Brunswick (BC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $1,273.3M, down 20% year-over-year, with adjusted EPS of $1.17, down 52% from Q3 2023, and results aligned with expectations despite a challenging marine market.

• Recurring revenue businesses contributed nearly 70% of Q3 adjusted operating earnings, helping offset market headwinds.

• Mercury outboard engines gained 420 basis points of U.S. market share in Q3; Freedom Boat Club expanded with a key acquisition in South Florida and first Asian locations.

• Maintained tight inventory management and adjusted production to align with retail demand.

• Restructuring, exit, and impairment charges were $12.2M in Q3, with estimated annualized cost savings of $20M from 2024 actions.

Financial highlights

• Q3 2024 net sales: $1,273.3M (down 20.1% year-over-year); adjusted operating margin was 9.9%, down 450 bps; adjusted operating earnings were $125.9M, down 45.3%.

• Q3 2024 adjusted EPS was $1.17 (down 51.7%); year-to-date adjusted diluted EPS $4.31 (down 41%).

• Free cash flow for the nine months was $6.6M, with full-year conversion expected to exceed 80%.

• Gross margin held steady at approximately 27% YTD; operating expenses down over $50M versus 2023.

• Cash and marketable securities at quarter-end totaled $284.9M–$301.7M.

Outlook and guidance

• 2024 net sales expected between $5.1B and $5.2B; adjusted diluted EPS of approximately $4.50; free cash flow of about $250M.

• Full-year new boat retail unit sales expected to finish down ~10% versus prior year; wholesale production of boats and engines down more significantly.

• Q4 market conditions expected to remain unchanged; production to stay moderated to maintain inventory levels.

• 2025 anticipated as a growth year for EPS, with improvement expected in the second half.

• Capital expenditures for 2024 expected to be $165M–$200M; annual share repurchases revised to ~$165M–$200M.