 30, 2023, respectively. We estimate the 2024 actions to date will result in approximately $20.0 million of annualized cost savings. Refer to Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

We recorded Equity earnings of $2.9 million and $5.4 million in the three and six months ended June 29, 2024, respectively, which were primarily related to our marine and technology-related joint ventures. This compares with Equity earnings of $2.2 million and $4.4 million in the three and six months ended July 1, 2023, respectively.

Current wording

We recorded Equity earnings of $1.6 million and $7.0 million in the three and nine months ended September 28, 2024, respectively, which were primarily related to our marine and technology-related joint ventures. This compares with Equity losses of $(17.3) million and $(12.9) million in the three and nine months ended September 30, 2023, respectively, which were primarily related to the impairment charge taken related to our investment in TN-BC Holdings LLC.

Previous wording

We recognized $(0.8) million of Other (expense) income, net in the three and six months ended June 29, 2024, respectively. This compares with $1.8 million and $0.9 million of Other (expense) income, net in the three and six months ended July 1, 2023, respectively. Other (expense) income, net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs.

Current wording

We recognized $(1.1) million and $(1.9) million of Other (expense) income, net in the three and nine months ended September 28, 2024, respectively. This compares with $6.0 million and $6.9 million of Other (expense) income, net in the three and nine months ended September 30, 2023, respectively. Other (expense) income, net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs.

Previous wording

Net interest expense increased for the three and six months ended June 29, 2024 when compared with the same prior year period due to an increase in average daily debt outstanding, which was influenced by the timing of debt issuances. Refer to Note 12 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 14 – Debt in the Notes to Consolidated Financial Statements in the 2023 Form 10-K.

Current wording

Net interest expense increased for the three and nine months ended September 28, 2024 when compared with the same prior year period due to an increase in average daily debt outstanding, which was influenced by the timing of debt issuances. Refer to Note 12 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 14 – Debt in the Notes to Consolidated Financial Statements in the 2023 Form 10-K.

Previous wording

We recognized an income tax provision for the three and six months ended June 29, 2024 of $27.7 million and $46.3 million, respectively, compared to $36.3 million and $135.3 million for the three and six months ended July 1, 2023, respectively. The decrease in the income tax provision for the three months ended June 29, 2024 is due to lower pretax income in high tax jurisdictions. The decrease in the income tax provision for the six months ended June 29, 2024 is due to the prior year intercompany sale of certain intellectual property rights and lower pretax income in high tax jurisdictions. We have also evaluated the effects of Pillar Two legislation and concluded that the tax effects are not material to the financial statements. Refer to Note 11 – Income Taxesin the Notes to Condensed Consolidated Financial Statements for further information.

Current wording

We recognized an Income tax provision for the three and nine months ended September 28, 2024 of $22.6 million and $68.9 million, respectively, compared to $46.2 million and $181.5 million for the three and nine months ended September 30, 2023, respectively. The decrease in the Income tax provision for the three months ended September 28, 2024 is primarily due to lower pretax income. The decrease in the Income tax provision for the nine months ended September 28, 2024 is primarily due to the prior year intercompany sale of certain intellectual property rights and lower pretax income. We have also evaluated the effects of Pillar Two legislation and concluded that the tax effects are not material to the financial statements. Refer to Note 11 – Income Taxesin the Notes to Condensed Consolidated Financial Statements for further information.

Previous wording

The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 20.9 percent and 21.1 percent for the three and six months ended June 29, 2024, respectively. The effective tax rate for the three and six months ended July 1, 2023 was 21.2 percent and 35.3 percent, respectively.

Current wording

The effective tax rate, which is calculated as the Income tax provision as a percentage of Earnings before income taxes, was 32.3 percent and 23.8 percent for the three and nine months ended September 28, 2024, respectively. The effective tax rate for the three and nine months ended September 30, 2023 was 28.9 percent and 33.4 percent, respectively.

Previous wording

Due to the factors described in the preceding paragraphs, operating earnings, net earnings from continuing operations, and diluted earnings per common share from continuing operations decreased during both the three and six months ended June 29, 2024 when compared with the same prior year period.

Current wording

Due to the factors described in the preceding paragraphs, Operating earnings, Net earnings from continuing operations, and Diluted earnings per common share from continuing operations decreased during both the three and nine months ended September 28, 2024 when compared with the same prior year period.

Previous wording

The following table sets forth Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Current wording

The following table sets forth Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and nine months ended:

Previous wording

Propulsion segment's net sales decreased in the second quarter of 2024 compared to the second quarter of 2023, with lower production rates at OEM boat manufacturers resulting in fewer engine orders in the quarter, while repower shipments were slightly up versus the same prior year period.

Current wording

Propulsion segment's net sales decreased in the third quarter of 2024 compared to the third quarter of 2023, due to lower production rates at OEM boat manufacturers resulting in lower engine orders in the quarter, partially offset by market share gains.

Previous wording

International sales were 37 percent of the Propulsion segment's net sales in the second quarter of 2024 and were flat from the prior year on a GAAP basis. On a constant currency basis, international sales increased 2 percent.

Current wording

International sales were 37 percent of the Propulsion segment's net sales in the third quarter of 2024 and decreased 19 percent from the prior year on a GAAP basis. On a constant currency basis, international sales decreased 18 percent.

Previous wording

International sales were 36 percent of the Propulsion segment's net sales in the first half of 2024 and decreased 12 percent from the prior year on a GAAP basis. On a constant currency basis, international sales decreased 11 percent in the first half of 2024.

Current wording

International sales were 36 percent of the Propulsion segment's net sales in the nine months ended September 28, 2024 and decreased 14 percent year over year on a GAAP basis. On a constant currency basis, international sales decreased 13 percent.

Previous wording

Propulsion segment's operating earnings in the second quarter of 2024 decreased when compared to the second quarter of 2023, due to the impact of lower net sales and higher manufacturing costs, including absorption from lower production, partially offset by the lapping of prior year unfavorable capitalized inventory variances and accelerated cost control measures.

Current wording

Propulsion segment's operating earnings in the third quarter of 2024 decreased when compared to the third quarter of 2023, primarily due to the impact of lower net sales and lower absorption from declines in production, partially offset by cost control measures.

Previous wording

The following table sets forth Engine P&A segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Current wording

The following table sets forth Engine P&A segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and nine months ended:

Previous wording

Engine P&A segment's net sales decreased in the first half of 2024 versus prior year as strong second quarter results only partially offset the lower sales in the first quarter of 2024.

Current wording

Engine P&A segment's net sales decreased in the nine months ended September 28, 2024 versus prior year as strong second quarter results only partially offset the lower sales in the first and third quarters of 2024.

Previous wording

International sales were 29 percent of the Engine P&A segment's net sales in the first half of 2024 and increased 1 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 2 percent in the first half of 2024.

Current wording

International sales were 29 percent of the Engine P&A segment's net sales in the nine months ended September 28, 2024 and increased 2 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 3 percent in the nine months ended September 28, 2024.

Previous wording

Engine P&A segment's operating earnings in the second quarter of 2024 increased compared to the second quarter of 2023, due to increased sales and the impact of pricing and cost control.

Current wording

Engine P&A segment's operating earnings in the third quarter of 2024 increased compared to the third quarter of 2023, resulting from the efficient performance of operations in Brownsburg, Indiana and cost control across the business.

Previous wording

The following table sets forth Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Current wording

The following table sets forth Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and nine months ended:

Previous wording

Navico Group segment's net sales decreased in the second quarter of 2024 compared to the second quarter of 2023, driven by reduced sales to marine OEMs as they balance production levels to match retail ordering patterns, partially offset by strong new product momentum and, while slow, some improvements in RV sales trends.

Current wording

Navico Group segment's net sales decreased in the third quarter of 2024 compared to the third quarter of 2023, primarily driven by reduced sales to marine OEMs resulting from lower boat production levels to match retail ordering patterns, partially offset by slight international sales growth and strong new product momentum.

Previous wording

International sales were 41 percent of the Navico Group segment's net sales in the first half of 2024 and decreased 6 percent year over year on a GAAP and constant currency basis.

Current wording

International sales were 41 percent of the Navico Group segment's net sales in the nine months ended September 28, 2024 and decreased 4 percent year over year on a GAAP and constant currency basis.

Previous wording

Navico Group segment's operating earnings in the second quarter of 2024 decreased when compared to the second quarter of 2023, as the impact from lower sales and increased discount activity was only partially offset by lower operating expenses.

Current wording

Navico Group segment's operating earnings in the third quarter of 2024 decreased when compared to the third quarter of 2023, as the impact from lower sales was only partially offset by lower operating expenses.

Previous wording

The following table sets forth Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Current wording

The following table sets forth Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and nine months ended:

Previous wording

Boat segment's net sales decreased in the second quarter of 2024 compared to the second quarter of 2023, due to softer wholesale orders as channel partners continue to order cautiously, partially offset by the favorable impact of modest model-year pricing and share gains.

Current wording

Boat segment's net sales decreased in the third quarter of 2024 compared to the third quarter of 2023, resulting from lower wholesale orders, as its channel partners continued to order cautiously, along with higher incentives and discounting, partially offset by the favorable impact of modest model-year pricing.

Previous wording

International sales were 22 percent of the Boat segment's net sales in both the second quarter and first half of 2024 and decreased 32 percent on a GAAP and constant currency basis versus the same periods in 2023.

Current wording

International sales were 16 percent of the Boat segment's net sales in the third quarter of 2024 and decreased 34 percent on a GAAP and constant currency basis versus the same periods in 2023.

Previous wording

Boat segment's operating earnings in the second quarter of 2024 decreased when compared to the second quarter of 2023, as the impact of the net sales declines and lower absorption from reduced production were only partially offset by pricing and continued cost control.

Current wording

Boat segment's operating earnings in the third quarter of 2024 decreased when compared to the third quarter of 2023, as the impact of the net sales declines and lower absorption from the reduced production was only partially offset by pricing and continued cost control.

Previous wording

Operating earnings in the first half of 2024 decreased due to the same factors above.

Current wording

Operating earnings in the nine months ended September 28, 2024 decreased due to the same factors above.

Previous wording

The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating loss for the three and six months ended:

Current wording

The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating loss for the three and nine months ended:

Previous wording

Corporate operating loss in the second quarter of 2024 decreased when compared to thesecond quarter of 2023, driven by lower variable compensation along with the impact of both the IT security incident and restructuring charges in the prior year.

Current wording

Corporate operating loss in the third quarter of 2024 decreased when compared to thethird quarter of 2023, driven by lower variable compensation along with the impact of the IT security incident in the prior year.

Previous wording

The following table sets forth an analysis of free cash flow for the six months ended:

Current wording

The following table sets forth an analysis of free cash flow for the nine months ended: