BC 10-K & 10-Q changes, risk factors and insider trading

In times of economic uncertainty or recession, consumers tend to have less discretionary income and defer significant spending on non-essential items, which may adversely affect our financial performance. Economic uncertainty caused by international conflicts,conflicts or tensions, the risk of inflation, and the macroeconomic environment may lead to unfavorable business outcomes. We continue to enhance our portfolio with new and/or expanded technologies, business models, services, and solutions that are less susceptible to economic cycles, but a portion of our business remains cyclical and sensitive to consumer spending on new engines, boats, and associated parts and accessories.

We sell products manufactured in the U.S. into certain international markets, including Europe, Canada, Latin America and Asia-Pacific in U.S. dollars. Demand for our products in these markets may be diminished by a strengtheningstrong U.S. dollar, or we may need to lower prices to remain competitive. Some of our competitors with cost positions based outside the U.S., including Asian-based outboard engine manufacturers and European-based large fiberglass boat manufacturers, may have an improved cost position due to a strengthening U.S. dollar, which could result in pricing pressures on our products. Although these factors have existed for several years, we do not believe they have had a material adverse effect on our competitive position to date.

SuccessfullyFailure managingto successfully manage our manufacturing operationsfootprint iscould critical toaffect our operating and financial results.

Instability, including, but not limited to, political events, civil unrest, andor an increase in criminal activity in locations where we maintain a significant presencepresence, could adversely impact our manufacturing and business operations. Decreased stability poses a risk of business interruption and delays in shipments of materials, components, and finished goods, as well as a risk of decreased local retail demand for our products.

In addition, political and economic uncertainty and shifts pose risks of volatility in other global markets, which could affect our operations and financial results. Changes in U.S.domestic policy regardingor foreign tradetrade, manufacturing, or manufacturingother policies may create negative sentiment about the U.S. among non-U.S. customers, employees, or prospective employees, which could adversely affect our business, sales, hiring, and employee retention. If we continue to expand our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks, which could materially impact international operations or the business as a whole.

We rely on third parties to supply raw materials used in the manufacturing process, including oil, aluminum, copper, steel, and resins, as well as product parts and components. The prices for these raw materials, parts, and components fluctuate depending on market conditions and, in some instances, commodity prices or trade policies, including tariffs. Substantial increases in the prices of raw materials, parts, and components would increase our operating costs, and could reduce our profitability if we are unable to recoup the increased costs through higher product prices orprices, improved operating efficiencies.efficiencies, or hedging programs. Similarly, if a critical supplier were to close its operations, cease manufacturing, or otherwise fail to deliver an essential component necessary to our manufacturing operations, that could detrimentally affect our ability to manufacture and sell our products, resulting in an interruption in business operations and/or a loss of sales.

•financial pressures on our suppliers due to global tariff regimes, a weakening economyeconomy, or unfavorable conditions in other end markets;

Changes in seasonal weather conditions can have a significant effect on our operating and financial results. Sales of our marine products are typically stronger just before and during spring and summer, and favorable weather during these months generally has a positive effect on consumer demand. Conversely, unseasonably cool weather, excessive rainfall, or drought conditions during these periods can reduce or change the timing of demand. Our revenues could be negatively affected if our sales were to fall below expected seasonal levels during these periods. Climate change could have an impact on longer-term natural weather trends, resulting in environmental changes including, but not limited to, increases in severe weather; changing sea levels; changes in sea, land, and air temperatures; poor water conditions; and reduced access to water, which could disrupt or negatively affect our business.

Hurricanes, floods, earthquakes, storms, wildfires, and catastrophic natural or environmental disasters, as well as acts of terrorismterrorism, violence, or civil unrest, could disrupt our distribution channel, operations, or supply chain and decrease consumer demand. If a catastrophic event takes place in one of our major markets, our sales could be diminished or our assets could be damaged. Additionally, if such an event occurs at or near our business locations, manufacturing facilities, or key supplier facilities, business operations and/or operating systems could be interrupted. We could be uniquely affected by weather-related catastrophic events, the severity of which may increase as a result of climate change, due to the location of certain of our boat facilities in coastal Florida, the size of the manufacturing operation in Fond du Lac, Wisconsin, and Freedom Boat ClubFBC locations on waterfronts.

We believe that our customers look for and expect quality, innovation, and advanced features when evaluating and making purchasing decisions about products and services in the marketplace. Our ability to remain competitive and meet our growth objectives may be adversely affected by difficulties or delays in product development, such as an inability to develop viable new products or customer solutions, gain market acceptance of new products, generate sufficient capital to fund new product development, or obtain adequate intellectual property protection for new products. Competitors may adopt new technologies and technological advancements, such as using artificial intelligence and machine learning to pursue new products, services, and approaches more quickly, successfully and effectively. To meet ever-changing consumer demands, timing of market entry, pricing of new products, and satisfying customers are all critical. As a result, we may not be able to introduce new products that are necessary to remain competitive in all markets that we serve. Furthermore, we must continue to meet or exceed customers' expectations regarding product quality, experiences, and after-sales service or our operating results could suffer.

The impact of actual or potential public health emergencies, epidemics, or pandemics on the Company, our suppliers, dealers, and customers, and the general economy could be wide-ranging and significant, depending on the nature of the issue, governmental actions taken in response, and the public reaction. The impact of such events could include employee illness, quarantines, cancellation of events and travel, business and school shutdowns, reduction in economic activity, and supply chain interruptions, which could cause significant disruptions to global economies and financial markets. In addition, these events could result in future significant volatility in demand, positively or negatively, for one or more of our products and have a negative effect on our business, financial condition, and results of operations.

Our ability to continue generating strong cash flow and profits depends partly on the sustained successful execution of our strategic plan and growth initiatives, including optimizing our business and product portfolio, continuing to successfully integrate acquisitions, and improving operating efficiency, and expanding into new adjacent markets.efficiency. To address risks associated with our plan and growth initiatives, we have established processes to regularly review, manage, and modify our plans, and we believe we have appropriate oversight to monitor initiatives and their impact. However, our strategic plan and growth initiatives may require significant investment and management attention, which could result in the diversion of these resources from the core business and other business issues and opportunities. Additionally, any strategic plan is subject to certain risks, including market conditions, customer acceptance, competition, the ability to manufacture products on schedule and to specification, the supply chain, and/or the ability to attract and retain qualified management and other personnel. There is no assurance that we will be able to develop and successfully implement our strategic plan and growth initiatives in a manner that fully achieves our strategic objectives.

The talents and efforts of our employees, particularly key managers, are vital to our success. Our management team has significant industry experience and would be difficult to replace. We may be unable to retain them or to attract other highly qualified employees. Failure to hire, develop, and retain highly qualified and diverse employee talent and to develop and implement an adequate succession plan for the management team could disrupt our operations and adversely affect our business and our future success. We perform an annual review of management succession plans with the Board of Directors, including reviewing executive officer and other important positions to substantially mitigate the risk associated with key contributor transitions, but we cannot ensure that all transitions will be implemented successfully.

If demand for recreational boats declines with a weakening economy, if demand for our products declinesdeclines, or if new product introductions are expected to replace existing products, our dealers, retailers, and other distributors could decide to reduce the number of units they hold. In the future, customers may have fewer hybrid or flexible work opportunities, which could reduce their available recreational time or willingness to purchase our products. These factors and recent economic headwinds could weaken demand for marine products and result in sustained lower dealer stocking levels. These actions could result in wholesale sales reductions in excess of retail sales reductions and would likely result in lower production levels of certain products, potentially causing lower rates of absorption of fixed costs in our manufacturing facilities and lower margins. While we have processes in place to help manage dealer inventories at appropriate levels, potential inventory reductions remain a risk to our future sales and results of operations.

Our franchisees are an integral part of Freedomthe Boat ClubFBC business and its growth strategies. We may be unable to successfully implement our growth strategies if our franchisees do not participate in the implementation of those strategies or if we are unable to attract a sufficient number of qualified franchisees. While our franchisees are required to comply with franchise and related agreements, our franchisees are independent and manage their boat clubs as independent businesses, responsible for day-to-day operations of their boat clubs. If these franchisees fail to maintain or act in accordance with applicable brand standards; experience service, safety, or other operational problems, including any data breach involving club member information; or project a brand image inconsistent with ours, our image and reputation could suffer, which in turn could hurt our business and operating results.

We manage our global business operations through a variety of information technology (IT) and operational technology (OT) systems which we continuallyregularly enhance to increase efficiency and security. We depend on these systems for commercial transactions, customer interactions, manufacturing, branding, employee tracking, and other applications. Some of the systems are based on legacy technology and operate with a minimal level of available support, and recent acquisitions using other systems have added to the complexity of our IT and OT infrastructure. New system implementations across the enterprise also pose risks of outages or disruptions, which could affect our suppliers, commercial operations, and customers. We continue to upgrade, streamline, and integrate these systems and have invested in strategies to prevent a failure or breach but, like those of other companies, our systems are susceptible to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events.

We exchange information with many trading partners across all aspects of our commercial operations through our IT systems. A breakdown, outage, malicious intrusion, breach, ransom attack, or other disruption of communications could result in erroneous or fraudulent transactions, disclosure of confidential information, loss of reputation and confidence, and may also result in legal claims or proceedings, penalties, and remediation costs. We have numerous e-commerce and e-marketing portals and our systems may contain personal information of customers or employees; therefore, we must continue to be diligent in protecting against malicious cyber attacks. We have been the target of attempted cyber attacks and other security threats and we may be subject to future breaches of our IT and OT systems. We have programs in place that are intended to detect, contain, and respond to data security incidents and that provide at least annual employee awareness training regarding phishing, malware, and other cyber risks. However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect, we may be unable to anticipate these techniques or implement adequate preventive measures. Moreover, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks. If our security measures are breached or fail, unauthorized persons may be able to obtain access to or acquire personal or other confidential data.data and/or disrupt our IT and OT systems. Depending on the nature of the information or systems compromised, we may also have obligations to notify consumers and/or employees about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. For example, we provided certain affected individuals credit monitoring as a result of the IT security incident in June 2023. This or future events could negatively affect our relationships with customers or trading partners, lead to potential claims against us, and damage our image and reputation.

We are subject to various data protection and privacy laws and regulations in the countries where we operate because we collect, store, process, share, and use personal information, and we rely on third parties that are not directly under our control to do so as well. For example, we are subject to the General Data Protection Regulation (GDPR) in the European Union (EU) and the California Consumer Privacy Act (CCPA). Although we have implemented plans to comply with these laws, GDPR,privacy CCPA,authorities and private litigants are active in pursuing investigations and litigation, and these and future laws and regulations could impose even greater compliance burdens and risks with respect to privacy and data security than prior laws.security. The EU (through the GDPR), all fifty U.S. states, and a growing number of legislative and regulatory bodies elsewhere in the world have adopted consumerdata breach notification requirements in the event of unauthorized access to or acquisition of certain types of personal information. These breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could cause us to incur substantial costs, require significant management time and attention, and increase negative publicity surrounding any incident that compromises personal information.

We believe that our brands, particularly including Mercury Marine, Boston Whaler, Lund, and Sea Ray, significantly contribute to our success, and that maintaining and enhancing these brands is important to expanding our customer base. A failure to adequately promote, protect, and strengthen our brands could adversely affect our business and results of operations. Further, in connection with the divestiture of the bowling and billiards businesses, we licensed certain trademarks and servicemarks,service marks, including use of the name "Brunswick," to the acquiring companies. Our reputation may be adversely affected by the purchasers' inappropriate use of the marks or of the name Brunswick, including potential negative publicity, loss of confidence, or other damage to our image due to this licensed use.

We recorded $322.5 million in impairment charges for Navico Group associated with an impairment of the Navico Group reporting unit's goodwill and trade names during the year ended December 31, 2025. As of December 31, 2024,2025, the balance of total goodwill and indefinite lived intangible assets for the enterprise was $1,270.3$976.4 million, which represents approximately 2218 percent of total assets. If the future operating performance of either the Company or individual operating segments is not sufficient, we could be required to record additional non-cash impairment charges. Impairment charges could substantially affect our reported earnings in the periods such charges are recorded. In addition, impairment charges could indicate a reduction in business value which could limit our ability to obtain adequate financing in the future.

Our manufacturing operations and the products we produce could result in product quality, warranty, personal injury, property damage, and other claims. The adoption of new technologies, such as artificial intelligence or autonomous products, may result in new or enhanced regulations, litigationlitigation, or liability. To manage these risks, we have established a global, enterprise-wide program charged with the responsibility for reviewing, addressing, and reporting on product integrity issues. Historically, the resolution of such claims has not had a materially adverse effect on our business, and we maintain what we believe to be adequate insurance coverage to mitigate a portion of these risks. However, we may experience material losses in the future, incur significant costs to defend claims or issue product recalls, experience claims in excess of our insurance coverage or that are not covered by insurance, or be subjected to fines or penalties. Our reputation may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products, and such claims could divert the efforts of our personnel, even if we are successful in defending them. We record accruals for known potential liabilities, but there is the possibility that actual losses may exceed these accruals and therefore negatively impact earnings.

Environmental restrictions, boat plant emission restrictions, and permitting and zoning requirements can limit production capacity, access to water for boating (or certain types of boats or propulsion) and marinas, and storage space. While future requirements, including any imposed on recreational boating, are not expected to be unduly restrictive, they may deter potential customers, thereby reducing our sales. Furthermore, regulations allowing the sale of fuel containing higher levels of ethanol for automobiles, which is not appropriate or intended for use in marine engines, may nonetheless result in increased warranty, service costs, customer dissatisfaction with products, and other claims against us if boaters mistakenly use this fuel in marine engines, causing damage to and the degradation of components in their marine engines. Many of our customers use our products for fishing and related recreational activities. Regulatory or commercial policies and practices impacting access to water, including availability of slip locations and/or the ability to transfer boats among different waterways, access to fisheries, or the ability to fish in some areas could negatively affect demand for our products. As we evolve our product electrification strategy, we are potentially subject to emerging regulations and requirements under the proposed European Union Battery Directive or other similar regulations regarding transportation, storage, handling, and use of batteries and the components used in battery manufacturing. These requirements, if adopted, could increase our costs, potentially reducing consumer demand for our products.

Our provision for income taxes and cash tax liability may be adversely impacted by changes in tax laws and interpretations in the U.S. or in other countries in which we operate. TheH.R. Inflation1 Reduction(the Act), enacted on July 4, 2025, included multiple changes to business tax and international tax provisions that apply to us. We continue to monitor the impact of the Act ofand 2022to (IRA) included various tax provisions, including a 15 percent minimum tax on global adjusted financial statement income. While we do not believeevaluate the IRAdifferent willelections that are available with respect to the timing of deductions. The Act did not have a material negative impact on the our business,financial itstatements for the year ended December 31, 2025. It is possible that future interpretations or additional tax law changes could have a material impact on the Company’sour tax rate. In addition, many non-U.S. jurisdictions are implementing local legislation based upon the Organization for Economic Co-operation and Development’s (OECD) base erosion and profit shifting project. TheseOn January 5, 2026, the OECD announced that the Inclusive Framework on Base Erosion and Profit Shifting agreed to a new package of administrative guidance for the global minimum tax rules. We do not expect this package (often referred to as the side-by-side agreement) will have a material impact on our tax provision, and we will continue to evaluate our obligations under these rules as local country legislation continues to evolve. Future changes could negatively impact our tax provision, cash flows, and/or tax-related balance sheet amounts, including our deferred tax asset values, and increase the complexity, burden, and cost of tax compliance.

We do not provide forward-looking guidance for certain financial measures on a GAAP basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts.effort. These items may include restructuring, exit and impairment costs, special tax items, acquisition-related costs, and certain other unusual adjustments.

(A) Special tax items during the year ended December 31, 2025 primarily relates to the discrete income tax benefit associated with goodwill impairment and 2024 tax return to provision adjustments. Special tax items during the year ended December 31, 2024 primarily relate to the discrete income tax expense recorded associated with an increase in the state valuation allowance.allowance and the discrete income tax benefit associated with goodwill impairment.

Net sales decreasedincreased 18.22.4 percent during 20242025 when compared with 2023.2024. The components of the consolidated net sales change were as follows:

Sales in 20242025 wereincreased belowcompared to the prior year asresulting from improved second-half market conditions and resulting stronger wholesale orders together with strong P&A and after market performance that helped overcome the impactimpacts of lowerthe wholesalechallenging orderingfirst-half patternsretail by dealers, OEMs and retailers, coupled with higher discounts in select segments, and unfavorable changes in foreign currency exchange rates, were only partially offset by annual price increases and well received new products.environment. Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.

Gross margin decreased 210100 basis points in 20242025 when compared with 20232024 driven by lowermaterial absorptioninflation fromincluding decreased production levelstariffs (90250 bps), materialpartially andoffset laborby inflationan increase in sales (60120 bps), sales-related drivers (60 bps), and foreignfavorable currency exchange-rate fluctuations (20 bps), partiallyand offsethigher by acquisitionsabsorption (2010 bps).

Selling, general and administrative expenses as a percentage of net sales increased 160 basis points during 20242025 when compared with the same prior year period, primarily due to lowerthe salesreinstatement of variable compensation (280194 bps), which was partially offset by costhigher control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensationsales (12034 bps). Research and development expense decreasedremained flat during 20242025 versus 2023.2024.

During 2024,2025, we recorded restructuring, exit and impairment charges of $121.7$353.1 million compared with $54.7$121.7 million in 2023.2024. TheRestructuring, Companyexit estimatesand impairment charges include $322.5 million and $85.0 million of Navico Group impairments in 2025 and 2024 respectively. We estimate that the restructuring actions executed in 20242025 will result in approximately $24.0$16.0 million of annualized cost savings. See Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details.

We recognized Equity earnings (loss) of $8.6$7.0 million and $(11.4)$8.6 million in 20242025 and 2023,2024, respectively.respectively, Thewhich primarywere driver of the loss in 2023 is the impairment charge takenmainly related to our investmentmarine inand TN-BCtechnology-related Holdingsjoint LLC.ventures. Refer to Note 1 – Significant Accounting Policies in the Notes to Consolidated Financial Statements for further information.

We recognized $(1.6) million and $9.0 million and $7.6 million in 20242025 and 2023,2024, respectively, in Other income(loss) (expense),income, net. Other income(loss) (expense),income, net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs as well as the gain on sale of one of our businesses in 2024.

Net interest expense increaseddecreased in 20242025 compared with 20232024 due to ana increasedecrease in average daily debt outstanding, which was influenceddriven by theearly timingextinguishment of debt. We recognized a gain on early extinguishment of debt issuances.related Weto alsothe recognizedtender offer slightly offset by a loss on early extinguishment of debt related to the2048 redemptionNotes ofand our 20272049 Notes. Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements.

We recognized an income tax provision of $54.0$0.2 million and $196.3$54.0 million in 20242025 and 2023,2024, respectively. TheFor decreasethe isyear ended December 31, 2025 the effective income tax rate differed from the statutory federal income tax rate of 21%, primarily due to lowerthe pretaximpact incomeof the goodwill and theintangible priorasset year intercompany sale of certain intellectual property rights.impairments. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 26.6(0.2) percent and 31.226.6 percent for 20242025 and 2023,2024, respectively. We have also evaluated the effects of Pillar Two legislation and concluded that the tax effects are not material to the financial statements. See Note 10 – Income Taxes in the Notes to Consolidated Financial Statements for a reconciliation of our effective tax rate and statutory Federal income tax rate.

Due to the factors described in the preceding paragraphs, Operating (loss) earnings, Net (loss) earnings from continuing operations, and Diluted (loss) earnings per common share from continuing operations decreased during 2024.2025. Diluted (loss) earnings per common share from continuing operations benefited from common stock repurchases in both years.

Propulsion segment's net sales decreasedincreased 5 percent in 20242025 versus prior year due to softerpricing marketactions conditionsand resulting in lowerstrong OEM production rates and engine orders and unfavorable changes in foreign currency exchange rates, partially offset by the impact of annual pricing and market share gains in outboard engines.orders. The components of the Propulsion segment's net sales change were as follows:

International sales were 3637 percent of the Propulsion segment's net sales in 2024.2025. International sales decreasedincreased 158 percent year-over-year on a GAAP basis and 148 percent on a constant currency basis.

Propulsion segment's operating earnings decreased versus the prior year, primarily due to the impact of lowerincremental tariffs and reinstatement of variable compensation slightly offset by increased sales and lowerhigher absorption from declines in production, partially offset by cost control measures.absorption.

Engine P&A segment's net sales decreasedincreased 4.9 percent in 20242025 versus the prior year asreflecting astrong resultboater ofparticipation softerand marketcontinued conditions.share gains in our distribution business line. The components of the Engine P&A segment's net sales change were as follows:

International sales were 3029 percent of the Engine P&A segment's net sales in 2024.2025. International sales increased slightly2 percent year-over-year on a GAAP basis and increased 1 percent on a constant currency basis.

Navico Group segment's net sales decreasedwere flat in 20242025 versus the prior year due to reduced sales to marine OEMs resulting from lower boat production levels to match retail ordering patterns and a weak RV manufacturing environment, partially offset by strong new product momentum.year. The components of the Navico Group segment's net sales change were as follows:

International sales were 4142 percent of the Navico Group segment's net sales in 2024.2025. International sales decreasedincreased 52 percent year-over-year on a GAAP and slight decrease on a constant currency basis.

Navico Group segment's operating earningsloss decreasedincreased versus the prior year primarily due to the impact of non-cash, intangible asset impairment charges andalong with the impact fromof lowertariffs sales,and partiallyreinstatement offsetof byvariable cost control measures.compensation.

Boat segment operating earnings decreased versus the prior year due to the lower volume, impact of the net sales declinestariffs, and lowerreinstatement absorptionof fromvariable reduced production, partially offset by pricing and cost control measures.compensation.

Corporate operating loss decreasedincreased compared with 20232024 driven by lowerhigher variable compensation costs alongslightly withoffset theby impact of both the IT security incident andlower restructuring charges incompared theto prior year.

The following table sets forth andata analysisfrom our Consolidated Statements of freeCash cash flowFlows for the years ended December 31, 20242025 and 20232024:

Net cash provided by operating activities of continuing operations in 2025 totaled $585.7 million versus $449.5 million in 2024. The primary drivers of Net cash provided by operating activities of continuing operations in 20242025 were net earnings, net of non-cash items, partially offset byand working capital. Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and Accrued expenses as presented in the Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Net inventory decreased $112.8$114.3 million primarily due to lower planned production. Accounts and notes receivable decreasedincreased $45.0$73.4 million primarily due to lowerincreased sales and timing of collections. Accounts payable decreased $144.2$26.1 million, primarily due to lower purchasing resulting from reduced production. Accrued expenses decreasedincreased $104.0$96.8 million, primarily driven by aan reductionincrease in accrued variable compensation.

Net cash used for investing activities was $168.9$141.6 million, which included $167.4$165.8 million of capital expenditures, $80.9 million of purchases of marketable securities and $31.8 million of cash paid for acquisitions, net of cash acquired, partially offset by $82.1 million of sales or maturities of marketable securities and $15.0$12.6 million of proceeds from sales of property, plant and equipment. Our capital spending was focused on investments in new products and technologies.

Net cash used for financing activities was $442.7$441.2 million, which included $613.2$412.6 million of payments of long-term debt including current maturities, $200.0$80.0 million of common stock repurchases, $112.3$112.6 million of cash dividends paid to common shareholders, and $87.4 million of payments of short-term debt, partially offset by $396.9 million of proceeds from issuances of long-term debt and $201.1$173.1 million of proceeds from issuances of short-term debt. Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2024.2025.

There were no borrowings under the Revolving Credit Agreement (Credit Facility) during 2024.2025. Available borrowing capacity under the Credit Facility as of December 31, 20242025 totaled $997.0$994.0 million, net of $3.0$6.0 million of letters of credit outstanding. During 2024,2025, the maximum amount utilized under our unsecured commercial paper program (CP Program) was $280.0 million$445.5 and as of December 31, 2024,2025, the Companywe had $115.0$290.0 million of borrowings outstanding under the CP Program.

The level of borrowing capacity under our Credit Facility and CP Program is limited by both a leverage and interest coverage test. These covenants also pertain to termination provisions included in our wholesale financing joint-venturejoint venture arrangements with Wells Fargo Commercial Distribution Finance. Based on our anticipated earnings generation throughout the year, we expect to maintain sufficient cushion against the existing debt covenants. As of December 31, 2024,2025, we were in compliance with the financial covenants in the Credit Facility and CP Program.

We anticipate executing a thoughtful capital strategy in 20252026 with planned debt reductions of $125approximately $160 million, capital expenditures at levels similar to 2024 of $160approximately $200 million, and a minimum of $80$50 million of share repurchases, which could increase in the event cash generation outpaces initial expectations.

(E) Other long-term liabilities primarily includesinclude long-term warranty contracts, future projected payments related to our nonqualified pension plans and deferred revenue.plans.

We recorded ana $305.8 million and $80.0 million impairment of the Navico Group reporting unit's goodwill during the year ended December 31, 2024. We did not record any goodwill impairments in 20232025 orand 2022.2024, respectively.

The costs of amortizable intangible assets are recognized over their expected useful lives, typically between three and fifteen years, using the straight-line method. Intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate long-lived assets. Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances indicate that it is more likely than not that an asset may be impaired. The impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount. An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset. TheWe Companyrecorded impairment charges of $16.7 million during the year ended December 31, 2025 related to various Navico trade names. We recorded impairment charges of $5.0 million during the year ended December 31, 2024 related to the Navico trade name. The CompanyWe recorded impairment charges of $16.6 million during the year ended December 31, 20232023, including a $13.0 million impairment of the Navico trade name. The Company recorded impairment charges of $17.4 million during the year ended December 31, 2022 related to capitalized software intangible assets that will not be placed into service.

Net sales increased 12.8%7.7% during the firstsecond quarter of 2026 compared with the firstsecond quarter of 2025. ThisSales increasegrowth reflected improvedsteady wholesaleOEM orders, continued strong P&A and retailaftermarket trends,performance continueddriven marketby sharehealthy gainsboating participation, pricing taken in propulsionprevious periods, and severalimproved boatmix. categories,Adjusted operating earnings and margins increased as the benefits of the higher sales, favorable mix, and strong OEMoperating demandexecution, forin propulsion,addition componentsto IEEPA refunds, more than offset inflationary pressures, increased variable compensation, incremental tariffs, and electronics,accelerated favorableproduct changesdevelopment in foreign currency exchange rates, pricing actions commencing in the second half of 2025, and solid boating participation driving aftermarket performance. For the third consecutive quarter, year-over-year net sales increased across all segments.investment. The Propulsion segment delivered significant sales growth resulting primarily from an improved market, stronghealthy OEM orders, wholesalesteady acceleration,market share, and continuedpricing globalactions sharetaken gains.in Therecent Enginequarters. P&A segment benefited from healthyStrong boater participation and continued distribution sharegains gains,drove which led tohigher sales improvementand comparedmargin tofor theEngine priorP&A year.segment. Navico Group segment reported sales growth over the prior year quarter as growth across all business lines was supported by improving OEM demand, steady aftermarket performance, and improved operational efficiency. Finally, the Boat segment sales grew overboth prior year driven by higher wholesale shipmentssales and stabilizedmargin, retailbenefiting conditions,from favorableincreased mix,focus on premium and core brands, pricing actions, operational efficiencies, and continued momentumgrowth in theFreedom BusinessBoat Acceleration portfolio.Club. Freedom Boat Club added four new locations, increased trips and improved same store sales. Our international net sales increased 2011 percent on a GAAP basis and increased 117 percent on a constant currency basis in the firstsecond quarter compared with the prior year.quarter.

Operating earnings in the firstsecond quarter of 2026 were $50.3$129.4 million and $82.6$150.1 million on a GAAP and asAs adjustedAdjusted basis, respectively. This compares to operating earnings during the firstsecond quarter of 2025 of $56.3$103.3 million and $72.1$126.0 million on a GAAP and As Adjusted basis, respectively. Adjusted operating earnings increased due to increased sales, favorable mix, pricing, improved absorption andabsorption, disciplined cost management and IEEPA refunds more than offsetting the impact of incremental tariffs implemented after the first quarter of 2025.2025, variable compensation, and accelerated product development investment.

The following table sets forth certain amounts, ratios, and relationships calculated from the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended:

The following is a reconciliation of our non-GAAP measures, adjusted operating earnings and adjusted diluted earnings per common share from continuing operations for the three and six months ended AprilJuly 4, 2026 when compared with the same prior year comparative period:

Net sales increased 12.8%7.7% during the firstsecond quarter of 2026 compared with the same prior year period. The components of the consolidated net sales change were as follows:

Gross margin remainedincreased relatively260 consistentbps in the firstsecond quarter of 2026 when compared to the same prior year period, driven by increased sales (380 bps), IEEPA refunds (200 bps), lower absorption (40 bps), and favorable foreign currency exchange rate fluctuations (6030 bps) offset by material inflation (195 bps), labor costs (130 bps), impact of incremental tariffs (240 bps), labor costs (100 bps), and inflation (10065 bps).

Selling, general and administrative expense as a percentage of net sales increased 60110 basis points during the firstsecond quarter of 2026 compared with the same prior year period due to increased spending in support of growth and operational initiatives. Research and development expense increased in the firstsecond quarter of 2026 versus the same period in 2025 due to accelerated, strategic investments in new products.

We recorded Restructuring, exit and impairment charges of $4.8$7.0 million and $1.1$11.8 million during the three and six months ended AprilJuly 4, 20262026, respectively. We recorded Restructuring, exit and Marchimpairment 29,charges 2025of $8.0 million and $9.1 million during the three and six months ended June 28, 2025, respectively. First quarter 2026 actions are not expected to result in material annualized cost savings. Refer to Note 3 – Restructuring, Exit, and Impairment Activities in the Notes to Condensed Consolidated Financial Statements for further information.

We recorded Equity earnings of $1.6$1.7 million and $2.2$3.3 million in the three and six months ended AprilJuly 4, 2026 and March 29, 2025,2026, respectively, which were primarily related to our marine and technology-related joint ventures. This compares with Equity earnings of $1.7 million and $3.9 million in the three and six months ended June 28, 2025, respectively.

We recognized $(1.61.1) million and $1.3$(2.7) million of Other (expense) income,expense, net in the three and six months ended AprilJuly 4, 2026, respectively. This compares with $(1.4) million and March$(0.1) 29,million of Other expense, net in the three and six months ended June 28, 2025, respectively. Other (expense) income,expense, net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other post-retirement benefit costs.

Net interest expense decreased for the three and six months ended AprilJuly 4, 2026 when compared with the same prior year period.period due to lower average debt outstanding resulting from debt repayments. Refer to Note 1011 – Debt in the Notes to Condensed Consolidated Financial Statements and Note 14 – Debt in the Notes to Consolidated Financial Statements in the 2025 Form 10-K.

We recognized an Income tax (benefit) provision for the three and six months ended AprilJuly 4, 2026 of $5.9$(1.8) million and $4.1 million compared to $7.9$15.7 million and $23.6 million for the three and six months ended MarchJune 29,28, 2025.2025, respectively. The effective tax rate, which is calculated as the Income tax provision as a percentage of Earnings before income taxes, was 21.9%(1.7)% and 28.1%3.1% compared to 20.8% and 22.8% for the three and six months ended AprilJuly 4, 2026 and MarchJune 29,28, 2025, respectively. The three and six months ended July 4, 2026 includes the discrete impact of a state tax law change that extends the carryforward period for R&D tax credits, which resulted in the reversal of a previously recognized valuation allowance position. This resulted in a $24.6 million benefit recorded in Income tax (benefit) provision.

Due to the factors described in the preceding paragraphs, Net earnings from continuing operations and Diluted earnings per common share from continuing operations increased during the three and six months ended AprilJuly 4, 2026 compared with the same prior year period.

The following table sets forth Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Propulsion segment's net sales increased in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, primarily driven by anhealthy improvedOEM market,orders, globalsteady market share gains,and pricing,pricing favorableactions changestaken in foreignrecent currency exchange rates, and strong OEM demand heading into selling season.quarters.

International sales were 3940 percent of the Propulsion segment's net sales in the firstsecond quarter of 2026 and increased 2014 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 109 percent.

Propulsion segment's operating earnings in the firstsecond quarter of 2026 decreasedincreased when compared to the firstsecond quarter of 2025 due to plannedhigher sales, IEEPA tariff refunds, and favorable absorption offset elevated material and labor inflation, including variable compensation, incremental tariffs, and accelerated investments in new product development and incremental tariffs partially offset by benefits of higher sales and improved absorption.investment.

The following table sets forth Engine P&A segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Engine P&A segment's net sales increased in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, due to healthystrong early season boatingboater participation, continued market share gainsresulting in itsdemand distributionfor business,parts and favorableaccessories changestogether inwith foreignpast currencypricing exchange rates.actions.

International sales were 3027 percent of the Engine P&A segment's net sales in the firstsecond quarter of 2026 and increased 1610 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased 76 percent from the prior year.

Engine P&A segment's operating earnings in the firstsecond quarter of 2026 increased compared to the firstsecond quarter of 2025, due to higher sales from healthy boating participation and continuedIEEPA distributionrefunds, shareoffset gains.by variable compensation.

The following table sets forth Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Navico Group segment's net sales increased in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, as sales increased across all business lines, supported by improvingincreased OEM demand,demand steadyfrom aftermarketnew performance,products, pricing,share favorablegains, changessustained inboating foreignparticipation currencysupporting exchangethe rates,aftermarket, and operational efficiency.pricing.

International sales were 4441 percent of the Navico Group segment's net sales in the firstsecond quarter of 2026 and increased 181 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increaseddecreased 82 percent.

Navico Group segment's operating earnings in the firstsecond quarter of 2026 increased when compared to the firstsecond quarter of 2025 reflecting theIEEPA early benefits of product portfolio optimization, operational improvements,refunds and disciplinedhigher cost control actions, and operating leverage from increased sales, which more than offset incremental tariffs.sales.

The following table sets forth Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the three and six months ended:

Boat segment's net sales increased in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025, driven by highera wholesalebeneficial shipmentsmix matchingof stabilizedpremium retailmodels, conditions,improved favorablepricing mix,and pricing,discounting, favorableand changesgrowth in foreignFreedom currencyBoat exchange rates, and sales growth from the Business Acceleration portfolio.Club.

International sales were 2221 percent of the Boat segment's net sales in the firstsecond quarter of 2026 and increased 2116 percent from the prior year on a GAAP basis. On a constant currency basis, international sales increased by 14 percent.

Boat segment's operating earnings in the firstsecond quarter of 2026 decreasedincreased when compared to the firstsecond quarter of 2025, asreflecting higher sales were offset by costs associated withsales, the planned exitflow-through of our facilities in Reynosa, Mexico,pricing and Flaglerlower Beach,discounts, Florida.and operational efficiencies focused on cost removal.

The following table sets forth Corporate/Other results for the three and six months ended:

Corporate operating loss in the firstsecond quarter of 2026 increased compared to the firstsecond quarter of 2025 driven by increased spending in support of growth and operational initiatives.initiatives and increased variable compensation.

Recent accounting pronouncements that have been adopted during the threesix months ended AprilJuly 4, 2026, or will be adopted in future periods, are included in Note 1 – Significant Accounting Policies in the Notes to Condensed Consolidated Financial Statements.

Certain statements in this Quarterly Report on Form 10-Q are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections about Brunswick’s business and by their nature address matters that are, to different degrees, uncertain. Words such as “may,” “could,” “should,” “expect,” "anticipate," "project," "position," “intend,” “target,” “plan,” “seek,” “estimate,” “believe,” “predict,” “outlook,” "will," and similar expressions are intended to identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this report. These risks include, but are not limited to: the effect of adverse general economic conditions, including rising interest rates, and the amount of disposable income consumers have available for discretionary spending; changes to trade policy and tariffs, including retaliatory tariffs; fiscal and monetary policy changes; international business risks, geopolitical tensions or conflicts, sanctions, embargoes, or other regulations; adverse capital market conditions; changes in currency exchange rates; competitive pricing pressures; higher energy and fuel costs; managing our manufacturing footprint and operations; loss of key customers; international business risks, geopolitical tensions or conflicts, sanctions, embargoes, or other regulations; actual or anticipated increases in costs, disruptions of supply, or defects in raw materials, parts, or components we purchase from third parties; supplier manufacturing constraints, increased demand for shipping carriers, and transportation disruptions; adverse weather conditions, climate change events and other catastrophic event risks; our ability to develop new and innovative products and services at a competitive price; absorbing fixed costs in production; our ability to meet demand in a rapidly changing environment; public health emergencies or pandemics; our ability to successfully implement our strategic plan and growth initiatives; attracting and retaining skilled labor, implementing succession plans for key leadership and executing organizational and leadership changes; our ability to integrate acquisitions and the risk for associated disruption to our business; the risk that restructuring or strategic divestitures will not provide business benefits; our ability to identify and complete targeted acquisitions; maintaining effective distribution; dealer and customer ability to access adequate financing; inventory reductions by dealers, retailers, or independent boat builders; requirements for us to repurchase inventory; risks related to the Freedom Boat Club franchise business model; outages, breaches, or other cybersecurity events regarding our technology systems, which have affected and could further affect manufacturing and business operations and could result in lost or stolen information and associated remediation costs; our ability to protect our brands and intellectual property; an impairment to the value of goodwill and other assets; product liability, warranty, and other claims risks; legal, environmental, and other regulatory compliance, including increased costs, fines, and reputational risks; risks associated with joint ventures that do not operate solely for our benefit; changes in income tax legislation or enforcement; managing our share repurchases; and risks associated with certain divisive shareholder activist actions.

The following table sets forth data from our Condensed Consolidated Statements of Cash Flows for the threesix months ended:

The following table sets forth an analysis of free cash flow for the threesix months ended:

Net cash usedprovided forby operating activities of continuing operations in the threesix months ended AprilJuly 4, 2026 totaled $63.7$251.5 million compared to $13.4$309.1 million in the threesix months ended MarchJune 29,28, 2025. The increasedecrease is primarily due to operating results and changes in working capital. Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and Accrued expenses as presented in the Condensed Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Accounts and notes receivable increased $118.7$42.9 million, due to timing of collections, Accounts payable increased $96.3$93.0 million, due to timing of payments, inventory increased $81.8$48.1 million due to increased production, and Accrued expenses decreasedincreased $44.4$0.5 million, due to payment of approximately $80.0 million of the prior year's variable compensation expense which had been accrued as of December 31, 2025.million.

Net cash used for investing activities was $55.2$117.2 million and primarily related to $57.2$98.6 million of capital expenditures.expenditures and $28.2 million related to the acquisition of another Freedom Boat Club franchise operation and territory. Our capital spending was focused on investments in new products and technologies.

Net cash providedused byfor financing activities was $133.5$107.1 million and primarily related to proceeds from issuance of short-term debt, partially offset by dividends paid to common shareholders and common stock repurchases.

We view our highly liquid assets as of AprilJuly 4, 2026, December 31, 2025 and MarchJune 29,28, 2025 as:

The following table sets forth an analysis of total liquidity as of AprilJuly 4, 2026, December 31, 2025 and MarchJune 29,28, 2025:

Cash, cash equivalents and marketable securities totaled $278.6$288.9 million as of AprilJuly 4, 2026, an increase of $21.0$31.3 million from $257.6 million as of December 31, 2025, and a decrease of $8.9$27.6 million from $287.5$316.5 million as of MarchJune 29,28, 2025. Total debt as of AprilJuly 4, 2026, December 31, 2025 and MarchJune 29,28, 2025 was $2,296.4$2,100.9 million, $2,102.2 million and $2,484.1$2,274.1 million, respectively. Our debt-to-capitalization ratio was approximately 5956 percent as of AprilJuly 4, 2026 compared to 56 percent as of December 31, 2025 and 5754 percent as of MarchJune 29,28, 2025.