Brunswick Corporation (BC) Earnings Call Transcript & Summary

Hello, everyone. Good morning, and welcome to Brunswick's 2023 Investor Day here at the New York Stock Exchange. I'm Lee Gordon. We are happy to be here again with you live today in-person and a very warm welcome to everybody who is joining us online from around the world. Watching our show, we've been doing a lot of great work here at Brunswick and are very excited to tell you all about it today. We're going to share some of our upcoming strategic plans and highlight some of the tremendous progress we have made since we were last together in Q1 of 2022. Today, you will hear from many of our senior leaders and from our management team, again, including some of our division presidents and our functional leaders as well. But before I introduce our first speaker, we do have to talk a little bit of business. And I'd like to remind everyone here on the call that we will comment and we'll have some of our forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. Now for details and factors to consider, please refer to the details provided in our forward-looking statements included in the materials today. You can also find those on brunswick.com. Now also during our presentation, we will be referring to certain non-GAAP financial information. Now reconciliations of GAAP to non-GAAP financial measures are provided in the appendix to this presentation and most recently published in the 8-K, which is also available on our website at brunswick.com. So as I mentioned, we have a very exciting day for you today here at the New York Stock Exchange. We're going to commence with some of the content that you will see for the very first time. And those of you here today, we hope -- we will get you out on the water. We're going to monitor the weather, and we'll let you know later on this afternoon. In just a moment, we'll hear from presentations first beginning with our CEO, Dave Foulkes, sharing highlights about our business and all our successes recently. But before Dave takes the stage, we want to show you why we truly believe in our philosophy that Next Never Rests. [Presentation]

Thank you, Lee. Good morning, everybody. Thank you all for joining us. I hope you enjoyed the video. I think it really conveys the spirit of Brunswick and the power of our enterprise. Thank you for joining us for the presentation this morning. As Lee said, we'll make a call on the on water portion of the day, probably around mid-morning, make sure we don't put anybody in jeopardy on those boats. Once again, our leadership team is very excited to share our strategic progress with you and also our incredible passion for our businesses. As Lee said, it was March 2022, we had our last Investor Day about 18 months ago, and we all know a lot has happened since then. We've had the end of the pandemic. We've had the supply chain crisis. We have the ongoing crisis in Ukraine. They all drove up inflation, and they drove up prices of durable goods, including our products. And then we had the reaction of the central banks, including the Fed, raising interest rates to combat inflation, which has driven up financing costs for many of our consumers. So the combination of those things have certainly put our consumers under pressure. They've impacted our end markets. And certainly, you see it to some extent in our financial performance and in our forecasts. As we get towards the end of Q3, we are still seeing pretty solid Boat Retail in the U.S., but we are also seeing that our customer OEMs, customers to Mercury and customers to Navico Group are being very cautious about their production planning and their inventory levels. So we would expect to be managing that situation and fighting through the balance of the year. The good news of all that though, really is that I think the industry is being prudent. I think that when growth reemerges, which, of course, it will, that it will flow fairly quickly through to wholesale and we'll be in a good situation on pipelines. So despite everything that's been going on despite the headwinds, despite the turbulence, we have continued to execute our strategy, adapted to market conditions and even found new growth opportunities, which we will share with you some of them, at least for the first time today. We've also taken the opportunity to take a lot of expense control actions and undertake some structural cost reduction, which will certainly continue to benefit us. And we've modified our capital strategy, slowed our M&A in favor of much heavier share repurchases than we'd originally planned. As a consequence of all that, I think we've demonstrated the power of our portfolio. The strength of our secular growth drivers by significantly outperforming previous downside scenarios. And I think also placing ourselves in a really strong position to capitalize when growth returns, which, of course, inevitably it will. So we have the strongest leadership team in the recreational product space. Great experience in marine and adjacent verticals, but also very strong domain experience in areas that are very important to our future digital transformation, advanced mobility. One person who is not with us today, unfortunately, is our CFO, Ryan Gwillim, who many of you know extremely well. Ryan is in the office and actually did a lot of work to support this presentation. But unfortunately, due to a medical condition, he's not allowed to fly at the moment. He will be back with us very soon and look forward to meeting you again then. But standing in for Ryan today is our Senior Vice President of Finance, Neha Clark, who you all know very well. So she'll present the finance section of the deck today. Our other speakers include our Chief Marketing Officer, Lauren Beckstedt, our Chief Technology Officer; Alex Cattelan, and our 4 business presidents, Aine Denari, President of our Boat Group; John Buelow, President of Mercury Marine, Propulsion and Parts and Accessories. Brett Dibkey, President of Navico Group; and Brenna Preisser, President of Business Acceleration. So we have taken a bit of a different approach to the agenda today than in past investor days. In past investor days, we kind of run fairly sequentially through our businesses and our functions. But today, Brunswick is a much more integrated enterprise. And so we've taken a more thematic approach to the agenda. We have one enterprise-wide electrification strategy, for example. So instead of hearing pieces of it, 3 or 4 different times, you'll hear about it altogether in one time. Same on product leadership. We have one strategy, operational excellence, we have one strategy. So our business leaders will present those together with illustrations and examples from across the enterprise. So I will start the presentation with an overview of our business, our progress with our strategic initiatives, how we've adapted to these unusual market conditions and how we've even added new growth opportunities. And then I'll close with some high-level financial projections. And then Lauren Beckstedt, our CMO will talk about our intensifying engagement with our consumers, deepening our understanding of our consumers. Then John and Brett and Aine will talk about our operational excellence strategies and our product leadership strategies, and they will be joined by Brenna and Alex to round out our ACES strategy. And then wrapping up will be Neha with more detail on those long-range financial projections. I always like to start with a slide like this. It's a great reference slide. It shows our 5 businesses. Propulsion, Engine P&A, Navico Group, Boat Group and Business Acceleration and some of the wonderful industry-leading brands we have across all those businesses. It also shows our 4 reportable segments. We combine our Boat Group and Business Acceleration into our boat segments. So we have 4 reportable segments. Business Acceleration is our smallest division, but also our fastest-growing division. So the Next Never Rests philosophy also applies here, and you can see some new brands in this list. In Mercury, you can see the Avator brand for our electric outboards and also the Flite brand for the E-Foils which we'll talk about a bit later. And in the -- in Boat Group, you can see the Veer small electric boats and also the brand-new Navan premium of venture brand that we launched at the Cannes Boat Show just last week, very successfully. Like any large contemporary business, our operating model doesn't just consist of our operating divisions. We have centers of excellence to leverage our scale and develop new capabilities and drive synergies across our enterprise. And in our case, a particular relevance here is our center of excellence for advanced technology led by Alex Cattelan. They are charged with coordinating our ACES strategy and developing some of the technology stack as well as other innovations. And our global marketing organization, led by Lauren, as you can imagine, at the moment, they are working hard on demand stimulation, lead generation, consumer analytics, advancing our marketing digital assets that are really important in a market like the one we see today. So having talked about a bit of background on our business, I want to talk now about our current market position in a bit more detail and how we are evolving our business for success in the future. So I think you all know that we are the biggest, by far, business in the marine industry. And we have many of the industry-leading brands across our entire enterprise. But we're also the most innovative company in the marine industry. We've had 600 -- more than 650 patents awarded since 2017 to protect our intellectual property. And if you look at our individual businesses and brands, and we'll talk about this later, you'll see that we're frequently the leader in their respective spaces. But altogether, our enterprise is the most comprehensive ecosystem by far in the industry. It can offer solutions to our OEM customers, to our channel partners, to our end consumers that nobody else can possibly offer. And that is an incredible competitive moats around our business. So let's dive a bit deeper. You know that Mercury because we've said it enough, Mercury has the leading outboard market share in the U.S., approaching 50%. We also now have the leading share in Canada and the leading share in Europe and many other major markets. And if we're not #1, we're #2 and we have a plan to get to #1. So it's just a matter of time. Right, John? We're also the leader in -- about more than 90% of recreational boats now are sold with outboard engines, but the Sterndrive market is still important, and Mercury is the leader in that market as well, including with new forward-facing drives for hybrid wakesports boats. We're also the leader in the global high-performance propulsion market, which pushes the boundaries of marine performance and technology and is very profitable. We occupy almost that entire market and continue to be a leader in that space. We are the leader, the biggest global distributor of marine parts and accessories. We enjoy about a 40% market share in the U.S. and high share in other markets as well. And as you'll see later, we're continuing to invest to make sure that we can deliver efficiently most of our products get delivered same day next day. It's very important for our dealers that, that happens. So we're continuing to invest in new technology to make sure we stay on the leading edge. We're the largest, certainly by revenue, boat manufacturer in the world with 18 of industry's leading brands, including, as you saw, 3 of the 4 best known brands in the U.S.: Boston Whaler, Sea Ray and Bayliner. And as Aine will discuss later, we're the leader in many segments, and we're also growing share, which is very important when the market is steady, that we grow share. Of course, we have the largest boat club in the world by an order of magnitude with Freedom Boat Club. So a lot of firsts within Brunswick. So here are some of the themes that we'll cover in the 2023 Investor Day. I will talk about our progress with the strategic initiatives that you know very well, the ones that we presented in the 2022 Investor Day. That included refining our brand this Next Never Rests tagline, advancing our product leadership capability to deliver more products to market faster and commercialize our ACES strategy, which is leading to market share gains. Our investments in automation and in operational excellence. The way that we're leaning in to the most resilient parts of the market. That's parts and accessories, but also things like Freedom, subscription services and also the premium part of the market which has been more robust in the current market conditions than the value part of the market. And then finally, the work that we're doing to make sure that we squeeze every enterprise synergy that we possibly can. And that is a big -- a large amount. And then Lauren and I and later Neha, will talk a bit about market and consumer trends and health. Obviously, there's a lot of pressure on many consumers at the moment, as I discussed earlier. But there are also some really exciting, I think, an encouraging long-term engagement trends with consumers in boating that Lauren will cover in detail. And then we'll talk about market dynamics and inventory and many other things. So as I mentioned, when we approached our 2022 Investor Day, the baseline scenario that we set out was of a market that was flat to growing slowly. And obviously, that is not what we've experienced. The market is down about 30% from its peak. And so we've had to adapt to those conditions. I think we've adapted really well and we'll talk about the ways that we've adapted to those conditions. We'll also talk about the fact that we've added new growth opportunities to offset some of those slower growth areas that we anticipated or that we now face versus our 2022 strategy. So some of those things will include the structural cost reduction actions, that we've taken and the expense control actions, the operational efficiency work that we've been doing, the work that we've been doing to stimulate demand, which has led to market share gains, the adjustments to our capital strategy that I mentioned. And then also these new growth vectors that we've begun to introduce, you may have seen some press releases recently. We'll talk about those in a lot more detail. So the original strategy, combined with the way that we've adapted and added, leads to new financial projections through the '23 to '27 period, and we'll share those with you as well today. So this is the -- a summary on a page, if you like, of the 2022 Next Wave strategy. There were 3 main elements to that strategy. Enhancing our existing position of leadership, which I think I've just talked about in quite some detail, also investing to win in a changing world, changing technology, changing consumer expectations. And then the work that we've done to accelerate the contribution of some emerging value drivers like Freedom Boat Club to be more material to our finances. I will not go through the right-hand side here, some of the operational initiatives associated with those because I'll cover them in more detail a bit later. Those of you who know us well, know our ACES strategy pretty well. But for those of you who may be a bit less familiar, ACES stands for autonomous, connected, electrified and shared. You'll recognize those themes from many verticals. They're just as important to marine. The application can be somewhat different, and we'll talk about that, but they are just as important. ACES is the cornerstone of our innovation strategy, but it's not the full extent of our strategy. We're innovating in many other areas that we'll also cover. So you will see this framework throughout my part of the presentation, and it attempts to delineate the actions and initiatives that we have underway. And so those that essentially optimize the core of our existing business represented by the inner circle here, those associated with executing and accelerating the very familiar strategic initiatives that we've been -- we laid out in 2022 and a little bit before. And then the outer ring represents the ways that we are adapting to the realities of the market and adding new growth opportunities. So let me just pull out some highlights from that inner ring, things that we are doing to optimize our existing business. At an enterprise level, of course, we are refining the Brunswick brand, and I hope you've seen that, but below the surface, we're doing an awful lot more. We've done an awful lot of work to enhance our marketing center of excellence which is extremely important in the current environment for demand stimulation and share gains, and it's being very successful. I'll explain how. But we also have enterprise-wide leveraging our scale initiatives on indirect costs, on commodity costs, on transportation costs. We are, by far, the biggest player in this industry, and we're doing everything we can to leverage that fact to reduce our costs. In Engine P&A, we have working hard to get up to 100% at our new distribution center, which is very high tech in Indiana. It's processing about 75% of all our orders at the moment. So we hope to get the other 25% in there by the end of the year. And Navico Group has undertaken some really major cost reduction, restructuring and footprint rationalization actions I'll talk about those. And then our Boat Group continues to be laser-focused on operating margins. Through new product introductions, through automation, through organizational consolidation, through footprint consolidation. We are doing everything we can to expand and maintain those margins. And then finally, in Business Acceleration, and you might think this is a bit of an odd example, but I'll explain it. We have just introduced a brand-new reservation system that all of the members of Freedom use. Now that is important for the Freedom membership experience, but what is even more important is that new system is backed by much better analytics than we have ever had before. So we understand everything about how everybody is using our boats, how the boat is being used. And that is really helpful in optimizing our fleet and optimizing our operations, optimizing our service, optimizing our maintenance. So this new system is a real enabler for more efficient performance of Freedom Boat Club. Here are just a few proof points behind there. About 30% of Boat Group sales are now digitally nurtured or digitally curated by us. That adds demand for our Boat Group, but it's more important than that if we know those customers, then we can continue to serve them new products and new experiences and new services in the future. We've invested about $40 million in our new distribution center, which I just mentioned, which is now handling about 75% of all of our P&A distribution. Navico in its consolidation efforts, has announced the closure of 13 locations already and completed the closure of 11. So it's on a very fast pace towards that consolidation. Boat Group between 2019 and 2022, expanded operating margins almost 300 basis points. Through a combination of those actions I talked about earlier. And that new reservation system in Freedom has only been online for about 12 or 18 months, already processed 400,000 reservations and generated all the analytics behind that. I did want to take a bit more time to talk about our Engine P&A business. And our Navico Group because they are a core part of our resiliency strategy. And they have been, to be honest, subject to pretty unusual market dynamics over the past year, particularly the stocking correction, if you like, or destocking that is occurring in our retail channel. Essentially, the retail channel built a lot of inventory during the supply chain crisis and now is destocking, which means that even though retail orders are fairly solid, we get fewer wholesale orders, although that is abating. So let me talk first about our Engine P&A business. That is essentially the annuity of Mercury's huge market share over time. It has contributed enormous growth to us, and it is a very stable market, and we expect it to continue to contribute strongly for us in the future. If you look at U.S. retail product sales and P&A, they're very similar to last year at a retail level. At a wholesale level, we have experienced this destocking process, which has led to lower wholesale sales. But we do believe that, that is significantly abating and we're more or less through that cycle. We're beginning to see P&A picking up again on a year-over-year basis. Between 2019 and 2022, that business top line grew 10% at 10% CAGR. So it is a very strong growth through that period. And it's preserving really strong margins and growing margins. Moving on to the Navico Group business. That has certainly been subject to some headwinds in terms of demand, that destocking cycle, Navico is more exposed to the recreational vehicle market, which is most of you know because you -- at least some of you cover all these, that business has been essentially through a full reset. But we once again see those retail imbalances beginning to correct. I think there are a few signs of life in the RV industry. It's not picking up greatly yet. And certainly, as I mentioned, as our OEM customers and the Marine side of the business remain cautious with our production planning that will be a bit of a headwind, but we have a great playbook for this kind of business. We've executed it with Mercury's outboard business, with the Boat Group business, we are putting a huge effort into industry-leading products and accelerating a lot of restructuring and cost reduction. But it will may be a bit choppy at the moment, we are very convinced that we can get Navico Group margins back up to the mid-teens through the planning cycle. So let me move on now. We've talked about optimization of the core business to the way that we're executing and accelerating those well-understood strategic initiatives. In our Propulsion business, you know that includes new products and capacity and high horsepower. We are uniquely placed in high horsepower. I'll talk about that differentiation, but also launching our first Electric Outboards, the Avator Electric Outboards. In Navico Group, it's developing and launching more connected full system solutions, which we'll talk a lot about later and power management solutions across multiple verticals, particularly the Fathom System that we've talked about earlier that is generating a huge amount of interest. In Boat Group, it's about expanding our production capacity in our premium brands like Boston Whaler and Sea Ray, Launching small electric boats and then optimizing the portfolio of models in Boat Group to line up with the needs of Freedom Boat Club. And in business acceleration, it's been about quickly expanding our Boat Club network in the U.S. and Europe. Acquiring Freedoms of franchises where that makes sense in Tier 1 markets and then also expanding our pre-owned boat business, Boateka and Brenna will talk about that later. So here are some great proof points. We'll talk about these in more detail, but I stole all the best proof points from other presenters. So just in the last couple of years, we -- you know Mercury has launched 400-horsepower, 500-horsepower and 600-horsepower outboard engines. We are the only people in the world who make any outboard above 450 horsepower. And demand is very good. We've launched the first 3 Avator models. There are more to come, I think, 5 by the end of this year. Navico Group has more than 30 customers now for that Fathom Generator Replacement System, and 39 customers for its integrated solutions. Many have come onboard just in the last year or so. In the second Boston Whaler production facility we opened at the end of 2021, we've now produced more than 900 large Boston Whaler boats, very important in the current market. Boston Wheeler is doing very well, but also expanding capacity of Sea Ray by more than 30%. And then in Business Acceleration, of course, we had the wonderful milestone of 400 Freedom locations, Congratulations, Brenna, and a membership growth of more than 20% since 2021. So those initiatives are doing very well and even accelerated versus our plan. I mentioned the synergies in our business. Of course, we want to grow our external customer base, and we are doing that. But part of the power of our portfolio is our ability to generate more margin through internal sales. So how do we do that? It's -- in the case of Propulsion, it is sales of our Propulsion products to our Boat Group and now to Freedom Boat Club and even to Boateka. From Navico to Propulsion, Navico developed all the batteries for the Avators and we will develop all of the batteries for future electrified products. Navico has now accelerated its sales into our Boat Group and into Freedom Boat Club and is now putting its products through our own distribution channels. In terms of Boat Group, Boat Group is, of course, a customer for Mercury and Navico Group, but it benefits from sales to Freedom Boat Club, which are accelerating. And then Business Acceleration is now a growing and very stable customer for our other businesses, a channel partner for Boat Group and a great participant in our ACES strategy. We benefit from codeveloping all of our ACES products. So the total internal sale, just primary internal sales value of that is about $0.5 billion. And that doesn't include secondary benefits from our synergies. Like, for example, the fact that Brenna mandates that even non-Brunswick boats coming into Freedom have Mercury engines on them. That is not included in here. So if you look at secondary and tertiary synergies, it's even bigger. This manifests itself in a much bigger margin stack, than is necessarily obvious through our reportable segments because the margins get recognized in the different segments. This is just, I think, a really good example. It brings to life those synergies in a typical Brunswick boats, about 50% of the bill of materials is sourced from Navico Group or Mercury Marine. And you can see all those components shown there and all the brands shown there. That is an incredible source of revenue and margin for our business. And you can see the progress that we've made with Navico Group in a short period of time between the second quarter of 2022 and the second quarter of 2023. Navico Group's share of wallet in Brunswick Boats has increased by 63%. So we have been taking extraordinary actions to get Navico product into our boats. In the same period, the number of Boat Group boats sold to Freedom has gone up by 10%, even though there's pressure in the marketplace. So we are really making progress accelerating those synergies. Before I finish talking about our strategic initiatives that you're very familiar with. I just want to say a few words. We continue to focus on conducting business responsibly and sustainably. We've been well recognized for a number of the things we do, including the launch of those electrified products, but we also clearly consistently demonstrate our commitment to our employees and to our communities. And we have made clear commitments on sustainability, especially around Scope 1 & 2 carbon emissions that include a 30% reduction in Scope 1 & 2 between 2022 baseline and 2025. And over the same period, sourcing 60% of our electrical energy requirements from renewable sources. We also very clearly an employer of choice. We invest heavily in our talent and heavily in ethics and diversity, and we are clearly recognized as a place -- one of the best places to work, and this is not just in the marine industry, this is across all industries, domestically and internationally. We are in the top 10 in many cases, of Best Places to Work. So as I said, our strategic initiatives are progressing very well, but the market has not progressed as we assumed it would in our 2022 Investor Day. This, I think, is a really interesting chart. That chart runs from the first quarter of 2020 through to August of this year, and it shows nominal interest rates for a boat loan, over that period. You can see that increased the 2 lines are larger loans and smaller loans, but they're essentially they're around 9%. Now if you reference the right-hand access versus something in the 4% or 5% range before the rate increases. The vertical bars represent the average monthly payment for a small aluminum boats in blue and a small fiberglass boat in black. Those are the kind of boats who would be most likely financed. So the average monthly payment references the left axis. So you can see that through this period, monthly payments have increased substantially which is certainly a headwind for our consumers. But because supply chain has stabilized, because input cost inflation has stabilized a lot for us, we are seeing some moderation and in fact, a slight rollover of interest rates in recent months, which is reducing monthly payments and may be a source of some of the stabilization and better industry retail that we've been seeing over this period. Hopefully, this is a stabilization that will continue into 2024 and maybe even improve when the Fed decides to begin the downward cycle of interest rates. And it's a really nice example of a stabilizing market situation. It's still high, but at least it's stabilizing. So what has that meant for the U.S. retail boat market? Well, as I said earlier, it has certainly meant a significant pullback in the market. We estimate the market this year will be around 150,000 units. That is about 30% down from the peak in 2020 of about 214,000 units. It's not actually that much below the modestly down call that we made at the beginning of the year, although that was open to some interpretation, we certainly admit that. But it certainly is significantly below the 2022 Investor Day baseline scenario. And the fact, it's very close to one of the 2 downside scenarios that we also presented in 2022 Investor Day, which was a 30% down scenario. We have significantly outperformed that scenario. A couple of other lines on this chart that are interesting. The dash blue line is the dollar value of the market, and you see that as almost unchanged because of inflation. But an important line on this chart is that purple line at the top, that is New Boat Registrations in millions through the whole 10-year roughly period. So New Boat registrations have stayed within 10.3 million to 10.5 million units registered per year during the whole period. And that is a good proxy for Boateka engagement and also a good proxy for P&A sales for us. So even though new boat sales are down, participation remains strong. And we can see that through our own surveys. When we survey in boats, which we do extensively and frequently, and Lauren will talk about that, we see that 80% of boaters say boating is core to their lifestyle. We see that more than 90% of boaters expect to remain owners beyond 5 years, which is very encouraging for us in terms of participation. We also see that some of the tailwinds that we saw during COVID from hybrid working or remote-working remain with us. And overall, intentions to participate in boating remain very strong. So the market has changed. What are we doing to adapt and add new growth opportunities. I'm sorry. Can I go backwards here? Okay. Great. Well, Across the board, of course, a lot of expense control and structural cost reductions and demand stimulation. In Propulsion, that's been capturing additional OEM share and Repower share, which we've been very successful at. Also adding new dealers, which gives us extra channels to market. In Navico Group, it's meant accelerating those integration and restructuring actions, so they are faster than we had previously planned, and attacking adjacent power management markets, which we'll discuss in some detail. In Boat Group, we've used promotions and discounts and other methods to stimulate demand. We've lent into the premium parts of the market, which, as I said, have been more robust. But we've controlled our pipeline very carefully. We're also adding dealers and geographies to give us more outlets for our product. And in Business Acceleration, we've been optimizing the Freedom fleet and accelerating the adoption of Boat Group products into Freedom Boat Club as well as, of course, controlling costs. Here are some great proof points for that. Now we have finally high horsepower production capacity available. We now own more than 60% of the high-horsepower Repower market. That is a big change from where we were before. Mercury just in the last, since 2022 has added 300 new dealerships. Everybody wants to be a mercury dealer because we have the best product. Navico Group has reduced headcount by 15% as part of its restructuring actions, but at the same time, added 28 new integrated systems customers. Boat Group, just through efficiency and productivity actions, expanded margins by about 50 basis points at the same time as accelerating the introduction of a lot of new products. And Business Accelerate -- inside the Freedom fleet, they are now about 25% Boat Group boats, Brunswick Boat Group boats, but the incoming is now about 50%. So over time, we will migrate that 25% significantly upwards. We've also, in addition to adapting to the market, being adding new growth opportunities, and that will be something we'll cover in a lot more detail in the subsequent presentations. But I'll just summarize here. You've seen our work, you've seen the acquisition of the E-Foil company, Fliteboard. We are adding Freedom locations outside of the U.S. We're adding new boat brands that address white space markets for us, markets we've never participated in before. We're adding retail financing offerings to our portfolio. So a lot of work on new growth opportunities, which we think will deliver about $0.5 billion by 2027, and we'll cover those in a lot more detail. So what does that mean for our financial projections versus 2022? Well, the left panel here shows the 2022 Investor Day targets. You can see the assumptions for the Boat market. It's the purple line. We assume the Boat market would rise up to about 215,000 units back to the peak in 2020. And that delivered about $8.7 billion of organic growth, and then we assumed incremental large M&A through the balance of the period on top of that, which delivered around $15 of organic EPS and another $2 associated with incremental large M&A in 2025. Through the actions that we've taken to add growth opportunities and reduce our structural costs. We now believe that we can get back to that organic target of $8.7 billion and $15 of EPS at a boat unit retail market of about 180,000 units versus the 215,000 units that we had previously assumed would be necessary. And that is because a lot of those growth areas are in white space, still marine, but white space areas that don't require the same level of overall growth in the boat market. If we go -- if we try and determine when that will be, when will the market get back to 180,000 units. Well, if we go back to pre-COVID boat revenue CAGRs or unit CAGRs, it's probably around 2027, is when we'll get back to that market level. We don't know exactly, obviously. But if the market rebounds modestly associated with the broader economic rebound, we think we'll get there around 2027. So in 2027, we will have expanded our margins, expanded our earnings. We'll be running an operating margin of about 16%, we think, around just less than 50% of our earnings will come from propulsion, but that will now include Avator and Flite. And then the balance of our earnings will come roughly equally from our other 3 businesses, our other 3 segments, Boat Group, Navico Group and Engine P&A. So I think given the turbulence that we have been through and the tough market situation that we have been through, we still take these long-term targets very seriously. We think that we've taken the right structural cost reduction actions. We think we found the right additional growth opportunities to get back to delivering that $15 of EPS and about $8.7 billion of top line revenue, albeit shifted about 2 years from our 2022 Investor Day. So Neha will cover this in a lot more detail, a lot of the background behind that. But in the meantime, thank you for your attention. I'd now like to introduce Lauren Beckstedt, our CMO, who will talk about the great work we're doing to engage with and understand our customers better. Lauren?

Thank you. Good morning. So Dave outlined some of the short-term impacts to the consumer, which are primarily economic. But Brunswick has always said that it's x-factor is our unmatched access to the consumer, which gives us powerful insights into -- which gives us powerful insights that help us stay ahead of a changing dynamic environment and stay ahead of the competition. When I say unmatched, I mean we have more than 5 million consumers in our installed base. We have more than 33 million daily unique users engaging with our brands online each year. We have the widest portfolio reach with leading or growing brands in every recreational boat category. And the broadening participation in new segments like specialty vehicles. Across our more than 60 lifestyle and product brands, Brunswick strength lies not just in knowing what product the consumer buys, but also personal and lifestyle behavioral attributes, like if a consumer needs support or if they are -- if the product is no longer meeting their lifestyle and they need to trade up or over into something else. Through our best-loved and most recognizable brands, innovative business models, experiences and technology, we nurture our relationship with these consumers, because the consumer's hearts and minds, their needs and their wants, shape everything that we do. Ripl Brunswick's community of boaters in the last year has more than tripled to 12,000 members. It was 4,000 in its first year. And this group is made up of 60% club members and boat owners and 40% marine enthusiasts intending to purchase or buy in the next year. About 1/4 of the group is female, and 15% are non-majority ethnicity. About 1/4 of the group is under the age of 45 and 2/3 between the ages of 45 and 65. All committed to shaping the future of boating. Our access to the consumer can be attributed to the strength and adoption of our brands, which are at the forefront of the consumers' relationship with boating. Boaters see recreational marine through the lens of our brands, that is such an influential and powerful position to be in. And as the consumer makeup of the markets that we serve shifts, we too are shaping diversity within marine. Since 2019, Brunswick has made progress with reaching the next-generation consumer. The number of female, ethnic minority and first-time boat buyers as a percentage of the total were all still up in 2022 versus 2019. Female and ethnic minority mix is also up for Freedom Boat Club over the same period and freedom over indexes on both metrics relative to the rest of our portfolio. And the first time boat buyer mix has also remained elevated with many Brunswick brands, over-indexing their category reach with the first-time boat buyer. In fact, for our brands, the percent of first-time boat buyers is up more than 400 basis points in 2022 versus 2019. Actually, first-time boat buyers account for more than half of Bayliner's registrations in 2022. Through our frequent consumer engagement across multiple touch points, we see that the macroeconomic environment is not impacting all consumers equally. In fact, there's encouraging resilience among 2 key cohorts. Existing owners and high-income prospects. In our monthly consumer pulse survey, higher income prospects, more than 70% have told us that the economic environment is not impacting their likelihood to purchase boat or membership. While there are more demands on the consumers' time post-COVID, month-over-month, consumers tell us they are getting out in the water at the same levels of activity as their pandemic era habits. And weekday boating remains really strong, showing us a greater workplace flexibility continues to be a tailwind for the marine consumer in our industry. Nearly half of all boaters tell us that they will never retire from boating. And third-party consumer indicators also support our proprietary research. Google search terms like Boat and Boat Club, while down from early pandemic era peaks generally remain on par with 2019, the latter 2021 and 2022 levels. Boat Club is actually more favorable versus 2019 and 2021. This strong consumer commitment to the water is supported by a large and stable population that engages in fishing. 50 million participants in the U.S. every year participate in fishing for -- that is more than kayaking, sailing, rafting and tow sports combined for some perspective. Brunswick is exceptionally well positioned to capitalize on the stable source of demand through brands like Boston Whaler, which is #1 in saltwater fishing, Lund among the leading freshwater fishing brands and strongest brand equity in its category. Mercury Pro XS with commanding share in the freshwater fishing market and Lowrance, just to name a few of our brands. We understand what keeps consumers engage through all stages of their lives and only Brunswick is positioned to capitalize on these opportunities. We have taken care to nurture our relevance so that the next-generation consumer sees themselves in our brands and to ensure Brunswick has a welcome entry point for everyone. Shortly, you'll hear from Business Acceleration President, Brenna Preisser, who will outline how only Brunswick is capable of delivering a holistic boating ecosystem. Through new participation methods like Freedom Boat Club and new buying experiences like Boateka. We're also investing and advancing the customer experience through investments in new high-tech facilities like Mercury's P&A distribution center, which will speed time to market for our customers and translate to a better consumer experience. And by supporting our dealers and our other channel partners to grow brand advocacy through new training and certification programs, better in-house tools, improved NPS tracking and warranty processing, all to make the consumer experience more seamless. These investments help us support the consumer throughout our broad portfolio of products and services, ultimately growing affinity across lifestyles and life stages. Now I'd like to introduce you to Aine Denari, who is joined by Brett Dibkey and John Buelow to discuss our leadership position in product excellence, ways in which we've extended our operational excellence. Followed by a collaborative look on electrification, one of our ACES strategies.

Great. Thank you very much, Lauren. Delighted to be here with you today. I'm Aine Denari, as Lauren mentioned, and I lead the Boat Group. Very happy to be here together with John, our leader for Mercury and Engine P&A, and Brett, our leader for Navico Group. So let me start by sharing a little bit with you about our product leadership position. Product leadership is, of course, absolutely critical to our success. We are firmly established as a leader, as you all well know, and this gives us a really strong, sustained competitive advantage across all our divisions. This is demonstrated by the pace of new product launches that we have. So we have launched 178 new products since the start of January 2022, and we have been awarded with 176 patents in that same timeframe. Additionally, the overall industry has honored us with 81 product awards in that timeframe. So that really speaks to the advantage that we have within our products. But of course, we're not resting on our laurels here. We are continuing to invest in R&D at the highest levels in the industry every single year. And this is allowing us to capture additional market share and continue to further our growth. We have 12 tech centers across our organization, 4 design studios. And we believe that we have the largest number of engineering and design staff in the industry with the most robust product development competencies. And of course, the -- our insightful marine insights, like consumer insights that Lauren mentioned really allow us to understand what the future product needs are and be able to deliver those best-in-class and innovative solutions. Let me share a little bit with you now about Boat Group specifically. So we are, as Dave mentioned, the largest recreational boat manufacturer in the world, with the world's broadest portfolio. We have 18 brands and 650 models across the group. And as you heard earlier, we also have the highest brand recognition with many of our major brands, including Bayliner, Sea Ray and Boston Whaler. We maintain a really fresh portfolio that is critical to our long-term success and growth. And this year alone, year-to-date, we have launched 70 new products, and we've been awarded with 25 industry awards. In that timeframe also, we have gained 50 basis points of market share year-to-date this year. And really, that is across most of our major brands have gained share within their segments. This position of strength and ongoing investment and cadence of new product launches is really what is allowing us to deliver strong growth over the last several years, and we are very confident that it will continue to deliver future growth as we go forward also. Speaking a little bit about market position, let me just share with you a few proof points. We actually hold the #1 market share position in many different areas, both in the U.S. as well as globally. In the U.S., in the 15- to 50-foot outboard saltwater fish segment overall, we have the #1 position. And within that, we have Boston Whaler is the #1 position within premium saltwater fish. And we have Bayliner as the #1 in overall recreational fiberglass and Sea Ray holds the #1 position in premium recreational fiberglass. Lund also holds the #1 position in premium aluminum fish. Then if we move to Canada, our Princecraft brand holds the #1 position across pontoon and aluminum fish combined. In Europe, our brands Quicksilver, Uttern and Bayliner pulled the #1 positions in many of their major markets, including Spain, Germany and the U.K. And then in New Zealand, our brand, Rayglass is the #1 position in its homeland country of New Zealand. And so although we already are in a very strong position, we do continue to further our advantage by really leaning into some of these growth opportunities that Dave mentioned earlier. So of course, this includes heavy investment in delivery of products in the ACES strategy with the autonomy, connectivity and electrification being key, but also making sure that we are developing and delivering products that are uniquely designed for our Freedom Boat Club sister division. And we have a bunch of other growth opportunities also. So this year alone, we have already introduced our 5 white space boats, including our Navan brand-new brand that we launched just last week in Cannes in the premium Adventure family, and that had a really great perception. You can see a few of these images here on the screen. We are also taking boats that we've developed for 1 geography and bringing them into new geographies where we see that there's unmet consumer needs. So for example, this year, we are actually bringing 5 Quicksilver models to the U.S. where we define that there is specific needs in those geographies. Additionally, we are developing products for new segments with new boat types. So, as an example, of course, earlier this year, we launched our new brand, Veer, together with Avator Propulsion, and that's really targeted at an entry-level consumer looking for a sustainable value proposition. And then finally, we're also leaning into opportunities that have new use cases or for example, crossover applications. And so for example, the Sea Ray SLX 260 Surf, that we launched earlier this year is a great example there, really combining the functionality of daytime cruising as well as the week surfing functionality. One other thing to mention from a product perspective within Boat Group is really the importance of the -- being a key partner to our sister divisions with both Mercury and Navico. Dave mentioned earlier that from a revenue synergy perspective, about 50% of the bill of material content within Boat Group, boats comes from our sister divisions, Mercury and Navico Group. So, of course, we have 100% of our boats include Mercury Propulsion Systems and components and also all of our multifunctional displays come from our sister divisions from Navico Group. Additionally, though, from a technology and development perspective, there's a lot of synergies that we drive. So we can jointly develop these end-to-end complex systems and really leverage our scale and our breadth of portfolio to be, first to market and to launch quickly as well as at scale. So as an example, the Veer application with the Avator Propulsion System or across our portfolio, launching both with the Fathom auxiliary power systems. So now I'd like to turn it over to John to share a little bit more about product leadership within Mercury.

Well thank you, Aine, and good morning, everybody. So Mercury is the clear leader in Marine Propulsion. We have an unrivaled product portfolio, that includes features and benefits that are delighting consumers around the world. We design our engines and produce our engines for superior performance, durability, reliability, and enhanced ownership experience. And we continue to be recognized for our product leadership with many awards, but more importantly, really strong consumer preference. Our leadership position is most notable in the high horsepower outboard category, where we integrate our superior prop-to-helm solutions to really lead in that category. And we're the undisputed frontrunner. We've invested $750 million in high horsepower outboard development and production since 2017. And now we have a completely new and unrivaled outboard engine lineup with high horsepower outboards, from 175-horsepower to 600 horsepower. Our investments in the new V6, V8, V10 and V12 platforms are paying major dividends. Each platform established a new benchmark for the industry, and this is enabling us to realize and sustain large gains in this premium high-value category. In the U.S., we've gained 12 points of market share since 2018. Our leadership in this category has been the primary catalyst behind our very successful OEM growth strategy which has resulted in numerous incremental and expanded relationships, and there's much more room to continue to grow as we further integrate our portfolio and technologies across different boat builders. We see the preference for Mercury growing around the world. Just last week at the Cannes Boat Show, 2 out of every 3 outboards were powered -- were Mercury Power. Critically, our sustained investment, our capability, our established leadership in this premium high-value category provides a long-term competitive advantage, given the challenges that others would now face in trying to replicate and execute this strategy. So we expect further share gains and our premium positioning to continue to drive growth through 2027. So, Mercury's innovation spans the entire propulsion spectrum. Our recent introduction of the Avator Electric outboard lineup, represents a really important development milestone in our history. We've already sold nearly 2,000 units since introducing the 7.5e into the market in just April of this year. And we also just launched the 20E and 35E models. And we plan to unveil 2 more low-voltage electric outboards in the coming months. Additionally, our industry-leading controls, rigging and propeller portfolios, allow us to really achieve true prop-to-helm leadership. All of our new product development programs emphasize the performance of the entire propulsion system, enabling further differentiation. So with these technologies, we make boating easier, more intuitive and enhance the overall boating experience for the consumer. Now lastly, share gains through our propulsion system leadership are driving a growing fleet of Mercury engines in the field, supporting an annuity of stable, high-margin P&A sales over time. We have high aftermarket share, industry-leading distribution capabilities in the U.S. and an intent to replicate that further around the world. So I'll now ask Brett to come up and continue to speak about product leadership with a lot of the great progress across the Navico Group business.

Thank you, John. Good morning, everyone. So we've been building Navico Group over the course of the last several years, really through accumulation of some of the strongest brands in the Marine industry. Today, we have 22 brands that participate in 17 product categories. And we service a number of end markets outside of marine, notably recreational vehicles, specialty vehicle, emergency vehicles, things of that nature. Really across all of these products and brands, we have been working very hard to innovate not only to improve the integration experience for our OEM customers, which is really important as technology advances, and I'll talk about that in a bit more detail here later on, but also laser-focused on improving the end consumer experience for the boater and her crew onboard. So far this year, we have launched 19 new products since the beginning of 2022, have won 21 innovation awards. I really believe, and hopefully, you'll see evidence, particularly as we talk about ACES a little bit later on that Navico has been and will continue to fuel a lot of innovation in the marine industry and beyond. What I think is unique about us and separates us from the folks that we compete with is the depth and breadth of our product portfolio. As Aine can attest boat building for the thousands of global OEMs around the world is difficult because it requires the integration of a number of complex systems, integrating propulsion and power management and water management and other house systems like entertainment and lighting, is no easy task. And Navico Group is building the capability to deliver all of this in an easy to integrate and turnkey way. Again, importantly, which is really critical, this improves the experience for the OEM, helps them ease the manufacturing process, but also again, improves the end experience for consumers. I'm going to walk through a couple of very quick integration examples. There are several. You'll see some of these as we go into ACES a little bit later on, but one that we're really proud of is Lowrance's ultimate fishing system here, the newly launched and award-winning multifunction display that we call HDS PRO seamlessly integrates with Coast Trolling Motors, seamlessly integrates with active target to live sonar to help keep anglers on the water, doing what they're there to do to catch more fish. I think the best example of our integration prowess, maybe the one representative brand here is CZone. CZone serves as a digital control and monitoring hub for more than 350 boat builders around the world. Aside from enabling seamless integration of all onboard systems, CZone also enables boat builders to create a branded experience at the helm, which all builders around the world are increasingly interested in. So for example, a Sea Ray experience, which is shown here on the slide can be differentiated from the Boston Whaler experience as an example. To help drive adoption of technologies like this, we formed a systems integration team at the end of 2019 that we call Navico Connect. Navico Connect works with boat builders, RV builders, specialty vehicle, upfitters and the like to drive adoption of new technologies like CZone,and we've experienced a tremendous amount of growth as a result of that. As we move into an era of even greater technology adoption within these end markets, we expect Navico Connect to continue to fuel that growth and synergize adoption. So in areas that we're going to talk about later, autonomy, connectivity, electrification, Navico Group is a partner that can work shoulder to shoulder with OEMs to help speed adoption. Just very quickly here is an example of how Navico Connect working with Sea Ray can bring a branded experience to life at the helm. These happen to all be Brunswick Boat Group examples, but we do this work for dozens of builders around the world. Okay, in closing the section here on product leadership and before we spend a few minutes on operational excellence, I do hope it's apparent how Brunswick is uniquely positioned to drive growth and value creation through product leadership. Our global presence, the depth and breadth of our portfolio, which really is unmatched, provide unrivaled global consumer understanding, unrivaled bow to stern innovation capability. Very simply stated, no one in the world is better positioned to translate consumer insights into leading products quickly like we are. When you couple that with our operational excellence capabilities, which we'll talk about here in just a moment and our unmatched global go-to-market reach, again, we have a lot of confidence that we will drive share growth, margin expansion and new growth pathways during this planning horizon. Okay. I'd now like to turn things back over to Aine Denari, who is going to take us through our industry-leading operational excellence capabilities.

Great. Thank you, Brett. So of course, operational excellence is really key to unlocking the margin expansion. And so that's why I wanted to share a little bit about some of the things that we are doing and the benefits that they are going to deliver both now and in the future. So as with product development, our scale on the operations side of the house is also unparalleled within the industry. We have 32 manufacturing facilities. We have 30 distribution centers. We have over 100,000 SKUs and all of this is staffed by over 11,000 operations employees. Since 2010, we have invested over $1 billion in our world-class operations, and this has delivered a variety of capacity expansions, vertical integrations, advanced manufacturing and automation. And this really has allowed us to unlock future value and really reinforces that competitive moat that we talked about earlier. With our long history and expertise, of course, we deliver world-class safety, quality, delivery and cost. Safety is, of course, our top priority, as you would expect. And we are very proud to say that in 2022, we once again delivered record recordable incident rate from a safety perspective. Quality, of course, is also really important, both from a manufacturing efficiency perspective, but also from a consumer satisfaction perspective. And this year, again, we also delivered world-class quality results across our facilities. As an example, Mercury is delivered year-to-date at 1.2% warranty as a percentage of sales rate. From an on-time delivery perspective, we're also making great strides here too, really as we emerge from the supply chain crisis with far more resilient and efficient supply chain systems that has really enabled us to deliver much better on-time delivery rates. And as an example, Navico Group year-to-date this year has delivered a 20 percentage point improvement year-to-date. And then, of course, productivity and continuous improvement is key to really unlocking those margins. So for every point of productivity gains that we deliver, we unlock millions of dollars in savings. For example, this year, within Boat Group across our facilities, we are on track to deliver 4 points of productivity gain across all of our facilities. As we mentioned, we have also been investing significantly in capacity as well as in vertical integration. And these are delivering significant dividends and position us really for the long-term future to be able to deliver further growth and market share gain. Some of the examples that recently came online are here on this slide. So you see within Navico Group, we recently delivered a 30% increase in injection molding capacity, and that has allowed us to bring a lot of vertical integration in-house. From a mercury perspective, with the expansion of the high horsepower engine lines, which continues to be in very high demand, we have increased capacity there by 59%. And then from a Boat Group perspective, as David mentioned earlier, within Boston Whaler, we brought online a second manufacturing facility in Flagler, Florida, which has increased our Boston Whaler capacity by 45%. Which is really critical right now because we still see a lot of strong demand in that premium segment. We're also investing pretty heavily across platforming, vertical integration, strategic sourcing and advanced manufacturing. And we'll just share a couple of proof points around each one of those areas. So let me start with the platforming and reuse. Platforming and reuse, of course, delivers many, many benefits and enables us to unlock a lot of savings. First of all, of course, it reduces complexity in both product development as well as validation aspects. It, of course, lowers production costs and deliveries economies of scale and allows us to manage lower inventory levels at the plant. It also, of course, delivers enhanced manufacturing efficiency as well as quality improvements, not just in our own facilities, but also with our suppliers. And then finally, it allows us to deliver more automation, which in turn results in faster cycle times. And an example I would like to share with you of a recent platforming and reuse strategy has been within Boat Group with our Harris common chassis platform. We launched this across the entire range of Harris Pontoon. So that's more 55 model so far. And from an operations perspective, this has allowed us to actually reduce our part numbers by more than 50%, and it has also delivered significant savings from a purchase components perspective and really delivered the far enhanced manufacturing quality as well. But it's really not just about the operational efficiency side of the business. It has also really allowed us to deliver world-class products with significant benefits across ride, handling, performance, fuel economy and top speed across the entire range of the Harris portfolio and it has also increased our engineering efficiency and speed to market by up to 30%, so pretty impressive results. Of course, our sister divisions are also delivering great use in terms of platforming in reuse. So Navico Group has recently launched the Android based NEON software platform, which is a modern, flexible architecture, which allows for faster development test and release cycles also allows over-the-air updates as well as third-party app integration. So great success there. And on the Mercury side, as John mentioned, the recently launched V6, V8 and V10 platform has resulted in a 50% reduction or 50% common content as well as a significantly lower upfront investment, faster speed to market and more flexibility from a manufacturing perspective. Now again, I'd like to turn it back over to Brett to share some more details from a vertical integration perspective.

Thanks. Thank you, Aine. Obviously, given the breadth and depth of our collective product portfolios, one of our unique advantages in market is the ability to more fully and aggressively drive vertical integration. We think this vertical integration strategy helps secure significant supply chain reliance, get us in the market faster and ultimately yield world-class cost and quality. A quick example, I'll walk through here on the vertical integration front is within the consumer, within the electronics space where we experienced a lot of supply chain disruption, obviously, over the last couple of years. As a result of that, we made a sizable capital investment at a Navico Group facility in Ensenada, Mexico. That more than doubled our production capacity of printed circuit board assemblies. Not only did this allow us to reduce reliance on overseas suppliers, but also dramatically reduced our overall cost profile as well. Today, roughly 40% of all printed circuit board assemblies within the company are satisfied internally, quickly migrating to the point where a high majority of our needs are met internally. Like Navico Group, Brunswick Boat Group has also been leveraging key capabilities to in-source key assemblies and processes pictured here is a fiberglass pontoon helm. That Aine and her team recently in-sourced in the last couple of years, over 30 processes and subassemblies in-sourced in the Boat Group. And fortunately, I think for both Aine and I, we have a terrific internal benchmark, really a reference in the industry for the power of in-sourcing and vertical integration as Mercury long ago, in-sourced a number of key processes, they reap the benefits and market of that every day in terms of their speed to market and their cost position as well. With that, I'll now turn things over to John, who's going to discuss strategic sourcing and advanced manufacturing.

Thank you, Brett. So as we continue to make strategic decisions around vertical integration, we also continue to advance our strategic sourcing initiatives, ensuring a resilient supply chain to support continued growth and continued margin expansion. So we're driving to an optimal solution, exploiting our internal manufacturing capability while choosing the best long-term partners with complementary knowledge and capabilities. Across our business, we're leveraging our volume for best cost, and we're also partnering with leading suppliers to bring new technologies to marine. Recent examples of unlocking value by scaling our strategic sourcing include Mercury's partnership with a leading electric motor supplier to bring transverse flux technology to marine across our entire Avator Electric Outboard lineup. Through our internal capabilities and our partnership, we have 79 patent applications pending for our Avator technology. And we continue to develop and integrate new technologies that will deliver a superior value proposition to consumers. Also within Navico Group, they've consolidated battery suppliers to lower cost and ensure supplier continuity or supply continuity. And across Brunswick Boat Group, we're leveraging their scale for resin supply and then extending the benefit to Navico Group and Mercury for savings across Brunswick. We also continue to make high-impact investments in Advanced Manufacturing. For example, increased use of automation is delivering improvements in productivity and safety. Beyond automation, we've embraced additive manufacturing, including 3D printing of die casting components with complex conformal cooling to allow us to cast precision parts while we're also deploying 3D printing to assist in prototyping, process development, fixturing and assembly tooling. Further, our manufacturing data and Industry 4.0 initiatives are allowing digital transformation across our manufacturing processes. Within Mercury alone, we have more than 500 pieces of equipment connected. We have a strong IT, OT skill set to collect and analyze data and drive improvements and then visualization of data and information across our operations is improving communication to all employees. In addition, we have pilot programs underway, utilizing machine learning and AI to assist with prediction of process anomalies for enhanced process stability and a reduction of downtime or downtime avoidance. And lastly, we're also continuing to invest in skill development of our highly engaged and talented workforce to ensure we remain on the leading edge of advanced manufacturing capability. So several recent examples of leveraging technology to improve cost, quality and delivery include Mercury's production automation of our V6, V8, V10 platform. Which is leading to large gains in productivity and extensive in-process quality validation is helping to ensure product quality. Also Navico Group, they modernized its low Michigan facility with robotic welding, laser cutting and bending and then enabled consolidation of a manufacturing location and prove quality, process speed and unlocked portfolio value. And within the Brunswick Boat Group, we're automating difficult operations such as riveting and tube welding to drive stability, quality and fewer resource dependencies. And in all cases, we're sharing the learnings and the best practices across our businesses to capture the maximum benefits for Brunswick. So to that end, I just want to show you this video of production automation in action at Mercury. And here, you can see multiple multi-axis robots handling die casting with molten metal [indiscernible] die spraying part extraction. You'll see automation moving parts through machining, including through in process validations for consistency and quality. And in assembly, you'll see that the parts move along a automated guided -- with automated guided vehicles. And one thing I'd point out on that is that process is really flexible. So in addition to improving the quality and the consistency, it's also flexible and we can easily move it to add additional stations to increase throughput across the line. So in closing, our unmatched investments in automation, IoT and contemporary operational systems is progressively building that deeper and wider competitive moat around our business. And our agile, flexible and resilient operations will translate into continued performance gains in 2024 and beyond. So we'll now take a short break for 10 minutes and when we return, we'll take you through our ACES and innovation strategy. Thank you. [Break]

Hello, everybody, we're going to resume in just a few minutes. I did want to -- let me wait for a few more people to go, "Oh, no, we're good. All right. So unfortunately, we've had to make the call not to continue with the Afternoon Boat Rides. We have been very excited to show you a lot of our new products and technology. But we've just been looking at photos and videos from the dock area, and it just looks slippery and not very safe for large groups of people to be wondering around. So we're going to take the call not to do that. I apologize. I hope you get a chance to get on those boats again in the future. You will see some videos of them operating. Instead, though, the management team will be around for about an extra hour in the building here. So please take the opportunity to interact with those who are ready to answer questions for an extended period of time. So apologies for that. We hope we can make this happen again in the future. Now we're going to continue.

Welcome back. So as you just saw, we have considerable strength in product leadership and in operational excellence, which enables innovation and advancement of our ACES innovation strategy. So Brett and I will begin this section with a discussion of our vision and exciting progress in electrification, and then we'll be joined shortly by Alex and Brenna. So to start off, I'd like to share with you this video highlighting the most recent step in our electrification journey. Our new all-electric intelligent differentiated 20E and 35E outboards. [Presentation]

So our intent is to be the unmatched leader in electrified marine experiences and innovation. And we're uniquely positioned to lead in this emerging area by combining our strong brand, our extensive technical capabilities and assets with our deep marine application knowledge to provide valuable integrated solutions that our customers can trust. Through our expertise and innovation, we will create an optimized holistic experience for the consumer while reducing our carbon footprint. We understand that consumers are shifting to electrification in many aspects of their everyday lives and the marine industry is no exception. Today, we have early adopters who have a propensity towards new technologies, but as technology continues to advance, we'll see more adoption of electrification across a broader base. Consumers are uncompromising in their expectations of their on-water experiences and that won't change with electrification. So our strategy, which is guided by a deep understanding of the consumer and through our innovative and unique solutions will deliver unparalleled experiences. Today, the marine industry presents 2 distinct markets that we are solving for, the low-voltage and the high-voltage market. The low-voltage market is recognized as established with solid growth. For us, it serves as a catalyst for ongoing innovation and the establishment of product expertise. The high-voltage market is limited by constraints of battery energy density and battery cost. These present challenges that currently hinder the widespread application of high-voltage systems in boats. And these challenges influence our strategy 4 different segments of the marine industry, while lowering battery costs will enhance affordability and accelerate adoption across some segments. High-energy density batteries are essential for meeting the unique needs of marine. And this includes providing longer ranges and enabling the required operational hours. But we're best positioned to leverage these continued advancements in battery technology to address diverse customer use cases and provide tailored solutions to meet specific marine applications. Now as you may have recently seen, Brunswick just announced the acquisition of Fliteboard, a leader in E-Foiling technology. So from a spark of an idea back in 2016 to a global company today with the world's most highly awarded electric hydro Foils, Flite has come a long way in a short time. We're excited to add Flite to Brunswick and believe it will further enhance our industry-leading electrification and shared access strategies. Flite's products, which combine advanced hydro foils and low-voltage electric marine propulsion, allow Brunswick to enter the emerging electric foiling surfboard market which we view as disruptive in the tow sports space. In addition, Flite presents the opportunity for technical, manufacturing, commercial and consumer synergies with the rest of Brunswick's existing portfolio. So as you can see in this video, well, there's a video, and you would be able to see just how exciting it is. It has features. It's a lot more portable. It has a relatively low price. And that really caters to a wide audience of boaters, sport enthusiasts and hospitality businesses. So we also believe Fliteboard -- that our Fliteboard acquisition is well timed as the market is early stage, and this gives us a great platform to advance electrified hydro foiling in marine and for us to grow the addressable market. So we're focused on continuing to develop new capabilities for our enterprise and this involves not just expanding our team with specialized talent but also forming partnerships to accelerate building incremental capabilities. Moreover, our commitment to cutting-edge technologies is reflected in the substantial investment that you see here, which really showcases our proactive stance in shaping the future. We're determined to build an ecosystem that boast diverse product portfolio with innovative digital services, seamless connectivity options and charging solutions that enhance the customer experience. And all these efforts will be supported with our world-class manufacturing and engineering capability, our high-quality integrated solutions and unmatched dealer and service network. So by aligning these strategic initiatives, Brunswick will deliver the best end-to-end customer experience in electrified marine market. So now I'd like to hand it over to Brett. Who will continue the section, highlighting how we're uniquely positioned and what gives Brunswick a clear right to win.

Thank you, John, all right. Today, Brunswick has a strong presence in 2 key electrification segments is captured here on the slide #1, on the top row is Marine Propulsion, as John just shared. The second is auxiliary power systems that replace more traditional sources of energy like internal combustion engines. We believe the Marine Propulsion addressable market which is driven by batteries and chargers and other electrical components from Navico Group, propulsors from Mercury and electrified vessels from Boat Group will be about a $2 billion market by 2030. And obviously, we believe we have a high right to win in that space. The second segment, Auxiliary power systems, we really serve 2 pretty distinct end markets here today, and I'll share more detail on this in just a moment. Marine, obviously, again, very high right to win market, which we believe will be a $100 million market by 2030. And then below Marine is what we call effectively the everything else market. The everything else market for us is underserved non-passenger vehicle markets like RV, like commercial trucks like specialty vehicles. We believe this is growing very rapidly today and will be a $5 billion market by 2030. I'll talk in a moment why we think we have a right to win here as well. But this market growth is driven, at least in part through increased adoption of anti-idle legislation. I'm going to spend a few minutes, John talked about propulsion. I'm going to talk a bit more about Auxiliary Power Systems, our Auxiliary Power System offering, as you've heard before, is referred to as Fathom. Fathom produces 24 -- up to 24-kilowatt hours of energy on a single charge. Ships with a very easy-to-use and intuitive user interface that gives control back to the consumer and understanding things like time to empty. And importantly and certainly as it differentiates itself from internal combustion engine generators, fathom produces no noise, no vibration, no emissions. Dave shared this earlier. But since the launch of Fathom roughly 12 months ago, customer adoption has been terrific. We have more than 30 global OEMs that we're shipping Fathom to, and that's a number that's growing pretty dramatically. I'm going to show you a quick video now that hopefully brings to life some of the unique features of the Fathom system. [Presentation]

All right. Well, obviously, that video focused on a marine application. I think it's important to note that a majority of our Fathom customers actually fall outside the marine industry and some of the industries represented by some of the icons on this slide. We developed Fathom like we develop all of our products for use in the marine industry. I think what we found is that many of these segments also rely on Power System Solutions that are designed for harsh rugged environments. So our product found natural distribution in some of those segments. In aggregate today, a little less than 50% of Navico Group's Power Systems revenue is generated outside the marine industry. So we definitely believe we have the product and the brands to compete in those industries, but also the distribution and the go-to-market capability as well. I hope it's evident that we have established in a relatively short period of time, a really formidable presence in electrification already. We will continue to build on this platform in the years ahead to drive what we believe will be a $600 million business from electrified products by 2027. Okay. Let me now introduce Alex Cattelan, our Chief Technology Officer, who's going to come up and share with all of you our autonomy strategy. Alex?

Thank you, Brett. And good morning, everyone. As many of you know, there are various levels of autonomy and driver assistance that are being developed in the mobility space, including in recreational marine. These levels range from full autonomy or Level 4 with little to no human intervention to the more simple level of Level 0, where you are signal processing only. Based on Brunswick's deep market knowledge and extensive customer research, we have initially chosen to focus on Level 1 and Level 2 autonomy, and developing features that make boating easier and more fun for new and experienced boaters alike. There are many similarities between autonomy development and automotive and the marine mobility applications, including the complexity progression of automated functions across the levels of autonomy. Autonomous development in Marine is, however, in many ways, more complex than in the automotive environment. There's 6 degrees of freedom for movement, higher control latency and more variability in the environment due to wind, waves, current and rain and a multitude of potential obstacles. Brunswick has already developed significant experience and capability in Level 1 and Level 2 autonomy through commercialization of features such as Joystick Piloting, Autopilot and Skyhook. As we will demonstrate today, in a video, we are expanding this capability through new yet to be released features, such as autonomous docking, dock hold and the ability to command a position for the boat to go to and hold the boat in that location. Additionally, we have an extensive roadmap of scalable functions that will further the mission to make boating easier. While this roadmap is initially focused on Level 1 and Level 2 autonomy, our intention is to expand into Level 3 and Level 4 in the future. The technology required for auto docking includes cameras, GPS and other sensors to understand the boat position, the relative motion in the surrounding environment. It requires high-performance computing capabilities to build that understanding and command of response and precise vessel control through propulsion and steering to execute that response appropriately. Intuitive communication and user interface is essential to ensure passengers understand the system operation and the status of the vessel at any given time. This communication is achieved through intuitive graphics on the display as well as other perception systems like sound, light and vibration. Successful execution of all of this requires a deep and rich understanding of the product, the technology and the customer. And Brunswick is the only company uniquely having all of the elements required to deliver a positive and richly successful autonomous docking experience for our customers. Positioning us as a clear leader in the space. And I will show that to you through a quick video. [Presentation]

All right. So very sorry that we cannot show you that today, we did have the boat ready to demonstrate that, but that is the actual boat that's sitting at Chelsea Piers today Autopilot. And as you can see from the video, we have leveraged our unique products and capabilities to ease the anxieties of docking and more in a boat. That, coupled with our already marketed automation systems such as Joystick Piloting, Autopilot and Skyhook, are just the beginning of our autonomy journey. We have a robust roadmap of features and functions we will develop building on the foundation of our initial investments and in fact, believe those new products will come with a 75% future investment savings. Thank you for your attention, and let me now introduce Brenna Preisser, who will highlight the outstanding progress and plans in our shared access strategy.

Thank you, Alex. And we are really looking forward to the future of Autonomy and Freedom Boat Club. I am so excited today to share an update on our progress in shared access through Freedom Boat Club, which has become a meaningful growth platform and a catalyst for synergies. While we have been very successful growing Freedom Boat Club, I think it is notable and important that we continue to see sufficient growth runway. When Brunswick entered the shared access market in 2019, we saw millions of people participating on the water now estimated to be $150 million in the U.S. and Europe and boat clubs are meeting a consumer need, which is essentially easier access to boating. Brunswick has accelerated the success of this model. And now we see this opportunity, the market expanding to potentially $2.5 billion by 2030 with Boat Clubs growing at an accelerated rate. Through Freedom, we have a winning business model. And through Brunswick, we have a competitive advantage. I'm going to cover that a bit later. A bit about Freedom. It is a subscription-based business model. So members pay an initiation fee and monthly dues. We continue to boast 90% member retention, which our research would suggest is best-in-class even for industries outside of marine. We are both a company-operated and franchise business model. Our franchisees are high-quality entrepreneurs. They are outstanding partners and part of our competitive advantage. 70% of our locations today are franchisee owned and operated, and Freedom has consecutively been ranked by Fortune -- entrepreneurial magazine as one of the best franchisees to own. We are also one of the largest boat club community in the world and growing. I think it's notable that as the retail market moderated growth moderated this past year. We are still on track to grow our membership base by another 6,000 members in 2023. According to our internal resources, what is also notable, Freedom is a catalyst for long-term industry expansion. And as we've surveyed our members, we estimate they're about 50,000 members who joined Freedom since 2019, who otherwise would not have purchased a new or preowned boat, which is strengthening the long-term health of the industry. So with Brunswick's leadership, we have not only enhanced the value of Freedom, nearly tripling the membership, we are also creating new growth laneways. Today, we have about 5,000 boats in the fleet. It is also important to note that Freedom Boat Club is accretive to Brunswick's operating margins. And with the potential to add another 10,000 boats over this plan period to support new membership sales to support fleet replacement cycles, you can begin to see the incredible opportunity that we have to enhance value through product leadership and product life cycle value. I also wanted to put an exclamation point on something we are very personally passionate about, but also is really important for the marine industry. Lauren Beckstedt mentioned earlier, 34% of new Freedom members are women. And women have always been participating in the marine industry. But what we're observing is, they are making the purchase decision and they are taking the home, another source of long-term industry expansion. So let's talk about the product life cycle value, through Freedom Boat Club, Brunswick is uniquely positioned to capture value not only through our membership sales but also through every product that enters Brunswick's ecosystem or Freedom's ecosystem. In previous Investor Days, we've shared a comparison of a single dealer sale to a boat that enters Freedom, and we've shared that as 3 to 5x the life profitability over 4 years. If you look at a company-operated location and a new boat that powers 10 members that estimate would be conservative over a 4-year period. So what we're showing here today is, there are 2 ways we create value. One is through member profitability, which I'll talk about our growth opportunity there. But the second is through this product life cycle value. And just bringing this to life here in the middle, Dave mentioned earlier, 25% plus boats in Freedom today are Brunswick product. Nearly all boats are powered, especially both going into the model are powered by Mercury Marine. 50% of our purchases today are Brunswick products, and that will grow over this planning period. Every boat that enters the Freedom ecosystem has accelerated P&A. So as we are capturing the power of Brunswick's P&A ecosystem, every boat that enters based on the accelerated use case carries with it P&A annuity. When it's time to liquidate or retire boats in approximately 3 years, an increasing number of boats are going through our direct-to-consumer Boateka channel. Through Boateka, we are refurbishing boats. And that, again, is another source of P&A value. And one particular opportunity I'm really excited about is the option to repower and put a new engine on these boats. We have some early test cases that have been very well received by potential buyers and by buyers. So the option to repower. And then finally, we recognize value in the D2C transaction through Boateka , where we're capturing financial services profitability. And this then this boat enters our -- the broader ecosystem and carries with it the P&A annuity. So, only Brunswick is positioned to realize the power of this full ecosystem of profitability, and this also shows how Freedom grows, it enhances value for the overall ecosystem and enterprise. Speaking of the membership profitability and our opportunities there, there's a couple of ways that we'll continue to grow the model. One is through white space expansion, which we continue to see opportunities. The second is through increased share of wallet. So later today, as we'll talk about our connectivity strategy, Think about the opportunity with digital products at scale to enhance the value of a Freedom membership and manage that our customers are willing to pay for. Dave also mentioned earlier signal to the premium end of the market, which is an opportunity for us. Captained experiences, concierge. This is all in the very early stage of our development. And additionally, Brunswick is best positioned to enhance customer lifetime value. And a recent member survey, 50% of our Freedom members said they would like to receive information on purchasing a boat. We know that many members who do leave, do purchase a boat. So as we now have opportunity and access to pre-owned boats, and of course, our broad dealer network, it is a great opportunity to keep people in the Brunswick ecosystem. So looking to the future, you can expect a couple of things. You can expect that we're going to continue to move into white space opportunities, especially in the U.S., Europe and Australia, which we launched locations earlier this year and have been off to a very good start. It's also possible that we expand into markets where boat clubs could ignite growth in recreational marine as you see here in the chart. You can expect that we are going to compete to win. We are going to continue to lean into every opportunity that we have with Freedom Boat Club to remain the world's leading boat club operator, and we are in the early innings of this journey. And then you can also expect that we're going to continue to support and be a partner in our overall ACES strategy through electrification, as you heard about earlier, and automation autonomy. Before we wrap up, I did just want to capture that Freedom is the foundation of our growth strategy. Within business acceleration, we have a portfolio of businesses to win and the broader direct-to-consumer and services market in marine. Financial services is just one example. We'll soon be working with a large marine lender to launch an integrated online finance -- financing program. The strategic benefits in the near term are more significant. This would give us the opportunity to customize promotional financing, provide instant online financing approval, not only supporting our dealers, but also as we noted earlier, as we move into these direct-to-consumer models through Boateka, it's going to create even more value for our portfolio. So finally, for -- to close out the shared access portion, we -- a couple of key takeaways. The first, Freedom has created a growth platform for Brunswick, with really long-term strategic benefits that we're going to be leaning into. We continue to see sufficient growth runway, and this Freedom has become a catalyst for synergies with ways to source value through membership sales and also extended product life cycle value. By 2027, combined, we expect our combined value to be $400 million in both shared access revenue and profitability or revenue and then also the broader ecosystem and synergies that we create. So as we round out then our ACES strategy today, I think it's fitting that we conclude with connectivity, which is really what ties our strategy together for the consumer. Brunswick has -- when we talk about connectivity and we talk about digital platforms, what we are doing at Brunswick is solving 2 needs. One, is boater friction. And the second, this is really a gateway for us to create commercial opportunities and value at scale. Brunswick has a holistic portfolio, not only as you've heard earlier today to connect the boat, to connect boaters to their boat to provide enhanced experiences. Think about Freedom Boat Club, not only with our 59,000 members, but our nearly -- memberships are nearly 100,000 members, our ability to connect with them at scale with winning products, both on the water and off the water. And we have a portfolio of digital products today. Navico Group alone has over 2 million digital users. So it's in this context and given Navico Group's many industry partners that they are taking a leadership role in developing marine OS, which I'll now turn it over to Brett to cover.

Thank you, Brenna. All right. So as Brenna said, a big part of our connectivity strategy is underpinned by what we call Marine OS, which is intended to be a full tech stack platform that enables boat builders around the world to adopt connectivity in a turnkey solution. Forgive the slide animation here, but I think it's important to go through these piece by piece. So Marine OS is offered by Navico Group and starts with on-vessel hardware, so an IoT product that we called CZone Connect One. That hardware connects to a cloud and back-end services that we also provide and ultimately, we provide the app or the user experience layer to help bring to life this connected experience. I'm going to walk through an example in just a little bit to help contextualize this a bit more. One more animation slide. So this slide really is intended to capture the architecture of the broader strategy, again, starting with the Marine OS platform that we are in the active process of building today. Through that platform, we can integrate content and services from providers, both within Brunswick and outside. So Mercury Propulsion data, CZone, house control, cartography and mapping from SEAMAP, Marine weather forecast from other third parties. We have the ability to integrate a lot of services into the platform. And ultimately deliver that content through a branded lens to improve the overall consumer experience. What I think differentiates Brunswick and puts us in position to win in this space, again, is the depth and breadth of our product offering not only are we offering the full tech stack platform, but a number of the services that we integrate are also ours and obviously, the consumer experience on the other side through a number of our boat brands. So simply stated, I think Brunswick just covers more ground here than anyone else really is capable of. I did want to walk through a quick example just to illustrate what this looks like from an end boater perspective. I'm going to show you the app here through the lens of a Sea Ray experience. Again, we do this for other OEMs as well. I'm going to walk through this relatively quickly and try to go through kind of an end-to-end journey from onboarding through a service experience. So in the early stages of onboarding, perhaps even before delivery takes place. the digital experience can begin to help strengthening relationship with the brand. Here, during the onboarding step, the user is sharing how she likes to spend time on the water. And here, she shares boater proficiency. In this case, she's a relative beginner. You can imagine how some of this information as it's gathered can begin to cultivate more personalized, targeted experiences for her vessel and for her aptitude on the water. One of the key early stages of taking delivery of a new boat is securing all the stuff invariably you need for that particular vessel. And here is an example that the app is walking the boater through a very curated experience to secure all the gear needed onboard. All of this capability, of course, can be supported in the back end by our land and sea business. After taking delivery of the vessel, lots of remote monitoring and control features, the ability to check battery and build status, GO location, all with the intent of promoting peace of mind when the boater is away from her vessel. During the day on the water, the digital experience on the app, the digital experience at the helm, can be synchronized to provide delightful branded experiences, again, hear things like trip tracking, route planning and the like. The app can also help walk consumers through a very contextual service experience, a lot of service experiences are no defect found. So in this case, if the boater is having an issue onboard, the app can work through a troubleshooting routine in the event that service is required by a technician, the vessel can provide remote access into the boat. So remote diagnostics, even over-the-air updates are capable via the marine OS platform. So a very quick spin by -- of what we're talking about when we highlight some of the connected user experiences that we're in the process of delivering to the market. Well, early in the connectivity journey, we are very confident in our ability to create several sources of value here, hardware sales and the OS licensing, the operating system licensing of Marine OS as an example, the ability to capture data and consumer insights to dramatically improve the consumer experience as well. What's more, and as Brenna indicated, the connectivity capabilities that we're building really do underpin our entire ACES strategy, autonomy, electrification, shared access, all dependent on connectivity and those experiences can be amplified by building robust capability in this space. And that's really how I would summarize our connectivity strategy. We are investing smartly ultimately to build capabilities. And as we do that, we think we can fuel unique portfolio innovation and new value creation opportunities for our investors as well. With that, and as I wrap up the ACES section. I'm now going to turn things over to Neha Clark, who is going to wrap this up with a financial overview. Neha?

Thank you, Brett. Okay. I hope you've enjoyed the morning thus far. I know we've had a lot of terrific material to share, and I'll wrap it up as we go through the finance section, and then we'll have a Q&A post that. Let me bring it all together and show how we believe what you've seen here today on the strategy translates into strong financial results. A quick review of the investment considerations. Why are we better? We have an operating model built for current and future success. We are angling in on the most recurring and premium parts of our business. The high horsepower outboard engines is a perfect example of this. Our product and technology leadership has been unwavering which continues to deliver market share gains across the enterprise. And the acceleration of new products and cost actions across Navico Group will deliver margin expansion over the plan Horizon. And we have proven that our focus on ACES as a defining strategy supports growth. There is no other marine company that has a comparable synergy story to drive scale and innovation across the enterprise, all which is leading to strong revenue and earnings and free cash flow generation, which I'll talk more about in a moment. As I unveil the updated planned financials, let me reiterate 3 underlying tenants, which some you've heard already today. Despite significantly worse U.S. marine market, retail market conditions, in '22 and '23, we've still delivered and in many ways, proven our downside story. We still believe in our previous plan targets and despite what is likely to be a flattish 2024. We anticipate matching those organic targets in 2027. We will continue to make smart capital strategy decisions will drive free cash flow and which will enable aggressive share repurchases as market conditions dictate. Allow us to build and invest in M&A aligned with ACES and our technology strategies, invest dividend growth and debt service flexibility. We will discuss each of these in the coming slides. Let me recap what we have done since the last Investor Day shortly, and then I'll get into the details on the current plan. We have delivered a strong performance despite the market declines against a relatively flat market assumption in the 2022 Investor Day plan. Our revenue has grown approximately 15% versus 2021, and we've achieved EPS of just over $10 which falls right in the midrange of the $9.60 to $10.25 EPS range from the 2022 Investor Day plan. Again, despite the negative market backdrop. Our Propulsion business continues to grow share, and our Boat Group delivered an adjusted earnings of 10%. This was all supported by consistent capital strategy focused on delivering the most value to our shareholders. Two important key takeaways. We don't believe we are at peak earnings. Given our unique operating model growth portfolio you've heard about this morning. And as Dave noted earlier, we've outperformed the downside scenarios in many ways. From a cost perspective, we have been actively managing our cost structure to adapt to the varying market conditions while maintaining investment to stimulate retail, develop new products, invest for growth and innovation in ACES. Our fixed cost as a percent of sales has remained consistent to pre-COVID levels. And as you've heard several examples of today, we have contained fixed costs, including headcount reduction, facility closures in Navico Group while supporting our growth investments, such as high horsepower engine outboard products and relative capacity expansion, all which is a result in highly variable cost portfolio as we move into the forward period. Let me take a minute to talk about the near-term outlook as we see it. As we look forward, we estimate that our third quarter will finish within our guided range however, likely towards the bottom range. For the full year, we are experiencing additional pressure as further caution for marine OEMs, is driving slower ordering in our Propulsion Navico Group businesses. Particularly as we look into the next quarter, so while this is an additional headwind for Q4 of 2023, it may derisk 2024. We are certainly confident and excited about the long-range outlook, but first half 2024 has the potential to be a more challenging period. Our base assumption reflects a 2024 U.S. Boat retail market that is flattish to 2023. Which would result in lower wholesale units as we match retail to wholesale for 2023 levels. In addition, our 0.85% debt sadly needs to be refinanced, but offset with gains from continued share repurchases. Moving into 2025, we are planning for growth. As the macro environment is expected to steady and interest rates decline. We anticipate the consumer to remain resilient with low unemployment and inflation to moderate. The U.S. boat market is expected to resume growth in a very similar fashion to as it did in previous strategic cycles, on its way back to 180,000 units. And I'll talk more about that in a minute. And finally, we will continue to be very disciplined in our capital strategy, setting up in support for growth and to maximize shareholder value. Our 2027 plan, it contemplates the same consistent revenue and earnings growth that Brunswick has delivered in recent strategic plans. We model this based upon a U.S. retail boat market that returns approximately to 180,000 units which we estimate will occur in 2027, as Dave mentioned earlier. We anticipate a 4-year revenue CAGR of mid- to high single-digits percent and an EPS CAGR of double-digit to low teens percent. Growth in each of our business units is responsible for more than 80% of the EPS growth throughout the plan with gains from modest share repurchases, net of increased debt costs, delivering the remainder $1 or so. We estimate free cash flow generation of upwards of $2.5 billion through the plan or a free cash flow conversion of approximately 75%. And while we are continuously evaluating M&A opportunities, the numbers reflected here exclude large-scale M&A, which would only be upside to the targets. Our propulsion story remains relatively unchanged. Although we're now adding to our core high horsepower engine momentum with growth initiatives in electrics such as Avator and Flite. And as you've heard several times, high horsepower engine grew share gains driven by the best product continues to be the key. Operational excellence and automation continues to drive margin gains, along with product design as new products have better margin profiles than those that they previously replaced. Our ongoing channel dynamics in high-horsepower outboard engine should be positive as we now have capacity to fulfill repower and additional orders in the international markets. Controls and riggings also continued to come along with share gains, which is an underappreciated high-margin part of this segment. Our Engine P&A business has broadly performed as anticipated despite the market down. Our products business has remained relatively steady, and we expect to continue to see strong margins from that part of the business. as inventory levels normalize at retailers and at marine dealers, we estimate more consistent growth at the back half of 2023, which really has given us confidence in this progress as we move forward. And while our Brownsburg, Indiana distribution center took a little longer to ramp up than forecasted benefits are starting to become very apparent. And our land and fee distribution business remains the market leader despite soft 2023 and is expected to return to more historical margins in the forward period. The Boat segment, which includes Business Acceleration, which houses Freedom Boat Club, anticipates mid-single-digit top line growth percentage and 200 basis points of margin expansion over the plan. Important to note that the boat business enters its period of pipeline management in a much healthier position. It has improved fixed cost, higher variable margins across the portfolio and a fresher dealer inventory than previous cycles. The Boat Group also benefits from share gains, primarily in Freedom products, which will be driven by exciting new products over the horizon. And you've heard our confidence in the Freedom Boat Club story. And with the continued expansion and growth initiatives, business acceleration will grow to approximately 10% of the segment over the plan. Additionally, both Boat Group and Business Acceleration will deliver 200 basis points margin expansion over the long term. Our Navico Group business, we -- as far as our Navico Group business, we remain very confident in the medium- and long-term performance of the segment. As this business brings, exact set of assets and brands, we wanted to get into in the Marine Electronics space, as you've heard about today. Because of the recent headwinds facing Navico Group, we have accelerated restructuring and integration actions. We've also increased the level of new products, which is critical in this space, and we've had fantastic lineup of new products coming in the next few years. This, coupled with our continued focus on manufacturing improvements and OpEx actions will deliver an operating margin expansion of 400 basis points. Let me move to capital strategy. Our core tenants have not changed materially from our recent strategic plans. Our capital strategy begins with critical spending on new products, technology to further our market leadership position, our organic growth and to grow our ACES and technology strategies. CapEx is expected to settle at 4% to 4.5% of sales with significant capacity projects at Mercury behind us while maintaining support for ACES and new products. Consistent cash generation should enable us to retain the strong financial position that we've worked very hard to achieve with a very healthy balance sheet, creating flexibility on the methods and levels of capital returns. Throughout the strategic plan, almost 2/3 of our planned capital spend is earmarked for growth, investments with the remainder of the capital allocation being returned to shareholders or repaying debt obligations. Given the increase in interest rates, company debt profiles have received more attention than they have in quite some time. Good news is our balance sheet remains extremely healthy. Our net leverage of 1.8x EBITDA is within our desired range and our debt load is extremely manageable. We intend on working our net leverage down to 1.5x during the plan, consistent with our long-term goals. Our investment-grade credit rating remains important to us, especially in times like these, where we likely will need to access the debt markets to refinance the 2024 notes. Our debt remains 100% fixed and in U.S. dollar, although we watch for opportunities to create optionality through the use of swaps and forwards that could allow us to convert certain debt into foreign currency or floating rates. Aside from needing to refinance the 2024 notes, we have no major debt due until 2031. On dividends, we remain committed to systematically increasing dividends on an annual basis as our earnings power grows. And with the goal of keeping dividends stable in any economic condition, our 2023 dividend of $1.60 per share is approximately a 17% payout, which although is slightly lower than our historical target still represents a 9% increase over prior year. Share repurchases where we continue to be more aggressive given our share price is trading at an unrepresentative low multiple despite our extremely favorable long-term outlook. Our 2027 plan includes an assumption of $150 million of repurchases each year. But as our track history has proven, it is very likely that we will exceed our annual target if valuation dislocation continues. Note that we have repurchased [ $1.35 billion ] of shares in the last 4 years alone, representing 20% of the company's actual shares outstanding. This leads us to what is most important for this group, total shareholder return. Despite market headwinds, everything you've heard today, new products, market share gains, margin improvement, focus on ACS and technology and our aggressive capital strategy is all reflected in TSR that outpaces our peer average and major relevant indices, and we intend on continuing to outperform. So why is this the right time to invest in Brunswick? We have demonstrated that through the portfolio management and growth actions we have taken over many years, our business -- we've brought our business over many years to a more resilient and durable position than it ever has been. You've heard in many ways in which we have continued to optimize our core business, stimulate demand, capture market share gains, execute our strategic initiatives, implement cost actions and add new growth opportunities, all of which has allowed us to achieve our long-term targets in a way that is even less dependent on the new boat market. So we have more than protected against the downside. And while we certainly may have some near-term headwinds to navigate, which we have proven we know how to do. Imagine how that prepares us to benefit from the inevitable tailwinds that are to come in the forward years. So I thank you all for your engagement and your time this morning. Before we conclude, I'll ask Dave to come up for a few closing remarks, and then we'll have a short Q&A session.

Thanks, Neha. I want to thank you. Thanks to all our presenters. Thanks to everybody who prepared material for today. I really hope you enjoyed it. We tried to provide a really comprehensive overview of where we're going and all the contributing factors that make us the strongest business by far, not only in the marine industry, but in the recreational product space. We are impossible for anybody to replicate. We have taken all the actions we needed to take to preserve near-term profitability and cash flow to outperform previous expectations in a downturn scenario and also to capitalize more than anybody else could on what happens when the market turns, which ineditably, it will, through share gains, through new growth opportunities and in a way that decouples us even further from the specifics of the new boat retail market. That 180,000 units that we think that we can get to the market can get to in 2027 is exactly where the market was in 2018 and 2019. It discounts any benefit from COVID that we might have included in any previous assumptions. So this is a very achievable number, albeit somewhat delayed from what we expected in 2022. So thank you all very much for your attention. We really appreciated it. And now I'd like to invite the team up to take questions. So we'll take some questions as a team, and then we'll be available for another hour or so for informal questioning.

We have two folks, Bree and Michelle, I think, in the back with microphones. So if you wouldn't mind, if you have a question, please just raise your hand, and they'll come with a microphone. And if you could just say your name, Scott, maybe you could start. Sorry, but if you could just say your name in case someone on the stage has not met you, that would be helpful.

Got it. Scott Stember from ROTH MKM. You said that third quarter will be at the lower end of the guidance that you gave, it looks like around $2.35, but it sounds like the full year is staying unchanged, which would suggest that the fourth quarter would -- might see an increase year-over-year. Could you just talk about what's going on in the fourth quarter?

Do you want to take that?

Yes. So I think the -- we -- well, first of all, we'll talk more about the fourth quarter when we get to our earnings call after the third quarter. We're not restating guidance. We're simply saying that third quarter is likely to be at the bottom end of our prior guidance. We're not currently saying anything about fourth quarter. I think what we clearly said though is it continues to be a tough environment, and we continue to fight as hard as we can to get to those numbers.

And if I can just one last question on the P&A side. It sounds like the reluctance of some of these retailers continues. But at the same time, POS remains, I guess, flattish. Are you starting to see any evidence that POS is starting to improve just given the fact that people are holding on to their boats? Or is it too late in the season at this point right now for that?

I would say what we're seeing is improved year-over-year. So if you think about what happened through 2022, the back end of 2022 was significantly different from the front end. We had really started to see a lot of the headwinds from inflation, and interest rates hit us in the back end of 2022. So I would say P&A generally is improving on a relative basis versus the back end of '22. I think it's probably -- I wouldn't yet say that we're back to kind of earlier in the cycle. I would say though that the rebalancing of inventories between wholesale and retail, the destocking correction is clearly abating. And in some of our businesses, Navico Group, for example, there are other kind of dynamics that occur at this time of year, Black Friday or ordering for the holiday season, those kind of things begin to take over there.

Joe Altobello, Raymond James. First question on the Boat Group. If you're right and retail is flattish next year, call it, 150,000 units, what does that imply in terms of the wholesale decline?

Well, we'll be matching wholesale and retail through that period. I think it's difficult to -- every year has a shape. It isn't just uniform throughout the year. I think what we likely expect is that the situation will begin to improve towards the back half of the year. But our best assumption is that on a 1-year average, it will be roughly flat. If we do see though progressive improvement in retail through the year, that will encourage builders to build inventories more quickly. And we're likely to see wholesale begin to accelerate again. We just don't know, to be honest, Joe, exactly what the shape of that year will be. It could be that wholesale is down again to match retail, if it's a flat year or a declining year. If the shape of the year is probably a bit more what we expect is that the economic conditions will begin to alleviate towards the back half of the year, we could see a wholesale improvement.

Got it. And just a follow-up on that. You talked about demand stimulation, new products, et cetera. How much does affordability play into that? And what are you doing on that side to help people afford higher-priced boats?

Quite a lot. Obviously, we talked about promotions and discounting. It's something we're doing more like pre-COVID levels right now. So even though advertised prices or MSRP equivalents might be significantly higher, when you take into account promotions and discounting, transaction prices are declining and dealer margins are definitely narrowing and tightening associated with transaction prices. But we're also -- we're one of the few boat manufacturers that offers an entry point to pretty much everybody. We offer boats that cost less than $10,000, offer boats that cost $2 million. So we are continuing to offer a full line of products and even expand those product lines to meet the needs in the wallet of pretty much anybody. I know Aine has a big effort at the moment to -- and I don't know if you want to say anything about it, Aine, but we are certainly looking very closely at how to continue to make some of our value products very affordable and back to some of the affordability levels that we saw prior to that increase through the last couple of years.

The first one in the back there.

Robin Farley with UBS. Can you talk a little bit about the factors that you think will lead to stabilization in 2024?

Yes. I think a couple of things are happening. As I showed on the chart earlier, we have seen from beginning of 2020 through to the middle of this year, significant increases in interest rates on boat loans. About 50% of our boats are financed at the point of sale. And we saw, of course, that principal increase that affected typical boat monthly payments. But over the last 3 or 4 months, those have both stabilized significantly. Boat loan rates have stabilized at about 9%, which is significantly higher than before and are actually beginning to roll over a bit. And transaction prices are definitely going down. So that is some indication that we've reached a new equilibrium, if you like. In that market environment, retail year-over-year has improved. So we have seen pretty strong months from May, June onwards. Even our early September retail is pretty strong versus last year. So we think that as hopefully conditions begin to improve, certainly in the interest rate front, as we go through 2024, we probably expect that retail will be relatively stable given the stability, with very similar conditions in the selling season this year.

And does that assume kind of no change in employment rate or other macro factors?

It's difficult for us, to be honest, to exactly -- I mean, we can do kind of regressions against broader economic indicators and trends, but it's very difficult for us to extract the exact effect of employment, for example. Employment typically is not a huge factor for our premium boat brands. It might be a more significant factor for some of our value brands, but it's very difficult to generalize, I would say.

Yes. Maybe I would just add that as you look at all different factors, interest rates, inflation, certainly, consumer health, unemployment, et cetera. So assuming that essentially there is a relatively steady backdrop on that front or it doesn't deepen or worsen an accelerated rate, that's essentially what we were talking to earlier with a flat retail market assumption next year.

Tristan Thomas-Martin from BMO. Are you doing anything to incentivize dealers to order and kind of hold inventory over the winter?

Aine, I don't know if you want to comment on that.

Yes. I mean there is always some element of incentivization and floor planning support that we do with dealers. I would say, in general, we're back to sort of pre-COVID behaviors there as we help incentivize. Of course, it's really important for us to be able to level load the factories. So it's important for us to be able to get those boats out to dealers. So we're -- I'd say we're back to those kind of pre-pandemic seasonal behaviors and then seasonal incentives on our side. But nothing extraordinary, just really back to kind of normalcy, I would say.

Okay. And just one more question. The 50% bill of goods and Mercury boats from Brunswick products, how much of that is the outboard? I'm assuming it's a big chunk. And then how high could that number get?

It certainly is a big chunk, but it varies really depending on the boat type. If you look at a smaller boat with less electronics and other systems on board, the Mercury portion would be a much higher proportion. If you look at a larger boat with a lot of electronics and subsystems like CZone and many -- Fathom, for example, on it, it starts to be a little bit more balanced. And how high could it get? I think there's still room to run on it. We have made a big effort to convert to as many Navico Group systems as we possibly can, but we're not complete in that process. So I would say there's -- well, that's probably another 10% or so that we could probably go, just as an estimate.

Yes. I mean especially as we think about more connectivity, more electronics, which is really the spaces that Navico Group is over-indexing into that certainly is going to provide us some additional runway. And of course, that's what we prioritize.

If you think about some of the other purchase parts of the BOM, we're just not in the business of resin and fiberglass and other things like that. So just some parts of the BOM that are always going to be outside of our area of expertise.

David MacGregor from Longbow Research. I guess a couple of questions. First of all, can you just talk about the used boat market and what you're seeing right now? And specifically in terms of pricing, what the implications might be for new boat pricing? And then secondly, I guess I'm just trying to get a sense to the extent to which you're prepared to lean into discounting right now. If you're able to get some relief on raw material side, do you take that to the bottom line? Or can you take any of it to the bottom line? Or do you find that it gets offset by your need to incentivize great demand?

Yes. So two parts to the question. On the subject of pre-owned boat pricing, we're definitely seeing a kind of a return to kind of pre-COVID levels, I would say. I wouldn't say we're going below that, but that is certainly a trend, a trend downwards at the moment on pre-owned boat pricing. We're not hugely directly exposed to that. But of course, pre-owned boats are an alternative to a new boat. So we have to certainly bear that in mind. That is where the huge efforts that we put into new models, new types, new electronics, all of those new features is really important so that we differentiate our new products from the -- from pre-owned products in the marketplace. I'm sorry, what was the second part of the question?

Just the extent to which -- I'm trying to get a sense of how far you're prepared to lean into creating. And if you get some relief on raw materials, can you take any of that to the bottom line?

I think we have not historically and don't intend to reduce our prices. And what we've typically done is moderate the rate of increases. So this year versus the last 2 years where we had pretty high rates of increase on boat prices, our typical model year change was in the 3% or 4% range, something like that. So we expect to moderate over time. The amount of discounting and promotions that we've had to apply so far have been very typical of pre-COVID, I would say, not excessive. New opportunities we have that we mentioned like the more integrated online financing or another potential incentive that we could deploy. We also, from a more premium boats, we'll do option allowances, for example, so they could get 3 options on the boats, those kinds of things. But I would say we are still well within historical levels of promotions and discounting. We are not -- we're remaining strong in our profit margins. We're not discounting in an excessive way at the moment and don't plan to.

Maybe time for one more.

Sean Rooney from Citi. So first, to what extent do you expect wholesale to outpace retail this year? And then how much of that boat segment revenue headwind from lower wholesale next year do you think can be offset from mix benefits and growth in Freedom Boat Club?

I think the first half of this year and the second half of this year are quite different in the wholesale/retail mix. In the first half of the year, we were still rebuilding pipelines in a lot of parts of the market that is essentially complete everywhere but premium fiberglass. We are still relatively lower in inventory levels in premium fiberglass than we were pre-COVID. The second half of this year, we've really been pretty much directly balancing retail and wholesale already. So we're not overbuilding retail at the moment. In fact, we might be slightly underbuilding retail at the moment. So by the time we get to 2024, we expect to be very much in line with balancing wholesale and retail. Premium product continues to be a strength. We think it still will be a strength. I'm not sure it will be more of a strength next year. We probably have a bit more room to run on inventory levels. Freedom Boat Club is, as Brenna mentioned, Freedom Boat Club is really not subject to the same inflation pressures or the same interest rate pressures that our products of experience. Being a member of Freedom has been relatively painless experience for newer and older members. So we continue to expect that model to be a very attractive part of our portfolio. For those people for whom the broader ownership experience, it doesn't fit their lifestyle.

Great. Thank you. We will now close the lines. And for those who joined virtually, thank you for joining. We will now move on to the afternoon. So lunch is served. I'm sure everyone is ready for something to eat. So lunch is served. Like we said earlier, we have -- the management team will be here and happy to engage and talk for another hour. So please allow yourself to grab something to eat and certainly engage with the team as you feel ready. Thank you.

Thank you.

Thank you.