BRUNSWICK CORP

Item 1. Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Cash Flows

Brunswick Corporation

Condensed Consolidated Statements of Shareholders' Equity

The Notes to Condensed Consolidated Financial Statements are an integral part of these condensed consolidated statements.

Note 1 – Significant Accounting Policies

Interim Financial Statements. Brunswick's unaudited interim condensed consolidated financial statements have been prepared pursuant to SEC rules and regulations. Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted.

These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Brunswick's 2024 Annual Report on Form 10-K for the year ended December 31, 2024 (the 2024 Form 10-K). These results include, in management's opinion, all normal and recurring adjustments necessary to present fairly Brunswick's financial position, results of operations and cash flows. Due to the seasonality of Brunswick's businesses, the interim results are not necessarily indicative of the results that may be expected for the remainder of the year.

The Company maintains its financial records on the basis of a fiscal year ending on December 31, with the fiscal quarters spanning approximately thirteen weeks. The first quarter ends on the Saturday closest to the end of the first thirteen-week period. The second and third quarters are thirteen weeks in duration and the fourth quarter is the remainder of the year. The first quarter of fiscal year 2025 ended on March 29, 2025 and the first quarter of fiscal year 2024 ended on March 30, 2024.

Recently Issued Accounting Standards

Income Statement: In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). This guidance requires disclosures about significant expense categories, including, but not limited to, inventory purchases, employee compensation, depreciation, amortization, and selling expenses. ASU 2024-03 is effective for financial statements for annual periods beginning after December 15, 2026. We are currently evaluating the impact of adopting this guidance on the consolidated financial statements.

Income Taxes: In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) — Improvements to Income Tax Disclosures. Under this ASU, entities must disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, ASU 2023-09 requires entities to disclose additional information about income taxes paid. ASU 2023-09 is effective for financial statements for annual periods beginning after December 15, 2024. We are currently evaluating the potential impact of adopting this guidance on the consolidated financial statements.

Note 2 –Revenue Recognition

The following tables present the Company's revenue in categories that depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors:

As of December 31, 2024,$191.2 million of contract liabilities associated with extended warranties, deferred revenue and customer deposits were reported in Accrued expenses and Other long-term liabilities, of which $19.5 million were recognized as revenue during the three months ended March 29, 2025. As of March 29, 2025, total contract liabilities were $201.2 million. The total amount of the transaction price allocated to unsatisfied performance obligations as of March 29, 2025 was $195.0 million for contracts greater than one year, which primarily relates to extended warranties. The Company expects to recognize $50.9 million of this amount in 2025, $51.8 million in 2026, and $92.3 million thereafter.

Note 3 –Restructuring, Exit and Impairment Activities

During the three months ended March 29, 2025 and March 30, 2024, the Company recorded restructuring charges related to headcount reductions and related costs associated with streamlining the enterprise-wide cost structure and improving operating efficiencies. The Company also incurred charges related to the rationalization of its manufacturing footprint.

The following table is a summary of these expenses for the three months ended March 29, 2025:

(A) Cash payments for the three months ended March 29, 2025 may include payments related to prior period charges.

(B) Restructuring, exit and impairment charges accrued as of March 29, 2025 are expected to be paid in the next twelve months.

The following table is a summary of these expenses for the three months ended March 30, 2024:

(A) Cash payments for the three months ended March 30, 2024 may include payments related to prior period charges.

Note 4 –Acquisitions

2024 Acquisition

On September 12, 2024, the Company acquired additional Freedom Boat Club franchise operations and territories in Southeast Florida. The acquisition enhances Freedom Boat Club's presence in Florida and provides an opportunity to leverage synergies across Brunswick's portfolio of brands. The acquisition is included as part of the Company's Boat segment.

The Company paid net cash consideration of $31.2 million for the acquisition. The opening balance sheet, which is preliminary and subject to change in the measurement period as the Company finalizes the purchase price allocation and fair value estimates, includes $26.7 million of goodwill and $5.2 million of customer relationships. The amount assigned to customer relationships will be amortized over the estimated useful life of 10 years. Transaction costs associated with the acquisition were not material to the Company's consolidated results of operations. The acquisition is not material to the Company's net sales, results of operations, or total assets during any period presented. Accordingly, the Company's consolidated results of operations do not differ materially from historical performance as a result of the acquisition, and pro forma results for prior periods are not presented.

Note 5 –Financial Instruments

The Company operates globally with manufacturing and sales facilities around the world. Due to the Company’s global operations, the Company engages in activities involving both financial and market risks. The Company utilizes normal operating and financing activities, along with derivative financial instruments, to minimize these risks. See Note 12 in the Notes to Consolidated Financial Statements in the 2024 Form 10-K for further details regarding the Company's financial instruments and hedging policies.

During the first quarter of 2025, the Company entered into $400.0 million of cross-currency swap contracts and settled $400.0 million of cross-currency swap contracts previously entered into, resulting in a deferred gain of $4.9 million within Accumulated other comprehensive loss, net of tax.

The following table summarizes the notional values of the Company's derivative instruments as of March 29, 2025, December 31, 2024, and March 30, 2024:

(A) Commodity contracts outstanding as of March 29, 2025 mature through 2026.

(B) The amount of gain or loss that is expected to be reclassified from Accumulated other comprehensive loss to earnings in the next twelve months is immaterial.

(C) Forward contracts outstanding as of March 29, 2025 mature through 2027 and mainly relate to the Euro, Australian dollar, Norwegian krone and Mexican peso.

As of March 29, 2025, December 31, 2024 and March 30, 2024, the fair values of the Company’s derivative instruments were:

As of March 29, 2025, December 31, 2024 and March 30, 2024, asset derivatives are included within Prepaid expenses and other and Other long-term assets, and liability derivatives are included within Accrued expenses and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

The effect of derivative instruments on the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 29, 2025 and March 30, 2024 is shown in the tables below.

The amount of gain (loss) on derivatives recognized in Accumulated other comprehensive loss was as follows:

The amount of gain (loss) reclassified from Accumulated other comprehensive loss into earnings was as follows:

The amount of gain (loss) on derivatives recognized directly into earnings was as follows:

Note 6 –Fair Value Measurements

The following table summarizes the Company's financial assets and liabilities measured at fair value on a recurring basis:

Fair Value of Other Financial Instruments. The carrying values of the Company's short-term financial instruments, including cash and cash equivalents and accounts and notes receivable, approximate their fair values because of the short maturity of these instruments. As of March 29, 2025, December 31, 2024 and March 30, 2024, the fair value of the Company’s long-term debt, including current maturities, and short-term debt was approximately $2,299.3 million, $2,161.3 million and $2,659.5 million, respectively, and was determined using Level 1 and Level 2 inputs described in Note 6 to the Notes to Consolidated Financial Statements in the 2024 Form 10-K. The carrying value of long-term debt, including current maturities, and short-term debt was $2,509.5 million, $2,370.2 million and $2,859.1 million as of March 29, 2025, December 31, 2024 and March 30, 2024, respectively.

Note 7 –Commitments and Contingencies

Product Warranties

The following activity related to product warranty liabilities was recorded in Accrued expenses during the three months ended March 29, 2025 and March 30, 2024:

Extended Product Warranties

The following activity related to deferred revenue for extended product warranty contracts was recorded in Accrued expenses and Other long-term liabilities during the three months ended March 29, 2025 and March 30, 2024:

Note 8 –Goodwill and Other Intangibles

Changes in the Company's goodwill during the three months ended March 29, 2025 and March 30, 2024, by segment, are summarized below:

Adjustments in both periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar. Adjustments during the three months ended March 30, 2024 also include immaterial purchase accounting adjustments related to the 2023 Fliteboard and Freedom Boat Club acquisitions. The accumulated impairment loss on goodwill was $80.0 million as of March 29, 2025 and December 31, 2024, respectively. There was no accumulated impairment loss on goodwill as of March 30, 2024. As of December 31, 2024, the Navico Group reporting unit's fair value approximated its carrying value. The economic uncertainty resulting from the volatile trade policy environment could negatively impact Navico Group's results of operations and cash flows and result in future impairment of the Navico Group reporting unit's goodwill.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of March 29, 2025, December 31, 2024, and March 30, 2024, are summarized by intangible asset type below:

Other intangible assets primarily consist of software, patents, and franchise agreements. Gross amounts and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. Aggregate amortization expense for intangibles was $19.2 million and $17.9 million for three months ended March 29, 2025 and March 30, 2024, respectively.

The Company tests its intangible assets for impairment during the fourth quarter of each year, or whenever a change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company did not record any impairment charges during the three months ended March 29, 2025 or March 30, 2024.

Note 9 –Segment Information

Information about the operations of Brunswick's reportable segments is set forth below:

(A) Net sales includes $73.3 million, $2.4 million, $24.7 million and $0.4 million million of segment eliminations for the Propulsion, Engine P&A, Navico Group and Boat reportable segments, respectively.

(B) Includes $0.7 million of Cost of sales related Restructuring, exit and impairment charges.

(C) Includes $208.0 million of Selling, general and administrative expense, $38.5 million of Research and development expense and $0.4 million of Restructuring, exit and impairment charges.

(A) Net sales includes $82.4 million, $1.7 million and $28.1 million of segment eliminations for the Propulsion, Engine P&A and Navico Group reportable segments, respectively.

(B) Includes $3.6 million of Cost of sales related Restructuring, exit and impairment charges.

(C) Includes $203.7 million of Selling, general and administrative expense, $45.8 million of Research and development expense and $9.9 million of Restructuring, exit and impairment charges.

Geographic Segments

Note 10 –Comprehensive Income

Accumulated other comprehensive loss, net of tax, in the Condensed Consolidated Balance Sheets includes foreign currency cumulative translation adjustments; prior service costs and credits and net actuarial gains and losses for defined benefit plans; and unrealized derivative gains and losses. Changes in the components of Accumulated other comprehensive loss, net of tax, for the three months ended March 29, 2025 and March 30, 2024 are as follows:

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the three months ended March 29, 2025:

(A) The tax effects for the three months ended March 29, 2025 were $(3.6) million for foreign currency translation and $3.5 million for derivatives.

(B) The tax effects for the three months ended March 29, 2025 were $0.5 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the three months ended March 29, 2025. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

The following table presents the changes in Accumulated other comprehensive loss, net of tax, by component for the three months ended March 30, 2024:

(A) The tax effects for the three months ended March 30, 2024 were $3.0 million for foreign currency translation and $(3.7) million for derivatives.

(B) The tax effects for the three months ended March 30, 2024 were $0.4 million for derivatives.

(C) The reclassification adjustments from Accumulated other comprehensive loss and associated tax effects related to defined benefit items were not material for the three months ended March 30, 2024. Refer to Note 5 – Financial Instruments for the reclassification adjustments from Accumulated other comprehensive loss, net of tax related to derivatives.

Note 11 –Income Taxes

The effective tax rate for the three months ended March 29, 2025 and March 30, 2024 was 28.1 percent and 21.4 percent, respectively. The effective tax rate for the three months ended March 29, 2025 was higher than the same period in the prior year, primarily due to the discrete income tax expense recorded associated with equity compensation.

Note 12 –Debt

The following table provides the changes in the Company's debt for the three months ended March 29, 2025:

(A) During the first quarter of 2025, the Company had short-term borrowings and repayments under its unsecured commercial paper program and borrowings outstanding of $380.0 million as of March 29, 2025.

(B) During the first quarter of 2025, the Company made the remaining principal repayments, totaling $125.0 million, of its 6.625% Senior Notes due 2049.

As of March 29, 2025, Brunswick was in compliance with the financial covenants associated with its debt.

2049 Notes

During the fourth quarter of 2024, the Company issued an irrevocable notice of redemption to the holders of its 6.625% Senior Notes due 2049 (2049 Notes). The 2049 Notes were redeemed in the first quarter of 2025 at a redemption price equal to 100 percent of the outstanding principal amount of $125.0 million plus accrued interest of $2.1 million in accordance with the redemption provision of the 2049 Notes. The Company recognized a loss on early extinguishment of debt of $3.7 million related to unamortized issuance costs. The Company financed the retirement of the 2049 Notes using commercial paper borrowings.

Credit Facility

The Company maintains a Revolving Credit Agreement (Credit Facility). During the three months ended March 29, 2025 and March 30, 2024, there were no borrowings under the Credit Facility. As of March 29, 2025, available borrowing capacity totaled $997.0 million, net of $3.0 million of letters of credit outstanding under the Credit Facility. As of March 30, 2024, available borrowing capacity totaled $741.7 million, net of $8.3 million of letters of credit outstanding under the Credit Facility. Refer to Note 14 in the Notes to Consolidated Financial Statements in the 2024 Form 10-K for details regarding Brunswick's Credit Facility.

Commercial Paper

The Company maintains an unsecured commercial paper program (CP Program) pursuant to which the Company may issue short-term, unsecured commercial paper notes (CP Notes). During the three months ended March 29, 2025, borrowings under the CP Program totaled $435.9 million. As of March 29, 2025, the Company had $380.0 million of borrowings outstanding under the CP Program with a weighted average interest rate of 5.10%. During the three months ended March 29, 2025, the maximum amount utilized under the CP Program was $445.5 million. During the three months ended March 30, 2024, borrowings under the CP Program totaled $425.0 million, all of which were repaid during the period. During the three months ended March 30, 2024, the maximum amount utilized under the CP Program was $225.0 million. Refer to Note 14 in the Notes to Consolidated Financial Statements in the 2024 Form 10-K for details regarding Brunswick's CP Program.

Note 13 –Supplier Finance Program Obligations

As of March 29, 2025, December 31, 2024, and March 30, 2024, the Company had $9.0 million, $8.2 million and $14.8 million confirmed invoices under the supplier finance program, respectively, which were included in Accounts payable on the Condensed Consolidated Balance Sheets.