Brunswick Corporation

Good morning and welcome to Brunswick Corporation's first quarter 2026 earnings conference call. All participants will be in a listen-only mode until the question and answer period. Today's meeting will be recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Stephen Weiland, Senior Vice President and Deputy CFO, Brunswick Corporation.

Good morning and thank you for joining us. With me on the call this morning are David Feltz, Brunswick's Chairman and CEO, and Ryan Willem, Brunswick's CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call, our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For details on the factors to consider, please refer to our recent SEC filings and today's press release. All of these documents are available on our website at brunswick.com. During our presentation, we will be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in the appendix to this presentation and the reconciliation sections of the unaudited consolidated financial statements accompanying today's results. I will now turn the call over to Dave.

Thank you, Steve. We delivered an excellent start to the year. building on the market recovery in the second half of 2025, with first quarter results significantly ahead of expectations despite the dynamic geopolitical and tariff environment. Global and U.S. boat retail were approximately flat on a unit basis compared to the relatively strong first quarter of last year, and premium sales were up. Q1 was the third consecutive quarter of improved relative retail performance building confidence in our retail forecast for the year as we move into the core selling season in our largest markets. Strong OEM order patterns drove gains for Mercury Marine and Nabico Group, while solid boating participation benefited our recurring revenue, parts and accessories, aftermarket, and subscription boating businesses. From an inventory perspective, boat and engine pipelines remain healthy, lean, and well aligned with demand. Global boat pipelines are down approximately 2,000 units versus last year and flat sequentially versus the end of 2025, reflecting our deliberate actions to closely match wholesale with retail. Our overall net sales of 1.5% 13% year-over-year with growth across all segments driven by continued market share gains, strong OEM demand, accelerated new product and technology introductions, and disciplined operational execution across the enterprise. Our adjusted earnings per share of 70 cents increased 25% versus last year with strong operating leverage from higher sales more than offsetting the impacts of the tariffs implemented after the first quarter of last year. We continue to execute our disciplined capital allocation strategy, repurchasing $20 million of shares year to date, and delivered our 14th consecutive annual dividend increase, underscoring our commitment to returning capital to shareholders while maintaining a strong balance sheet. In our core U.S. market, product demand and voting participation remain relatively unaffected by the conflict in the Middle East, although the health of the value consumer remains a focus. We have a relatively small direct exposure to Middle East markets, but are monitoring trends in Australia and New Zealand and other more exposed markets as oil supply tightens. Our high exposure to the most insulated markets, particularly the US and Canada, which account for more than 70% of total sales, balanced portfolio, lean channel inventories, and operational discipline position us strongly to effectively navigate the volatility. Turning to segment performance, for the third consecutive quarter, all segments delivered year-over-year sales growth. Operating margin expanded across the portfolio except for propulsion, which absorbed the majority of first quarter incremental tariffs. The strong performance reflected improving retail and wholesale trends, sustained voter participation, and disciplined operational execution across the organization. Propulsion sales increased significantly versus last year, with Mercury's global and U.S. outboard unit orders increasing more than 15% over the prior year period, and record Mercury outboard share at recent boat shows, including 60% overall and 80% on-the-water share at Miami and 70% share at Palm Beach, signaling the potential for further high-force bar share gains. Overall, our 12 share remains steady at 47%, with year-to-date retail share up 200 basis points, along with strong wholesale share gains. Our accelerated investments in future high-horsepower outboard platforms and all-new mid-range high-volume models will reinforce our long-term competitive advantage. Healthy voter participation and continued distribution gains drove higher sales and margin year over year in our Engine P&A business, with Land & Sea again increasing U.S. distribution share by 150 basis points. Navico Group delivered revenue growth and margin improvement, supported by new product launches and operational improvement actions. We introduced the Simrad NS04 and B&G Zeus SRX multifunction displays at the Miami Boat Show, received an Innovation Award for the Lowrance Active Target 2XL Fish Finder, and continue to execute Stimrad AutoCaptain implementation plans with a range of OEM customers. Finally, our boat group segment grew sales and margin as wholesale shipments aligned with stable retail. Boat show revenue increased year-over-year despite weather impacts at some upper Midwest and northern market events. At the Palm Beach Premium Saltwater Show, Boston Whaler and Sea Ray delivered high unit sales and a substantial 40% revenue increase versus last year. Freedom Boat Club added four new locations in the quarter, increased member trips by 20%, improved same-store sales by 10%, and earlier this month completed the acquisition of the largest remaining franchise club in the Freedom Network, which serves the Boston and Cape Cod regions. Moving on to external conditions, rate cuts enacted late in 2025 are a continuing tailwind for retail and floor plan financing as we enter the peak selling season. While expectations for incremental rate relief have moderated, our forecast does not rely on additional cuts. Fuel prices have risen recently due to geopolitical events, but generally remain within historical bounds. and we are not experiencing any clearly discernible direct impact on retail or OEM demand or on boating participation in our largest markets. The tariff environment remains dynamic, and Ryan will discuss the specific impact to our guidance later on the call. The tariff on Mercury Marine's Japanese competitors remains in place, representing a potential structural advantage for Brunswick. Refunds related to previously paid IEPA tariffs are not yet factored into our outlook. Current dealer sentiment is improved overall, but still cautious, supported by healthy and fresh inventories and lower pre-owned boat supply, which supports new boat demand. While incentives remain elevated versus historical norms, they improved approximately 100 basis points last year, and we are forecasting further modest improvement in 2026. Looking now at industry retail performance, the latest SSI data for March shows U.S. industry main powerboat retail down approximately 5% year to date. Against this backdrop, SSI reported that Brunswick outperformed the industry. Our global and U.S. internal retail unit sales were approximately flat year over year compared with the relatively strong first quarter of 2025 prior to the impact of tariffs. with premium and core again outperforming value. From a pipeline standpoint, conditions remain very healthy. Global boat pipelines are down approximately 2,000 units versus last year, but flat sequentially versus the fourth quarter and benefiting from wholesale to retail alignment consistent with our plan. In addition, our global boat order backlog at the end of the first quarter represented 71% of our second quarter wholesale forecast, up six percentage points from last year, providing improved near-term visibility. Turning to engines, U.S. outboard engine industry grew 6% in the first quarter, with mercury retail units up approximately 11%. With a similar dynamic to boats, U.S. outboard pipelines were down approximately 10% versus last year, but flat sequentially versus the fourth quarter, reflecting wholesale to retail matching. Overall, the combination of sustained share gains, disciplined pipeline management, and improving wholesale to retail alignment gives us confidence in our outlook for 2026 and supports our expectation for a flat to improving market as we enter the peak boating season. Finally, I want to address the impacts of recent oil price volatility, which has been a frequent topic in recent investor discussions. From the boat buyer or boater perspective, historically, there has not been a correlation between oil price spikes and boat sales or boating participation. A primary driver of this low correlation is that fuel costs represent a relatively small portion of total boat ownership expense. because on an annual basis, the typical recreational boat only uses about 20% to 30% of the fuel of a comparable passenger vehicle. From a boat group perspective, exposure to oil-linked materials is relatively small, representing a combined 2% of total cost of goods sold, and with the relevant materials being under long-term supply agreements. Our scale and sophistication also enable hedging programs for other key commodities, such as aluminum, further reducing exposure to spot price volatility. However, aluminum prices do remain elevated. Diesel prices have, however, impacted boat and other transportation costs, and we have implemented some surcharges. I'll now turn the call over to Ryan to discuss our first quarter financial performance and updated guidance.