Good morning, and welcome to Brunswick Corporation second quarter 2024 earnings conference call. All participants will be in a listen-only mode until the question- and- answer period. Today's meeting will be recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Neha Clark, Senior Vice President, Enterprise Finance, Brunswick Corporation. Please go ahead. Good morning, and thank you for joining us. With me on the call this morning are Dave Foulkes, Brunswick CEO, and Ryan Gwillim, CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call, our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For details on these factors to consider, please refer to our recent SEC filings and today's press release. All of these documents are available on our website at brunswick.com. During our presentation, we will be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are prepared in the appendix to this presentation and the reconciliation sections of the unaudited, consolidated financial statements accompanying today's results. I will now turn the call over to Dave. Thanks, Neha, and good morning, everyone. With high interest rates continuing to pressure consumer budgets and suppress discretionary spending, the introduction of new model year products at the beginning of the important month of June did not catalyze boat purchases as we had anticipated, and our second quarter results were slightly below expectations. Without strong peak season momentum, the continued slower retail sales, combined with higher levels of discounting and carrying costs, have increased pressure on dealer and channel partner profit margins, resulting in ongoing conservative wholesale ordering patterns, even for new model year products. In turn, this is causing OEMs to maintain lower boat production rates through the main selling season, with impacts to Propulsion and Navico Group OEM orders. With slower new boat retail sales in the peak sales months, we now expect full year unit retail sales to be down approximately 10% versus our original forecast of flat. As a result of heightened demand stimulation efforts focused on clearing more aged field inventory, our remaining field inventory is very fresh, with approximately 85% of units being current. Our focus continues on leveraging our new products and adjusting production levels to maintain or gain share in key categories, while diligently managing field inventory levels to end the year with weeks on hand at appropriate levels and units below prior year. Despite sales and earnings below guidance, the resiliency of our portfolio is being demonstrated with our recurring revenue businesses and channels, including our Engine P&A business, Propulsion Repower business, Freedom Boat Club, and Navico Group's aftermarket sales, contributing more than 50% of our Q2 adjusted operating earnings. In addition, our businesses delivered strong cash flow, enabling $170 million to be deployed for share repurchases year-to-date and further solidifying our focus on returning value to shareholders. Turning to some highlights from our segments in the quarter. Despite our Propulsion business delivering lower sales and operating earnings versus the second quarter of 2023, year-to-date, we continue to gain share in outboard engines, with more than 48% overall share of the U.S. outboard market. In addition, Propulsion's controls, rigging and propeller product categories had a strong quarter, with operating margins ahead of the same period in 2023. Our Flite eFoil business also had its strongest ever sales month in June. With boating participation continuing to be very solid in our major global markets, our engine parts and accessories business had a strong quarter, with sales and operating earnings up versus the second quarter of 2023, and we completed the full transition of Engine P&A distribution to our new state-of-the-art facility in Brownsburg, Indiana. As anticipated, Navico Group had lower sales and operating earnings versus the second quarter of 2023 due to reduced marine OEM order rates and persistently slow RV orders, but continued to show stability, with sequential improvement in aftermarket sales and overall sales and earnings consistent with first quarter results. Finally, our boat business had a solid performance given market conditions, with sales and operating earnings below the prior year quarter, consistent with lower planned production levels. Freedom Boat Club continued to deliver steady membership sales growth, while adding two more flagship locations in Denmark and the U.K., and recording an impressive 200,000 member trips in the quarter. Expanding on the external environment, with the majority of the retail selling season behind us, it is evident that the 2024 U.S. marine retail market is underperforming versus our initial expectations due to the continuing high interest rate environment, and while there is now a higher probability of interest rate relief beginning in September, this will be after the main selling season and will likely have a minor impact on 2024 and be more of a potential tailwind for 2025. Dealer sentiment is sequentially improving. However, the slower pacing of wholesale orders continues as the weaker retail environment drives a desire for more conservative inventory levels. Discounting and promotion levels remain elevated, particularly on prior model year products to stimulate retail movement. Our investments in digital platforms continues to drive benefits across our brands, with close to 40% of boats and Freedom Boat Club membership sales in Q2 being digitally assisted. OEMs and channel partners continue to moderate production levels to adjust to the environment, and in the absence of external stimulus, we do not now foresee this pattern changing significantly through the remainder of the season. Despite these challenging conditions, we continue to see strong boating participation, supporting our resilient recurring revenue businesses. We continue to invest in and launch many exciting new products and technologies across all our businesses and product lines, with the intent to position us for market share gains and to ensure we have the freshest portfolio when the market returns to growth. Finally, the previously proposed North Atlantic right whale vessel speed restriction rule was delayed to November 2024 on the administration's most current regulatory agenda. Moving now to U.S. retail performance. We saw a weaker Q2 U.S. retail market than anticipated, with U.S. industry new boat unit sales in the quarter declining significantly versus the second quarter of 2023, driven particularly by a weaker June. U.S. outboard engine industry retail units declined 6% in the second quarter versus prior year. As mentioned, Mercury Marine U.S. overall year-to-date outboard market share is holding at around 48%, up slightly from 2023, and our share of 350 horsepower and above engines exceeds 70%. As customer OEMs modulate production, which in some cases requires extended manufacturing shutdown periods, we expect market share data across engine and boat brands may be more noisy than normal for the remainder of the year, although we anticipate gaining additional share in some areas. During the quarter, we continued to diligently monitor pipeline levels, and we ended the quarter with 33 weeks on hand and 11,500 units in the U.S. pipeline, slightly above prior year. In order to manage year-end pipelines on a full year basis, we currently plan to wholesale around 1,500 fewer units than internal retail unit sales, which represents approximately a 7% reduction in ending inventory versus prior year. Before I turn it over to Ryan, I wanted to quickly walk through the components of our updated adjusted EPS guidance of between $5 and $5.50 per share. As you can see, just about all of the anticipated decline from our view in April is related to the softer market conditions that have persisted through the main retail selling season and the resulting channel dynamics we believe will be, we will experience for the remainder of 2024. The most significant change since April is the combined impact of the weaker market and resulting lower wholesale sales in an environment where we anticipate pipeline inventories to be flatter down across all our businesses. We plan to wholesale several thousand fewer boats this year than originally planned, and despite continuing to take market share, Mercury will correspondingly ship fewer engines to OEM partners, who have also lowered production to be consistent with demand. The next two factors are directly related to the slower market conditions. First, all our businesses are experiencing lower absorption and slightly higher manufacturing costs due to the lower production levels. Second, we've continued to use promotions and discounting to drive retail sales and to keep our inventory as fresh as possible. Offsetting these factors is our combined focus on driving down controllable operating expenses. We anticipate ending the year with OpEx down almost 10% from initially planned levels, while still protecting spending on key growth initiatives and projects to advance our strategic objectives. Despite this year not unfolding as we'd hoped and anticipated, we continue to make prudent decisions and expect to finish 2024 in a strong balanced position while preparing to fully capture the upside when the market returns to growth. I'll now turn the call over to Ryan to provide additional comments on our financial performance and outlook. Thanks, Dave, and good morning, everyone. Brunswick's second quarter results were slightly below expectations, but remained resilient despite a challenging macroeconomic environment and much softer U.S. retail marine market than anticipated. Versus the second quarter of 2023, net sales in the quarter were down 15%, with adjusted operating margins of 12.5%, resulting in an adjusted EPS of $1.80. Gross margins continued to remain resilient. Adjusted operating expenses were down $32 million versus Q2 of 2023, and free cash flow performed better than anticipated, with free cash flow conversion of approximately 140%. Second quarter sales were below prior year, as the impact of continued lower wholesale ordering by dealers and OEMs, coupled with higher discounts in certain business segments, was only partially offset by annual price increases and benefits from well-received new products. Adjusted operating earnings were down versus prior year as a result of the impact of lower net sales and higher manufacturing costs, primarily related to absorption from lower production, partially offset by significant cost control measures throughout the enterprise. On a year-to-date basis, sales are down 19%, resulting in an adjusted diluted EPS of $3.14, down 36%. The entire enterprise remains focused on reducing operating expenses, which are down $43 million versus first half of 2023 levels. Finally, year-to-date operating deleverage of 27% remains slightly higher than the midpoint of our assumptions in our downside scenarios, but has been negatively impacted by unique factors, including increased discounting, elevated depreciation expense, primarily related to recent capacity projects in propulsion, and lower absorption across the enterprise due to lower production volumes. Now we'll look at each reporting segment, starting with our propulsion business. Sales in our propulsion segment were down 21%, with lower production rates at OEM boat manufacturers resulting in fewer engine orders in the quarter, while repower shipments were slightly up versus Q2 2023. The high-margin controls, riggings, and props business had slightly lower sales, but higher adjusted operating margins than prior quarter, led by a strong aftermarket performance. Adjusted operating margins were below prior year, primarily due to the impact of lower net sales and higher manufacturing costs, including absorption for lower production, partly offset by the lapping of prior year unfavorable capitalized inventory variances and accelerated cost control measures. Our aftermarket-led engine parts and accessories business had a strong quarter, with sales, margins, and operating earnings up versus second quarter of 2023. With the transition to the Brownsburg, Indiana, distribution facility now complete, this business was able to service product to customers around the globe, leading to year-over-year sales increases in both the U.S. and international markets. Navico Group reported a sales decrease of 8%, driven primarily by reduced sales to marine OEMs as they balanced production levels to match retail ordering patterns, partially offset by strong new product momentum, and while slow, some improvement in RV sales trends. Segment adjusted operating earnings decreased as the impact from lower sales and increased discount activity was only partially offset by lower operating expenses. Finally, our boat business delivered steady results despite planned softer wholesale orders, as its channel partners continued to order cautiously, partially offset by the favorable impact of modest model year pricing and share gains. The segment delivered adjusted operating margins within expectations, as the impact of the net sales declines and lower absorption from the reduced production was partially offset by pricing and continued cost control. Freedom Boat Club, which is included in business acceleration, had another solid quarter, contributing approximately 10% of the boat segment's revenue during the quarter, while seeing very steady membership growth despite the macroeconomic uncertainty. We thought we would take a moment to remind investors how our shaping of the portfolio over the last 15 years has resulted in strikingly different financial performance, despite a very similar retail boat market. 2010 was the last time when approximately 140,000 boat units were retailed in the United States. That year, Brunswick had $3.4 billion of sales and lost more than $0.50 a share. Since that year, Brunswick has more than tripled the size of its aftermarket P&A business, divested non-core businesses, and gained more than 1,000 basis points of share in outboard engines. Our boat business is much healthier and leaner today than it was in 2010, as evidenced by this business being strongly profitable this year versus losing significant earnings in 2010 on similar global wholesale orders. Finally, we are keenly aware that our current guidance is slightly below the $6 downside case we laid out several years ago. Although we'd argue that we're still well within a reasonable margin of error for this type of exercise, the main components impacting the guidance are the reset of our P&A businesses after the post-COVID restocking and more cautious wholesale ordering patterns in all of our businesses, despite elevated discount and promotional activity, which more than offset the better deleverage in our boat business, larger market share gains by Mercury, and benefits from cost efforts and higher share repurchases during the period. With the majority of the retail selling season behind us, it is evident that the 2024 U.S. marine retail market is underperforming in peak season versus our initial expectations and is likely to end the year at unit levels similar to 2010. The macroeconomic environment remains uncertain, and while there is now a higher probability of interest rate relief beginning in September, this would occur after the main selling season and will likely have an immaterial impact on our 2024 results, but potentially provide a tailwind for 2025. In this environment, our OEM customers and channel partners continue to order cautiously, and we do not foresee this pattern changing significantly through the remainder of this season. In these challenging conditions, our resilient, recurring revenue businesses and channels, including our engine parts and accessories, Freedom Boat Club, and the aftermarket repower sales of Propulsion and Navico Group, are fully demonstrating their earnings and cash flow power. Through the balance of the year, we will continue to launch many exciting new products to support future share gains, while focusing on delivering year-end inventory levels in line with historical norms, executing our strategic plan, investing in our long-term growth initiatives, and expect to deliver resilient EPS and cash flow. The result is the following updated guidance to match these market realities, including net sales of between $5.2 billion and $5.4 billion, and Adjusted Diluted EPS in the range of $5-$5.50, while keeping Free Cash Flow guidance in excess of $350 million. Please see the appendix for additional guidance regarding anticipated segment metrics. I will wrap up the financial update by sharing certain updated PNL, cash flow, and other capital strategy assumptions for the full year, with only two items that have materially changed since our April call. First, we continue to moderate our capital expenditure spending for the year and now anticipate $175 million of CapEx spending for the year. This amount remains far in excess of maintenance capital levels and still allows our businesses to continue with their key growth initiatives. Second, furthering our balanced and flexible approach to our capital strategy, we have revised our plan to repurchase between $200 million and $220 million of shares in 2024, consistent with our initial assumptions for the year and have completed $170 million through the second quarter. We plan to spend around $20 million each quarter going forward on share repurchases, balancing repurchases and debt reduction to gradually achieve our desired net leverage targets. I will now pass the call back over to Dave for concluding remarks. I'm excited to close our prepared remarks by highlighting some recently launched new products and other exciting developments. Flite continues to expand its product line with the introduction of the Ultra L2 eFoil, a lightweight and slim board designed for high maneuverability. During the quarter, we opened the order book for the award-winning Mercury Avator 75e and 110e electric outboards. The most powerful engines in the Avator family are well suited for powering a variety of vessels, including pontoons, runabouts, and rigid inflatables. Among 80 new or updated Brunswick Boat models launched so far in 2024, the all-new Sea Ray SPX 190 and SPX 190 outboard models, featuring the new Sea Ray design language and many class-leading features, were introduced. Navico Group attended the world's largest fishing show, ICAST, and showcased several exciting new products from the Simrad and Lowrance brands, including the innovative new Recon electric steer trolling motor, which has been developed for both freshwater and saltwater anglers and features a unique joystick remote. In addition, the Lowrance brand also launched Eagle Eye, a highly accessible all-in-one live sonar solution, combining CHIRP and DownScan in one transducer, along with detailed C-MAP charting. In the quarter, Brunswick Brands won 11 top product awards from Boating Industry Magazine for the second consecutive year, and not to be outdone, Freedom Boat Club continued to expand geographically, with the recently announced additional flagship locations in Copenhagen and near London. That's the end of our prepared remarks. We'll now open the line for questions. Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we request you to restrict to one question and one follow-up question per participant. Our first question comes from the line of Fred Wightman with Wolfe Research. Please go ahead. Hey, guys. Thanks for the question. I'm wondering if you could just give us maybe a high-level update on how you're getting to that 10% retail number now. I know that there's been some disconnect between what you've seen with your internal registrations and what we've seen from SSI, but just given sort of the state of the macro and what you've seen from the past month or two, you know, what gives you confidence in the updated target? Yeah. Hi, Fred, it's Dave here. Yeah, so, yeah, as normal, over time, I think the, our internal retail projections and SSI will align, but as you know, it, it normally takes a few months to do that. Through Q1, we were kind of—our internal retail was about flat, slightly ahead of the market. And then through Q2, we saw a, a weaker May. It was down about eight, something, maybe 8%-10%, which we expected because of the, model year changeover that was happening in June. ... What we hoped and anticipated was that the new models in June would catalyze some increase in retail, but that didn't happen. And our June is down about 20%, essentially in line with SSI. The difference with SSI is some of the states that report late are some of the states that we have the highest market share in, particularly in the Midwest, for our freshwater products. So we're pretty aligned with what's going on with SSI at the moment, with those caveats. So, you know, could the, could it—the market really be down, you know, high singles? Yeah, it could be. But given, you know, our uncertainty level at the moment, I think, you know, 10% is reasonable. High singles to 10% is probably reasonable. July is better than June. Still down, maybe kind of mid to high singles at the moment, but that would still give us, you know, something in the high singles to 10 at the end of the year. By the time we get through July, we're through 75% of retail, so the ability to shift that endpoint much is, you know, diminished after the end of July. That makes sense. Thinking about the dealer inventory target for year-end, you guys talked about a 7% decline. I'm thinking at a high level, if you get there, and you hit that target, and you think about 2025, do you think 25 is sort of retail and wholesale in line? Do you think that there's restocking that needs to happen? How do you think about the setup? Well, I think we're approaching the year-end with a conservative view on inventory. And when I say conservative, I mean we're at the low end of what we think is gonna be necessary for 2025. And we can talk about 2025, you know, at some point, maybe during the call. But I feel as though across our various segments, with that level of inventory, we will have de-risked any scenario, any reasonable scenario for 2025. If you look across inventory levels across the various segments, they're very balanced everywhere. So by the end of the year, a lot of our value products in aluminum will be kind of relatively down. Our premium fiberglass will be up a bit versus the end of last year, but really that's necessary because we were under-inventoried, and those segments are performing relatively better. So I think, you know, that's better to be a bit conservative at this point in time, I think. Fair enough. Thank you. Thank you. Our next question comes from the line of Mike Swartz with Truist Securities. Please go ahead. Hey, guys. Good morning. Maybe just to start, and at, at high level, broad brush strokes, is there any way to think about, you know, what maybe the initial dealer volume commitments for your model year 2025 product looks like? You know, at this time, this year versus last year, I know there's some differences in the timing of the model year changeover and probably when dealers are thinking about accepting more inventory, but just very high level, is there any way to think about what that looks like? Yeah. Hi, Mike. Yeah, at the moment, more than 70% of our planned production for Q3 is accounted for with orders, which is relatively normal for us. So, with brands like Boston Whaler, it's 100% accounted for. With some of the aluminum brands where we have smaller boats, you know, all the way down to, you know, a few thousand-dollar boats, it's pretty normal as well. So I think, you know, we're pretty comfortable with the position we're in for orders for the third quarter. We know less about Q4 at the moment. Okay. And then just on the cost reduction program, I guess I'm trying to understand. It seems like it equates to something in the $70 million-$80 million range. Just trying to understand, is that an annualized number? It sounds like that's just for 2024. And then how much of that is actually variable? Meaning, how much of that would come back if and when production comes back? Yeah, Mike, I'll take this. Good morning. As you know, by the end of the year, OpEx is gonna be down pretty close to $100 million, right? Or, you know, somewhere $90 million-$100 million, which is about 10%. Of that, you know, a chunk of that is compensation expense, which will obviously be pretty low this year, given where we are versus our targets. That portion would expect to come back, obviously, and we'd reset that at 100% to start 2025. And then there's pieces that obviously are being delayed spending in 2024, that we would also want to come back to, to 2025, given a better market environment. It's fair to say that about a third of that, we would say is complete takeout, that we would keep out, for the very near term, certainly near term, and would not be added back, until or if at all, when market conditions improved, and we were able to spend a little bit more for growth. I think, you know, the third is really for 2024 as well, so the impact of that third on 2025 on a run rate basis would be higher. Yeah, sure. Okay, great. Thanks a lot. Thank you. Our next question is from the line of Matthew Boss with JP Morgan. Please go ahead. ... Great, thanks. So Dave, maybe could you elaborate on more recent trends that you're seeing in the marketplace, if you broke it down across premium versus the value channel? And just larger picture, how best to anticipate the progression into 2025, if you looked back at prior cycles? Yes, certainly. So, I guess what we're seeing, I would—premium is still somewhat stronger than value. But I would say the other thing that we're seeing is that, generally, fishing related products, all the way from Boston Whaler saltwater fishing at the high end, through to some of our aluminum, fishing at the more value and kind of core part of our market, are all relatively strong. And the more general purpose, kind of general recreational products seem to be performing somewhat weaker. So that would be things like value, fiberglass, runabouts, pontoons, are definitely down more than the market, at the moment. So those are a couple of ways to kind of break it down at the moment. I think, you know, we're fortunate in being strongly indexed to fishing. Probably about two thirds of our products are fishing-related products. So, I think, the strength of that part of the market continues to favor us going forward. So yeah, it's those people who are committed to boating, not just for boating, but for other activities like fishing, seem to be prioritizing their spending this year versus others who may be more inclined to trade off one activity a bit more versus another. Great. And then, Ryan, just as we think about industry recovery over time, what's the best EBIT flow through rate or incremental margins to consider for 2025, just given reductions that you've made on the operating expense side? Yeah, it's a good question, and maybe I, I'm gonna—I'll go ahead and just tackle 25, our views on 25, given your question. But the, the short answer there is, you know, we always believe that we can lever up, incrementals at 20% or more. And frankly, we've delevered this year at about that same pace. If you normalize for absorption and discounting, that 27%, year-to-date number would look just about right at 20, maybe even a little bit below. But the way to think about 25 for us, first, it starts with the consumer. We're obviously assuming slightly, hopefully, healthier economic conditions, a rate environment that has begun to come down, but still employment being low, GDP still being relatively resolute. Obviously, November's gonna throw some uncertainty into the ring, but we'll get through that, as we always do. The result there would probably be some stability in the marine market. Just as an aside, we're likely to finish the year main power boat segment at about 140,000 units. That is 5% above where we were coming out of the GFC, which was a much tougher macroeconomic environment. I think it's reasonable to assume a market, and obviously not making a call on the 25 market yet, but I think it's reasonable to assume that a flat market to this year is kind of a floor with, you know, some upside into low or even mid-single digits, which would get back half of the market loss this year, and would also represent a retail level that is approximately 50% of what we would consider replacement level for the U.S. market. So from that, you go to the wholesale retail dynamics, which, Dave touched on earlier. But in a flat market, and wholesale matching retail, you'd get about 1,500 boat units back, together with the accompanying, engine units, not only in our boats, but every, you know, all across the OEM landscape, which, by the way, we keep gaining share at Mercury. It's, we understand that the market is a little softer, but one thing that you can always count on is, is continued market share gains. If you then want to assume that retail next year is slightly up, then you can get to a world where wholesale next year is 10% at units or more, greater than this year, and again, with the, benefits on the engine side, too. Then, if you look at the Brunswick-specific dynamics, again, Mercury continues to take share with new products coming. Continued stability and growth in engine P&A. I know it's been a bit of a sore subject for a couple of quarters, six, six-ish quarters, but that engine P&A aftermarket recurring business is now showing exactly why we built it up to what it is today and, and is growing in a market that new sales are down. So we have continued stability there in engine P&A. I would say Navico is really where you're gonna start to see some improvement, both on the margin and sales side. The benefits from the cost takeout action, significant new products, and possibly, it has to happen someday in an improved RV market, which, remember, Navico touches about 10%. And then you have the positive impact from OpEx, as we talked about earlier, and just an overall drive of cash, resulting in capital strategy gains, share repurchases, and, and a likely lower interest expense with some debt work we're gonna do. So the way to look at the... You know, we'll, we'll see where 25 lands, here as we get closer to the end of the year, but it sure seems like there's a lot more tailwinds than, than headwinds, both for the market, but certainly, on the items that, that Brunswick can control. It's great color. Best of luck. ... Thank you. Our next question is from James Hardiman with Citi. Please go ahead. Hey, good morning, guys. Thanks for taking my call. I was kind of in and out in the early part of Q&A. If you already answered this, I apologize, but that bridge on slide nine, that $220 in market and pipeline correction, do you get any of that back in a, let's say, for the sake of argument, a flat market with 1:1 wholesale to retail? Do you get any of that $220 back? You talked about the $85, but I'm curious about that other big negative. We do. We do, James. And, you know, in a flat market, you could assume we get, you know, 1,500 plus back, and then the associated engine benefit, too. And again, if wholesale matches retail, we get the benefit with our boats, but also putting our engines on, you know, 48%+ of the boats in the U.S., with even more with multiple engines. And then if you can assume retail slightly up, then yeah, you're in a world where wholesale can exceed wholesale this year by 10%+. So yeah, you're getting- Okay. You know, you could, you could definitely get a big, you know, a chunk of that back. Got it. And then, I mean, you touched on this, Ryan, the notion that we're basically back at GFC levels of retail, and we still haven't seen a recession yet. I guess I could put a bullish or a bearish spin on that. The bearish spin would be that this is a market that's in big time secular decline, right? That even in a relatively healthy macro environment, obviously not for your industry, we've seen massive declines. I guess the bearish view on that would be, you know, this is the work of the Fed and interest rates, and everybody sort of underestimated just how interest sensitive these purchases are, and once interest rates begin to come down, we don't need to wait another decade for demand to sort of reflate. I'm curious your thoughts on big picture. Just obviously, this retail has missed everybody's expectations by a good amount over the last couple of years. Thoughts on what you think this means going forward? Yeah, James. So a good question, I think. I think the, you know, broadly, any studies you look at on demographics through to 2030, and we've mentioned this before, suggest that the wealthy are gonna get wealthier. And generally, that's supportive of us, just like it is for a range of other discretionary items. I do think what we're seeing is a couple of things here. One is, of course, as you mentioned, the interest rate environment. And you mentioned that these purchases are interest rate sensitive, and of course, they are. But I do think that there are a couple of other kind of layers of impact of interest rates, particularly for some of our core consumers. It's not just about the fact that financing the purchase is more expensive, it's that overall, their budgets are pressured more by cumulative inflation and interest rates on other financed purchases. Not to mention the fact that there's a confidence issue there. So I think there are various dimensions that are influencing discretionary purchases at the moment, beyond simply the increased financing costs. I think over time, what we've seen with the cumulative impact of inflation is going to kind of average out over time. The last couple of years, we've had relatively small increases, and certainly, we would anticipate that next year. So I think there are a number of factors that are in play here, cumulative inflation, the secondary and tertiary impacts of interest rates, that are larger barriers or inhibitors than we had anticipated. But I do think that there's no reason to believe that there's a secular negative trend here. We always also plan to outperform the market, and generally we've continued to do that, particularly obviously on the engine side, but with some of our boat brands, which have gained share year-to-date, like Boston Whaler and Sea Ray, that support that kind of wealth accumulation trend. I would also add, James, you know, one stat that we look at pretty carefully is participation across the industry. And you know, registered boats continue to be north of 10 million, just in the U.S. alone. And then you have, on top of that, all the growth in the shared models, which we're leading the way there in Freedom. So I would caution taking new boat sales as the main metric on a, you know, calling something secular, when people are out there boating as much, if not more than they have been in past years. And I would say new product sales are, you know, softened for all the reasons Dave said, but participation remains strong. We don't see any—we don't see any cracks in that, in that participation trend. Got it. Thanks, guys. Thanks, James. Thank you. Our next question is from the line of Megan Alexander with Morgan Stanley Investment Managers. Please go ahead. Hi. Thanks so much for taking our question. I wanted to spend a little bit of time on, on the propulsion segment in particular. So, maybe the first question on the top line, and then I'll ask a follow-up on the margin. So, you know, it does seem like the, the bulk of the reduction on, on the top line to the guide this year is coming from propulsion. I think if I'm doing the math right, looking for, you know, declines in the back half, kind of similar to what you saw in the first half. I was curious, you know, I think you said in the prepared remarks, retail, engine retail for the industry was down 6 in 2Q. Was wondering if you could, you know, let us know how Mercury compared to that. And then just maybe parse out, you know, in the updated guide from a top line perspective, how should we think about, you know, kind of the impacts of lower retail than you expected and perhaps taking some units out of the channel in that segment? Yeah. Well, we could do it together. Yeah. Okay. So, yeah, so, I think the impacts that you're seeing on propulsion are a couple of things at the moment. In terms of, you know, how much down is Mercury versus others, well, our share is up year-to-date, so we're obviously less down than the market, and we would anticipate that through this year, we will continue to gain share in Mercury. No reason to believe that we won't. I think the good news in propulsion at the moment is that obviously we've had to adjust production down to support market conditions, which are lower than we anticipated, but we've taken pretty prompt action on that. The other thing that you're seeing, though, is that a significant destocking trend at OEM customers, and now we look at retail and wholesale across every segment of outboard production, and they are back in balance. So, I think that's a, you know, it's a good trend for us. It means that any increase or growth in retail is gonna flow pretty directly back to Mercury. But we are in a situation in which OEMs are just not wanting to take any product that they don't think is gonna go on the back of a boat in 2024. They know we have production available, which is not always the case in the past, so, you know, as in many, many other areas, they're, they're, they are ordering kind of smaller quantities more frequently and making sure that they match what their use patterns are gonna be. Did you wanna follow up? Yeah, I'll just, you know, wholesale units for engines is gonna be down about 20% this year, which is roughly close to what boats would be, which is down kind of 24%. But you're gonna see a lot more of that in the back half, just because of production schedules. We're still pretty good in the first half. We have enough inventory, as Dave said. OEM orders did slow quicker than we thought. And again, not, not because they're choosing other engine providers, but just because production at our OEM partners slowed quick, you know, through the first couple of quarters. So the back half, all you're seeing is the same dynamic that you're seeing in boats, just a little bit later in the year. You know, boats started taking wholesale out really in the middle of last year, and you're just seeing it happen quicker in propulsion. But I would say engine pipeline, which again, we can't track, we don't track as closely, but we do know that engine pipeline will be down from the start of the year because we will be under shipping retail, again, to start us off in a really nice position in 2025. Okay, got it. That's super helpful. Thank you. And then just to follow up on the margin line, what you're guiding for from a propulsion perspective, I think is, you know, decently or solidly below 2019 levels, yet, you know, sales are still well ahead and understand the impact that production has on that. But can you just maybe provide some more color around the margin guidance? I think it does imply, you know, some pretty steep decrementals in the back half, just relative to what you've talked about. And then just tie it with, you know, I know a lot's changed in the year, but you know, last nine months ago, you talked about kind of a 20% margin for this segment. Is that, is that still realistic to think about in a more normal environment, or have things, you know, kind of changed too much? Yeah, it's a very fair question and a good one. I would tell you, let me answer in reverse. Yes, there's no reason that at normal production volume and normal market conditions, that the propulsion business can't be back at or above 20% operating margins. You know, it is simply a volume game for the full year that's driving that margin down. You know, the absorption impact on the lower production is pretty significant. Call it, you know, north of $30 million. You know, currency's a little bit of a bad guy that most of it's the first half, but that's really hurting. And just overall, there's not the OpEx you can take out quick enough to overcome the absorption and hit there. And then also, remember, the depreciation is larger there this year because of all the capacity projects and capital we've put in there. So they're, you know, getting that impact of a hit without the accompanying sales, which we will get eventually. So you're kind of getting a mismatch there. So we, we agree, it's, it's certainly worse than we anticipated, but if you normalize, take out absorption and kind of the one-timers, you're still in the mid to upper teens at a normalized volume. You know, you get a little bit more volume back to a retail market that looks just a little bit better, and you're, you're getting back close to that 20%. Awesome. That's super helpful. Thank you. Thank you. Our next question is from the line of Xian Siew with BNP Paribas Asset Management. Please go ahead. Hi, guys. Thanks for the question. I was just curious about your inventory target of reductions for 7%. Like, do you think that's enough relative to retail down 10%? I don't think it implies much of a weeks on hand reduction. ... Yes, Xian, thanks for the question. I think, I mean, obviously, we have a number of considerations when we're trying to kind of target retail. We think about weeks on hand, we also think about units in the field, and we think about units per dealer, which we've you know, talked about a lot. There is an issue that if we go down too low, we just can't carry a representative segment of our product line across the bulk of our dealers. So we're trying to balance a number of factors here. I think if we consider, you know, one factor, you might get a slightly different answer to another factor. But the fact is that we are going to significantly undership retail this year, and I believe still end up with a decent number of units at each dealer. Really, the area where we are gonna have or gonna increase inventory slightly versus last year is in the premium end of our product lines, particularly Boston Whaler and Sea Ray. And we were still working our way out of a hole on those products through the last several years because we couldn't catch up after the supply chain crisis. So, thinking about it in those different ways, I think we feel it is a good balanced position to be in and derisks 2025. Okay, got it. Really helpful. Then maybe on propulsion, you know, to your point, the wholesale volume declines are down kind of in line with new boat sales. Do you think the segment is becoming more correlated to new boat sales, or are there kind of like the structural tailwinds still intact? Then also kind of pricing has been, or price mix has been a big benefit. Is that under pressure at all, or are you able to hold that, and it's just volume that's coming down? Yeah, no, Zion, I'd say it's just volume. In fact, you know, repower sales continue to be pretty strong throughout the first half of the year. We still think that that's about 15% of the overall units, 15-20. But it's really just the OEM volumes that are, you know, that are sluggish. But we're not seeing any issues on the price volume mix. Obviously, 300 hp above where our share is extremely robust. It's where we can take the most price because we're, we're, you know, we're the only engine in town for anything kind of 400, 500, 600, and certainly we believe our all of our high horsepower products are best in class. So we're still able to get a premium there and don't see that changing. Okay, thanks. Thank you. Our next question is from the line of Craig Kennison with Baird. Please go ahead. Hey, good morning. Thanks for taking my questions as well. You mentioned floor plan interest costs for dealers. I'm just wondering if there are metrics you can point to that would help us frame that additional expense, whether it's just the rate they face or the percentage of their gross profit today versus prior periods? Yeah, it, Craig, that's tough. I mean, obviously, they're the... you can track the rate they're paying, right? So our, we, you know, with our benefit of having BAC, our dealers are paying kind of a SOFR plus the, plus the bank rate, you know, the SOFR plus a percentage. So obviously, that's up, you know, several points since 2021. And you can take the average, kind of average floor plan there, times that rate. But, you know, all in all, I think the dealer network remains extremely healthy. We get reports every couple of weeks on, and on amount of boats in the field that are aged and any, challenges that our dealers are having paying floor plan or, covering their, you know, covering their sales. So we're not seeing any concerning trends. In fact, throughout the summer, aged inventory, you know, Brunswick has been low across the way, but aged inventory around all of BAC's portfolio has gone down, and we're seeing a really good liquidations on anything more than a year old. So, you know, you can do the math by just taking the SOFR plus the change in, you know, the change in rates, but all in all, still a pretty healthy environment. And then shifting gears, just a lot of this discussion has been the macro, which of course you don't control, but it seems like there is a self-help opportunity at Navico, and I'm just wondering where you think or what the current expectation is for, I guess margin, the margin profile of that business if we get back to, let's say, 150,000 boats? Yeah, I think you're right. And obviously, we take that very seriously, Craig, and we're working on it very diligently, including in terms of the footprint. You know, we've closed about 40% of the facilities there. We've significantly reduced headcount, and we're working very diligently on cost of sales. So and, but the cost of sales work that we're doing is not flowing quite yet, because we still have inventory, you know, prior to some of those reductions. It will start to flow through, along with a stream of new products, some of which we highlighted today. So yeah, we're doing all the right things on Navico Group. I wish it had flowed through a bit earlier, but obviously the marine OEM environment and the RV OEM environment is a tough one. However, aftermarket is doing better and making up for that, which is why you see the kind of flat revenue by quarter. We have some great new products coming through, both on the OEM side and the aftermarket side. Great. Thanks, Dave and Ryan. Thank you. Thanks, Craig. Thank you. Ladies and gentlemen, this concludes our question-and-answer session. At this time, I would like to turn the call back to Dave for some concluding remarks. Dave? Thank you very much, and thank you all for joining us and for your questions. Although the peak season sales didn't meet our initial expectations, we came pretty close to our Q2 guidance. But it is clear that we are looking at a different back half of the year than we originally anticipated. I am very, very pleased, though, with the way our market share is holding up, but also particularly with the way that our recurring revenue, our businesses are holding up. P&A is performing very well. Mercury Repower, Freedom Boat Club, we didn't even get a question on, for once this time, but it continues to grow memberships. It's grown about 3% in terms of memberships this year. So a lot of great performance there, which is driving really robust earnings and very strong cash flow. So we're very excited about that part of the business, and we are clearly positioning ourselves very, very well for 2025. I do wanna end by just saying that we continue to focus on being an employer of choice. We have a great team at Brunswick that's driving everything that you hear about. And we recently were ranked number one in the engineering and manufacturing category in Time's Best Midsize Companies, which I think is a testament to how we run the business from a financial perspective, from a personnel perspective, and from a corporate responsibility perspective. So I'm delighted with that. I wanted to thank all of our employees. Thank you all very much. Thank you. The conference of Brunswick Corporation has now concluded. Thank you for your participation. You may now disconnect your line.