• Net Sales: Down 15% in Q4 2024 compared to Q4 2023.
• Adjusted Operating Margins: 4% in Q4 2024.
• Adjusted EPS: $0.24 for Q4 2024.
• Free Cash Flow: $278 million in Q4 2024, a record for any fourth quarter in Brunswick's history.
• Full Year Sales: Down 18% for 2024.
• Full Year Adjusted Operating Margins: 9.5% for 2024.
• Full Year Adjusted Diluted EPS: $4.57, down 48% for 2024.
• Free Cash Flow Conversion: 92% for the full year 2024.
• Share Repurchases: $200 million in 2024, representing approximately 2.5 million shares or 4% of the company.
• Propulsion Business Sales: Decreased 24% in 2024.
• US Engine Pipeline Reduction: Over 25,000 units in 2024.
• Boat Business Sales: Decreased 18% in Q4 2024.
• Freedom Boat Club Sales Contribution: Approximately 12% of the Boat segment sales.
• Cash on Hand: $287 million at the end of 2024.
• Capital Expenditures: $167 million in 2024.
• 2025 Guidance - Net Sales: Between $5.2 billion and $5.6 billion.
• 2025 Guidance - Adjusted Diluted EPS: Between $3.50 and $5.
• 2025 Guidance - Free Cash Flow: In excess of $350 million.

• Warning! GuruFocus has detected 4 Warning Sign with BC.

Release Date: January 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brunswick Corp (NYSE:BC) achieved significant cash generation in the fourth quarter of 2024, exceeding expectations.
• The company gained 110 basis points of US retail outboard engine market share during the year.
• Brunswick Corp (NYSE:BC) completed $200 million in share repurchases in 2024, demonstrating strong capital strategy execution.
• The Freedom Boat Club had another strong quarter, expanding its locations and achieving over 600,000 annual member trips.
• The company showcased innovative new products at the Consumer Electronics Show, generating excitement and positive momentum.

Negative Points

• Net sales in the fourth quarter were down 15% compared to the previous year due to lower production and wholesale ordering.
• The company anticipates an annualized impact of approximately $35 million in 2025 due to tariffs.
• Adjusted operating earnings and margins declined versus the fourth quarter of 2023 due to lower net sales and decreased production levels.
• The uncertain tariff environment and foreign exchange rate fluctuations pose potential headwinds for 2025.
• Discounting and promotion levels remain elevated, particularly on prior model year products, affecting profitability.

Q & A Highlights

Q: Can you help us unpack the $1.25 cost savings in the EPS bridge? Where are those savings coming from? A: David Foulkes, CEO: The savings come from several areas. We began generating run rate savings in 2024 by reducing our hourly and salaried staff. We will see a full year of these savings in 2025. Additionally, we have optimized our production lines and renegotiated cost reductions with suppliers, setting us up as a very efficient operation for 2025.

Q: Of the $1.25 cost savings, how much is from enacted measures versus future actions? How much is structural versus temporary? A: David Foulkes, CEO: It's probably about 50-50 between enacted and future measures. We have learned to operate more efficiently, and we are reluctant to add back fixed costs. We have ongoing projects that will yield benefits in 2025, including supply chain improvements and value engineering to reduce COGS.

Q: The guidance range is wide. What would lead to the low end versus the high end of the range? A: Ryan Gwillim, CFO: The high end would be achieved with a market that outperforms flat, improved FX rates, and no additional tariffs. The low end would result from a market decline, worsening FX rates, and potential new tariffs. The range reflects the uncertainty in the current environment.

Q: Is the plan to continue under-shipping the channel in the first half of the year? A: Ryan Gwillim, CFO: Yes, the plan is for wholesale to under-ship retail in the first half of the year, then moderate and flip in the second half. We took actions in the back half of 2024 to control inventory, resulting in historically low wholesale levels, setting us up for improvement in the second half of 2025.

Q: What is the outlook for industry growth in 2025, and how do interest rates factor into this? A: David Foulkes, CEO: We expect a flat market in the US, with potential for better performance. Boat loan rates have decreased from 9% to around 7.5%, which is a tailwind. The combination of lower rates, improved small business confidence, and promotions could drive market growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.