Brunswick Corporation (BC) Earnings Call Transcript & Summary

Good morning, and welcome to Brunswick Corporation's Second Quarter 2026 Earnings Conference Call [Operator Instructions]. Today's meeting will be recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Stephen Weiland, Senior Vice President and Deputy CFO of Brunswick Corporation.

Good morning, and thank you for joining us. With me on the call this morning are David Falz, Brunswick's Chairman and CEO; and Ryan Gwillim, Brunswick's CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call, our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For details on the factors to consider, please refer to our recent SEC filings and today's press release. All of these documents are available on our website at brunswick.com. During our presentation, we will be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in the appendix to this presentation and the reconciliation sections of the unaudited consolidated financial statements accompanying today's results. I will now turn the call over to Dave.

Thank you, Steve. Fronted delivered a strong second quarter despite the turbulent external backdrop, with financial performance ahead of expectations, and year-over-year sales growth across all reporting segments for the fourth consecutive quarter. Our premium and core bias portfolio remained resilient, and our first half boat retail sales were essentially flat when adjusted for the purposeful value model rationalization actions initiated last year. Marine OEM growth rates moderated somewhat from the exceptional first quarter growth but remain very healthy and drove gains for Mercury Marine and Navico Group. Voting participation also remains very strong and continues to drive our recurring revenue parts and accessories aftermarket and subscription voting businesses. Bolton engine pipelines continue to be lean and fresh with balanced channel dynamics. With global bulk pipelines down approximately 1,800 units for the year, we are well positioned for wholesale growth with any future market improvement. Our overall net sales of $1.6 billion increased 8% year-over-year with growth across all segments, driven by pricing actions taken in recent periods, improved mix, new product traction, continued healthy OEM demand and strong operational execution. Adjusted earnings per share of $1.56 increased 34% versus last year, benefiting from the same underlying business drivers as well as recognized tariff refunds, partially offset by cost inflation, higher variable compensation, incremental tariffs and continued product investment. Absent the net EPA benefits, including its associated influence on variable compensation, adjusted EPS was still significantly ahead of expectations demonstrating the strength of our underlying business performance. All segments increased adjusted operating earnings and margin with the exception of propulsion, which incurred additional tariffs and higher product development expenses as expected. Later, Ryan will discuss the overall financial impact of the IE per refunds on our results and guidance for the year. Finally, we repurchased $35 million of shares year-to-date, and we'll retire $160 million or more of debt by year-end, underscoring our commitment to both maintaining an investment-grade balance sheet and returning capital to our shareholders. Turning now to external conditions. Both fuel prices have clearly not dampened enthusiasm for both in participation, the prolonged conflict in the Middle East, combined with the impacts of inflation on affordability are negatively impacting consumer sentiment, particularly amongst buyers of our valued products. We continue to closely monitor the tariff environment and successfully drive mitigation actions. We now expect total gross IPA refunds of approximately $60 million to $70 million. We recognized approximately $30 million of submitted and accepted refunds in the quarter, with the remaining expected Phase II refunds of approximately $10 million reflected in full year guidance. The window for the balance of our refund submissions beyond Phase 2 is not yet open and not yet reflected in guidance. We're also monitoring the newly introduced Section 301 in Canadian tariffs, which we currently estimate will drive roughly $5 million of net negative incremental 2026 impact and we'll continue to adjust our mitigation actions as the environment evolves. Dealer an OEM sentiment is stable but cautious with wholesale order rates remaining fairly steady and we continue to outperform the market, expanding our share of wallet and capturing new OEM wins with well-received new products. Moving to segment performance, our sustained momentum across our businesses and product lines is evident from the fact that all segments delivered year-over-year sales growth for the fourth consecutive quarter. As discussed earlier, adjusted operating margin also expanded across the enterprise in the quarter, except in the Propulsion segment. However, our incremental 2026 tariff payments are first half biased and we expect all segments will expand operating margin over the next 2 quarters. After a very strong first quarter, U.S. outboard engine industry retail units finished the first half slightly down versus prior year. However, our propulsion business delivered another strong quarter with year-over-year sales growth driven by steady OEM demand, continued high market share and strong international momentum. First half global and U.S. outboard wholesale orders were up over 10% with very strong June order activity. U.S. Outboard rolling 12 share was down slightly to 46% driven primarily by below 5-horsepower registration declines of volume retailers and a strong 2025 comp with OEM share remaining robust. Internationally, Mercury is driving strong share gains with double-digit unit order increases year-to-date and rolling 12 outboard share up across most regions with significant gains in Asia and Latin America. Notably, in Brazil, we've increased share 600 basis points since 2019. Our 5 new engine platforms are on track with 4 launching in the next 2 years. We're also pursuing growth opportunities in repower, government and commercial markets, which we'll share more about at our upcoming Investor Day. Engine pipelines remain lean with U.S. outboard pipelines down 7% in the quarter versus prior year. Engie Parts and Accessories delivered another strong quarter supported by healthy boating participation and resulting product demand along with past pricing actions. Combined with continued distribution gains, this drove higher sales and the products and distribution businesses both contributed to improved profitability, underscoring the stability and attractive operating leverage of this recurring revenue business. Our second quarter sales were the highest since 2022, and up across all global regions with Land and Sea rolling 12 distribution share increasing again by 130 basis points. The engine P&A business and Navigo Group continue to work together to exploit combined footprint opportunities. Navigo Group continued its strong performance trajectory with sales growth across its business lines, supported by new products, multiple OEM wins, sustained aftermarket demand and ongoing operational improvement actions and exclusive of the net EPA impact expanded its core operating margin by over 250 basis points versus prior year. We were also excited to finalize our first OEM supply agreement with Saks store for Simrad Auto captain with more expected to be finalized soon. Lastly, our Boat segment grew both sales and margins, benefiting from the increased emphasis on premium and core brands, pricing actions and continued growth in Freedom Boat Club. And we expect continued strong margin expansion over the remainder of the year, benefiting from mix, portfolio actions and operating efficiencies. The latest SSI data for June year-to-date, it shows U.S. main powerboat segment retail, down approximately 4%, impacted by sentiment, affordability and poor weather in some northern markets Overall, Brunswick U.S. internal retail is performing at similar levels, but with premium fiberglass and core product lines flat to prior year and pressure on value product lines as anticipated. When adjusted for our purposeful rationalization of value models, our first half U.S. retail was roughly flat versus last year. Pipelines are lean and healthy, ending down approximately 1,800 units. The business acceleration portfolio continues to deliver growth and attractive margins led by Freedom boco. We recently announced our 450th global network location and member trips were up a record 13% for the first half of the year. I'll now hand the call over to Ryan for more details on our financial performance.

Thank you, Dave, and good morning, everyone. Brunswick's second quarter performance came in ahead of expectations with strong sales and earnings growth over last year. On a consolidated basis, sales were up 8%, reflecting steady OEM orders, continued strong P&A and aftermarket performance, driven by healthy boating participation and pricing taken in previous periods. As Dave mentioned earlier, it was fantastic to see the fourth consecutive quarter of year-over-year sales growth for all segments. Adjusted operating earnings and margins were up, driven by the higher sales, EPA refunds and positive mix impacts more than offsetting higher inflationary pressures, increased variable compensation, incremental tariffs versus Q2 of 2025 and continued spending on product development, primarily in propulsion. Even absent the net impact of the EPA refund recognized in the quarter, adjusted operating earnings were up strongly versus the second quarter of 2025. This resulted in adjusted EPS of $1.56, up $0.34 over last year, an outstanding result. We delivered a robust $278 million of free cash flow in the quarter, just slightly behind Q2 of 2025 due solely to the second quarter timing of our annual profit sharing payment. This simple bridge shows the key factors of our Q2 adjusted EPS performance. From our Q2 guidance midpoint of $1.15, we had a net beat of a little less than $0.20 in the quarter due to our outstanding business performance. We then recognized a net IEFA benefit of slightly more than $0.20, which is the gross IPA refunds accrued in Q2, netted against the related earnings impact of our enterprise-wide compensation plans. The result was an adjusted EPS of $1.56. Now looking at the first half of the year, sales were up 10%, reflecting the prior second quarter factors just mentioned, together with the exceptionally strong first quarter results. First half adjusted operating earnings increased 18% over the prior year. Adjusted EPS is up 32% and free cash flow of $161 million is ahead of last year after normalizing for the impact of enterprise compensation paid versus 2025. Moving to our segments. Propulsion had another fantastic quarter with sales increasing 8% versus the prior year, driven by steady OEM demand and market share and pricing actions taken in recent quarters. Adjusted operating earnings were up and margins essentially flat versus prior year due to the increased sales, favorable absorption and net EPA refund offsetting elevated material labor inflation, product spend and tariffs. Absent the net AEP refund, adjusted operating earnings and margins declined year-over-year due to the incremental costs just mentioned, offsetting the earnings from the increased sales and positive absorption impact. As year-over-year tariff cost reverse and elevated product spend normalizes in the back half of the year, we anticipate significant margin expansion in the second half of the year resulting in full year margin growth of more than 100 basis points for the Propulsion segment. Our engine parts and accessories business delivered another strong quarter of 9% sales growth with 16% growth in the higher-margin products business. Growth in the quarter reflected strong voter participation and the resulting demand for P&A together with past pricing actions. Adjusted operating earnings were up 19%, and adjusted operating margin increased 200 basis points, driven by the increased mix from products and the leverage on higher sales, with the net EPA refund offering a very slight benefit. Now turning to Navico Group that had another quarter of solid growth and improved profitability. Sales grew 7% over prior year and were up across all business lines and regions driven by increased OEM demand for new products, pricing and boating participation supporting very strong aftermarket performance. Adjusted operating earnings increased 143% and propelled by leverage on their higher revenue and their net IEFA refund with the adjusted operating margin expanding by 680 basis points. Absent the net EPA refund impact both adjusted earnings and margins were still up significantly. Navico Group is solidly on track for its full year target of increasing adjusted operating margin in excess of 100 basis points without any assistance from tariff refunds and despite inflationary impacts on inputs, including memory costs and other raw materials. Wrapping up segment results. Our Boat segment increased sales by 5%, driven by beneficial mix from premium models, improved pricing and discounts and Freedom Boat Club. Adjusted operating earnings were up 45% with margins up 120 basis points, reflecting higher sales, the flow-through of pricing and lower discounts and the continued focus on operational efficiencies designed to lower costs and increase gross margins throughout the portfolio. GreetBot Club had a very strong quarter, announcing its 450th global network location and continued increases in members and trips. EPA refunds had a de minimis impact on this segment. I will now share our updated guidance for the third quarter and full year. While certain new boat retail markets remain pressured due to continued elevated macro and geopolitical uncertainty, our portfolio of leading premium boat and engine products continue to grow sales and capture OEM and consumer share and our recurring revenue businesses continue to benefit from committed healthy boating participation. Our disciplined execution and improvement actions also continued to drive strong operating leverage and our expected results in materially increased adjusted operating margins and earnings this year overcoming the approximately $40 million impact of incremental tariffs, which is slightly elevated since our last estimate due to the anticipated impact of Section 301 replacing Section 122. Our overall tariff impact is first half weighted, with the year-over-year second half impact lower than 2025. The overall result is revenue of $5.7 billion to $5.8 billion, up strongly over 2025. Adjusted operating margins of approximately 8%, up 100 basis points year-over-year, and adjusted EPS of $4.35 to $4.75, up almost 40% at the midpoint. We're also increasing our free cash flow guidance to more than $400 million on the back of strong earnings, prudent working capital management and the benefit of the net EPA refunds. Given all the moving pieces, we thought 1 last bridge would be helpful to show the components of our adjusted EPS guidance range. As I mentioned earlier, absent any tariff refund impacts, our Q2 performance beat was about $0.20. From there, we anticipate a full year net IEFA benefit of a little more than $0.30 which includes the refunds accrued in Q2 plus the remainder of our Phase II refunds, which we believe will be approved in the second half of the year. We are not anticipating or including in guidance any Phase IV refunds in 2026 which could add more than $0.20 once approved. Offsetting these benefits are 2 primary factors: first, we anticipate incurring an additional $0.15 of material inflation in the back half of the year versus what was included in our April guidance, mostly incurred at Mercury and Abaco gold. Second, we believe that tariff changes just discussed will add another approximately $0.05 to our overall cost base. These costs and benefits net to an approximate $0.30 of adjusted EPS benefit and we're flowing it through to the full year with our EPS midpoint now $4.55 for the year, reflecting a balanced view of risks and opportunities as we navigate the continued challenging macro environment. I'll now pass the call back over to Dave for concluding remarks.

Thanks, Ryan. This year, Brunswick earned 15 boating industry top product awards, the most we've ever received in a single year with 13 different brands represented spanning boats, propulsion, vessel control and marine electronics. . This extraordinary performance, along with many other domestic and international product design and technology awards clearly illustrates the increasing breadth and depth of our product leadership. Overall, through the first half of the year, Brunswick has secured a company record 86 awards, and we remain firmly on track to surpass 100 enterprise awards for the fifth consecutive year. As in prior years, this recognition spans products innovation, workplace culture, leadership and corporate reputation and reflects the strength and consistency of our organization and values. Thank you to all of our Brunswick employees whose talent and dedication makes this recognition possible. Before we open the line for questions, while I'm very pleased and excited about Brunswick's performance and trajectory next never rest, and there is a lot more to come, which we will share at Brunswick's Investor Day on August 11. We will release a prerecorded video strategy presentation on our website next week and address questions on those materials at the events live Q&A session. The event, which will be held at Mercury Marine's headquarters in Fonda, Wisconsin will also include facility tours and onwards of product demonstrations. For those unable to attend we'll also be pleased to answer follow-up questions in post-event calls. We're approaching capacity for the event, so please register if you've not already done so. With that, we'll now open the line for questions.

We will now be conducting a question-and-answer session. One moment, please, will be poll for questions. The first question is from James Hardiman from Citi.

Real shocker, I have a question on tariffs. There's a lot of moving pieces there. Obviously, the incentive comp makes it even more complicated. But I think I get it for the quarter, maybe as we just think about the full year guide, EPS is up $0.30, tariffs are giving you $0.30. Those sort of roughly cancel other out. There's some operational upside, but that's being offset by inflation and Canadian tariffs. Let me know if you think that's sort of good math. And then as we think about the margin guide, a 25 basis point increase, is that up or down at all ex the refunds?

James, maybe I'll take this. And maybe I'll be it just a little bit broader to start just so that everyone gets the full picture. I think we consider the tariffs paid in '26 and then the EPA refunds, pretty different animals. So maybe I'll take them in sections, and that will help kind of everyone on the call. So on '26, really the only major change in the quarter was the elimination of $1.22. It was replaced by Section 301. And then the additional potential Canadian tariffs. Together, we think that's probably a $5 million or so bad guy and that's really a second half hit. So if you think about our incremental tariff impact from last year, that takes it from our previous range where we thought we were at the bottom of that 35% to 45% range and puts us squarely in the middle of approximately $40 million. And so that is embedded in the guidance. We will continue to mitigate. We'll continue to lower China impact. And that is, remember, first half loaded as the way the timing worked through last year versus this year bad guy in the first half and actually a neutral positive in the second half of this year due to that timing. And then maybe on EPA refunds, we think about it in a couple of ways. We've been pretty public with a gross number, so just a growth before any other impacts to the P&L of $60 million of EPA refunds. You saw today in the materials, that looks to be now between $60 million and $70 million, but 2 very key things here. So first, this is a gross number. We understand the refunds are a reduction of COGS, which ultimately is an increase to earnings, but that gross number does not include the associated impacts the refunds have on other parts of the P&L, namely variable compensation. And that's why we're really -- we're talking about it as a net number, which as we turn the calendar will enable everyone to back out the net impact, which is really the correct way to think about it. And then the other item is there's a lot of timing involved here. ICA refunds are really in 3 phases. There's Phase I which is very small, received and recognized in the quarter in Q2, but very, very small. Phase 2, which is about 60% of the refunds and I'll get to that in a second. And then Phase 4, which is the remainder. And importantly, we are not anticipating currently any Phase IV refunds to be accrued or any benefit in 2026. So have not included that number in any guidance. So that's part of the million to million of gross that will eventually be received, but it is not included in any 2026 guidance. So that leaves the treatment of Phase II IPO and simply about $30 million of that, as you correctly mentioned, $30 million was accepted in Q2 and therefore, included the results and once netted for enterprise-wide variable comp impacts represented about a $0.20 benefit in the quarter. So that's what you saw on the bridge. The remaining about $10 million of Phase 2 was not accepted in Q2 due to some technicalities in the system. But we will -- we are confident that they will be accepted. And so although not in the Q2 numbers, they are a benefit in the second half, which we included about $0.10 into the full year guidance. So that really is all things tariff. And then to roll it forward to your full year guidance question, we had a $0.20 beat in Q2 that had nothing to do with tariffs. We had another approximately $0.20 of net EPA, which we talked about resulting in the $0.40 overall beat versus our midpoint of $1.15 from April. And then if you look forward to the second half, -- we really -- we see about $0.20 of risk on the macros, which is inflation and the increased tariffs that I discussed, which is offset by that $0.10 of Phase 2 goodness. So if you think about what flowed through you really got the whole Q2 beat that was not related to tariffs and about half of the net IEFA goodness in the quarter is for $0.30, so a raise from $4.25 to $4.55 at the midpoint. So long answer, but lots of things covered there. I hope that answers your question.

That's really good, and it's -- I think it's a good way to frame it. I guess on a or what should really matter and that's sort of the demand environment. You talked about retail all-in being down 4%, I think, flattish ex the sort of value units rationalization. What can you tell us about the momentum within those numbers? You guys started out the year really strong. I think January and February were up meaningfully and then March was weaker and then here in 2Q, 2Q was weaker than 1Q. Is there anything that we should be drawing from that? And I think the tide breaker is always the last month, right, which everybody will want to focus on. But anything you can tell us to help us frame sort of where demand appears to be headed with the most sort of updated data points that you have?

Yes. Thank you, Jim, I'll take that one. Yes, I think -- I mean, we clearly are continuing to see this case shaped economy effect that we've seen some times some time now. And it's almost like there are 2 distinct markets at the moment, and maybe we should work to frame them as best we can going forward. That clearly is a premium market, which is very stable. We said that premium fiberglass was roughly flat, but in fact, it was almost exactly -- it was exactly flat basically almost to the unit. So Boston Whaler and Sea Ray and Novan are very solid, continue to be very solid. Also our core portfolio was very solid, flat almost exactly which includes kind of premium pontoons, premium fishing. But what we are seeing that we illustrated -- we talked about earlier, really is that the kind of fiberglass runabout boats where people are not maybe as committed to voting as part of their lifestyle. They're not typically fishing boats, they're not premium boats. That's where we're seeing the softness and it's not new. It's exactly what we talked about and exactly why we rationalized the product line in that area and also rationalize the manufacturing footprint in that area. So we kind of rightsizing our business in the softer part of the market, with still potential for rebound but group actually probably sacrificed some revenue to do this, but gained about 100 basis points of margin, which is exactly what we intended. So I think we will continue to look at both parts of the market going forward, a part that is very solid and resilient and has good momentum. And we actually I think you'll see some positive things going on, particularly in saltwater fishing in the balance of the year. But this part of the market that we're, I guess, leaning away from, which is the less committed part of the market, that kind of general run about fiberglass, but we are seeing people just more cautious and more fragile, I guess, from the overall economy.

Next question is from Randy Konik from Jefferies.

I guess, Ryan, for you, what I wanted to try to get to understand, maybe qualitatively, if you don't want to give quantitatively, is just how we should be thinking about the long-term margin power of the business. You talked about it in the answers to questions or a script in terms of continuing to work on things like reducing your manufacturing footprint, i.e., fixed cost expense in the business. So I'm just trying to understand, as we think about over time, the demand environment improving, not focusing on what's going on in the next 90 days over the last 30 days for the next 2 to 3 to 5 years, I just want to understand that in an assumption of an improving long-term detail of demand, how you -- how we should be thinking about the margin power of the company overall? And maybe just high level how we think about the different segments as it compares to prior cycle high margins may be achieved during Covert, et cetera? How do we want to think about that similar or not similar this time around versus last time around? That would be super helpful.

Yes, Randy, I'll take that. The very good news is in 4 days, you can get a whole lot of detail on exactly that, which is what do we think our earnings power is in a market that we think is going to be may not provide as much help as maybe in previous plans anticipated. We agree. We think there is still growth in the market. We think we're at a trough in terms of units. But there's different views on how fast that returns to a more normalized view. And the one constant is that Brunswick can continue to drive earnings and a variety of market conditions as we've proven already. Without getting too detailed because I do want people to see all the specifics that will be in our investor materials, no one's going to be surprised to see the operating leverage that's embedded in our plan. It's north of 20%. It can get to something that's north of that in various conditions. And that's really across the portfolio. There's not one single business unit that is a laggard or far ahead. I will give you a couple just things to think about Navico Group continues to grow and have gross margin growth. That has the highest product and variable margins of anything across our company, and that will continue to be a strength, I think, as we progress through the next strategic plan, our parts and accessories business also continues to be extremely strong from a margin standpoint, but just consistent as can be. I mean this year, boding usage, we know is up, and that's been reflected then in a very strong year from the P&A side. And then propulsion and as both continue to grow margins throughout any conditions you've seen the boat business at a wholesale level that they haven't really seen in a decade, still grow margins this year. As Dave mentioned a second ago, while propulsion continues to be flat to slightly up and will be up for the full year despite strong product spending and the tariff impact. So you're going to -- I think the investor community is going to be very pleased to see the innate growth across all of our businesses that would be supercharged -- in the event there is just a little bit of industry help or market help, also given that the pipelines are kind of in historic flows across our portfolio. So I hope that helps. And certainly, Monday morning, the additional information, it will be very helpful.

Super helpful. And then just can you just maybe quantify and remind us, you just mentioned it, the extra spend and pull forward that is related to I think some of these higher horsepower engine programs, I think you said 4 or 5 programs are in process, a couple or 4 or the 5, I think, are launching in the next 1 or 2 years. Just curious on how we should be thinking about that extent of the pull forward and the duration of that expense, such that when we get to, let's say, I don't know, second quarter, first quarter, 2027, is that an expense relap and that those pull forward expenses start to kind of pull off a little bit? Just high level, how we should be thinking of that as well.

Yes, it's about $20 million to $25 million of spend, and that's been spread across a couple of quarters. So yes, by the time you get to next year, the product spend may not be dramatically lower, but this is a lumpier time. Remember, these engine programs ebb and flow over time, and you may get to a point which we have over the last couple of quarters where each engine program is in a spot where it's a little heavier spend. And so that's what you're seeing, but do not take away that we're going to stop spending on engine product development because that is a core competency of ours and keeps us well ahead of our competition. So a little bit lumpy. Think about it is about $20 million spread over a couple of quarters. But again, it will soften but not dramatically so as we go to the out years.

The next question is from Matthew Boss from JPMorgan.

So Dave, could you just elaborate on the progression of Boat retail sales to the core summer selling season with retail sales tracking down 4% year-to-date. Any change to flat to up slightly for the year? Or any change separately in your outlook for wholesale units this year?

Yes. On the retail side, I think given the soft of value, value part of the market, I think flattish is probably where we'll end up, it could be slightly down on a unit basis. But entirely due to the value part of the market, we still see the premium and core parts of the market as very solid at the moment. So we would say that they're likely to be flat, those parts of the market through the balance of the year. By the end of July, which is where we're at right now, it's about 75% of retail for the year. So that will be modest kind of changes going forward. I think maybe what I didn't say earlier is, although we're -- we have to recognize that the markets behave -- different parts of the market behave differently. If you're looking in the automotive market at the moment, pickups and SUVs, you're having a pretty good time of it. If you're looking at past cars, having quite such a good time of it. And that is very analogous to what's going on in the boating market at the moment. And we lean into premium and core. That is where the vast majority of our profitability is. So that remains very steady with plenty of upside opportunity, which we'll also talk about in Investor Day. The other thing I didn't really say was, of course, we are participating in the, if you like, the value part of the market through Freedom Buckle. There are alternative ways to get at that consumer in ways that are less subject to inflation, less subject to interest rates, all those kind of things. So I think that we are mixing our approaches to the market appropriately exactly for how the market is behaving and we'll continue to do so. And we did see really strong performance from Freedom Boat Club this year. And the other part of the market that we don't talk about enough, even though we try to is voting participation, which has been incredibly strong. So if people own a boat, they are using it extensively despite fuel price increases as we anticipated. So there is no shortage of interest in going boating. We're just seeing this 1 part of the market, which is a bit less committed and a bit more economically fragile showing some softness. But that is really not super material to our results, as you've seen.

And maybe just to add on that, you did have a wholesale question and just to piggyback off of what Dave is saying, wholesale sales for our premium core products as we look at the 2027 model year, which we're now in continue to be very strong, especially at Whaler. So as we think about wholesale assumptions for the year, I don't think there's any material changes. If there'd be any changes in the numbers, just the raw numbers, it would be premium and core continue to be strong and maybe up a little bit over expectations while value would be slightly down. So really good momentum on wholesale as we think about the back half of this year.

The next question is from Joe Altobello from Raymond James.

I guess, first on shipments in the back half of the year. How are you guys thinking about wholesale versus retail with respect to both boats and engines, would you expect dealers to end the year higher in terms of weeks on hand?

Yes. I think it will be flattish on a weeks on hand basis. Joe, I think what we are seeing from dealers and actually, you see it in the dealer sentiment studies, we think -- they think that they are approaching the right level of inventory, and I speak about that on a total market basis. And for us, we are very lean and fresh inventory levels. So we have not seen any diminishing trends in wholesale orders. We believe orders will remain very solid, which will probably mean that weeks on hand will probably be pretty flat through this year.

Got it. And just moving on to the U.S. outboard market. Are you seeing any shifts in terms of pricing from some of your competitors at this point?

No, we are not seeing any material shifts in pricing. We continue to see very modest pricing and we are continuing to follow that. As you know, we price at a premium. So we're continuing to maintain that premium, but we're not seeing a lot of pricing activity at the moment.