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Brunswick (BC) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Consumer Discretionary· Apr 30, 2026

Source: earnings call transcript

Executive summary

Brunswick Corporation Q1 FY26 — Strong Start to Year with Market Outperformance

Brunswick delivered a strong Q1 FY26, exceeding expectations with significant sales and EPS growth, driven by market share gains and operational execution. The company outperformed a flat boat retail market, benefiting from lean inventories and strong OEM demand, while navigating dynamic geopolitical and tariff environments. Management remains confident in its full-year outlook, balancing strong performance with cautious macroeconomic considerations.

Highlights

5

  • Net sales increased 13% year-over-year to $1.4 billion, with growth across all segments.

  • Adjusted EPS increased 25% year-over-year to $0.70, driven by strong operating leverage.

  • Global and U.S. boat retail was approximately flat on a unit basis, outperforming the industry (SSI data showed U.S. main Powerboat retail down ~5% YTD).

  • Navico Group adjusted operating earnings increased 64% with adjusted operating margin expanding 280 basis points.

  • Boat Group adjusted operating earnings increased 63% with adjusted operating margin expanded 130 basis points.

Concerns

4

  • Propulsion adjusted operating earnings declined year-over-year due to planned accelerated investments in product development and incremental tariff impact.

  • Free cash flow was negative in Q1, consistent with seasonal patterns, and down year-over-year due to reinstated variable compensation.

  • Geopolitical volatility introduces new uncertainties, especially regarding consumer health outside the U.S. from a prolonged conflict in the Middle East.

  • Fuel prices have risen recently, with diesel prices impacting transportation costs, though generally remaining within historical bounds.

Guidance & targets

CategoryTargetConfidence
Adjusted EPS
$4.00-$4.50
high materiality
Medium
Full-year incremental net tariff impact
near the lower end of our original $35 million to $45 million estimate
medium materiality
High
Retail market environment
flat to slightly up
high materiality
Medium
Wholesale unit shipments (boat)
up mid-single digits
medium materiality
Medium
Wholesale unit shipments (engine)
up mid- to high single digits
medium materiality
Medium
Promotional spending improvement
about 40 basis points
low materiality
Medium
IEEPA tariff refunds
$50 million
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Propulsion
Sales increased significantly. Adjusted operating earnings declined due to planned accelerated investments in product development and incremental tariff impact. Pro forma adjusted operating leverage was north of 20% absent incremental tariffs, even with high single-digit million additional product development spend.
Mercury's global and U.S. outboard unit orders: increasing more than 15% over the prior year periodMercury outboard share at recent boat shows: 60% overall and 80% on the water share at Miami, 70% share at Palm BeachOverall R12 share: 47% (steady)Year-to-date retail share: up 200 basis pointsWholesale share: strong gains
—17%—Adjusted operating earnings declined year-over-year
Engine P&A
Delivered growth from its aftermarket high-margin recurring revenue portfolio. Driven by healthy early season boating participation and continued market share gains. Robust adjusted operating leverage at 27%.
U.S. distribution share (Land and See): increasing by 150 basis points
—14%—Adjusted operating earnings up 24%, adjusted operating margin expanded 140 bps
Navico Group
Transitioning from stability to growth, with sales up across all business lines. Supported by improving OEM demand, steady aftermarket performance, and operational efficiency. Benefits from product portfolio optimization, operational improvements, and disciplined cost control actions.
Adjusted operating leverage: 47%
—7%—Adjusted operating earnings increased 64%, adjusted operating margin expanded 280 bps
Boat Group
Sales driven by higher wholesale shipments matching stabilized retail conditions, favorable mix, and momentum in the business acceleration portfolio. Growth led by aluminum fish and pontoon brands. Healthy adjusted operating leverage of 25%.
Freedom Boat Club new locations: 4Freedom Boat Club member trips: increased by 20%Freedom Boat Club same-store sales: improved by 10%Boston Whaler and Sea Ray revenue increase at Palm Beach show: 40%
—6%—Adjusted operating earnings increased 63%, adjusted operating margin expanded 130 bps

BC operating KPIs by quarter

BC operating KPIs stated on its earnings calls, by fiscal quarter
KPIThis call Mar 2026 Q1 FY26 Jun 2026 Q2 FY26Change vs prior quarter
Stores Freedom Boat Club
446 Since the acquisition, we've also grown the location count from 170 locations to 446 global, corporate-owned and franchise locations, adding 4 more locations in the quarter. Source: earnings call transcript
450 We recently announced our 450th global network location and member trips were up a record 13% for the first half of the year. Source: earnings call transcript
+0.9%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

ProductTypeDetails
Simrad NSO 4 multifunction displaylaunch
B&G Zeus SRX multi-function displaylaunch
Lowrance Active Target 2XL fish finderlaunch
Sea Ray SLX 360launch
Boston Whaler Outrage 330 and 290 modelslaunch
Mercury's advanced keyless engine start systemlaunch
Mercury's innovative Boost over-the-air outboard performance upgradelaunch
Fliteboard's RACE ultra-high-performance modellaunch

Deals & partnerships

Freedom Boat Club franchise club (Boston and Cape Cod region) Acquisition of the largest remaining franchise club in the Freedom network.

Adds 21 locations to the corporate-owned total and a strategic maintenance operations center to drive synergies with other nearby corporate locations.

Risks & headwinds

Geopolitical Volatility current

Heightened geopolitical volatility

Mitigation:High exposure to insulated markets (U.S. and Canada, >70% of sales), balanced portfolio, lean channel inventories, and operational discipline.

Consumer Health (Value Segment) current

Potential impact on the health of our consumer, especially outside the U.S.

Mitigation:Monitoring trends in Australia, New Zealand, and other exposed markets; premium sales outperforming value; offering alternatives like Freedom Boat Club for value boaters.

Fuel Prices current

Fuel prices have risen recently, diesel prices have impacted boats and other transportation costs

Mitigation:Implementing surcharges; historical data shows low correlation between oil price spikes and boat sales/participation; oil-linked materials are 2% of COGS under long-term supply agreements; hedging programs for other key commodities like aluminum.

Tariff Environment Dynamics current

The tariff environment remains dynamic

Mitigation:Net impact of recent changes (IEEPA repeal/replacement, Section 232 amendments) is positive; full-year incremental net tariff impact expected at lower end of original estimate.

Boat Group Footprint Rationalization Costs FY26

Headwind to us from a cost basis this year

Mitigation:Process is on track; expected to flow through to more than $10 million of efficiencies next year.

What to watch in Q2 FY26

Adjusted EPS

Next quarter (Q2 FY26 results)
Current $0.70 (Q1 FY26)
Target Progress towards $4.00-$4.50 FY26 guidance range, especially considering Q2 tariff impact.

Why it matters

To assess if the company can achieve its full-year EPS guidance despite Q2 tariff headwinds and macroeconomic caution.

The result is materially unchanged guidance on the sales, margin and free cash flow lines, but an increase to adjusted EPS guidance to $4 to $4.50 reflecting the lower full year expected incremental net tariff impacts I just discussed as well as the first quarter overdrive while also factoring in some cautiousness given the current dynamic macroeconomic environment.

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Q&A highlights

Can you provide an update on Mercury's capacity utilization and ability to handle additional volumes, and a framework for incremental margin in that business, given market share gains and product cycle tailwinds?

Mercury is well-capacitized after prior investments and does not anticipate major additional investments in the next year. Operating leverage is typically >20%, approaching 30% in Q1 absent tariff impact, even with high single-digit million additional product development spend.

“We do not anticipate any major additional investments to be able to support volume certainly in the next year or so. So yes, we're very excited about that. As you heard from Ryan and I'll maybe turn over to him. Mercury is leveraging up very nicely. And absent the tariffs, I think we're -- but, Ryan, maybe you want to take over the leverage numbers?”

asked by Craig Kennison · answered by David Foulkes

2 min read 5 chapters

Detailed narrative

Market Outperformance and Inventory Management

Brunswick's global and U.S. boat retail was flat year-over-year on a unit basis in Q1 FY26, outperforming the industry which saw U.S. main Powerboat retail down approximately 5% year-to-date. This marks the third consecutive quarter of improved relative retail performance. The company maintained lean and healthy engine and boat pipelines, with global boat pipelines down 2,000 units year-over-year but flat sequentially, reflecting deliberate alignment of wholesale with retail demand.

Strategic Investments and Product Innovation

The company continues to invest in future high-horsepower outboard platforms and new mid-range models, reinforcing its long-term competitive advantage. Recent product launches include the Simrad NSO 4 and B&G Zeus SRX multi-function displays, the Lowrance Active Target 2XL fish finder (which received an innovation award), the all-new Sea Ray SLX 360 and Boston Whaler Outrage 330 and 290 models, Mercury's advanced keyless engine start system, and Fliteboard's RACE ultra-high-performance model. These innovations are driving market share gains and industry recognition.

Tariff Environment and Financial Impact

The tariff environment remains dynamic, with IEEPA tariffs repealed and replaced by Section 122, and Section 232 tariffs on steel and aluminum amended. The net impact of these changes is positive, leading the company to believe its full-year incremental net tariff impact will land near the lower end of its original $35 million to $45 million estimate. Additionally, refunds for previously paid IEEPA tariffs, estimated at $50 million, are not yet factored into the outlook and will be recognized as cash is received, expected over the balance of this year and next.

Freedom Boat Club Expansion and Synergies

Freedom Boat Club (FBC) continues its strong growth trajectory, adding 4 new locations in Q1 FY26, increasing member trips by 20%, and improving same-store sales by 10%. Earlier this month, FBC completed the acquisition of its largest remaining franchise club in the Boston and Cape Cod region, adding 21 corporate-owned locations and a strategic maintenance operations center. This acquisition is expected to be day-one accretive to earnings and contributes to the approximately $300 million in enterprise synergies generated since FBC's 2019 acquisition, growing its global footprint from 170 to 446 locations.

Consumer Trends and Geopolitical Volatility

Product demand and boating participation in the core U.S. market remain relatively unaffected by geopolitical events, though the health of the value consumer remains a focus, with premium sales continuing to outperform value. While expectations for incremental interest rate relief have moderated, the company's forecast does not rely on additional cuts. Fuel prices have risen recently but are generally within historical bounds, with no clearly discernible direct impact on retail or OEM demand in Brunswick's largest markets.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.