BRUNSWICK CORP
For the period ended Dec 31, 2024. Filed Feb 14, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 14, 2025
BC$77.23-2.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-16.
0000014930-24-000054
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-14.
0000014930-25-000025
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 137 previous paragraphs and 108 current paragraphs.
61 unchanged; 29 reworded; 18 added; 39 removed; 8 previous and 0 current paragraphs rearranged.
Tables are not compared: 22 previous and 17 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
For a discussion of Brunswick's consolidated results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022, refer to Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 16, 2024.
Current report
On September 12, 2024, we acquired additional Freedom Boat Club franchise operations and territories in Southeast Florida for net cash consideration of $31.2 million. Refer to Note 4 – Acquisitionsin the Notes to the Consolidated Financial Statements for further information.
Current report
(A) 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.
Current report
Selling, general and administrative expenses as a percentage of net sales increased 160 basis points during 2024 when compared with the same prior year period, due to lower sales (280 bps), partially offset by cost control measures across the enterprise, including lower employee compensation costs associated with headcount reductions and lower variable compensation (120 bps). Research and development expense decreased during 2024 versus 2023.
Current report
The following table sets forth Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2024 and 2023:
Current report
International sales were 36 percent of the Propulsion segment's net sales in 2024. International sales decreased 15 percent year-over-year on a GAAP basis and 14 percent on a constant currency basis.
Current report
Propulsion segment's operating earnings decreased versus the prior year, primarily due to the impact of lower sales and lower absorption from declines in production, partially offset by cost control measures.
Current report
Engine P&A segment's net sales decreased in 2024 versus the prior year as a result of softer market conditions. The components of the Engine P&A segment's net sales change were as follows:
Current report
Engine P&A segment's operating earnings increased versus the prior year, as the impact of the operational efficiencies resulting from the completed transition to the Brownsburg, Indiana distribution center, annual pricing, and lower operating expenses more than offset lower volumes and higher material inflation.
Current report
Navico Group segment's net sales decreased in 2024 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. The components of the Navico Group segment's net sales change were as follows:
Current report
International sales were 41 percent of the Navico Group segment's net sales in 2024. International sales decreased 5 percent year-over-year on a GAAP and constant currency basis.
Current report
Navico Group segment's operating earnings decreased versus the prior year due to intangible asset impairment charges and the impact from lower sales, partially offset by cost control measures.
Current report
The following table sets forth Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2024 and 2023:
Current report
Boat segment's net sales decreased in 2024 versus the prior year resulting from lower wholesale orders, as dealers continue to manage pipeline levels, along with higher levels of selective discounting, partially offset by the favorable impact of modest model-year pricing.
Current report
International sales were 20 percent of the Boat segment's net sales in 2024. International sales decreased 31 percent year-over-year on a GAAP basis and 30 percent on a constant currency basis.
Current report
Boat segment operating earnings decreased versus the prior year due the impact of the net sales declines and lower absorption from reduced production, partially offset by pricing and cost control measures.
Current report
Corporate operating loss decreased compared with 2023 driven by lower variable compensation costs along with the impact of both the IT security incident and restructuring charges in the prior year.
Current report
We anticipate executing a thoughtful capital strategy in 2025 with planned debt reductions of $125 million, capital expenditures at levels similar to 2024 of $160 million, and a minimum of $80 million of share repurchases, which could increase in the event cash generation outpaces initial expectations.
Removed paragraphs (39)
Previous report
On October 4, 2021, we completed the acquisition of Navico for $1.094 billion net cash consideration. Navico was a privately held global company based in Egersund, Norway, and is a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography. We also completed the acquisitions of substantially all the net assets of RELiON Battery, LLC, SemahTronix, LLC, Fanautic Club, and certain Freedom Boat Club franchise operations and territory rights in the United States during 2021 for net cash consideration of $66.1 million. Refer to Note 4 – Acquisitionsin the Notes to the Consolidated Financial Statements for further information.
Previous report
Selling, general and administrative expenses as a percentage of net sales increased 140 basis points during 2023 when compared with the same prior year period, due to lower sales (70 bps), increased relative spending on technology initiatives and the IT security incident (20 bps), sales and marketing (20 bps), operating expenses associated with current year acquisitions (20 bps) and amortization (10 bps).
Previous report
Sales in each segment benefited from steady demand, new product performance, and pricing implemented throughout the year, partially offset by unfavorable changes in foreign currency exchange rates. Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.
Previous report
Gross margin percentage increased 10 basis points in 2022 when compared with 2021 driven by increased sales (620 bps) and acquisitions (60 bps), partially offset by higher manufacturing costs including material and labor inflation and inefficiencies caused by supply chain disruptions (670 bps).
Previous report
The 60 basis points decrease in selling, general and administrative expenses as a percentage of revenue in 2022 compared to 2021 reflects the impact of less variable compensation expense (130 bps) partially offset by increased spending on sales and marketing (40 bps) and increased purchase accounting intangible asset amortization (30 bps).
Previous report
During 2022, we recorded restructuring, exit and impairment charges of $25.1 million compared with $0.8 million in 2021. The future cost savings related to restructuring actions executed in 2022 are not expected to be material to our Consolidated Financial Statements. See Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details.
Previous report
We recognized equity earnings of $4.0 million and $2.3 million in 2022 and 2021, respectively, which were mainly related to our marine and technology-related joint ventures.
Previous report
The following table sets forth the Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021:
Previous report
International sales were 32 percent of the Propulsion segment's net sales in 2023. International sales decreased 4 percent year-over-year on a GAAP basis and 3 percent on a constant currency basis.
Previous report
Propulsion segment's operating earnings for the year were $494.7 million, a decrease of 5.4 percent versus the prior year, as sales declines and higher input costs more than offset benefits from cost-control measures.
Previous report
Propulsion segment's net sales increased $319.3 million or 12.7 percent in 2022 versus the prior year due to favorable product mix, pricing and higher sales volume. The components of the Propulsion segment's net sales change were as follows:
Previous report
International sales were 32 percent of the Propulsion segment's net sales in 2022. International sales increased 6 percent year-over-year on a GAAP basis and 13 percent on a constant currency basis.
Previous report
Propulsion segment's operating earnings for the year were $522.9 million, an increase of 16.3 percent in 2022 versus the prior year, as a result of increased sales and lower operating expenses, slightly offset by higher inflationary costs and investments in new products and capacity expansion.
Previous report
Engine P&A segment's net sales decreased $110.4 million or 8.4 percent in 2023 versus the prior year due to lower sales in both of the Products and Distribution businesses. The components of the Engine P&A segment's net sales change were as follows:
Previous report
International sales were 29 percent of the Engine P&A segment's net sales in 2023. International sales decreased 11 percent year-over-year on a GAAP basis and 9 percent on a constant currency basis.
Previous report
Engine P&A segment's operating earnings for the year were $217.4 million, a decrease of 18.9 percent versus the prior year, due to a decline in sales and higher manufacturing costs more than offsetting the impact of pricing and lower operating expenses.
Previous report
Engine P&A segment's net sales decreased $61.5 million or 4.5 percent in 2022 versus the prior year due to a decline in sales volume only partially offset by the benefit of product mix and pricing implemented throughout the year. The components of the Engine P&A segment's net sales change were as follows:
Previous report
Engine P&A segment's operating earnings were $268.0 million in 2022, a decrease of 5.1 percent, driven by lower sales, as well as material and labor inflation and transition costs from a new distribution center.
Previous report
Navico Group segment's net sales decreased by $154.6 million or 14.5 percent in 2023 versus the prior year due to lower sales resulting from softer marine OEM orders and the continued weak RV manufacturing environment. The components of the Navico Group segment's net sales change were as follows:
Previous report
International sales were 37 percent of the Navico Group segment's net sales in 2023. International sales decreased 9 percent year-over-year on a GAAP basis and 10 percent on a constant currency basis.
Previous report
Navico Group segment's operating earnings for the year were $5.2 million, a decrease of 92.4 percent versus the prior year due to lower sales, restructuring charges associated with actions executed in the year and slightly elevated input costs, partially offset by benefits from new product introductions and cost reduction initiatives.
Previous report
Navico Group segment's net sales increased $381.0 million or 55.4 percent in 2022 versus the prior year due to the factors affecting all of our segments previously mentioned, in addition to having a full year of the Navico acquisition included in the segment's net sales for 2022. The components of the Navico Group segment's net sales change were as follows:
Previous report
International sales were 35 percent of the Navico Group segment's net sales in 2022. International sales increased 72 percent year-over-year on a GAAP basis and 82 percent on a constant currency basis.
Previous report
Navico Group segment's operating earnings were $68.2 million in 2022, an increase of 27.7 percent due to increased sales factors mentioned above, partially offset by increased input costs.
Previous report
The following table sets forth the Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021:
Previous report
Boat segment's net sales decreased $130.0 million or 6.1 percent versus 2022 due to decreased sales volumes to dealers, partially offset by favorable product mix and pricing. The components of the Boat segment's net sales change were as follows:
Previous report
International sales were 22 percent of the Boat segment's net sales in 2023. International sales decreased 12 percent year-over-year on a GAAP and on a constant currency basis.
Previous report
Boat segment operating earnings for the year were $155.6 million, a decrease of 26.9 percent versus the prior year, due to lower sales and restructuring charges associated with actions in the year, partially offset by cost reduction activities.
Previous report
Boat segment's net sales increased $416.3 million or 24.4 percent versus 2021 due to increased sales volumes to dealers and favorable product mix and pricing. The components of the Boat segment's net sales change were as follows:
Previous report
International sales were 24 percent of the Boat segment's net sales in 2022, and increased 13 percent on a GAAP basis and 19 percent on a constant currency basis.
Previous report
Boat segment's operating earnings were$212.8 million in 2022, an increase of 49.5 percent versus the prior year, due to increased sales together with operational efficiencies and positive mix. The increase was partially offset by inefficiencies resulting from supply chain disruptions and inflation pressures.
Previous report
Corporate operating expenses increased by $13.9 million in 2023 compared with 2022 due to spending on enterprise growth initiatives, the IT security incident and unfavorable mark-to-market adjustments for deferred compensation arrangements.
Previous report
Corporate operating expenses increased by$9.2 million in 2022 compared with 2021 due to the impairment of capitalized software intangible assets as well as an increase in investments in enterprise growth initiatives. This was partially offset by a decrease in variable compensation expense and favorable mark-to-market adjustments for deferred compensation arrangements.
Previous report
2022 Cash Flow
Previous report
The primary drivers of Net cash provided by operating activities of continuing operations in 2022 were net earnings, net of non-cash items, partially offset by increases in working capital. Accounts and notes receivable increased $74.6 million primarily due to increased sales. Inventory increased $292.8 million, primarily to support higher production volumes.
Previous report
We anticipate executing a balanced capital strategy in 2024, leveraging our strong cash position and liquidity. We anticipate being active with share repurchases with spend in excess of $200 million in 2024.
Previous report
Although we plan to continue funding many projects and investments in products and technology for future growth, we are in harvest phase as it relates to many of our larger capital projects from recent years and plan to scale back spending slightly without anticipated sacrifice to any future growth plans, leading to anticipated capital expenditures of approximately $225 million in 2024.
Previous report
Long-Lived Assets. We continually evaluate whether events and circumstances have occurred that indicate the remaining estimated useful lives of our definite-lived intangible assets and other long-lived assets may warrant revision or that the remaining balance of such assets may not be recoverable. We exercise judgment when evaluating whether events or circumstances have occurred either internally or externally that would warrant revisions to useful lives or indicate the balances of the assets may not be recoverable. Once an impairment indicator is identified, we test for recoverability of the related asset group using an estimate of undiscounted cash flows over the asset group's remaining life. We exercise judgment when forecasting future cash flows including the performance of the underlying market in which the asset or asset group operates as well as the impact of specific initiatives. These estimates are subject to uncertainty as actual results may differ from our forecast. If actual results differ from the forecast, our results of operations could be materially adversely affected. If an asset group's carrying value is not recoverable, we record an impairment loss based on the excess of the carrying value of the asset group over the long-lived asset group's fair value. Fair value is determined using observable inputs, including the use of appraisals from independent third parties, when available, and, when observable inputs are not available, based on our assumption of the data that market participants would use in pricing the asset, based on the best information available in the circumstances. Specifically, we use discounted cash flows to determine the fair value of the asset when observable inputs are unavailable. We tested our long-lived asset balances for impairment as indicators arose during 2023, 2022 and 2021, resulting in impairment charges of $1.3 million, $1.5 million and $0.8 million, respectively, which are recognized either in Restructuring, exit and impairment charges or Selling, general and administrative expense in the Consolidated Statements of Operations.
Previous report
Income Taxes. Deferred taxes are recognized for the future tax effects of temporary differences between financial and income tax reporting using tax rates in effect for the years in which the differences are expected to reverse. We evaluate the realizability of net deferred tax assets and, as necessary, record valuation allowances against them. We exercise judgment when evaluating the realizability of deferred tax assets by evaluating the potential to recover the value of these assets through the utilization of tax loss and credit carrybacks, the reversal of existing taxable temporary differences and carryforwards, certain tax planning strategies, and future taxable income exclusive of reversing temporary differences and carryforwards. These estimates are subject to uncertainty as actual results may differ from our forecast. If actual results differ from the forecast, our results of operations could be materially adversely affected. We estimate our tax obligations based on historical experience and current tax laws and litigation. The judgments made at any point in time may change based on the outcome of tax audits and settlements of tax litigation, as well as changes due to new tax laws and regulations and our application of those laws and regulations. These factors may cause our tax rate and deferred tax balances to increase or decrease. We exercise judgment when evaluating whether it is more likely than not a tax position will be sustained upon examination by the relevant taxing authorities. This evaluation is subject to uncertainty as it involves the interpretation of tax laws and regulations and our interpretation could differ from that of the taxing authorities. If a position is not sustained upon examination, the impact could be material to our results of operations and cash flows. See Note 10 – Income Taxesin Notes to Consolidated Financial Statements for further details.
Reworded paragraphs (29)
Previous wording
Certain statements in Management's Discussion and Analysis are based on non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States. A "non-GAAP financial measure" is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. For example, the discussion of our cash flows includes an analysis of free cash flows and total liquidity; the discussion of our net sales includes net sales on a constant currency basis; the discussion of our net sales includes net sales excluding acquisitions; and the discussion of our earnings includes a presentation of operating earnings and operating margin excluding restructuring, exit and impairment charges, purchase accounting amortization, acquisition, integration and IT-related costs, IT security incident costs, Sport Yacht & Yachts, reclassification of held-for-sale items, gain on sale of assets, TN-BC Holdings LLC joint venture impairment, loss on early extinguishment of debt, special tax items, and other applicable charges and of diluted earnings per common share, as adjusted. Non-GAAP financial measures do not include operating and statistical measures.
Current wording
Certain statements in Management's Discussion and Analysis are based on non-GAAP financial measures. GAAP refers to generally accepted accounting principles in the United States. A "non-GAAP financial measure" is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented. For example, the discussion of our cash flows includes an analysis of free cash flows and total liquidity; the discussion of our net sales includes net sales on a constant currency basis; the discussion of our net sales includes net sales excluding acquisitions; and the discussion of our earnings includes a presentation of operating earnings and operating margin excluding restructuring, exit and impairment charges, purchase accounting amortization, acquisition, integration, and IT related costs, IT security incident costs and other applicable charges and of diluted earnings per common share, as adjusted. Non-GAAP financial measures do not include operating and statistical measures.
Previous wording
As previously announced on June 13, 2023, the Company experienced an IT security incident that impacted some of its systems and global facilities. Please refer to Note 1 – Significant Accounting Policies in the Notes to the Consolidated Financial Statements for further details.
Current wording
In June 2023, the Company experienced an IT security incident that impacted some of its systems and global facilities. Please refer to Note 1 – Significant Accounting Policies in the Notes to the Consolidated Financial Statements for further details.
Previous wording
During the second quarter of 2022, we acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $93.9 million. Refer to Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements for further information.
Current wording
During the fourth quarter of 2023, we acquired additional Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $16.0 million.
Previous wording
During the fourth quarter of 2023, we acquired additional Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $16.0 million. On September 1, 2023, the Company acquired all of the issued and outstanding shares of Fliteboard Pty Ltd for $87.6 million net cash consideration. Refer to Note 4 – Acquisitionsin the Notes to the Consolidated Financial Statements for further information.
Current wording
On September 1, 2023, the Company acquired all of the issued and outstanding shares of Fliteboard Pty Ltd for $88.3 million net cash consideration. Refer to Note 4 – Acquisitionsin the Notes to the Consolidated Financial Statements for further information.
Previous wording
Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency reflect the impact that changes in currency exchange rates had on comparisons of net sales. To determine this information, net sales transacted in currencies other than U.S. dollars have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period. The percentage change in net sales expressed on a constant currency basis better reflects the changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Approximately 23 percent of our annual net sales are transacted in a currency other than the U.S. dollar. Our most material exposures include sales in Euros, Canadian dollars, Australian dollars and Brazilian real.
Current wording
Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency reflect the impact that changes in currency exchange rates had on comparisons of net sales. To determine this information, net sales transacted in currencies other than the U.S. dollar have been translated to U.S. dollars using the average exchange rates that were in effect during the comparative period. The percentage change in net sales expressed on a constant currency basis better reflects the changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Approximately 25 percent of our annual net sales are transacted in a currency other than the U.S. dollar. Our most material exposures include sales in Euros, Canadian dollars, Australian dollars and Brazilian real.
Previous wording
Net sales decreased 6.0 percent during 2023 when compared with 2022. The components of the consolidated net sales change were as follows:
Current wording
Net sales decreased 18.2 percent during 2024 when compared with 2023. The components of the consolidated net sales change were as follows:
Previous wording
Sales in 2023 were below the prior year as higher discounts in select segments coupled with the impact of cautious wholesale ordering patterns by dealers, OEMs and retailers in the second half of the year were partially offset by successful new product momentum, positive mix and pricing. Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.
Current wording
Sales in 2024 were below the prior year as the impact of lower wholesale ordering patterns 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. Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.
Previous wording
Gross margin percentage decreased 70 basis points in 2023 when compared with 2022 driven by higher manufacturing costs including material and labor inflation (260 bps), depreciation (60 bps), absorption (35 bps), the IT security incident (30 bps), and unfavorable foreign currency exchange-rate fluctuations (25 bps), offset by sales-related drivers (330 bps) and acquisitions (10 bps).
Current wording
Gross margin decreased 210 basis points in 2024 when compared with 2023 driven by lower absorption from decreased production levels (90 bps), material and labor inflation (60 bps), sales-related drivers (60 bps), and foreign currency exchange-rate fluctuations (20 bps), partially offset by acquisitions (20 bps).
Previous wording
During 2023, we recorded restructuring, exit and impairment charges of $54.7 million compared with $25.1 million in 2022. The Company estimates the restructuring actions executed in 2023 will result in approximately $45 million of annualized cost savings. The future cost savings related to restructuring actions executed in 2022 are not expected to be material to our Consolidated Financial Statements. See Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details.
Current wording
During 2024, we recorded restructuring, exit and impairment charges of $121.7 million compared with $54.7 million in 2023. The Company estimates the restructuring actions executed in 2024 will result in approximately $24.0 million of annualized cost savings. See Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details.
Previous wording
We recognized equity (loss) earnings of $(11.4) million and $4.0 million in 2023 and 2022, respectively. The primary driver of the loss in 2023 is the impairment charge taken related to our investment in TN-BC Holdings LLC. Refer to Note 1 – Significant Accounting Policies in the Notes to Consolidated Financial Statements for further information.
Current wording
We recognized Equity earnings (loss) of $8.6 million and $(11.4) million in 2024 and 2023, respectively. The primary driver of the loss in 2023 is the impairment charge taken related to our investment in TN-BC Holdings LLC. Refer to Note 1 – Significant Accounting Policies in the Notes to Consolidated Financial Statements for further information.
Previous wording
We recognized $7.6 million and $(6.1) million in 2023 and 2022, respectively, in Other income (expense), net. Other income (expense), net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs.
Current wording
We recognized $9.0 million and $7.6 million in 2024 and 2023, respectively, in Other income (expense), net. Other income (expense), 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.
Previous wording
Net interest expense increased in 2023 compared with 2022 due to an increase in average daily debt outstanding, which was influenced by debt issuances. Refer to Note 14 – Debtin the Notes to Consolidated Financial Statements.
Current wording
Net interest expense increased in 2024 compared with 2023 due to an increase in average daily debt outstanding, which was influenced by the timing of debt issuances. We also recognized a loss on early extinguishment of debt related to the redemption of our 2027 Notes. Refer to Note 14 – Debtin the Notes to Consolidated Financial Statements.
Previous wording
We recognized an income tax provision of $196.3 million and $172.3 million in 2023 and 2022, respectively. The increase is primarilydue to the discrete income tax expense recorded in connection with the intercompany sales of intellectual property rights in the first and third quarters of 2023. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 31.2 percent and 20.2 percent for 2023 and 2022, respectively. 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.
Current wording
We recognized an income tax provision of $54.0 million and $196.3 million in 2024 and 2023, respectively. The decrease is primarily due to lower pretax income and the prior year intercompany sale of certain intellectual property rights. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 26.6 percent and 31.2 percent for 2024 and 2023, 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.
Previous wording
Propulsion segment's net sales decreased $60.2 million or 2.1 percent in 2023 versus prior year due to cautious OEM ordering patterns in the second half of the year, partially offset by continued market share gains in outboard engines, positive mix and pricing as well as the acquisition of Fliteboard. The components of the Propulsion segment's net sales change were as follows:
Current wording
Propulsion segment's net sales decreased in 2024 versus prior year due to softer market conditions resulting in lower 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. The components of the Propulsion segment's net sales change were as follows:
Previous wording
The following table sets forth the Engine P&A segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021:
Current wording
The following table sets forth Engine P&A segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2024 and 2023:
Previous wording
International sales were 30 percent of the Engine P&A segment's net sales in 2022. International sales decreased 9 percent year-over-year on a GAAP basis and 3 percent on a constant currency basis.
Current wording
International sales were 30 percent of the Engine P&A segment's net sales in 2024. International sales increased slightly year-over-year on a GAAP basis and increased 1 percent on a constant currency basis.
Previous wording
The following table sets forth the Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021:
Current wording
The following table sets forth Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2024 and 2023:
Previous wording
The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021:
Current wording
The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating loss for the years ended December 31, 2024 and 2023:
Previous wording
Net cash provided by operating activities of continuing operations in 2022 totaled $580.4 million versus $586.2 million in 2021. The decrease is primarily due to increased working capital, partially offset by higher net earnings.
Current wording
Net cash provided by operating activities of continuing operations in 2024 totaled $449.5 million versus $745.2 million in 2023. The decrease is primarily due to lower net earnings.
Previous wording
The primary drivers of Net cash provided by operating activities of continuing operations in 2023 were net earnings, net of non-cash items, partially offset by working capital usage. Accounts and notes receivable decreased $54.5 million primarily due to lower sales and timing of collections. Accounts payable decreased $86.1 million, primarily due to lower purchasing resulting from reduced production. Accrued expenses decreased $22.8 million, primarily driven by a reduction in our derivative liability position.
Current wording
The primary drivers of Net cash provided by operating activities of continuing operations in 2024 were net earnings, net of non-cash items, partially offset by 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 million primarily due to lower planned production. Accounts and notes receivable decreased $45.0 million primarily due to lower sales and timing of collections. Accounts payable decreased $144.2 million, primarily due to lower purchasing resulting from reduced production. Accrued expenses decreased $104.0 million, primarily driven by a reduction in accrued variable compensation.
Previous wording
Net cash used for investing activities of continuing operations was $443.2 million, which included $388.3 million of capital expenditures, $93.8 million of cash paid for acquisitions, net of cash acquired, and $60.1 million of purchases of marketable securities, partially offset by $56.4 million of sales or maturities of marketable securities and $42.5 million of cross-currency swap settlements. Our capital spending was focused on investments in capacity expansion, new products and technology.
Current wording
Net cash used for investing activities was $168.9 million, which included $167.4 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 million of proceeds from sales of property, plant and equipment. Our capital spending was focused on investments in new products and technologies.
Previous wording
Net cash provided by financing activities was $110.8 million and primarily related to proceeds of issuances of long-term debt, partially offset by common stock repurchases, payments of long-term debt including current maturities, and cash dividends paid to common shareholders. 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, 2022.
Current wording
Net cash used for financing activities was $442.7 million, which included $613.2 million of payments of long-term debt including current maturities, $200.0 million of common stock repurchases, $112.3 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 million of proceeds from issuances of short-term debt. Refer to Note 14 – Debtin the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2024.
Previous wording
(B) We define Total liquidity as Cash and cash equivalents and Short-term investments in marketable securities as presented in the Consolidated Balance Sheets, plus amounts available for borrowing under our lending facilities. Total liquidity is not intended as an alternative measure to Cash and cash equivalents and Short-term investments in marketable securities as determined in accordance with GAAP in the United States. We use this financial measure both in presenting our results to shareholders and the investment community and in our internal evaluation and management of our businesses. Management believes that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same metric that we use to gauge progress in achieving our goals. We believe that the non-GAAP financial measure "Total liquidity" is also useful to investors because it is an indication of our available highly liquid assets and immediate sources of financing.
Current wording
(B) We define Total liquidity as Cash and cash equivalents and Short-term investments in marketable securities as presented in the Consolidated Balance Sheets, plus amounts available for borrowing under our lending facilities. Total liquidity is not intended as an alternative measure to Cash and cash equivalents and Short-term investments in marketable securities as determined in accordance with GAAP in the United States. We use this financial measure both in presenting our results to shareholders and the investment community and in our internal evaluation and management of our businesses. We believe that this financial measure and the information it provides are useful to investors because it permits investors to view our performance using the same metric that we use to gauge progress in achieving our goals. We believe that the non-GAAP financial measure "Total liquidity" is also useful to investors because it is an indication of our available highly liquid assets and immediate sources of financing.
Previous wording
Cash, cash equivalents and marketable securities totaled $468.6 million as of December 31, 2023, a decrease of $131.5 million from $600.1 million as of December 31, 2022. Total debt as of December 31, 2023 and December 31, 2022 was $2,430.4 million and $2,509.0 million, respectively. Our debt-to-capitalization ratio decreased to 54 percent as of December 31, 2023 from 55 percent as of December 31, 2022.
Current wording
Cash, cash equivalents and marketable securities totaled $269.8 million as of December 31, 2024, a decrease of $198.8 million from $468.6 million as of December 31, 2023. Total debt as of December 31, 2024 and December 31, 2023 was $2,340.6 million and $2,430.4 million, respectively. Our debt-to-capitalization ratio was 55 percent and 54 percent as of December 31, 2024 and December 31, 2023, respectively.
Previous wording
We borrowed $125.0 million under the Credit Facility during 2022, all of which was repaid prior to year-end and thus we did not have any borrowings outstanding under the Credit Facility as of December 31, 2022. Available borrowing capacity under the Credit Facility as of December 31, 2022 totaled $747.2 million, net of $2.8 million of letters of credit outstanding. During 2022, the maximum amount utilized under our CP Program was $300.0 million.
Current wording
There were no borrowings under the Revolving Credit Agreement (Credit Facility) during 2024. Available borrowing capacity under the Credit Facility as of December 31, 2024 totaled $997.0 million, net of $3.0 million of letters of credit outstanding. During 2024, the maximum amount utilized under our unsecured commercial paper program (CP Program) was $280.0 million and as of December 31, 2024, the Company had $115.0 million of borrowings outstanding under the CP Program.
Previous wording
There were no borrowings under the Revolving Credit Agreement (Credit Facility) during 2023. Available borrowing capacity under the Credit Facility as of December 31, 2023 totaled $741.9 million, net of $8.1 million of letters of credit outstanding. During 2023, the maximum amount utilized under our unsecured commercial paper program (CP Program) was $125.0 million.
Current wording
There were no borrowings under the Credit Facility during 2023. Available borrowing capacity under the Credit Facility as of December 31, 2023 totaled $741.9 million, net of $8.1 million of letters of credit outstanding. During 2023, the maximum amount utilized under our CP Program was $125.0 million.
Previous wording
We calculate the fair value of our reporting units considering both the income approach and the guideline public company method. The income approach calculates the fair value of the reporting unit using a discounted cash flow approach utilizing a Gordon Growth model. Internally forecasted future cash flows, which we believe reasonably approximates market participant assumptions, are discounted using a weighted average cost of capital (Discount Rate) developed for each reporting unit. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance. We exercise judgment when forecasting future cash flows including the performance of the underlying market in which the reporting unit operates as well as the impact of specific initiatives. We exercise judgment when determining the level of risk associated with achieving the forecasted future cash flows. These estimates are subject to uncertainty as actual results may differ from our forecast. If actual results differ from the forecast, our results of operations could be materially adversely affected. Fair value under the guideline public company method is determined for each reporting unit by applying market multiples for comparable public companies to the unit’s current and forecasted financial results. We exercise judgment when determining the comparable public companies and market multiples. The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples.
Current wording
We calculate the fair value of our reporting units considering both the income approach and the guideline public company method, a form of the market approach. The income approach calculates the fair value of the reporting unit using a discounted cash flow approach utilizing a Gordon Growth model. Internally forecasted future cash flows, which we believe reasonably approximates market participant assumptions, are discounted using a weighted average cost of capital (Discount Rate) developed for each reporting unit. The Discount Rate is developed using market observable inputs, as well as considering whether or not there is a measure of risk related to the specific reporting unit’s forecasted performance. We exercise judgment when forecasting future cash flows including the performance of the underlying market in which the reporting unit operates as well as the impact of specific initiatives. We exercise judgment when determining the level of risk associated with achieving the forecasted future cash flows. These estimates are subject to uncertainty as actual results may differ from our forecast. If actual results differ from the forecast, our results of operations could be materially adversely affected. Fair value under the guideline public company method is determined for each reporting unit by applying market multiples for comparable public companies to the unit’s current and forecasted financial results. We exercise judgment when determining the comparable public companies and market multiples. The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples.
Previous wording
We did not record any goodwill impairments in 2023,2022 or 2021.
Current wording
We recorded an $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 2023 or 2022.
Previous wording
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 described below. 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. The Company recorded impairment charges of $16.6 million during the year ended December 31, 2023 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. The Company did not record any impairment charges during the year ended December 31, 2021.
Current wording
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. The Company recorded impairment charges of $5.0 million during the year ended December 31, 2024 related to the Navico trade name. The Company recorded impairment charges of $16.6 million during the year ended December 31, 2023 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.
Rearranged previous paragraphs (8)
Previous report — wording carried elsewhere
Net sales increased 16.5 percent during 2022 when compared with 2021. The components of the consolidated net sales change were as follows:
Previous report — wording carried elsewhere
We recognized $(6.1) million and $(6.8) million in 2022 and 2021, respectively, in Other income (expense), net. Other income (expense), net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs.
Previous report — wording carried elsewhere
Net interest expense increased in 2022 compared with 2021 due to an increase in average daily debt outstanding, which was influenced by debt issuances. Refer to Note 14 – Debtin the Notes to Consolidated Financial Statements.
Previous report — wording carried elsewhere
We recognized an income tax provision of $172.3 million and $141.0 million in 2022 and 2021, respectively. The increase is primarily due to increased earnings before income taxes. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 20.2 percent and 19.1 percent for 2022 and 2021, respectively. 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.
Previous report — wording carried elsewhere
Due to the factors described in the preceding paragraphs, operating earnings, net earnings from continuing operations and diluted earnings per common share from continuing operations increased during 2022. Diluted earnings per common share from continuing operations benefited from common stock repurchases in both years.
Previous report — wording carried elsewhere
Net cash provided by operating activities of continuing operations in 2023 totaled $745.2 million versus $580.4 million in 2022. The increase is primarily due to a decrease in working capital usage, partially offset by lower net earnings. 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.
Previous report — wording carried elsewhere
Net cash used for investing activities of continuing operations was $378.9 million, which included $289.3 million of capital expenditures and $103.6 million of cash paid for acquisitions, net of cash acquired, partially offset by $14.8 million of sales of property, plant and equipment. Our capital spending was focused on investments in capacity expansion, new products and technology, although at lower levels than the prior year.
Previous report — wording carried elsewhere
Net cash used for financing activities was $487.0 million and primarily related to common stock repurchases, cash dividends paid to common shareholders and payments of long-term debt including current maturities. Refer to Note 14 – Debtin the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2023.