Brunswick (NYSE:BC) executives struck an upbeat tone on the company’s fourth-quarter and full-year 2025 earnings call, pointing to a strengthening boat market in the second half of the year, improved operating execution across businesses, and a sharp increase in free cash flow that supported debt reduction and shareholder returns.
Full-year results show return to growth and higher cash generation
Chairman and CEO David Foulkes said Brunswick finished 2025 “ahead of recent expectations,” with all businesses reporting sales and earnings growth in the fourth quarter. The company posted full-year net sales of $5.4 billion, up 2% year-over-year, which Foulkes described as the first year of net sales growth in three years. Adjusted EPS was $3.27, which management said reflected tariff headwinds that weighed heavily on the fourth quarter.
Fourth-quarter performance supported by wholesale recovery and pricing
Gwillim said fourth-quarter consolidated sales rose 16% versus the prior year, driven by improved market conditions, increased wholesale shipments, pricing actions earlier in the year, a lower discounting environment, and steady boating participation supporting parts, accessories, and aftermarket demand. Fourth-quarter earnings improved 41% year-over-year, as higher sales, better production absorption, and operational improvements more than offset incremental tariffs and the restatement of variable compensation.
Brunswick also reported $88 million of free cash flow in the fourth quarter. Gwillim noted this was down from an “unseasonably high” fourth quarter in 2024, reflecting a more normalized working capital environment and higher production levels.
Market conditions: retail stabilized, pipelines lean, rates easing
Foulkes said retail demand stabilized in the second half of 2025 following a challenging second quarter that was “primarily caused by tariff-induced economic uncertainty.” While the U.S. retail boat market ended the year down about 9% in units, Brunswick’s global retail boat unit sales were down 5%, with management attributing the shortfall primarily to weakness in value products. Dealer inventories were described as “very low,” with a high percentage of recent model-year product.
In response to a question about fourth-quarter retail performance, management said retail unit sales were essentially flat in the quarter, “within 10 units.” Foulkes added that premium and core categories—about 75% of Brunswick’s portfolio and roughly 90% of gross margin—remained strong, while value products showed some recovery.
Looking to 2026, management cited multiple tailwinds, including lower interest rates and strong early-season retail. The company noted the U.S. Federal Reserve cut rates by 75 basis points in late 2025, and management expects additional cuts in 2026. Foulkes said retail financing rates had declined to about 7.5% from 9%–10% at the peak, though still above pre-pandemic levels. He also said that, despite low seasonal volumes, dealers were up double digits so far in January.
Brunswick repeatedly emphasized lean channel inventory. Foulkes said global boat pipelines were down about 2,200 units from a year earlier and U.S. outboard pipelines were down about 10%. As of year-end, management said the global boat order backlog equaled 79% of the first-quarter wholesale forecast, up 13 percentage points from the prior year. In Q&A, management said it expects 2026 pipeline levels to be roughly flat to down by “a couple hundred units at most,” with a goal to more closely match wholesale and retail.
Segment highlights: propulsion momentum, Navico improvement, boat margins expand
In propulsion, Gwillim said sales rose 23% in the fourth quarter with double-digit growth across product categories, primarily due to strong OEM orders heading into the early 2026 retail season. Management said the segment delivered significant earnings and margin expansion on higher volume and improved absorption, even after tariffs and variable compensation impacts.
Foulkes highlighted Mercury’s market position, stating it remains the outboard market share leader in the U.S., Canada, and Europe. He said Mercury ended the year at about 47% U.S. retail outboard share and gained 70 basis points in the second half, with large gains in higher horsepower engines. Brunswick also pointed to accelerating wholesale share, noting Mercury’s wholesale share was up more than 400 basis points in the fourth quarter and 900 basis points in December versus the prior year.
The company also described a series of commercial developments, including more than 100 new or renewed OEM agreements in the last 12 months and recently announced exclusive agreements with Axopar, Saxdor, and De Antonio Yachts. In Q&A, Foulkes said Mercury has also been signing multi-year agreements in Europe, including five-year deals that he described as unusual for the industry. He added that Brunswick hired 60 new Mercury engineers in 2025 and has five new outboard programs underway.
In engine parts and accessories, Gwillim said fourth-quarter sales rose 15% and adjusted operating earnings increased 7%, with slightly lower margins due to mix, as distribution grew faster. Foulkes said Brunswick’s U.S. distribution business gained 210 basis points of share in 2025.
Navico Group posted a second consecutive quarter of sales growth, up 4% year-over-year, supported by OEM orders and steady aftermarket performance during the holiday selling season. Management said operational performance helped expand adjusted operating margin by 180 basis points. Foulkes also highlighted new connected solutions and the introduction of Simrad AutoCaptain, which Brunswick described as an example of integrated systems co-developed across Navico, Mercury Marine, and Brunswick Boat Group.
In boats, management said the business benefited from improved retail conditions in the quarter, with sales up 11% and adjusted operating margin expanding 290 basis points, aided by pricing actions and improved discounting levels. Foulkes said discounting improved about 100 basis points year-over-year in 2025. He also noted premium boat brand strength at the Fort Lauderdale Boat Show, where Brunswick delivered 15% overall revenue growth across premium brands versus the prior year’s show.
Freedom Boat Club continued to expand, ending 2025 with 442 global locations. Foulkes said member trips surpassed 640,000 for the year, up 5% versus 2024.
Tariffs, capital strategy, and 2026 outlook
Tariffs remained a key discussion point. Foulkes said Brunswick’s mitigation actions offset more than half of its gross dollar exposure, resulting in about $75 million of net incremental tariff impact in 2025. Management said it expects incremental tariff costs of approximately $35 million to $45 million in 2026, net of continued mitigation actions, because tariffs are expected to be in effect for the full year versus a partial year in 2025. In Q&A, management said a full year of IEEPA tariffs would represent about a $20 million to $25 million impact, though any timing or retroactivity would depend on outcomes.
Brunswick also outlined ongoing balance sheet actions. Foulkes said the company ended 2025 with $1.3 billion of liquidity, including full access to an undrawn revolving credit facility. He noted the company converted $300 million of long-term debt into commercial paper in December and expects actions initiated in late 2024 to reduce expected 2026 interest expense by about $40 million, including the benefits of at least $160 million in anticipated debt retirement during 2026.
For 2026, Brunswick guided to revenue of $5.6 billion to $5.8 billion, adjusted operating margin of 7.5% to 8%, and adjusted EPS of $3.80 to $4.40. Guidance assumes a flat to slightly up U.S. retail boat market, stable boating participation, and wholesale sales more closely matching retail. The company expects free cash flow in excess of $350 million, while also noting more than $100 million of cash impact tied to variable compensation earned in 2025 and paid in the first half of 2026.
For the first quarter, Brunswick projected adjusted EPS of $0.35 to $0.45, which management said would be burdened by a majority of the full-year incremental tariff costs and increased investments in key product programs early in the year.
About Brunswick (NYSE:BC)
Founded in 1845 by John Moses Brunswick, Brunswick Corporation is a global leader in recreation products. Headquartered in Mettawa, Illinois, the company has evolved from its origins as a billiard table manufacturer into a diversified supplier of leisure equipment, serving both consumer and commercial markets around the world.
Brunswick operates through two primary segments: Marine and Bowling & Billiards. In its Marine segment, the company designs, manufactures and distributes recreational boats, outboard engines and aftermarket parts under recognized brands such as Sea Ray, Bayliner and Mercury Marine.
