BRUNSWICK CORP Q2 FY26 Results

Brunswick delivered a strong second quarter despite a turbulent macroeconomic and geopolitical environment, with financial performance ahead of expectations and year-over-year sales growth across all reporting segments for the fourth consecutive quarter. Our balanced portfolio, continued healthy OEM demand, strong boating participation, improved mix, and disciplined operational execution drove robust sales and earnings growth, further supported by the recognition of certain IEEPA tariff refunds. Absent the net IEEPA benefit, including its associated influence on variable compensation, adjusted operating earnings increased substantially versus Q2 2025, and adjusted EPS remained significantly ahead of expectations, demonstrating the strength of our underlying operating performance. Certain parts of the U.S. and global new boat market remained pressured in the quarter, primarily in the value segments, as macro uncertainty and the prolonged conflict in Iran weighed on consumer sentiment. However, our premium- and core-biased portfolio remained resilient, and first-half U.S. retail was roughly flat when adjusted for the purposeful value-model rationalization actions initiated last year. Boat and engine pipelines remained lean and fresh, positioning Brunswick and its dealers well for future market improvement. Our Propulsion business delivered another strong quarter with year-over-year sales growth driven by steady OEM demand, continued high market share, and strong international momentum, particularly in Latin America and Asia. Mercury Marine remains well positioned with five new engine programs on track and additional opportunities in repower, government, and commercial markets. Engine Parts and Accessories delivered another strong quarter, supported by healthy boating participation and the resultant demand for products along with past pricing actions. The Products and Distribution businesses both contributed to improved profitability, underscoring the stability and attractive operating leverage of this recurring-revenue business. Navico Group continued its strong performance trajectory, with sales growth across its business lines supported by new products, OEM wins, sustained aftermarket demand, and ongoing operational improvement actions. The business also advanced strategic opportunities in unmanned surface vessels and continued to demonstrate meaningful progress toward its margin-improvement objectives, remaining an important contributor to Brunswick’s technology leadership. Our Boat segment grew both sales and earnings, benefiting from increased focus on premium and core brands, pricing actions, operational efficiencies, and continued growth in Freedom Boat Club. Freedom reached an important network milestone during the quarter announcing its 450th global network location and achieving a record 13 percent growth in first-half trips demonstrating the strength of boating participation and the appeal of shared-access boating. Finally, we remain on track to retire at least $160 million of debt this year and have repurchased $35 million of shares year-to-date, underscoring our commitment to both maintaining an investment grade balance sheet and returning capital to our shareholders. Our strong second quarter performance again highlighted the benefits of Brunswick’s balanced portfolio as we continue to manage through a dynamic external environment. As we move through the second half of 2026, we are very pleased with Brunswick’s ability to deliver strong performance in an uncertain environment. While prolonged geopolitical uncertainty and inflation are certainly weighing on consumer sentiment, we continue to see some encouraging indicators across the marine ecosystem. These factors reinforce our confidence that Brunswick is structurally well positioned, with healthy channel dynamics, strong brand and product momentum, and high exposure to healthy boating participation trends. The tariff environment remains fluid, but our mitigation actions and disciplined operational execution are helping offset external cost pressures. We now expect full-year incremental tariffs to be approximately $40 million, with the year-over-year impact heavily weighted to the first half. Our updated earnings outlook also reflects approximately $25 to $30 million of net IEEPA refunds expected to be recognized in 2026, inclusive of the resulting impact on enterprise-wide compensation. Together with continued business improvement actions, strong operating leverage, and mix benefits, we expect materially higher adjusted operating margin this year, while maintaining our commitment to keeping pipelines healthy and preserving balance-sheet strength. Using our best estimates related to these items and all other business impacts, the following is our updated full-year guidance: 1.Net sales: $5.7 billion to $5.8 billion; 2.Adjusted operating margin: ~8.0 percent; 3.Adjusted diluted EPS: $4.35 to $4.75; 4.Free cash flow: $400 million or more; and 5.Third quarter 2026 revenue of $1.4 billion to $1.5 billion, and adjusted diluted EPS of $1.20 to $1.40. This outlook reflects our increased visibility to the remainder of the year, strong margin improvement, the net benefit of recognized IEEPA refunds, and our confidence in Brunswick’s ability to deliver compelling results through a challenging macro environment while remaining well positioned to capture upside from any market improvement. Finally, Brunswick will host its 2026 Investor Day on Tuesday, August 11, 2026, at Mercury Marine headquarters in Fond du Lac, Wisconsin. The event will include a live Q&A with Brunswick leadership, facility tours, and on-water experiences showcasing the latest Brunswick innovations. A prerecorded video strategy presentation will be published on the Company’s website in advance of the event.