BRUNSWICK CORP

References to "we," "us," "our," the "Company," "Brunswick," and "Brunswick Corporation" refer to Brunswick Corporation and its consolidated subsidiaries unless the context specifically states or implies otherwise.

Brunswick Corporation is a global leader in marine recreation, delivering innovation that transforms experiences on the water and beyond. Our unique, technology-driven solutions are informed and inspired by deep consumer insights and powered by our belief that “Next Never Rests.™” We design, manufacture, and market recreational marine products, including leading marine propulsion products and boats, as well as parts and accessories for the marine and RV markets, and we operate the world's largest boat club. We are dedicated to industry leadership, to being the best and most trusted partner to our many customers, and to building synergies and ecosystems that enable us to challenge convention and define the future. Incorporated in Delaware on December 31, 1907, Brunswick has traded on the New York Stock Exchange for nearly 100 years.

Our strategy is focused on:

•Understanding and addressing the changing needs and behaviors of global boating participants;

•Investing in innovative, global product leadership and leveraging our leading brands to meet consumer needs;

•Delivering distinctive, elevated ownership and shared-access experiences that expand boating participation;

•Being the partner of choice to our customers by offering integrated technical and business solutions;

•Engaging consumers with the richest, most intuitive digital experiences;

•Leading the industry in Autonomy, Connectivity, Electrification, and Shared Access (ACES) strategies, with an expanding set of commercially available products in each category;

•Unlocking unique and profound enterprise synergies;

•Investing in increasing global business resiliency;

•Being an acknowledged marine industry leader in sustainability; and

•Being an employer of choice through our clear purpose and culture of inclusiveness.

These strategies support our aim to create exceptional experiences, expand participation in recreational boating, deliver industry-transforming technology, and leverage our leading businesses to grow earnings and enhance shareholder value. Our integrated business strategy is supported by a balanced capital strategy that includes critical investments in new products and technology to further our market leadership position, organic growth initiatives, and our ACES and technology strategies while also managing debt levels and maturities, maintaining strong cash and liquidity positions, and continuing to return capital to shareholders through share repurchases and dividends.

Effective January 1, 2023, the Company changed its management reporting and updated its reportable segments to Propulsion, Engine Parts and Accessories (Engine P&A), Navico Group and Boat to align with our internal operating structure, described further below.

Key brands associated with each of our segments are listed below.

Refer to Note 5 – Segment Information in the Notes to Consolidated Financial Statements for additional information regarding our segments.

Propulsion Segment

The Propulsion segment, which we believe is a world leader in the manufacturing and sale of recreational marine engines and propulsion systems, had net sales of $2,763.8 million in 2023. The Propulsion segment designs, manufactures and sells engines, controls, rigging, and propellers globally to over 860 boat builders (both independent and Brunswick's Boat segment) and a network of more than 8,900 marine dealers and distributors, specialty marine retailers, marine service centers, and various local, state, and federal governmental accounts. White River Marine Group, LLC (including Tracker and Ranger Boats) and Brunswick Boat Group are significant customers.

Propulsion segment engines are designed for use in recreational, commercial, and racing applications. Mercury designs and sells four-stroke outboard engine models ranging from 2.5 to 600 horsepower; Mercury Marine and Mercury Racing manufacture inboard and sterndrive engine models ranging from 115 to 1,550 horsepower. Mercury Marine also manufactures two-stroke, non-DFI (direct fuel injection) engines for certain markets outside the United States and Avator™ electric propulsion systems in models ranging from 7.5e to 110e. In 2023, Brunswick acquired Fliteboard Pty Ltd (Fliteboard), a leader in eFoiling technology, to further enhance our electrification and shared-access strategies. Fliteboard is operated as part of the Propulsion segment.

Engine P&A Segment

The Engine P&A segment had net sales of $1,199.8 million in 2023. Engine P&A sells products such as engine parts and consumables including oils and lubricants, electrical products, boat parts and systems, and also includes our marine parts and accessories distribution businesses.

Engine P&A products are designed for and sold mostly to aftermarket retailers, dealers, distributors, and original equipment manufacturers (including Brunswick Boat segment brands) for both marine and non-marine markets. The Engine P&A distribution businesses are leading distributors of Brunswick and third party marine parts and accessories throughout North America, Europe, and Asia-Pacific, offering same-day or next-day delivery service to a broad array of marine service facilities.

Navico Group Segment

The Navico Group segment, which had net sales of $914.7 million in 2023, designs, develops, manufactures, and markets products and systems for the marine, RV, specialty vehicle, mobile and industrial markets, as well as aftermarket channels. Navico Group products include marine electronics, sensors, and control systems, digital control and monitoring systems, instruments, fish finders, sonar, radar, trolling motors, fuel systems, batteries, power management, and electrical systems. Navico Group sells its products to aftermarket distributors and retailers as well as original equipment manufacturers. White River Marine Group, LLC, Brunswick's Engine P&A distribution businesses and Brunswick Boat Group are significant customers.

Boat Segment

The Boat segment consists of the Brunswick Boat Group (Boat Group), which manufactures and distributes recreational boats, and Business Acceleration. We believe that the Boat segment, which had net sales of $1,989.4 million during 2023, is a world leader in the manufacture and sale of pleasure boats. The Boat segment manages Brunswick's boat brands, evaluates and optimizes the Boat segment's boat portfolio, promotes recreational boating services and activities to enhance the consumer experience and dealer profitability, including through its Business Acceleration initiatives, and speeds the introduction of new technologies into boat manufacturing and design processes.

The Boat segment procures substantially all of its engines from Brunswick's Propulsion segment, and boats often include other parts and accessories supplied by the Engine P&A and Navico Group segments. The Boat Group sells its products through a global network of more than 1,300 dealers and distributors, with some operating in more than one location and some carrying more than one of our boat brands. The Boat Group's largest dealer, MarineMax, Inc., is a significant external customer which carries a number of the Boat Group's product lines and has multiple locations.

Included within the Boat segment is the Business Acceleration business, which is dedicated to developing emerging and disruptive business models, focusing on services and subscriptions, and engaging the next generation of diverse boaters. Business Acceleration businesses accountedfor 8 percent of Boat segment net sales in 2023.

Business Acceleration's Freedom Boat Club (FBC) is the world's largest boat club network. FBC operates in more than 400 locations across the U.S., Canada, Australia, and Europe, and has nearly 60,000 memberships. FBCmembers pay an upfront initiation fee and ongoing monthly dues in exchange for gaining shared access to their local club’s diverse fleet of boats and reciprocal privileges at all other FBC locations. Business Acceleration also operates a variety of other businesses including dealer and retailer financing; retail extended warranty and insurance businesses; Boateka, a certified pre-owned boat platform; and other marine services businesses.

Financing Services

Through our Brunswick Financial Services Corporation subsidiary, we own a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC). Under the terms of the joint venture agreement (JV Agreement), BAC provides secured wholesale inventory floor plan financing to our boat and engine dealers as well as Freedom Boat Club franchisees. A subsidiary of Wells Fargo & Company owns the remaining 51 percent.

The JV Agreement contains a financial covenant that conforms to the maximum leverage ratio test in the Credit Facility described in Note 14 – Debt in the Notes to Consolidated Financial Statements. The JV Agreement contains provisions allowing for the renewal of the JV Agreement or the purchase of the other party's interest in the joint venture at the end of its term. Alternatively, either partner may terminate the JV Agreement at the end of its term. Refer to Note 8 – Financing Joint Venture in the Notes to Consolidated Financial Statements for more information about our financial services offered through BAC.

Many dealers secure floor plan financing from BAC, and, to a lesser extent, from other third party financing companies, enabling them to stock product in advance of the peak selling season and providing stable channels for our products. Brunswick provides risk mitigation to BAC and other finance companies in the form of inventory repurchase commitments, under which we are obligated to repurchase inventory in the event of a dealer's default. This risk mitigation is reflected in our estimate of repurchase liabilities. Our business units, along with BAC, maintain active credit operations to manage this financial exposure, and we continually seek opportunities to sustain and improve the financial health of our various distribution channel partners. Refer to Note 11 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for further discussion of these arrangements.

In addition to floor plan financing, Business Acceleration recently announced the launch of Brunswick Finance, a digital retail finance solution that simplifies the purchase process by leveraging a fully integrated technology platform offering end-to-end integration across the boat buying ecosystem, from applying for pre-qualification to underwriting, finalizing agreements and e-signing for loans.

Distribution

We utilize independent distributors, dealers, and retailers (Dealers) for the majority of our boat sales, sales of parts and accessories, and some sales of marine engines. We have over 19,000 active Dealers serving our business segments worldwide. Our Dealers typically carry one or more product categories and are independent companies or proprietors that range in size from small, family-owned businesses to a large, publicly traded corporation with substantial revenues and multiple locations. Some Dealers sell our products exclusively, while a majority also carry competitor and complementary products. We partner with our Dealer network to improve quality, service, distribution, and delivery of parts and accessories to enhance the boating customer's experience.

Besides our network of independent Dealers, we sell parts and accessories to boat builders and operate our own wholesale parts and accessories distribution companies, which are leading distributors of marine parts and accessories with a network of warehouses located throughout the markets they serve, offering same or next-day delivery to a broad array of marine service facilities and Dealers. In addition, we operate a leading boat dealer in the Southeastern U.S. with four locations selling boats and parts and accessories.

Technology and Innovation

We believe Brunswick is uniquely positioned to continue defining the future of the global marine industry. We are continuously and consistently innovating the future of recreational boating through growing service, connectivity, and alternative participation capabilities and businesses. To support our goal, we have established cross-functional and cross-business investments and initiatives, and hire leaders with strong technology experience. We continue to develop solutions to further improve boater experiences both by advancing the efficiency and capabilities of our core product lines and through our ACES strategy.

We continue to develop and refine future innovative projects through our team at the i-Jet Innovation Lab at the University of Illinois Urbana-Champaign. In 2023, Mercury Marine unveiled its Avator 7.5e electric outboard at the Consumer Electronics Show in Las Vegas and has since introduced Avator electric propulsion systems up to 110e. Mercury Marine also entered into an agreement with Jing-Jin Electric (JJE), an electrified propulsion leader in components, assemblies, and systems for global automotive applications, to collaborate on Mercury's portfolio of electric propulsion solutions. Our Boat Group introduced the new Veer boat brand, intended to support electric propulsion, and Navan by Quicksilver, which combines innovative technology with superior performance. Navico Group introduced three new Mastervolt brand larger capacity, lithium-ion deep-cycle supply batteries to provide enhanced power storage capacity in a lighter weight and smaller footprint. Navico Group's Whale brand launched Heat Air, a lightweight, space-efficient, propane-based, heating solution for recreational vehicles.

Brunswick won numerous awards in 2023 for our groundbreaking products, including:

•National Marine Manufacturers Association (NMMA) and Boating Writers International (BWI) honored our Veer boat brand with a 2023 Minneapolis Innovation Award in the fishing boat category.

•Multiple NMMA Innovation Awards at the 2023 Miami International Boat Show, including for the Fathom e-Power System, Lowrance HDS Pro with Active Imaging HD and ActiveTarget 2, and the Sea Ray SLX 260 Outboard.

•A record 11 Boating Industry Magazine 2023 Top Product Awards to products across our portfolio.

International Operations

Non-U.S. sales are set forth in Note 2 – Revenue Recognition and Note 5 – Segment Informationin the Notes to Consolidated Financial Statements and are also included in the table below, which details our non-U.S. sales by region:

We transact a portion of our sales in non-U.S. markets in local currencies, while a meaningful portion of our product costs are denominated in U.S. dollars as a result of our U.S. manufacturing operations. As a result, the strengthening or weakening of the U.S. dollar affects the financial results of our non-U.S. operations.

Propulsion non-U.S. sales comprised approximately 43 percent of our non-U.S. sales in 2023. Engine P&A non-U.S. sales comprised approximately 18 percent of our non-U.S. sales in 2023. Navico Group non-U.S. sales comprised approximately 17 percent of our non-U.S. sales in 2023. Boat non-U.S. sales comprised approximately 22 percent of our non-U.S. sales in 2023.

Raw Materials and Supplies

We purchase a wide variety of raw materials from our supplier base, including commodities such as aluminum, copper, resins, oil, and steel, as well as product parts and components, such as boat windshields. The prices for these raw materials, parts, and components fluctuate depending on market conditions and inflation. In 2023, our operations continued to experience intermittent supply chain uncertainty and disruptions. Our global procurement operations constantly strive to obtain adequate supplies, better leverage purchasing power across our divisions, and improve cost efficiencies. We mitigate commodity price risk on certain raw material purchases by entering into fixed priced contracts or derivatives to reduce our exposure related to changes in commodity prices.

Intellectual Property

We own intellectual property, including patents, trademarks, and trade secrets, related to our current and future products and production methods, in the U.S. and certain other countries. By law, patents have a limited term, so our patents expire over time. Our trademarks and trade secrets have potentially indefinite lives. We consider our collection of intellectual property to be a valuable asset that is important to our competitive position. As of December 31, 2023, we own more than:

•1,100 active U.S. patents;

•450 pending U.S. patent applications;

•650 active foreign patents;

•270 pending foreign patent applications;

•370 U.S. registered trademarks; and

•1,800 foreign registered trademarks.

We invest substantial resources in acquiring, maintaining, and defending our intellectual property rights, and we expect to continue to do so. When feasible, we seek patent protection on products and production methods that are under development, and in areas of possible future development. We require employees who will develop intellectual property, or who have access to intellectual property, to sign confidentiality and intellectual property assignment agreements. We invest in physical and IT security programs to prevent theft and inadvertent disclosure of trade secrets. In addition to "Brunswick," our primary trademarks include Mercury Marine, Boston Whaler, Lund, and Sea Ray.

Market and Competitive Conditions

Demand for our products is typically seasonal, with sales generally highest in the second quarter of the calendar year. Strong competition exists in each of our product groups, but no single enterprise competes with us in all product groups. In each product area, competitors range in size from large, highly-diversified companies to small, single-product businesses. We also indirectly compete with businesses that offer alternative leisure products or activities. The following summarizes our competitive position in each segment:

Propulsion. The marine engine market is highly competitive among several major international companies, such as outboard engine manufacturers based in Japan and several smaller companies. Our competitive advantage is a function of product features, technology, quality and durability, breadth of product line, performance, distribution and manufacturing capabilities, along with effective promotion, after-sales service, and distribution.

Engine P&A. The marine parts and accessories market is highly competitive and fragmented. Our competitive advantage in this market includes our product breadth and quality, proprietary parts and technology, global distribution network, extensive portfolio of recognized brands, sales team, delivery timing, and service.

Navico Group. Navico Group competes in the marine, RV, and specialty vehicle parts and accessories markets, which are also highly competitive and fragmented. Our competitive advantage in these markets includes our extensive portfolio of recognized brands, proprietary technology, integrated solutions, product quality, sales team, and service offering.

Boat. Although there are many boat manufacturers, few manufacturers compete in the breadth of categories or geographies in which our Boat segment competes. We compete on the bases of product features, technology, quality, brand strength, dealer service, pricing, performance, value, durability, and styling, along with effective promotion and distribution. In addition, FBC competes on number and quality of locations, pricing, and service.

Climate Change and Environmental Compliance

Our customers rely on clean air and water to enjoy our products and services, and we are committed to practices and policies designed to help protect the environment and the well-being of our employees, customers, and the public. We seek to comply with applicable environmental regulatory and industry standards across all our facilities and in the products we manufacture. We strive continually to improve energy efficiency, minimize the carbon emissions of our operations, supply chain, and product portfolio, and deliver more cost-effective and lower carbon technology products and solutions to our customers. These environmental sustainability efforts are integrated into our business strategy and operations.

Some of our recent sustainability projects and accomplishments include:

In recognition of its sustainability efforts, Brunswick was listed among Newsweek’s America's Most Responsible Companies for 2023 for the fourth consecutive year, Sustainalytics' “Industry Top Rated” for 2023, Newsweek's inaugural list of America's Greenest Companies and USA Today and Statista's inaugural Climate Leaders List, which recognizes companies' efforts to reduce Scope 1 and Scope 2 greenhouse gas emissions. Additionally, Mercury Marine received Green Masters status from the Wisconsin Sustainable Business Council for the 13th consecutive year.

For more information on our sustainability strategy, programming, data, and goals, we refer you to our annual Sustainability Report (which is not incorporated by reference herein), available on our website at https://www.brunswick.com/corporate-responsibility/sustainability.

We anticipate that increased global regulation relating to climate change, such as climate disclosure requirements or product emissions limitations, will require us to comply or potentially face market access limitations or other penalties, including fines. Our manufacturing operations and products are subject to numerous and increasingly strict federal, state, local, and foreign environmental laws and regulations. As we evolve our product electrification strategy, we are subject to other regulations and requirements relating to the transportation, storage, handling, and use of batteries and the components used in battery manufacturing. Our products are subject to increasingly stringent regulations regarding chemical and material composition, and we are subject to extended producer responsibility laws and regulations requiring manufacturers to be responsible for collection, recovery, and recycling of wastes from certain products. Compliance with these laws and regulations has not had a material impact on our capital expenditures, earnings, financial condition, or competitive position. There can be no assurance, however, that current or future environmental laws and regulations will not impose costly requirements upon us. Any failure to comply with applicable environmental laws, regulations, and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes, and legal liability, and could negatively affect our competitive position.

For further information, refer to Section 1A, Risk Factors, for a discussion of risks related to environmental compliance and to Note 11 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for a description of certain environmental proceedings.

Human Capital Resources

Brunswick is dedicated to creating an inspiring and inclusive work environment that attracts, develops, and retains top talent. This environment unlocks our employees’ potential to continue transforming the marine industry.

Employee Information

As of December 31, 2023, we employed approximately 17,300 employees, 96 percent of whom were full-time. Our employee base is approximately 65 percent hourly and 35 percent salaried. Temporary and contingent employees (including interns and co-ops) and contractors accounted for approximately 2,300 additional workers.

Approximately 2,500 of our U.S. employees belong to labor unions and approximately 1,000 additional employees are members of international unions or work councils. We believe that the relationships among our employees, the unions or work councils, and the Company remain stable. Mercury Marine and its largest union, the International Association of Machinists and Aerospace Workers (IAM) Lodge 1947, negotiated a new collective bargaining agreement in 2023, which will remain in place through September 30, 2028. During 2023, we experienced no union-related work stoppages.

Diversity and Inclusion

We view diversity, equity, and inclusion (DEI) as a strategic business initiative. We consider DEI to be a competitive advantage and have therefore focused our efforts on expanding diverse representation throughout our global workforce and reinforcing a culture of belonging at every worksite.

A cross-functional/divisional core team leads our enterprise-wide initiative, TIDE (Together: Inclusion, Diversity and Equity), to integrate DEI in our business processes and behaviors.

We maintain five employee resource groups (ERGs): Women on Water, Brunswick Black Professionals Network, Asians and Pacific Islanders in Marine, Organization for Hispanic/Latinos for Leadership and Advancement, and Brunswick Veterans Network. These ERGsare self-organized, Company-supported groups focused on cultivating a sense of belonging and inclusion at Brunswick. Each ERG strives to support employees by deepening engagement, unifying and connecting communities, and fostering professional and personal growth.

Through TIDE and our ERGs, we accomplished the following in 2023:

•Grew our ERGs to over 1,000 participants, up 100 percent over 2022.

•Conducted 18 experiential activities, including commemorative events and cultural programming.

•Held 10 professional and personal development events.

•Introduced three new inclusion programs including the United People of Brunswick experience, Inspiring Inclusion Award and the Inclusivity & You learning program.

•Developed three new pipeline programs to support diversity in early career hiring for technical talent.

We support increasing representation of diverse populations at all levels of the organization. Women make up one-third of our Executive Officers and one-third of our Directors are female. Women comprise appr oximately 29 percent of our total global workforce, and racially or ethnically diverse employees make up approxi mately 25 percent of our U.S. workforce.

We are proud to note that Forbes named Brunswick to its 2023 lists of World’s Best Employers, America's Best Employers for Veterans, and America’s Best Employers for Women. U.S. News and World Report named us one of the Best Companies to Work For in 2023, and Brunswick finished inthe top 10 of all companies on both its Best Companies for Work-Life Balance and Best Companies for Quality of Pay lists. Boating Industry Magazine named four of our exceptional female colleagues as “Women Making Waves" and Manufacturing Institute (MI), the workforce development and education partner of the National Association of Manufacturers, named Brunswick Boat Group President Aine Denari as a 2023 Women MAKE America Awards Honoree.

Health and Safety

Employee health and safety are top priorities. We proactively identify and address potential safety risks in our business and operations. Our goal is to achieve zero work-related incidents and injuries. We maintain a Safety Management System (SMS) to formally address safety risks throughout the workplace and use our SMS to manage potential work-related hazards that pose a risk of high consequence of potential injury. Implementing processes and systems that meet SMS criteria is designed to result in less frequent and less severe work-related incidents and injuries.

The Company's recordable and lost-time incident rates from 2021 to 2023, recorded as of December 31, are as follows:

Our global recordable incident rate is considerably lower than the benchmarks of the U.S. Bureau of Labor Statistics for similar businesses and operations. Additionally, we reported no fatalities in 2023.

Compensation and Benefits

Our compensation philosophy is to encourage performance that creates sustainable, long-term shareholder value; motivates achievement of financial and strategic goals; attracts, retains, and motivates talent; and reinforces our pay-for-performance culture. We are committed, and strive to ensure, that employees are paid equitably for their work, regardless of their race or gender.

We offer market-competitive salaries and wages including incentive bonus opportunities for managers and senior individual contributors, an equity incentive program for director-level positions and above, and a discretionary retirement contribution dependent on the Company’s performance.

Our range of benefits (varying by country) includes:

•Paid time off (vacation, parental leave, sick time, and disability programs);

•Healthcare coverage (medical, dental, prescription, vision, and hearing);

•Financial savings and investment opportunities (flexible spending accounts, health savings accounts, retirement, employee stock purchase, and credit monitoring programs);

•A suite of life, accident, and critical illness insurance programs;

•Wellness programs; and

•Educational assistance programs.

Employee Learning and Development

We support career advancement and create a rewarding environment for employees to learn, grow, and perform at their best. We provide opportunities for continuous learning and development, such as:

•Workday Learning, a learning platform that offers courses in leadership and innovation, effective communication, and strategic thinking;

•Rotational leadership programs to develop Brunswick’s future business and financial leaders;

•Women’s development and mentoring programs, which enhance our succession bench strength and champion female leaders of the future; and

•Wide-ranging hands-on learning and development programs to enhance and grow our critical functional skills.

We recognize that we operate in competitive marketplaces when it comes to finding top talent, particularly in technical fields. We strive to offer our employees career-specific tools, skilled apprenticeship programs, and robust on-the-job training opportunities. Our technical career tracks provide development for engineers and technology personnel who will shape our future ACES initiatives. We also incentivize innovation through a long-established inventor recognition award program.

Part of employee development includes annual performance feedback and management for all employees, for which we have a standard process that includes opportunities for employee engagement at every stage. We also maintain succession plans that foster internal promotion to key positions.

We believe our strong compliance culture plays a central role in our success. The Integrity Playbook, Brunswick’s code of conduct, serves as the foundation of our Ethics Program. In 2023, 97 percent ofour active global salaried population completed our annual code of conduct training.

Employee Engagement

During 2023, Brunswick again completed a global employee engagement survey, in which approximately 85 percent of employees participated, an increase of three percentage points compared to 2022. Insights from the survey will be used to develop action plans at the manager, facility, division, and corporate level to further enhance employee satisfaction and positive connections to Brunswick.

Please see our annual Sustainability Report (which is not incorporated by reference herein), available on our website, for additional information about our human capital management programs.

Available Information

Brunswick maintains an Internet website at http://www.brunswick.com that includes links to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, and Proxy Statements (SEC Filings). The SEC Filings are available without charge as soon as reasonably practicable following the time that they are filed with, or furnished to, the SEC. Shareholders and other interested parties may request email notification of the posting of these documents through the Investors section of our website. Brunswick’s SEC Filings are also available on the SEC’s website at http://www.sec.gov.