Brunswick Corporation

Good morning and welcome to Brunswick Corporation's second 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 Foulkes, Brunswick's Chairman and CEO, and Ryan Gwillim, 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.

Brunswick delivered a strong second quarter despite the turbulent external backdrop with financial performance ahead of expectations and year-over-year sales growth across all reporting segments for the fourth consecutive quarter. Our premium and core buyers portfolio remained resilient and our first half boat retail sales were essentially flat when adjusted for the purposeful value model rationalization actions initiated last year. Marine OEM growth rates moderated somewhat from the exceptional first quarter growth, but remained very healthy and drove gains for Mercury Marine and Navico Group. Boating participation also remains very strong and continues to drive our recurring revenue parts and accessories aftermarket and subscription boating businesses. Boating engine pipelines continue to be lean and fresh with balanced channel dynamics. With global bulk pipelines down approximately 1,800 units for the year, we're well positioned for wholesale growth with any future market improvement. Our overall net sales of $1.6 billion increased 8% year-over-year with growth across all segments driven by pricing actions taken in recent periods, improved mix, new product traction, continued healthy OEM demand, and strong operational execution. Adjusted earnings per share of $1.56 increased 34% versus last year, benefiting from the same underlying business drivers, as well as recognized tariff refunds, partially offset by cost inflation, higher variable compensation, incremental tariffs, and continued product investment. Absent the net IEPA benefit, including its associated influence on variable compensation, Adjusted EPS was still significantly ahead of expectations, demonstrating the strength of our underlying business performance. All segments increased adjusted operating earnings and margin, with the exception of propulsion, which incurred additional tariffs and higher product development expenses as expected. Later, Ryan will discuss the overall financial impact of the IEPA refunds on our results and guidance for the year. Finally, we've repurchased $35 million of shares year-to-date and will retire $160 million or more of debt by year-end, underscoring our commitment to both maintaining an investment-grade balance sheet and returning capital to our shareholders. Turning now to external conditions, while fuel prices have clearly not dampened enthusiasm for boating participation, The prolonged conflict in the Middle East, combined with the impacts of inflation on affordability, are negatively impacting consumer sentiment, particularly amongst buyers of our valued products. We continue to closely monitor the tariff environment and successfully drive mitigation actions. We now expect total gross IEPA refunds of approximately $60 to $70 million. We recognized approximately $30 million of submitted and accepted refunds in the quarter, with the remaining expected Phase 2 refunds of approximately $10 million reflected in full-year guidance. The window for the balance of our refund submissions beyond Phase 2 is not yet open and not yet reflected in guidance. We're also monitoring the newly introduced Section 301 and Canadian tariffs, which we currently estimate will drive roughly $5 million of net negative incremental 2026 impact. And we'll continue to adjust our mitigation actions as the environment evolves. Dealer and OEM sentiment is stable but cautious, with wholesale order rates remaining fairly steady. And we continue to outperform the market, expanding our share of wallet and capturing new OEM wins with well received new products. Moving to segment performance, our sustained momentum across our businesses and product lines is evident from the fact that all segments delivered year-over-year sales growth for the fourth consecutive quarter. As discussed earlier, adjusted operating margin also expanded across the enterprise in the quarter, except in the propulsion segment. However, our incremental 2026 tariff payments are first-half biased. and we expect all segments will expand operating margin over the next two quarters. After a very strong first quarter, U.S. outboard engine industry retail units finished the first half slightly down versus prior year. Our propulsion business delivered another strong quarter with year-over-year sales growth driven by steady OEM demand, continued high market share and strong international momentum. First half global and U.S. outboard wholesale orders were up over 10%, with very strong June order activity. U.S. outboard rolling 12 share was down slightly to 46%, driven primarily by below 5 horsepower registration declines of volume retailers and a strong 2025 comp, with OEM share remaining robust. Internationally, Mercury is driving strong share gains with double-digit unit order increases year-to-date and rolling 12 outboard share up across most regions with significant gains in Asia and Latin America. Notably, in Brazil, we've increased share 600 basis points since 2019. Our five new engine platforms are on track with four launching in the next two years. and we're also pursuing growth opportunities in repower, government and commercial markets, which we'll share more about at our upcoming investor day. Engine pipelines remain lean, with U.S. output pipelines down 7% in the quarter versus prior year. Engine parts and accessories delivered another strong quarter, supported by healthy voting participation and resulting product demand, along with past pricing actions. Combined with continued distribution gains, this drove higher sales and the products and distribution businesses both contributed to improved profitability, underscoring the stability and attractive operating leverage of this recurring revenue business. Our second quarter sales were the highest since 2022 and up across all global regions, with land and sea rolling 12 distribution share increasing again by 130 basis points. The Engine P&A business and Navico Group continue to work together to exploit combined footprint opportunities. Navico Group continued its strong performance trajectory with sales growth across its business lines, supported by new products, multiple OEM wins, sustained aftermarket demand, and ongoing operational improvement actions, and Exclusive of the net IEPA impact, expanded its core operating margin by over 250 basis points versus prior year. We were also excited to finalize our first OEM supply agreement with SACSTOR for Simrad Auto Captain, with more expected to be finalized soon. Lastly, our boat segment grew both sales and margins, benefiting from the increased emphasis on premium and core brands, And we expect continued strong margin expansion over the remainder of the year, benefiting from mix, portfolio actions, and operating efficiencies. The latest SSI data for June year-to-date shows U.S. main powerboat segment retail down approximately 4%, impacted by sentiment, affordability, and poor weather in some northern markets. Overall, Brunswick U.S. internal retail is performing at similar levels, but with premium fiberglass and core product lines flat to prior year and pressure on value product lines as anticipated. When adjusted for our purposeful rationalization of value models, our first half U.S. retail was roughly flat versus last year. Pipelines are lean and healthy, ending down approximately 1800 units. The business acceleration portfolio continues to deliver growth and attractive margins, led by Freedom Boat Club. We recently announced our 450th global network location, and member trips were up a record 13% for the first half of the year. I'll now hand the call over to Ryan for more details on our financial performance.