Brunswick Corporation’s 2024 Financial Performance: Navigating Choppy Waters

Brunswick Corporation, a leading manufacturer of recreational boats, marine engines, and marine electronics, has released its financial results for the year 2024. The report paints a mixed picture, with the company facing headwinds in some of its key segments, but also showcasing resilience and strategic initiatives to navigate the challenges.

Consolidated Financial Performance

In 2024, Brunswick’s net sales decreased by 18.2% to $5,237.1 million, compared to $6,401.4 million in the previous year. This decline was primarily driven by lower wholesale ordering patterns by dealers, OEMs, and retailers, coupled with higher discounts in select segments and unfavorable changes in foreign currency exchange rates.

Gross margin decreased by 210 basis points to 25.8%, mainly due to lower production levels, material and labor inflation, and sales-related factors, partially offset by the impact of acquisitions. Selling, general, and administrative expenses as a percentage of net sales increased by 160 basis points, reflecting the impact of lower sales, partially offset by cost control measures.

The company recorded restructuring, exit, and impairment charges of $121.7 million in 2024, compared to $54.7 million in 2023, as it executed various restructuring actions to streamline operations and achieve cost savings. These actions are expected to result in approximately $24.0 million in annualized cost savings.

As a result of these factors, operating earnings decreased by 57.6% to $311.6 million, and net earnings from continuing operations declined by 65.5% to $149.3 million. Diluted earnings per common share from continuing operations decreased by 63.9% to $2.21.

Segment Performance

Brunswick’s operations are divided into four reportable segments: Propulsion, Engine Parts and Accessories (Engine P&A), Navico Group, and Boat.

Propulsion Segment The Propulsion segment’s net sales decreased by 25.0% in 2024, primarily due to softer market conditions resulting in lower OEM production rates and engine orders, as well as unfavorable changes in foreign currency exchange rates. These factors were partially offset by the impact of annual pricing and market share gains in outboard engines. Segment operating earnings decreased by 51.0%, mainly due to the impact of lower sales and lower production absorption.

Engine P&A Segment The Engine P&A segment’s net sales decreased by 3.3% in 2024, as a result of softer market conditions. However, segment operating earnings increased by 1.1%, driven by operational efficiencies from the completed transition to the Brownsburg, Indiana distribution center, annual pricing, and lower operating expenses, which more than offset the impact of lower volumes and higher material inflation.

Navico Group Segment The Navico Group segment’s net sales decreased by 12.5% in 2024, due to reduced sales to marine OEMs resulting from lower boat production levels and a weak RV manufacturing environment, partially offset by strong new product momentum. Segment operating earnings decreased significantly, primarily due to intangible asset impairment charges and the impact of lower sales, partially offset by cost control measures.

Boat Segment The Boat segment’s net sales decreased by 21.9% in 2024, resulting from lower wholesale orders as dealers continued to manage pipeline levels, along with higher levels of selective discounting, partially offset by the favorable impact of modest model-year pricing. Segment operating earnings decreased by 59.3%, due to the impact of net sales declines and lower production absorption, partially offset by pricing and cost control measures.

Cash Flow, Liquidity, and Capital Resources

In 2024, Brunswick generated $449.5 million in net cash from operating activities, a decrease from $745.2 million in the previous year, primarily due to lower net earnings. The company used $168.9 million for investing activities, including $167.4 million in capital expenditures, and $442.7 million for financing activities, which included $613.2 million in debt payments and $200.0 million in common stock repurchases.

As of December 31, 2024, Brunswick had $269.8 million in cash, cash equivalents, and marketable securities, and $997.0 million in available borrowing capacity under its lending facilities, resulting in total liquidity of $1,266.8 million. The company’s debt-to-capitalization ratio was 55%, up slightly from 54% in the previous year.

Looking ahead to 2025, Brunswick plans to execute a thoughtful capital strategy, including $125 million in debt reductions, $160 million in capital expenditures, and a minimum of $80 million in share repurchases, with the potential for increased repurchases if cash generation exceeds initial expectations.

Outlook and Strategic Initiatives

Despite the challenges faced in 2024, Brunswick remains focused on executing its strategic initiatives to drive long-term growth and profitability. The company is investing in new product development, expanding its presence in the growing recreational boating and marine electronics markets, and pursuing strategic acquisitions to enhance its capabilities and market position.

One key initiative is the continued integration and optimization of the Navico Group, which the company acquired in 2021. The Navico Group, a leading provider of marine electronics and digital solutions, has faced headwinds in 2024, but Brunswick remains confident in its long-term potential to drive innovation and growth in the marine electronics segment.

Additionally, Brunswick is leveraging its strong brand recognition and customer loyalty to navigate the current market conditions. The company is working closely with its dealer network to manage inventory levels and ensure a smooth transition as the industry adjusts to changing consumer demand.

Conclusion

Brunswick’s 2024 financial performance reflects the challenges faced by the broader recreational boating and marine industries, with softening demand and supply chain disruptions impacting the company’s top and bottom lines. However, the company’s diversified business model, strategic initiatives, and strong liquidity position provide a solid foundation for navigating these choppy waters.

As Brunswick looks to the future, it remains focused on driving innovation, optimizing its operations, and capitalizing on the long-term growth opportunities in the marine and recreational boating markets. With its experienced management team, strong brand portfolio, and commitment to delivering value to shareholders, the company is well-positioned to weather the current storm and emerge as an even stronger industry leader.