Skip to content
    BC
    Earnings call· Jun 2026(Q2 FY26)

    BRUNSWICK Q2 FY26 earnings call BC

    Jul 30, 2026 Source

    Executive summary

    Brunswick Q2 FY26 — Strong Sales Growth Across All Segments and Increased EPS

    Brunswick delivered a strong second quarter, exceeding financial expectations with sales growth across all segments and robust adjusted EPS, benefiting from pricing actions, new product traction, and strong operational execution. The company is navigating a turbulent external backdrop, including new tariffs and inflationary pressures, while strategically focusing on premium and core product lines and leveraging its recurring revenue businesses. Management remains confident in its full-year outlook, raising free cash flow guidance and maintaining a balanced view of risks and opportunities.

    Highlights

    5

    • Net sales increased 8% year-over-year to $1.6 billion, with growth across all segments for the fourth consecutive quarter.

    • Adjusted EPS rose 34% year-over-year to $1.56, significantly ahead of expectations even absent tariff benefits.

    • Free cash flow was robust at $278 million in the quarter.

    • Navico Group's adjusted operating margin expanded by 680 basis points, driven by higher revenue and tariff refunds.

    • Freedom Boat Club announced its 450th global network location, with member trips up a record 13% for the first half of the year.

    Concerns

    4

    • New Section 301 and Canadian tariffs are estimated to drive a net negative incremental $5 million impact in 2026.

    • Anticipated additional $0.15 of material inflation in H2 FY26, mostly impacting Mercury and Navico Group.

    • U.S. main powerboat segment retail sales were down approximately 4% year-to-date, impacted by sentiment, affordability, and weather.

    • Propulsion segment's adjusted operating margin was essentially flat year-over-year due to elevated material/labor inflation, product spend, and tariffs, despite increased sales.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $5.7 billion to $5.8 billion
    high materiality
    High
    Full-year 2026 Adjusted Operating Margins
    approximately 8%
    high materiality
    High
    Full-year 2026 Adjusted EPS
    $4.35 to $4.75
    high materiality
    High
    Full-year 2026 Free Cash Flow
    more than $400 million
    high materiality
    High
    Full-year 2026 Net IEFA Benefit
    a little more than $0.30
    medium materiality
    High
    Full-year 2026 Material Inflation Impact
    additional $0.15
    medium materiality
    High
    Full-year 2026 Tariff Changes Impact
    approximately $0.05
    medium materiality
    High
    Propulsion Segment Full-year Margin Growth
    more than 100 basis points
    medium materiality
    High
    Navico Group Full-year Adjusted Operating Margin Target
    in excess of 100 basis points
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Propulsion
    Driven by steady OEM demand, market share, and pricing actions. Elevated material/labor inflation, product spend, and tariffs offset margin gains. Expects >100 bps margin expansion for full year.
    U.S. Outboard rolling 12 share: down slightly to 46%International share gains: double-digit unit order increases YTDBrazil share increase: 600 bps since 2019U.S. outboard pipelines: down 7% YoY
    		up 8%8%—Adjusted operating earnings up, margins essentially flat
    Engine Parts and Accessories (P&A)
    Supported by healthy boating participation, product demand, and past pricing actions. Improved profitability from product mix and leverage on higher sales.
    Products business growth: 16%Land and Sea rolling 12 distribution share: increased by 130 bps
    		up 9%9%—Adjusted operating earnings up 19%, adjusted operating margin up 200 bps
    Navico Group
    Strong performance across business lines, new products, OEM wins, aftermarket demand, operational improvements. Solidly on track for full-year target of >100 bps adjusted operating margin increase (ex-tariff refunds).
    Core operating margin expansion (ex-EPA): over 250 bps
    		up 7%7%—Adjusted operating earnings up 143%, adjusted operating margin expanded 680 bps
    Boat
    Benefited from premium models, improved pricing, lower discounts, and operational efficiencies. Expects continued strong margin expansion over the remainder of the year.
    Freedom Boat Club global network locations: 450thFreedom Boat Club member trips: up 13% for H1
    		up 5%5%—Adjusted operating earnings up 45%, margins up 120 bps

    Operational metrics

    20
    Net Sales Growth
    8%YoY
    Q2 FY26

    Net sales of $1.6 billion.

    Adjusted EPS
    $1.56up 34% YoY
    Q2 FY26

    Benefiting from underlying business drivers and recognized tariff refunds, partially offset by cost inflation, higher variable compensation, incremental tariffs and continued product investment.

    Adjusted EPS Beat vs. Guidance Midpoint
    $0.20
    Q2 FY26

    Net beat of a little less than $0.20 versus Q2 guidance midpoint of $1.15, due to outstanding business performance.

    Net IEFA Benefit
    $0.20
    Q2 FY26

    Slightly more than $0.20, representing gross IPA refunds accrued in Q2, netted against related earnings impact of enterprise-wide compensation plans.

    First Half Sales Growth
    10%YoY
    H1 FY26

    Reflecting prior Q2 factors and exceptionally strong Q1 results.

    First Half Adjusted Operating Earnings Growth
    18%YoY
    H1 FY26

    Over the prior year.

    First Half Adjusted EPS Growth
    32%YoY
    H1 FY26

    Over the prior year.

    Incremental Tariff Impact
    $40 million
    FY26

    Overall tariff impact is first half weighted.

    Gross IPA Refunds
    $60 million to $70 million
    total

    Total expected gross IPA refunds.

    IPA Refunds Recognized
    $30 million
    Q2 FY26

    Submitted and accepted refunds recognized in the quarter.

    Remaining Phase II IPA Refunds Expected
    $10 million
    H2 FY26

    Reflected in full year guidance, expected to be approved in H2.

    Section 301 and Canadian Tariffs Impact
    $5 million
    2026

    Net negative incremental 2026 impact.

    Product Development Spend
    $20 million to $25 million
    couple of quarters

    Spread across a couple of quarters, representing a lumpier time for engine program spend.

    Global and U.S. Outboard Wholesale Orders Growth
    over 10%YoY
    H1 FY26

    With very strong June order activity.

    U.S. Outboard Pipelines Down
    7%YoY
    Q2 FY26

    Engine pipelines remain lean.

    Land and Sea Distribution Share Increase
    130 bps
    rolling 12

    Distribution share increasing again.

    U.S. Main Powerboat Segment Retail Down
    4%
    YTD June

    Impacted by sentiment, affordability, and poor weather in some northern markets.

    Pipelines Down
    1,800 units
    Q2 FY26

    Global bulk pipelines down approximately 1,800 units for the year, lean and healthy.

    Freedom Boat Club Member Trips Growth
    13%
    H1 FY26

    Record increase for the first half of the year.

    Registered Units Growth
    6.5%
    past years

    7 million units out of 10 registered, grown from around 6.5% over the past years or so.

    Industry KPIs

    8
    MetricValueDetails
    EPS$1.56USD
    Revenue$1.6 billionUSD
    Inventorylean and fresh
    Market share46%%
    Operating marginapproximately 8%%
    Operating income EBITup stronglyUSD
    Tariff impact mitigation$60 million to $70 millionUSD
    Share buyback capital return$35 millionUSD

    Product announcements

    1
    ProductTypeDetails
    5 new engine platformsroadmap

    Deals & partnerships

    1
    Saks storeOEM supply agreement for Simrad Auto captain

    Navico Group finalized its first OEM supply agreement with Saks store for Simrad Auto captain.

    Risks & headwinds

    4
    Consumer sentiment negatively impacted by Middle East conflict and inflationOngoing

    Negatively impacting consumer sentiment, particularly amongst buyers of our valued products.

    Mitigation: Focus on premium and core brands; rationalization of value models.

    New Section 301 and Canadian tariffs2026, primarily H2

    Net negative incremental $5 million 2026 impact.

    Mitigation: Continue to adjust mitigation actions as the environment evolves.

    Additional material inflationH2 FY26

    Additional $0.15 EPS impact in H2 FY26.

    Mitigation: Implied by pricing actions and operational efficiencies.

    Softness in value product linesH1 FY26, ongoing

    U.S. main powerboat segment retail down ~4% YTD, with pressure on value product lines.

    Mitigation: Purposeful rationalization of value models and manufacturing footprint; focus on premium/core segments.

    What to watch in Q3 FY26

    5

    Full-year Adjusted EPS

    Next quarter (Q3 FY26 earnings call)
    Current$4.35-$4.75 (midpoint $4.55)
    TargetConfirmation or revision of guidance

    Why it matters

    Key indicator of overall financial performance and management's ability to navigate macro challenges🌐.

    Adjusted EPS of $4.35 to $4.75, up almost 40% at the midpoint.

    Q&A highlights

    5

    Clarification on the net impact of tariffs, refunds, and variable compensation on full-year EPS and operating margin guidance, specifically asking if the $0.30 EPS raise is offset by tariffs.

    Ryan Gwillim explained that tariffs paid in 2026 and EPA refunds are distinct. New tariffs (Section 301, Canadian) are a $5M hit in H2. Gross EPA refunds are $60M-$70M, but the net benefit (after variable comp) is what matters. $30M of Phase II refunds were accepted in Q2 (net $0.20 EPS benefit), with another $10M expected in H2 (net $0.10 EPS benefit). Phase IV refunds are not in 2026 guidance. The Q2 EPS beat of $0.20 was unrelated to tariffs. The full-year EPS guidance raise from $4.25 to $4.55 midpoint reflects the Q2 beat and partial net EPA benefit, offset by H2 inflation and new tariffs.

    “So that leaves the treatment of Phase II IPO and simply about $30 million of that, as you correctly mentioned, $30 million was accepted in Q2 and therefore, included the results and once netted for enterprise-wide variable comp impacts represented about a $0.20 benefit in the quarter.”

    asked by James Hardiman · answered by Ryan Gwillim

    2 min read5 chapters

    Detailed Narrative

    01

    Market Dynamics and Portfolio Resilience

    Brunswick's premium and core bias portfolio demonstrated resilience amidst a turbulent external backdrop, with first-half boat retail sales flat when adjusted for purposeful value model rationalization. The company continues to outperform the market, expanding its share of wallet and capturing new OEM wins with well-received new products. Dealer and OEM sentiment is stable but cautious, with wholesale order rates remaining fairly steady, and overall net sales increased 8% year-over-year.

    02

    Tariff Management and Financial Impact

    The company is actively monitoring and mitigating tariff impact🌐s, expecting total gross IPA refunds of $60 million to $70 million. Approximately $30 million of submitted and accepted refunds were recognized in Q2, with an additional $10 million from Phase II expected in H2. New Section 301 and Canadian tariffs are projected to add $5 million in net negative incremental impact for 2026, slightly elevating the total incremental tariff impact🌐 to approximately $40 million for the year.

    03

    Product Development and Innovation

    Brunswick earned a record 15 boating industry top product awards in the quarter, with 86 awards year-to-date, reflecting strong product leadership across 13 different brands. Five new engine platforms are on track, with four launching in the next two years, supported by ongoing product development investments of approximately $20 million to $25 million spread over a couple of quarters. The company is also pursuing growth opportunities in repower, government, and commercial markets.

    04

    Boating Participation and Recurring Revenue

    Boating participation remains very strong and continues to drive robust performance in parts and accessories aftermarket and subscription businesses. Freedom Boat Club, a key part of the business acceleration portfolio, recently announced its 450th global network location, with member trips increasing a record 13% for the first half of the year. Engine pipelines remain lean and fresh, positioning the company for wholesale growth with any future market improvement.

    05

    Segment-Specific Performance Drivers

    All segments delivered year-over-year sales growth for the fourth consecutive quarter. Propulsion saw strong OEM demand and international momentum, with double-digit unit order increases year-to-date internationally. Engine P&A benefited from healthy boating participation and pricing actions, achieving 16% growth in its higher-margin products business. Navico Group's growth was fueled by new products and OEM wins, and the Boat segment improved margins through a focus on premium brands and operational efficiencies.

    AI-generated summary of the company’s earnings call. Not investment advice.