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Introduction & Market Context
Brunswick Corporation (NYSE:BC) reported its first quarter 2025 results on April 24, showing significant year-over-year declines in both sales and earnings, while management reduced full-year guidance primarily due to tariff pressures. The marine manufacturer’s stock, which closed at $45.27 on April 23, has been trading near its 52-week low of $41.00, reflecting ongoing challenges in the recreational marine market.
Despite the year-over-year declines, Brunswick highlighted sequential improvements from Q4 2024 and exceptional free cash flow generation during the quarter. The company’s results come amid a challenging environment for the marine industry, with U.S. boat retail down 5% and outboard engine retail down 6% in the first quarter.
Quarterly Performance Highlights
Brunswick reported Q1 2025 net sales of $1.2 billion, down 11% compared to the same period in 2024. Adjusted earnings per share fell sharply to $0.56, a 59% decrease year-over-year. However, the company generated a significant improvement in free cash flow, up $160 million compared to Q1 2024.
As shown in the following chart of quarterly financial results:
"We delivered Q1 results ahead of expectations and an outstanding free cash flow improvement of +$160M versus Q1 2024," noted Ryan Gwillim, Brunswick’s CFO. The company also reported $26 million in share repurchases during the quarter.
Segment Analysis
Brunswick’s performance varied across its four business segments, with all experiencing year-over-year declines but showing some positive sequential trends compared to the fourth quarter of 2024.
The Propulsion segment, which includes Mercury outboard and sterndrive engines, reported net sales of $487 million, down 16% year-over-year. Adjusted operating margin decreased to 9.5%, a 600 basis point decline from Q1 2024. Despite these challenges, management noted "solid performance exceeding expectations resulting in sequential improvement versus Q4 2024."
The Engine Parts & Accessories segment was the strongest performer, with sales of $255.3 million, down just 3% year-over-year. This segment actually improved its adjusted operating margin by 140 basis points to 15.3%, with adjusted operating earnings up 7% versus Q1 2024.
Navico Group, which includes marine electronics and systems, reported net sales of $208.2 million, a 1% decrease from Q1 2024. The company noted that "aftermarket business continues to deliver topline growth, while marine and RV OEM ordering remains under pressure."
The Boat segment experienced a 13% sales decline to $372.1 million. Within this segment, aluminum freshwater boats showed a 5% increase, while recreational fiberglass declined 6%, saltwater fishing fell 13%, and business acceleration dropped 25%. Operating margin decreased 500 basis points to 2.4%.
Tariff Impact & Guidance Revision
A significant focus of Brunswick’s presentation was the impact of tariffs on its business outlook. The company detailed potential incremental tariff exposure of $100-125 million for 2025, with approximately 70% of enterprise cost of goods sourced from the United States.
The following chart illustrates the factors affecting Brunswick’s revised EPS guidance:
Brunswick reduced its full-year 2025 adjusted EPS guidance from a previous midpoint of $4.25 to a new range of $2.50-$4.00 (midpoint $3.25). The primary factors for this reduction include volume impact (-$0.75) and tariffs impact (-$1.00), partially offset by cost reductions ($0.20) and currency benefits ($0.20).
The company’s updated guidance includes:
"The EPS range is driven by anticipated revenue of $5-$5.4B," management explained, adding that "potential volume impacts resulting from the tariff environment and general uncertainty in the macro economy could result in boat unit sales being slightly down versus 2024 with weakness primarily related to value product."
Market Conditions & Inventory
Brunswick provided insights into current market conditions, noting that U.S. boat industry retail was down 5% in Q1, with Brunswick slightly underperforming the market primarily due to weakness in value brands. The company’s premium boat segment performed relatively better, with flat year-over-year sales, while core products declined mid-single digits and value products fell approximately 20%.
The following chart shows U.S. industry retail units and pipeline inventory:
Pipeline inventory ended the quarter at 35.6 weeks on hand, representing 1,500 fewer units than Q1 2024. Management characterized boat and engine pipeline inventories as "healthy" heading into the primary retail season.
Strategic Initiatives & Product Launches
Despite the challenging environment, Brunswick continued to invest in new products and innovation. The company highlighted several key product launches from Q1 2025, including the Simrad NSS4 multi-function display, Lund 185 Impact GL, and the Flite Series 5 Fliteboard with Flite Jet 2 propulsion system.
The company’s product innovation strategy is illustrated in the following image:
Brunswick also emphasized its continued recognition in the industry, noting that it had already secured more than 40 awards in Q1 and was on track to surpass 100 enterprise awards again in 2025. These include recognition from Newsweek as one of the "Most Trustworthy Companies in America" and "Greatest Workplaces for Women."
Forward-Looking Statements
Looking ahead to Q2 2025, Brunswick expects revenue between $1.1 billion and $1.3 billion, with adjusted EPS of $0.80 to $1.10. For the full year, the company is targeting operating margins of 6.5% to 8.0% and free cash flow of at least $350 million.
Management remains focused on cost reduction initiatives and tariff mitigation strategies to offset some of the headwinds facing the business. The company plans to retire approximately $125 million in debt during 2025 and has allocated approximately $80 million for share repurchases.
Brunswick’s CEO Dave Foulkes emphasized the company’s continued focus on innovation and operational efficiency despite the challenging environment. With boat unit sales expected to be slightly down versus 2024, the company is prioritizing its premium and core segments while anticipating continued weakness in value products.
Full presentation:
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