Brunswick’s outlook revised to stable from positive by S&P

Investing.com -- S&P Global Ratings revised Brunswick Corp (NYSE:BC).’s outlook to stable from positive on Tuesday, citing prolonged elevated leverage and marine market weakness.

The credit rating agency affirmed the ’BBB-’ issuer credit rating on Brunswick, noting that strong cash flow generation, market share gains in engine and parts segments, resilient EBITDA margin, and tight marine dealer inventory management would likely offset negative impacts from tariff costs and a weak marine market.

S&P expects Brunswick to reduce its adjusted leverage in 2026. The company has maintained EBITDA margins in the low-teens percent range during the 12 months ended June 2025 despite several years of marine market weakness.

Brunswick’s dealer inventory management strategy has kept dealer floors lean during a multi-year weak retail boat market, helping generate strong free cash flow that has been used primarily to reduce net debt.

S&P’s base case incorporates adverse effects of incremental tariffs, particularly related to China, though inputs sourced from China represent less than 5% of Brunswick’s cost of goods sold. The agency also assumes modest decline in marine retail sales in 2025 compared to historically low levels in 2024.

Based on company guidance and S&P’s assumptions, Brunswick’s adjusted leverage is expected to be in the low-3x area in 2025, improving to the mid-2x area in 2026.

The company’s variable cost structure and planned cost reduction actions could enable it to improve adjusted EBITDA margin to the low- to mid-teens percent area in 2026, contingent on retail marine market recovery. For 2025, Brunswick estimates U.S. retail boat sales could exceed the lowest level since 2010.

Brunswick’s resilient performance partly reflects its diversification into less-cyclical products and categories. The company has expanded into parts and accessories through acquisitions including Navico and Freedom Boat Club, reducing revenue and profit volatility.

S&P could lower the rating if Brunswick’s EBITDA margin weakens materially or if leveraging transactions push adjusted debt to EBITDA above 3.25x. An upgrade could occur if the company sustains EBITDA margin in the mid-teens percent area and reduces adjusted leverage below 2.5x.

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