Brunswick Q1 2025 results reflect uncertain market outlook
Brunswick Corporation today reported results for the first quarter of 2025. Consolidated net sales for Q1 2025 are $1,221.8m, representing a 10.5 per cent decline compared to the same period in 2024. GAAP diluted EPS from continuing operations was $0.30, while adjusted diluted EPS stood at $0.56.
“All of our businesses delivered a strong first quarter as the resilient composition of our portfolio, together with proactive pipeline management, well-received new products, the benefits of executed and ongoing structural cost reduction measures, and efficient execution resulted in first quarter financial performance ahead of expectations despite the challenging macro environment,” says Brunswick chairman and chief executive officer, David Foulkes.
Retail sales for core and premium boat brands were in line with expectations. However, weaker demand for entry-level products has led to internal discussions about streamlining offerings in that category.
The report reveals Freedom Boat Club continues to be considered as an alternative means of market participation. Early season boat show performance was flat year-on-year, and overall retail performance contributed to field inventory levels that are viewed as appropriate ahead of the main retail season.
Free cash flow for the quarter improved by $160m compared to Q1 2024, attributed to inventory and working capital initiatives, resulting in the second-highest first-quarter cash flow in over a decade. This allowed for share repurchases exceeding initial plans.
Sales and operating earnings in the propulsion segment rose sequentially from the fourth quarter of 2024, but remain below Q1 2024 levels. Mercury outboard engines gained 40 basis points of US retail share on a rolling twelve-month basis, with performance in April expected to be strong. Sales to US boat OEMs increased as customers raised production ahead of the retail season.
The engine parts and accessories segment reported lower sales, down 3 per cent year-on-year, mainly due to slightly reduced shipments. However, the distribution business recorded 2 per cent growth. The segment posted a 15 per cent operating margin, an increase of over 100 basis points compared to Q1 2024, supported by operational efficiency and reduced cost inflation.
Navico Group experienced flat sales versus the prior year and a decline in operating earnings. While aftermarket sales remained strong, lower OEM demand had a negative impact. The group recorded sequential sales growth compared to Q4 2024, with recent product launches gaining traction.
The boat segment saw a 13 per cent year-on-year decline in sales, reflecting cautious dealer ordering. Modest model-year price increases only partially offset this. Freedom Boat Club accounted for approximately 11 per cent of segment sales. Segment earnings fell in line with expectations, affected by lower sales and production volumes.
“Our first quarter results again demonstrated the resiliency of our portfolio, with our recurring revenue businesses and channels, including our Engine P&A business, Propulsion’s repower business, Freedom Boat Club and Navico Group’s aftermarket sales, contributing nearly 60 per cent of our first quarter adjusted operating earnings,” says Foulkes. “In addition, our businesses delivered strong cash flow and we completed $26 million in share repurchases in the quarter, maintaining our commitment to return value to shareholders.”
Brunswick ended the quarter with $305.5m in cash and marketable securities, an increase of $18.8m from the end of 2024. Net cash used for operating activities of continuing operations was $13.4m, including working capital impacts.
Net cash provided by investing and financing activities amounted to $42.9m. This figure includes $266.2m in short-term debt issuance, $126.1m in long-term debt repayments, $37.7m in capital expenditures, $28.2m in dividend payments and $25.6m in share repurchases.
Looking ahead, Brunswick forecasts full-year 2025 net sales of $5bn to $5.4bn and adjusted diluted EPS in the range of $2.50 to $4.00. Free cash flow is expected to exceed $350m. For the second quarter, the company expects net sales of $1.1bn to $1.3bn and adjusted diluted EPS between $0.80 and $1.10.
“As we enter the prime retail season in the US, we are keenly aware of the direct impact of tariffs on our business and the new uncertainties faced by our wholesale customers, channel partners, and the end-consumers who buy our products at retail around the world,” says Foulkes. “Although we cannot control the ever-changing conditions in which we do business, we can control our response and continue to push forward our strategic initiatives.
“In this regard, we plan to continue to: invest in new products and technologies, including many to be launched this year; drive differentiation and market share gains for our brands; work closely and dynamically with our channel partners to maintain healthy and appropriate boat, engine and parts pipelines and support them with appropriate incentive programs to stimulate demand; mitigate the direct tariff impact on our business; and maintain optionality through supply chain actions, including targeted onshoring.
“We are also evaluating opportunities to improve profitability and cash flow through rationalisation of our manufacturing footprint, incremental COGS and operating expense reductions, and ongoing capital management.”
Foulkes adds: “In these challenging conditions, our resilient, recurring revenue businesses and channels continue demonstrating their earnings and cash flow power, which is helping to mitigate the impacts of market conditions. That being said, there remains significant uncertainty related to our 2025 performance and guidance, primarily due to the uncertainties of trade policy, the direct and indirect impact of these uncertainties on our consumers, fluctuations in foreign exchange rates and the interest rate environment.”
