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What changed in BRUNSWICK CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of BRUNSWICK CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+291 added−291 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-16)

Top changes in BRUNSWICK CORP's 2023 10-K

291 paragraphs added · 291 removed · 226 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

57 edited+27 added−22 removed17 unchanged
Biggest changeThe numerous awards Brunswick won in 2022 are further testament to our commitment to continuous development and innovation, including these significant awards: • Boating Industry Magazine Top Product awards to Mercury Marine Joystick Piloting for Single-Engine Pontoons, Trophy T24CC center console boat, Harris Grand Mariner pontoon, Heyday H22 wake boat, Lund Renegade, Simrad NSX, and Mastervolt MLI 1250 Ultra. • NMMA Innovation Awards at the 2022 Miami International Boat Show to Mercury Marine for the V12 600HP Verado in the outboard category; CZone for Control X in the Mechanical and Electrical Systems category; and Heyday for its all-new H22 wake boat in the Tow Boats category. • IBEX Innovation Awards Honorable Mentions for Navico Group Powerbase and Antenna and the Pro Mariner Pro Tournament Elite. 4 T a ble of Contents International Operations Non-U.S. sales are set forth in Note 5 – Segment Information and Note 2 – Revenue Recognition in the Notes to Consolidated Financial Statements and are also included in the table below, which details our non-U.S. sales by region: (in millions) 2022 2021 2020 Europe $ 904.4 $ 796.2 $ 550.1 Canada 458.2 411.7 246.3 Asia-Pacific 466.0 439.0 383.9 Rest-of-World 284.4 237.4 169.2 Total $ 2,113.0 $ 1,884.3 $ 1,349.5 Total International Sales as a Percentage of Net Sales 31 % 32 % 31 % We transact a portion of our sales in non-U.S. markets in local currencies, while a meaningful portion of our product costs are denominated in U.S. dollars as a result of our U.S. manufacturing operations.
Biggest changeInternational Operations Non-U.S. sales are set forth in Note 2 – Revenue Recognition and Note 5 – Segment Information in the Notes to Consolidated Financial Statements and are also included in the table below, which details our non-U.S. sales by region: (in millions) 2023 2022 2021 Europe $ 837.3 $ 904.4 $ 796.2 Canada 373.0 458.2 411.7 Asia-Pacific 410.0 466.0 439.0 Rest-of-World 331.3 284.4 237.4 Total $ 1,951.6 $ 2,113.0 $ 1,884.3 Total International Sales as a Percentage of Net Sales 30 % 31 % 32 % We transact a portion of our sales in non-U.S. markets in local currencies, while a meaningful portion of our product costs are denominated in U.S. dollars as a result of our U.S. manufacturing operations.
Our strategy is focused on: • Understanding and addressing the changing needs and behaviors of global boating participants; • Investing in innovative, global product leadership and leveraging our leading brands to meet consumer needs; • Delivering distinctive, elevated ownership and shared-access experiences that expand boating participation; • Investing in increasing global business resiliency; • Being the partner of choice to our customers by offering leading, integrated technical and business solutions; • Leading the industry in Autonomy, Connectivity, Electrification, and Shared Access (ACES) strategies, with an expanding set of commercially available products in each category; • Unlocking unique and profound enterprise synergies; • Engaging consumers with the richest, most intuitive digital experiences; • Being an acknowledged marine industry leader in sustainability; and • Being an employer of choice through our clear purpose and culture of inclusiveness.
Our strategy is focused on: • Understanding and addressing the changing needs and behaviors of global boating participants; • Investing in innovative, global product leadership and leveraging our leading brands to meet consumer needs; • Delivering distinctive, elevated ownership and shared-access experiences that expand boating participation; • Being the partner of choice to our customers by offering integrated technical and business solutions; • Engaging consumers with the richest, most intuitive digital experiences; • Leading the industry in Autonomy, Connectivity, Electrification, and Shared Access (ACES) strategies, with an expanding set of commercially available products in each category; • Unlocking unique and profound enterprise synergies; • Investing in increasing global business resiliency; • Being an acknowledged marine industry leader in sustainability; and • Being an employer of choice through our clear purpose and culture of inclusiveness.
Our range of benefits (varying by country) includes: • Paid time off (vacation, parental leave, sick time, and disability programs); • Healthcare coverage (medical, dental, prescription, and vision); • Financial savings and investment opportunities (flexible spending accounts, health savings accounts, retirement, employee stock purchase, and credit monitoring programs); • A suite of life, accident, and critical illness insurance programs; • Wellness programs; and • Educational assistance programs.
Our range of benefits (varying by country) includes: • Paid time off (vacation, parental leave, sick time, and disability programs); • Healthcare coverage (medical, dental, prescription, vision, and hearing); • Financial savings and investment opportunities (flexible spending accounts, health savings accounts, retirement, employee stock purchase, and credit monitoring programs); • A suite of life, accident, and critical illness insurance programs; • Wellness programs; and • Educational assistance programs.
The prices for these raw materials, parts, and components fluctuate depending on market conditions and inflation. In 2022, our operations continued to experience intermittent supply chain uncertainty and disruptions. Our global procurement operations constantly strive to obtain adequate supplies, better leverage purchasing power across our divisions, and improve cost efficiencies.
The prices for these raw materials, parts, and components fluctuate depending on market conditions and inflation. In 2023, our operations continued to experience intermittent supply chain uncertainty and disruptions. Our global procurement operations constantly strive to obtain adequate supplies, better leverage purchasing power across our divisions, and improve cost efficiencies.
Bureau of Labor Statistics for similar businesses and operations. Additionally, we reported no fatalities in 2022. Compensation and Benefits Our compensation philosophy is to encourage performance that creates sustainable, long-term shareholder value; motivates achievement of financial and strategic goals; attracts, retains, and motivates talent; and reinforces our pay-for-performance culture.
Bureau of Labor Statistics for similar businesses and operations. Additionally, we reported no fatalities in 2023. Compensation and Benefits Our compensation philosophy is to encourage performance that creates sustainable, long-term shareholder value; motivates achievement of financial and strategic goals; attracts, retains, and motivates talent; and reinforces our pay-for-performance culture.
We anticipate that increased global regulation relating to climate change, such as climate disclosure requirements or product emissions limitations, will require us to comply or potentially face market access limitations or other penalties, including fines. Our manufacturing operations and products are subject to numerous and increasingly strict federal, state, local, and foreign environmental laws and regulations.
W e anticipate that increased global regulation relating to climate change, such as climate disclosure requirements or product emissions limitations, will require us to comply or potentially face market access limitations or other penalties, including fines. Our manufacturing operations and products are subject to numerous and increasingly strict federal, state, local, and foreign environmental laws and regulations.
These strategies support our aim to create exceptional experiences for customers, expand participation in recreational boating, deliver industry-transforming technology, and leverage our leading businesses to grow earnings and enhance shareholder value.
These strategies support our aim to create exceptional experiences, expand participation in recreational boating, deliver industry-transforming technology, and leverage our leading businesses to grow earnings and enhance shareholder value.
We are committed, and strive to ensure, that employees are paid equitably for their work, regardless of their race or gender. 9 T a ble of Contents We offer market-competitive salaries and wages including incentive bonus opportunities for managers and senior individual contributors, an equity incentive program for director-level positions and above, and a discretionary retirement contribution dependent on the Company’s performance.
We are committed, and strive to ensure, that employees are paid equitably for their work, regardless of their race or gender. We offer market-competitive salaries and wages including incentive bonus opportunities for managers and senior individual contributors, an equity incentive program for director-level positions and above, and a discretionary retirement contribution dependent on the Company’s performance.
The JV Agreement contains a financial covenant that conforms to the maximum leverage ratio test in the Credit Facility described in Note 15 – Debt in the Notes to Consolidated Financial Statements.
The JV Agreement contains a financial covenant that conforms to the maximum leverage ratio test in the Credit Facility described in Note 14 – Debt in the Notes to Consolidated Financial Statements.
We mitigate commodity price risk on certain raw material purchases by entering into fixed priced contracts or derivatives to reduce our exposure related to changes in commodity prices. Intellectual Property We own intellectual property, including patents, trademarks, and trade secrets, related to our current and future products and production methods, in the U.S. and certain other countries.
We mitigate commodity price risk on certain raw material purchases by entering into fixed priced contracts or derivatives to reduce our exposure related to changes in commodity prices. 5 Tab l e of Content s Intellectual Property We own intellectual property, including patents, trademarks, and trade secrets, related to our current and future products and production methods, in the U.S. and certain other countries.
The P&A distribution businesses are leading distributors of both third party and our own marine parts and accessories throughout North America, Europe, and Asia-Pacific, offering same-day or next-day delivery service to a broad array of marine service facilities.
The Engine P&A distribution businesses are leading distributors of Brunswick and third party marine parts and accessories throughout North America, Europe, and Asia-Pacific, offering same-day or next-day delivery service to a broad array of marine service facilities.
Under the terms of the joint venture agreement (JV Agreement), BAC provides secured wholesale inventory floor plan financing to our boat and engine dealers. A subsidiary of Wells Fargo & Company owns the remaining 51 percent.
Under the terms of the joint venture agreement (JV Agreement), BAC provides secured wholesale inventory floor plan financing to our boat and engine dealers as well as Freedom Boat Club franchisees. A subsidiary of Wells Fargo & Company owns the remaining 51 percent.
We continue to develop solutions to further improve boater experiences both by advancing the efficiency and capabilities of our core product lines and through our ACES strategy. We continue to expand our i-Jet Innovation Lab at the University of Illinois at Urbana-Champaign.
We continue to develop solutions to further improve boater experiences both by advancing the efficiency and capabilities of our core product lines and through our ACES strategy. We continue to develop and refine future innovative projects through our team at the i-Jet Innovation Lab at the University of Illinois Urbana-Champaign.
We have over 19,000 active Dealers serving our business segments worldwide. Our Dealers typically carry one or more product categories and are independent companies or proprietors that range in size from small, family-owned businesses to a large, publicly-traded corporation with substantial revenues and multiple locations. Some Dealers sell our products exclusively, while a majority also carry competitor and complementary products.
Our Dealers typically carry one or more product categories and are independent companies or proprietors that range in size from small, family-owned businesses to a large, publicly traded corporation with substantial revenues and multiple locations. Some Dealers sell our products exclusively, while a majority also carry competitor and complementary products.
Human Capital Resources B runswick is dedicated to creating an inspiring and inclusive work environment that attracts, develops, and retains top talent. This environment unlocks our employees’ potential to continue transforming the marine industry. Employee Information As of December 31, 2022, we employed approximately 18,400 full-time employees and 600 part-time employees.
Human Capital Resources B runswick is dedicated to creating an inspiring and inclusive work environment that attracts, develops, and retains top talent. This environment unlocks our employees’ potential to continue transforming the marine industry. Employee Information As of December 31, 2023, we employed approximately 17,300 employees, 96 percent of whom were full-time.
The implementation of both processes and systems that meet SMS criteria are designed to result in less frequent and less severe work-related incidents and injuries. The Company's recordable and lost-time incident rates from 2020 to 2022, recorded as of December 31, are as follows: Our global recordable incident rate is considerably lower than the benchmarks of the U.S.
Implementing processes and systems that meet SMS criteria is designed to result in less frequent and less severe work-related incidents and injuries. 9 Tab l e of Content s The Company's recordable and lost-time incident rates from 2021 to 2023, recorded as of December 31, are as follows: Our global recordable incident rate is considerably lower than the benchmarks of the U.S.
In addition, FBC competes on number and quality of locations, pricing, and service. Climate Change and Environmental Compliance Our customers rely on clean air and water to enjoy our products and services, and we are committed to practices and policies designed to help protect the environment and the well-being of our employees, customers, and the public.
Climate Change and Environmental Compliance Our customers rely on clean air and water to enjoy our products and services, and we are committed to practices and policies designed to help protect the environment and the well-being of our employees, customers, and the public.
We believe that the Boat segment, which had net sales of $2,119.4 million during 2022, is a world leader in the manufacture and sale of pleasure motorboats.
We believe that the Boat segment, which had net sales of $1,989.4 million during 2023, is a world leader in the manufacture and sale of pleasure boats.
The Boat segment procures substantially all of its outboard engines, gasoline sterndrive engines, and gasoline inboard engines from Brunswick's Propulsion segment, and boats often include other parts and accessories supplied by the P&A segment.
The Boat segment procures substantially all of its engines from Brunswick's Propulsion segment, and boats often include other parts and accessories supplied by the Engine P&A and Navico Group segments.
The Propulsion segment sells its products globally to over 850 boat builders (both independent and Brunswick's Boat segment), a network of more than 8,800 marine dealers and distributors, specialty marine retailers, and marine service centers, and various local, state, and federal governmental accounts.
The Propulsion segment designs, manufactures and sells engines, controls, rigging, and propellers globally to over 860 boat builders (both independent and Brunswick's Boat segment) and a network of more than 8,900 marine dealers and distributors, specialty marine retailers, marine service centers, and various local, state, and federal governmental accounts .
The parts and accessories market is highly competitive and fragmented. Our competitive advantage in this market includes our product breadth and quality, proprietary parts and technology, global distribution network, extensive portfolio of recognized brands, sales team, delivery timing, and service. Boat.
Our competitive advantage in this market includes our product breadth and quality, proprietary parts and technology, global distribution network, extensive portfolio of recognized brands, sales team, delivery timing, and service. Navico Group. Navico Group competes in the marine, RV, and specialty vehicle parts and accessories markets, which are also highly competitive and fragmented.
We require employees who will develop intellectual property, or who have access to intellectual property, to sign confidentiality and intellectual property assignment agreements. We invest in physical and IT security programs to prevent theft and inadvertent disclosure of trade secrets.
We require employees who will develop intellectual property, or who have access to intellectual property, to sign confidentiality and intellectual property assignment agreements. We invest in physical and IT security programs to prevent theft and inadvertent disclosure of trade secrets. In addition to "Brunswick," our primary trademarks include Mercury Marine, Boston Whaler, Lund, and Sea Ray.
Of our boat sales in Canada and Europe, approximately 45 percent and 95 percent of the units, respectively, were produced in those regions. Raw Materials and Supplies We purchase a wide variety of raw materials from our supplier base, including commodities such as aluminum, copper, resins, oil, and steel, as well as product parts and components, such as boat windshields.
Boat non-U.S. sales comprised approximately 22 percent of our non-U.S. sales in 2023. Raw Materials and Supplies We purchase a wide variety of raw materials from our supplier base, including commodities such as aluminum, copper, resins, oil, and steel, as well as product parts and components, such as boat windshields.
We also incentivize innovation through a long-established inventor recognition award program. Part of employee development includes annual performance feedback and management for all employees, for which we have a standard process that includes opportunities for employee engagement at every stage. We also maintain succession plans that foster internal promotion to key positions.
Part of employee development includes annual performance feedback and management for all employees, for which we have a standard process that includes opportunities for employee engagement at every stage. We also maintain succession plans that foster internal promotion to key positions. We believe our strong compliance culture plays a central role in our success.
Brunswick’s SEC Filings are also available on the SEC’s website at http://www.sec.gov. 11 T a ble of Contents
Brunswick’s SEC Filings are also available on the SEC’s website at http://www.sec.gov. 11 Tab l e of Content s
We provide opportunities for continuous learning and development, such as: • Brunswick University, a learning platform that offers courses in leadership and innovation, effective communication, and strategic thinking; • LEAD, a leadership development program that helps guide leaders to create performance excellence and develop customer experience thinking; • Rotational leadership programs to develop Brunswick’s future business and financial leaders; • Women’s development and mentoring programs , which enhance our succession bench strength and champion female leaders of the future; and • Wide-ranging hands-on learning and development programs to enhance and grow our critical functional skills.
We provide opportunities for continuous learning and development, such as: • Workday Learning, a learning platform that offers courses in leadership and innovation, effective communication, and strategic thinking; • Rotational leadership programs to develop Brunswick’s future business and financial leaders; • Women’s development and mentoring programs , which enhance our succession bench strength and champion female leaders of the future; and • Wide-ranging hands-on learning and development programs to enhance and grow our critical functional skills. 10 Tab l e of Content s We recognize that we operate in competitive marketplaces when it comes to finding top talent, particularly in technical fields.
Item 1. Business References to "we," "us," "our," the "Company," "Brunswick," and "Brunswick Corporation" refer to Brunswick Corporation and its consolidated subsidiaries unless the context specifically states or implies otherwise.
Item 1. Business References to "we," "us," "our," the "Company," "Brunswick," and "Brunswick Corporation" refer to Brunswick Corporation and its consolidated subsidiaries unless the context specifically states or implies otherwise. Brunswick Corporation is a global leader in marine recreation, delivering innovation that transforms experiences on the water and beyond.
We believe that these arrangements are in our best interest; however, these arrangements expose us to credit and business risk. Our business units, along with BAC, maintain active credit operations to manage this financial exposure, and we continually seek opportunities to sustain and improve the financial health of our various distribution channel partners.
Our business units, along with BAC, maintain active credit operations to manage this financial exposure, and we continually seek opportunities to sustain and improve the financial health of our various distribution channel partners. Refer to Note 11 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for further discussion of these arrangements.
As a result, the strengthening or weakening of the U.S. dollar affects the financial results of our non-U.S. operations. Propulsion non-U.S. sales represented approximat ely 40 percent of our non-U.S. sales in 2022. P&A non-U.S. sales comprised approximately 36 percent of our non-U.S. sales in 2022. Boat non-U.S. sales comprised approximately 24 percent of our non-U.S. sales in 2022.
As a result, the strengthening or weakening of the U.S. dollar affects the financial results of our non-U.S. operations. Propulsion non-U.S. sales comprised approximately 43 percent of our non-U.S. sales in 2023. Engine P&A non-U.S. sales comprised approximately 18 percent of our non-U.S. sales in 2023. Navico Group non-U.S. sales comprised approximately 17 percent of our non-U.S. sales in 2023.
Please see our annual Sustainability Report (which is not incorporated by reference herein), available on our website, for additional information about our human capital management programs. 10 T a ble of Contents Available Information Brunswick maintains an Internet website at http://www.brunswick.com that includes links to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, and Proxy Statements (SEC Filings).
Available Information Brunswick maintains an Internet website at http://www.brunswick.com that includes links to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, and Proxy Statements (SEC Filings).
We are proud to note that Forbes named Brunswick to its 2022 list of World’s Best Companies, America’s Best Large Employers, America’s Best Employers for Diversity, and America's Best Employers for Veterans, and that Forbes and Statista named us one of America’s Best Employers for Women, World’s Best Employers, and America's Best Employers for Veterans lists, all in 2022.
We are proud to note that Forbes named Brunswick to its 2023 lists of World’s Best Employers, America's Best Employers for Veterans, and America’s Best Employers for Women. U.S.
The Propulsion segment designs and sells controls, rigging, and propellers to boat builders (including Brunswick Boat segment brands) and aftermarket retailers, distributors, and distributi on businesses. White River Marine Group, LLC (including Tracker and Ranger Boats) and Brunswick Boat Group are significant customers. Mercury brand engines are designed for use in recreational, commercial, and racing applications.
White River Marine Group, LLC (including Tracker and Ranger Boats) and Brunswick Boat Group are significant customers. Propulsion segment engines are designed for use in recreational, commercial, and racing applications.
Although there are many boat manufacturers, few manufacturers compete in the breadth of categories or geographies in which our Boat segment competes. We compete on the bases of product features, technology, quality, brand strength, dealer service, pricing, performance, value, durability, and styling, along with effective promotion and distribution.
We compete on the bases of product features, technology, quality, brand strength, dealer service, pricing, performance, value, durability, and styling, along with effective promotion and distribution. In addition, FBC competes on number and quality of locations, pricing, and service.
The marine engine market is highly competitive among several major international companies, such as outboard engine manufacturers based in Japan and several smaller companies including Chinese manufacturers. Our competitive advantage is a function of product features, technology, quality and durability, pricing, performance, and manufacturing capabilities, along with effective promotion, after-sales service, and distribution. P&A.
Our competitive advantage is a function of product features, technology, quality and durability, breadth of product line, performance, distribution and manufacturing capabilities, along with effective promotion, after-sales service, and distribution. Engine P&A. The marine parts and accessories market is highly competitive and fragmented.
As of December 31, 2022, we own more than: • 900 U.S. patents; • 350 pending U.S. patent applications; • 500 foreign patents; • 200 pending foreign patent applications; • 360 U.S. registered trademarks; and • 1,500 foreign registered trademarks.
As of December 31, 2023, we own more than: • 1,100 active U.S. patents; • 450 pending U.S. patent applications; • 650 active foreign patents; • 270 pending foreign patent applications; • 370 U.S. registered trademarks; and • 1,800 foreign registered trademarks.
Our integrated business strategy is supported by a balanced capital strategy that includes allocating capital to organic growth initiatives and strategic acquisition opportunities while also managing debt levels and maturities, maintaining strong cash and liquidity positions, and continuing to return capital to shareholders through share repurchases and dividends. We have three reportable segments: Propulsion, Parts & Accessories (P&A), and Boat.
Our integrated business strategy is supported by a balanced capital strategy that includes critical investments in new products and technology to further our market leadership position, organic growth initiatives, and our ACES and technology strategies while also managing debt levels and maturities, maintaining strong cash and liquidity positions, and continuing to return capital to shareholders through share repurchases and dividends.
Brunswick was also listed among Newsweek’s America's Most Responsible Companies for 2023 for the third consecutive year and among Sustainalytics' “Industry Top Rated” for 2023. For more information on our sustainability strategy, programming, data, and goals, we refer you to our annual Sustainability Report (which is not incorporated by reference herein), available on our website at https://www.brunswick.com/corporate-responsibility/sustainability.
Additionally, Mercury Marine received Green Masters status from the Wisconsin Sustainable Business Council for the 13th consecutive year. For more information on our sustainability strategy, programming, data, and goals, we refer you to our annual Sustainability Report (which is not incorporated by reference herein), available on our website at https://www.brunswick.com/corporate-responsibility/sustainability.
Propulsion Segment The Propulsion segment, which we believe is a world leader in the manufacturing and sale of recreational marine engines and propulsion systems, had net sales of $2,824.0 million in 2022.
Refer to Note 5 – Segment Information in the Notes to Consolidated Financial Statements for additional information regarding our segments. Propulsion Segment The Propulsion segment, which we believe is a world leader in the manufacturing and sale of recreational marine engines and propulsion systems, had net sales of $2,763.8 million in 2023.
We consider DEI to be a competitive advantage and have therefore focused our efforts on expanding diverse representation throughout our global workforce and reinforcing a culture of belonging at every worksite.
We consider DEI to be a competitive advantage and have therefore focused our efforts on expanding diverse representation throughout our global workforce and reinforcing a culture of belonging at every worksite. 8 Tab l e of Content s A cross-functional/divisional core team leads our enterprise-wide initiative, TIDE (Together: Inclusion, Diversity and Equity), to integrate DEI in our business processes and behaviors.
The Boat Group's largest dealer, MarineMax, Inc., is a significant external customer which carries a number of the Boat Group's product lines and has multiple locations.
The Boat Group's largest dealer, MarineMax, Inc., is a significant external customer which carries a number of the Boat Group's product lines and has multiple locations. Included within the Boat segment is the Business Acceleration business, which is dedicated to developing emerging and disruptive business models, focusing on services and subscriptions, and engaging the next generation of diverse boaters.
Business Acceleration's Freedom Boat Club (FBC) is the world's largest boat club network. FBC operates in more than 370 locations across the U.S., Canada, and Europe, and ha s over 54,000 memberships.
Business Acceleration businesses accounted fo r 8 percent of Boat seg ment net sales in 2023. Business Acceleration's Freedom Boat Club (FBC) is the world's largest boat club network. FBC operates in more than 400 locations across the U.S., Canada, Australia, and Europe, and has nearly 60,000 memberships.
We recognize that we operate in competitive marketplaces when it comes to finding top talent, particularly in technical fields. We strive to offer our employees career-specific tools, skilled apprenticeship programs, and robust on-the-job training opportunities. Our technical career track provides development for engineers and technology personnel who will shape our future ACES initiatives.
We strive to offer our employees career-specific tools, skilled apprenticeship programs, and robust on-the-job training opportunities. Our technical career tracks provide development for engineers and technology personnel who will shape our future ACES initiatives. We also incentivize innovation through a long-established inventor recognition award program.
Strong competition exists in each of our product groups, but no single enterprise competes with us in all product groups. In each product area, competitors range in size from large, highly-diversified companies to small, single-product businesses. We also indirectly compete with businesses that offer alternative leisure products or activities. The following summarizes our competitive position in each segment: Propulsion.
Market and Competitive Conditions Demand for our products is typically seasonal, with sales generally highest in the second quarter of the calendar year. Strong competition exists in each of our product groups, but no single enterprise competes with us in all product groups. In each product area, competitors range in size from large, highly-diversified companies to small, single-product businesses.
We believe our strong compliance culture plays a central role in engagement and retention. The Integrity Playbook, Brunswick’s code of conduct, serves as the foundation of our Ethics Program. In 2022, 99 percent of our active global salaried population completed our annual code of conduct training. Employee Engagement During 2022, Brunswick again completed a global employee engagement survey.
The Integrity Playbook , Brunswick’s code of conduct, serves as the foundation of our Ethics Program. In 2023, 97 percent of our active global salaried population completed our annual code of conduct training.
Any failure to comply with applicable environmental laws, regulations, and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes, and legal liability, and could negatively affect our competitive position.
Any failure to comply with applicable environmental laws, regulations, and contractual obligations could result in fines, suspension of production, the need to alter manufacturing processes, and legal liability, and could negatively affect our competitive position. 7 Tab l e of Content s For further information, refer to Section 1A, Risk Factors, for a discussion of risks related to environmental compliance and to Note 11 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for a description of certain environmental proceedings.
In addition, we operate a leading boat dealer in the Southeastern U.S. with four locations selling boats and parts and accessories. Many Dealers secure floor plan financing from BAC, and, to a lesser extent, from other third party financing companies, enabling them to stock product in advance of the peak selling season and providing stable channels for our products.
Refer to Note 8 – Financing Joint Venture in the Notes to Consolidated Financial Statements for more information about our financial services offered through BAC. 3 Tab l e of Content s Many dealers secure floor plan financing from BAC, and, to a lesser extent, from other third party financing companies, enabling them to stock product in advance of the peak selling season and providing stable channels for our products.
P&A products are designed for and sold mostly to aftermarket retailers, dealers, and distribution businesses, as well as original equipment manufacturers (including Brunswick Boat segment brands) for both marine and non-marine markets. Intercompany sales to the Brunswick Boat Group were insignificant to the segment's sales in 2022.
Engine P&A sells products such as engine parts and consumables including oils and lubricants, electrical products, boat parts and systems, and also includes our marine parts and accessories distribution businesses. 2 Tab l e of Content s Engine P&A products are designed for and sold mostly to aftermarket retailers, dealers, distributors, and original equipment manufacturers (including Brunswick Boat segment brands) for both marine and non-marine markets.
Each ERG strives to support employees by deepening engagement, unifying and connecting communities, and fostering professional and personal growth. By establishing a space – physical or virtual – where employees can voice and inform their perspectives, ERGs bring the entire enterprise closer together.
Each ERG strives to support employees by deepening engagement, unifying and connecting communities, and fostering professional and personal growth.
Women make up one-third of our Executive Officers. Women comprise approximately 29 percent of our total global workforce, and racially diverse employees make up approximately 24 percent of our U.S. workforce.
We support increasing representation of diverse populations at all levels of the organization. Women make up one-third of our Executive Officers and one-third of our Directors are female. Women comprise appr oximately 29 percent of o ur total global workforce, and racially or ethnically diverse employees make up approxi mately 25 percent of our U.S. workforce .
Mercury Marine designs and sells four-stroke outboard engine models ranging from 2.5 to 600 horsepower in variations including naturally aspirated and supercharged engines. Mercury Marine and Mercury Racing manufacture inboard and sterndrive engine models ranging from 115 to 1,750 horsepower.
Mercury designs and sells four-stroke outboard engine models ranging from 2.5 to 600 horsepower; Mercury Marine and Mercury Racing manufacture inboard and sterndrive engine models ranging from 115 to 1,550 horsepower. Mercury Marine also manufactures two-stroke, non-DFI (direct fuel injection) engines for certain markets outside the United States and Avator™ electric propulsion systems in models ranging from 7.5e to 110e.
Products include marine electronics, sensors, and control systems, digital control and monitoring systems, instruments, fish finders, sonar, radar, trolling motors, fuel systems, batteries, power management, and electrical systems, as well as specialty vehicle, mobile, and transportation aftermarket products. 2 T a ble of Contents Boat Segment The Boat segment consists of the Brunswick Boat Group (Boat Group), which manufactures and distributes recreational boats, and Business Acceleration.
Navico Group products include marine electronics, sensors, and control systems, digital control and monitoring systems, instruments, fish finders, sonar, radar, trolling motors, fuel systems, batteries, power management, and electrical systems. Navico Group sells its products to aftermarket distributors and retailers as well as original equipment manufacturers.
We design, manufacture, and market recreational marine products, including leading marine propulsion products and boats, as well as parts and accessories for the marine and RV markets, and we operate the world's largest boat club. Our commitment to developing the next generation of marine and recreational experiences, technologies, and connections is backed by a long history of quality and innovation.
Our unique, technology-driven solutions are informed and inspired by deep consumer insights and powered by our belief that “Next Never Rests.™” We design, manufacture, and market recreational marine products, including leading marine propulsion products and boats, as well as parts and accessories for the marine and RV markets, and we operate the world's largest boat club.
The collective bargaining agreement between Mercury Marine and its largest union, the International Association of Machinists and Aerospace Workers (IAM) Lodge 1947, remains in place until August 26, 2023. During 2022, we experienced no work stoppages. Diversity and Inclusion We view diversity, equity, and inclusion (DEI) as a strategic business initiative.
We believe that the relationships among our employees, the unions or work councils, and the Company remain stable. Mercury Marine and its largest union, the International Association of Machinists and Aerospace Workers (IAM) Lodge 1947, negotiated a new collective bargaining agreement in 2023, which will remain in place through September 30, 2028. During 2023, we experienced no union-related work stoppages.
Temporary and contingent employees (including interns and co-ops) and contractors accounted for approximately 800 additional workers. 7 T a ble of Contents Approximately 23 percent of our U.S. employees belong to labor unions, and we believe that the relationships among our employees, the unions, and the Company remain stable.
Our employee base is approximately 65 percent hourly and 35 percent salaried. Temporary and contingent employees (including interns and co-ops) and contractors accounted for approximately 2,300 additional workers. Approximately 2,500 of our U.S. employees belong to labor unions and approximately 1,000 additional employees are members of international unions or work councils.
See the "Financing Joint Venture" section below for details about our related financing joint venture that operates closely with Boating Services Network. Financing Joint Venture Through our Brunswick Financial Services Corporation subsidiary, we own a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC).
Business Acceleration also operates a variety of other businesses including dealer and retailer financing; retail extended warranty and insurance businesses; Boateka, a certified pre-owned boat platform; and other marine services businesses. Financing Services Through our Brunswick Financial Services Corporation subsidiary, we own a 49 percent interest in a joint venture, Brunswick Acceptance Company, LLC (BAC).
Refer to Note 9 – Financing Joint Venture in the Notes to Consolidated Financial Statements for more information about our financial services offered through BAC. 3 T a ble of Contents Distribution We utilize independent distributors, dealers, and retailers (Dealers) for the majority of our boat sales, sales of parts and accessories, and some sales of marine engines.
Distribution We utilize independent distributors, dealers, and retailers (Dealers) for the majority of our boat sales, sales of parts and accessories, and some sales of marine engines. We have over 19,000 active Dealers serving our business segments worldwide.
Also in 2022, Boating Industry Magazine named four of our exceptional female colleagues as “Women Making Waves," and our Chief Human Resources Officer was named by Crain’s Chicago Business as a Notable Executive in Diversity, Equity and Inclusion. Health and Safety Employee health and safety are top priorities.
Boating Industry Magazine named four of our exceptional female colleagues as “Women Making Waves" and Manufacturing Institute (MI), the workforce development and education partner of the National Association of Manufacturers, named Brunswick Boat Group President Aine Denari as a 2023 Women MAKE America Awards Honoree. Health and Safety Employee health and safety are top priorities.
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Incorporated in Delaware on December 31, 1907, Brunswick has traded on the New York Stock Exchange for more than 95 years. As the global leader in recreational marine, it is our intention to define the future of recreation through ongoing, consumer-focused innovation, technology, and experiences.
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We are dedicated to industry leadership, to being the best and most trusted partner to our many customers, and to building synergies and ecosystems that enable us to challenge convention and define the future. Incorporated in Delaware on December 31, 1907, Brunswick has traded on the New York Stock Exchange for nearly 100 years.
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The Propulsion segment manufactures and markets a full range of outboard, sterndrive, and inboard engines, as well as propulsion-related controls, rigging, and propellers. The P&A segment includes engine parts and consumables, such as oils and lubricants, electrical products, boat parts and systems, and our distribution businesses.
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Effective January 1, 2023, the Company changed its management reporting and updated its reportable segments to Propulsion, Engine Parts and Accessories (Engine P&A), Navico Group and Boat to align with our internal operating structure, described further below. 1 Tab l e of Content s Key brands associated with each of our segments are listed below.
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The P&A segment also includes Navico Group, which was formed in 2022 and consists of the former Advanced Systems Group businesses and the three P&A businesses acquired in 2021: Navico, RELiON and SemahTronix.
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In 2023, Brunswick acquired Fliteboard Pty Ltd (Fliteboard), a leader in eFoiling technology, to further enhance our electrification and shared-access strategies. Fliteboard is operated as part of the Propulsion segment. Engine P&A Segment The Engine P&A segment had net sales of $1,199.8 million in 2023.
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The Boat segment manufactures and distributes recreational boats, including sport boats and cruisers, runabouts, fiberglass offshore boats and fishing boats, aluminum fishing, utility, pontoon and deck boats, tow/wake boats, and heavy-gauge aluminum boats.
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Navico Group Segment The Navico Group segment, which had net sales of $914.7 million in 2023, designs, develops, manufactures, and markets products and systems for the marine, RV, specialty vehicle, mobile and industrial markets, as well as aftermarket channels.
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The Boat segment also includes Business Acceleration, which operates Freedom Boat Club, dealer financing and ancillary services, and develops other emerging marine business models. 1 T a ble of Contents Key brands associated with each of our segments are listed below.
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White River Marine Group, LLC, Brunswick's Engine P&A distribution businesses and Brunswick Boat Group are significant customers. Boat Segment The Boat segment consists of the Brunswick Boat Group (Boat Group), which manufactures and distributes recreational boats, and Business Acceleration.
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Segment Key Brands Propulsion Avator Mercury MerCruiser Mercury Racing Parts & Accessories Ancor C-MAP Lenco MotorGuide Simrad Attwood CZone Lowrance Payne's Marine Group Whale BLA Garelick Marinco ProMariner B&G Kellogg Marine Supply Mastervolt Quicksilver BEP Land 'N' Sea Mercury RELiON Blue Sea Systems Lankhorst Taselaar Mercury Precision Parts SeaChoice Boat Bayliner Boater's Choice Insurance Cypress Cay Lund Sea Ray Blue Water Finance Brunswick Acceptance Company Freedom Boat Club Mercury Repower Finance Thunder Jet BoatClass Brunswick Dealer Advantage Harris Princecraft Uttern Boateka Brunswick Product Protection Heyday Quicksilver Veer Boston Whaler Crestliner Lowe Rayglass Refer to Note 5 – Segment Information in the Notes to Consolidated Financial Statements for additional information regarding our segments.
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In addition to floor plan financing, Business Acceleration recently announced the launch of Brunswick Finance, a digital retail finance solution that simplifies the purchase process by leveraging a fully integrated technology platform offering end-to-end integration across the boat buying ecosystem, from applying for pre-qualification to underwriting, finalizing agreements and e-signing for loans.
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Mercury Marine also manufactures two-stroke, non-DFI (direct fuel injection) engines for certain markets outside the United States, and electric outboard motors. Mercury engines comply with applicable environmental, emissions, and noise regulations. Parts & Accessories Segment The P&A segment had net sales of $2,323.7 million in 2022.
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In addition, we operate a leading boat dealer in the Southeastern U.S. with four locations selling boats and parts and accessories. Technology and Innovation We believe Brunswick is uniquely positioned to continue defining the future of the global marine industry.
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Included within the Boat Segment is the Business Acceleration business, which is dedicated to developing emerging and disruptive business models, focusing on services and subscriptions, engaging the next generation and a diverse set of boaters, and investing in early-stage innovative marine companies. Business Acceleration businesses accounted for 6 percent of Boat seg ment sales in 2022.
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In 2023, Mercury Marine unveiled its Avator 7.5e electric outboard at the Consumer Electronics Show in Las Vegas and has since introduced Avator electric propulsion systems up to 110e.
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Business Acceleration's Boateka platform, launched in 2021, sells certified pre-owned boats direct to consumers and differentiates itself by offering transparent pricing, a hassle-free purchase experience, and a 90-day warranty.
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Mercury Marine also entered into an agreement with Jing-Jin Electric (JJE), an electrified propulsion leader in components, assemblies, and systems for global automotive applications, to collaborate on Mercury's portfolio of electric propulsion solutions. Our Boat Group introduced the new Veer boat brand, intended to support electric propulsion, and Navan by Quicksilver, which combines innovative technology with superior performance.
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Boating Services Network is a dealer finance and ancillary service business that provides floor plan financing through Brunswick Acceptance Company (USA) and Brunswick Commercial Finance (Canada), retail financing through Blue Water Finance and Mercury Repower Finance, retail extended warranties under the Passport and Passport Premier brands through Brunswick Product Protection Corporation, retail insurance through Boater's Choice Insurance, and marine services from close to 50 name brand providers through Brunswick Dealer Advantage.
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Navico Group introduced three new Mastervolt brand larger capacity, lithium-ion deep-cycle supply batteries to provide enhanced power storage capacity in a lighter weight and smaller footprint.
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Refer to Note 7 – Financing Receivables and Note 12 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for further discussion of these arrangements. Technology and Innovation We believe Brunswick is uniquely positioned to define the future of the global marine industry.
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Navico Group's Whale brand launched Heat Air, a lightweight, space-efficient, propane-based, heating solution for recreational vehicles. 4 Tab l e of Content s Brunswick won numerous awards in 2023 for our groundbreaking products, including: • National Marine Manufacturers Association (NMMA) and Boating Writers International (BWI) honored our Veer boat brand with a 2023 Minneapolis Innovation Award in the fishing boat category. • Multiple NMMA Innovation Awards at the 2023 Miami International Boat Show, including for the Fathom e-Power System, Lowrance HDS Pro with Active Imaging HD and ActiveTarget 2, and the Sea Ray SLX 260 Outboard. • A record 11 Boating Industry Magazine 2023 Top Product Awards to products across our portfolio.
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In addition, in 2022, Mercury Marine introduced Joystick Piloting for Outboards for single-engine pontoons, using advanced technology to bring intuitive boating experiences to all boaters, and announced its Avator electric outboard concept, representing our next step in marine innovation, advanced technology, and engineering.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur reputation may be adversely affected by the purchasers' inappropriate use of the marks or of the name Brunswick, including potential negative publicity, loss of confidence, or other damage to our image due to this licensed use. 21 T a ble of Contents Either inadequate intellectual property protection that could allow others to use our technologies and impair our ability to compete or the failure to successfully defend against patent infringement claims could have a material adverse effect on our financial condition and results of operations.
Biggest changeEither inadequate intellectual property protection that could allow others to use our technologies and impair our ability to compete or the failure to successfully defend against patent infringement claims could have a material adverse effect on our financial condition and results of operations. We regard much of the technology underlying our products as proprietary.
RISKS RELATED TO ECONOMIC AND MARKET CONDITIONS Worldwide economic conditions significantly affect our industries and businesses, and economic decline can materially impact our financial results. In times of economic uncertainty or recession, consumers tend to have less discretionary income and to defer significant spending on non-essential items, which may adversely affect our financial performance.
RISKS RELATED TO ECONOMIC AND MARKET CONDITIONS Worldwide economic conditions significantly affect our industries and businesses, and economic decline can materially impact our financial results. In times of economic uncertainty or recession, consumers tend to have less discretionary income and defer significant spending on non-essential items, which may adversely affect our financial performance.
We have numerous e-commerce and e-marketing portals and our systems may contain personal information of customers or employees; therefore, we must continue to be diligent in protecting against malicious cyber attacks. We have been the target of attempted cyber attacks and other security threats and we may be subject to breaches of our IT systems.
We have numerous e-commerce and e-marketing portals and our systems may contain personal information of customers or employees; therefore, we must continue to be diligent in protecting against malicious cyber attacks. We have been the target of attempted cyber attacks and other security threats and we may be subject to future breaches of our IT systems.
Our ability to continue generating strong cash flow and profits depends partly on the sustained successful execution of our strategic plan and growth initiatives, including optimizing our business and product portfolio, continuing to make and successfully integrate acquisitions, improving operating efficiency, and expanding into new adjacent markets.
Our ability to continue generating strong cash flow and profits depends partly on the sustained successful execution of our strategic plan and growth initiatives, including optimizing our business and product portfolio, continuing to successfully integrate acquisitions, improving operating efficiency, and expanding into new adjacent markets.
We could be uniquely affected by weather-related catastrophic events, the severity of which may increase as a result of climate change, due to the location of certain of our boat facilities in coastal Florida, the size of the manufacturing operation in Fond du Lac, Wisconsin, and Freedom Boat Club locations.
We could be uniquely affected by weather-related catastrophic events, the severity of which may increase as a result of climate change, due to the location of certain of our boat facilities in coastal Florida, the size of the manufacturing operation in Fond du Lac, Wisconsin, and Freedom Boat Club locations on waterfronts.
We sell products manufactured in the U.S. into certain international markets, including Canada, Europe, and Latin America, in U.S. dollars. Demand for our products in these markets may be diminished by a strengthening U.S. dollar, or we may need to lower prices to remain competitive.
We sell products manufactured in the U.S. into certain international markets, including Europe, Canada, Latin America and Asia-Pacific in U.S. dollars. Demand for our products in these markets may be diminished by a strengthening U.S. dollar, or we may need to lower prices to remain competitive.
RISKS RELATED TO OUR REGULATORY, ACCOUNTING, LEGAL, AND TAX ENVIRONMENT Changes to U.S. trade policy, tariffs, and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations. Changes in laws and policies governing foreign trade could adversely affect our business and trigger retaliatory actions by affected countries.
RISKS RELATED TO OUR REGULATORY, ACCOUNTING, LEGAL, AND TAX ENVIRONMENT Changes to trade policy, tariffs, and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations. Changes in laws and policies governing trade could adversely affect our business and trigger retaliatory actions by affected countries.
In addition, there may be tax inefficiencies in repatriating cash from non-U.S. subsidiaries, or changes to tax laws that affect cash repatriation. 14 T a ble of Contents Instability, including, but not limited to, political events, civil unrest, and an increase in criminal activity in locations where we maintain a significant presence could adversely impact our manufacturing and business operations.
In addition, there may be tax inefficiencies in repatriating cash from non-U.S. subsidiaries, or changes to tax laws that affect cash repatriation. Instability, including, but not limited to, political events, civil unrest, and an increase in criminal activity in locations where we maintain a significant presence could adversely impact our manufacturing and business operations.
In addition, an uncorrected defect or supplier's variation in a raw material, part, or component, either unknown to us or incompatible with our manufacturing process, could jeopardize our ability to manufacture products. 13 T a ble of Contents Some additional supply risks that could disrupt our operations, impair our ability to deliver products to customers, and negatively affect our financial results include: • financial pressures on our suppliers due to a weakening economy or unfavorable conditions in other end markets; • supplier manufacturing constraints and investment requirements; • deterioration of our relationships with suppliers; • events such as natural disasters, power outages, or labor strikes; • disruption at major global ports and shipping hubs; or • an outbreak of disease or facility closures due to COVID-19 or a similar public health threat.
In addition, an uncorrected defect or supplier's variation in a raw material, part, or component, either unknown to us or incompatible with our manufacturing process, could jeopardize our ability to manufacture products. 14 Tab l e of Content s Some additional supply risks that could disrupt our operations, impair our ability to deliver products to customers, and negatively affect our financial results include: • financial pressures on our suppliers due to a weakening economy or unfavorable conditions in other end markets; • supplier manufacturing constraints and investment requirements; • deterioration of our relationships with suppliers; • events such as natural disasters, power outages, or labor strikes; • disruption at major global ports and shipping hubs; or • an outbreak of disease or facility closures due to COVID-19 or a similar public health threat.
RISKS RELATED TO OUR BUSINESS AND OPERATIONS Our financial results may be adversely affected by our third party suppliers' increased costs or inability to meet required production levels due to increased demand or disruption of supply of raw materials, parts, and product components.
Our financial results may be adversely affected by our third party suppliers' increased costs or inability to meet required production levels due to increased demand or disruption of supply of raw materials, parts, and product components.
This acquisition, other 2021 and 2022 acquisitions, and potential future acquisitions present integration risks, including: • disruptions in core, adjacent, or acquired businesses that could make it more difficult to maintain business and operational relationships, including customer and supplier relationships; • the possibility that the expected synergies and value creation will not be realized or will not be realized within the expected time period; • the possibility that we will incur unexpected costs and liabilities; • diversion of management attention; and • difficulties recruiting and retaining employees.
Acquisitions present integration risks, including: • disruptions in core, adjacent, or acquired businesses that could make it more difficult to maintain business and operational relationships, including customer and supplier relationships; • the possibility that the expected synergies and value creation will not be realized or will not be realized within the expected time period; • the possibility that we will incur unexpected costs and liabilities; • diversion of management attention; and • difficulties recruiting and retaining employees.
In addition, our independent boat builder customers may react negatively to potential competition for their products from Brunswick's own boat brands, which can lead them to purchase marine engines, boat systems, parts and accessories, and marine engine supplies from competing manufacturers and may negatively affect demand for our products.
In addition, our independent boat builder customers may react negatively to potential competition for their products from Brunswick's own boat brands, which can lead them to purchase marine engines, boat systems, parts and accessories, and marine engine supplies from competing manufacturers and may negatively affect demand for our products. Higher energy and fuel costs can affect our results.
Moving production to a different plant, expanding capacity at an existing facility, or ceasing production at a facility involves risks, including difficulties initiating production within the cost and timeframe estimated, supplying product to customers when expected, integrating new products, and attracting skilled workers to handle additional production demands.
Moving production to a different plant, expanding capacity at an existing facility, and decreasing or ceasing production at a facility involves risks, including difficulties initiating production within the cost and timeframe estimated, supplying product to customers when expected, integrating new products, and attracting and retaining skilled workers.
If economic conditions deteriorate, we anticipate that dealer failures or voluntary market exits would increase, especially if overall retail demand materially declines. 18 T a ble of Contents Dealer or distributor inability to secure adequate access to capital could adversely affect our sales. Our dealers require adequate liquidity to finance their operations, including purchasing our products.
If economic conditions deteriorate, we anticipate that dealer failures or voluntary market exits would increase, especially if overall retail demand materially declines. Dealer or distributor inability to secure adequate access to capital could adversely affect our sales. Our dealers require adequate liquidity to finance their operations, including purchasing our products.
Our provision for income taxes and cash tax liability may be adversely impacted by changes in tax laws and interpretations in the U.S. or in other countries in which we operate. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (IRA), with various tax provisions, including a 15% minimum tax on global adjusted financial statement income.
Our provision for income taxes and cash tax liability may be adversely impacted by changes in tax laws and interpretations in the U.S. or in other countries in which we operate. The Inflation Reduction Act of 2022 (IRA) included various tax provisions, including a 15% minimum tax on global adjusted financial statement income.
Compliance with these rules and regulations, and compliance with any changes to current regulations, could increase the cost of our operations. Changes in income tax laws or enforcement could have a material adverse impact on our financial results.
Compliance with these rules and regulations, and compliance with any changes to current regulations, could increase the cost of our operations. 23 Tab l e of Content s Changes in income tax laws or enforcement could have a material adverse impact on our financial results.
If we do not successfully manage the risks associated with divestitures, our business, financial condition, and results of operations could be adversely affected as the potential strategic benefits may not be realized or may take longer to realize than expected.
If we do not successfully manage the risks associated with divestitures, our business, financial condition, and results of operations could be adversely affected as the potential strategic benefits may not be realized or may take longer to realize than expected. An inability to identify and complete targeted acquisitions could negatively impact financial results.
In addition, impairment charges could indicate a reduction in business value which could limit our ability to obtain adequate financing in the future. We manufacture and sell products that create exposure to potential claims and litigation.
In addition, impairment charges could indicate a reduction in business value which could limit our ability to obtain adequate financing in the future. 22 Tab l e of Content s We manufacture and sell products that create exposure to potential claims and litigation.
We regard much of the technology underlying our products as proprietary. We rely on a combination of patents, trademark, copyright, and trade secret laws; employee and third-party non-disclosure agreements; and other contracts to establish and protect our technology and other intellectual property rights.
We rely on a combination of patents, trademark, copyright, and trade secret laws; employee and third-party non-disclosure agreements; and other contracts to establish and protect our technology and other intellectual property rights.
We use an estimate of the related undiscounted cash flow over the remaining life of the asset in measuring whether the asset is recoverable. 22 T a ble of Contents As of December 31, 2022, the balance of total g oodwill and indefinite lived intangible assets was $1,273.0 million , which represents approximatel y 20 percent of total assets.
We use an estimate of the related undiscounted cash flow over the remaining life of the asset in measuring whether the asset is recoverable. As of December 31, 2023, the balance of total g oodwill and indefinite lived intangible assets was $1,342.2 million , which represents approximatel y 22 percent of total assets.
Additionally, any new initiative is subject to certain risks, including customer acceptance, competition, the ability to manufacture products on schedule and to specification, the ability to create the necessary supply chain, and/or the ability to attract and retain qualified management and other personnel.
Additionally, any strategic plan is subject to certain risks, including market conditions, customer acceptance, competition, the ability to manufacture products on schedule and to specification, the supply chain, and/or the ability to attract and retain qualified management and other personnel.
This could negatively affect our relationships with customers or trading partners, lead to potential claims against us, and damage our image and reputation. 20 T a ble of Contents We rely on third parties for computing, storage, processing, and similar services.
This or future events could negatively affect our relationships with customers or trading partners, lead to potential claims against us, and damage our image and reputation. 20 Tab l e of Content s We rely on third parties for computing, storage, processing, and similar services.
However, we remain subject to risks, including: • the steps we take to protect our proprietary technology may be inadequate to prevent misappropriation of our technology; • third parties may independently develop similar technology; • agreements containing protections may be breached or terminated; • we may not have adequate remedies for breaches; • existing patent, trademark, copyright, and trade secret laws may afford limited protection; • a third party could copy or otherwise obtain and use our products or technology without authorization; or • we may be required to litigate to enforce our intellectual property rights, and we may not be successful.
However, we remain subject to risks, including: • the steps we take to protect our proprietary technology may be inadequate to prevent misappropriation of our technology; • third parties may independently develop similar technology; • agreements containing protections may be breached or terminated; • we may not have adequate remedies for breaches; • existing patent, trademark, copyright, and trade secret laws may afford limited protection; • a third party could copy or otherwise obtain and use our products or technology without authorization; or • we may be required to litigate to enforce our intellectual property rights, and we may not be successful. 21 Tab l e of Content s Policing unauthorized use of our intellectual property is difficult, particularly outside the U.S., and litigating intellectual property claims may result in substantial cost and divert management’s attention.
We continue to be subject to meaningful tariffs, and there is no assurance that we will be granted exclusions in the future. Like many other multinational corporations, we do a significant amount of business that would be affected by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs and international trade agreements).
Like many other multinational corporations, we do a significant amount of business that would be affected by changes to the trade policies of the U.S. and foreign countries (including governmental action related to tariffs and international trade agreements).
In particular, reduced cash flow from decreases in sales and tightening credit markets could impair dealers' ability to fund operations. Inability to fund operations can force dealers to cease business, and we may be unable to obtain alternate distribution in the vacated market. An inability to obtain alternate distribution could unfavorably affect our net sales through reduced market presence.
Inability to fund operations can force dealers to cease business, and we may be unable to obtain alternate distribution in the vacated market. An inability to obtain alternate distribution could unfavorably affect our net sales through reduced market presence.
Sales outside the United States, especially in emerging markets, are subject to various risks, including government embargoes or foreign trade restrictions, foreign currency effects, tariffs, customs duties, inflation, difficulties in enforcing agreements and collecting receivables through foreign legal systems, compliance with international laws, treaties, and regulations, unexpected changes in regulatory environments, such as the uncertainty surrounding the effect of the United Kingdom’s exit from the European Union, commonly referred to as “Brexit," disruptions in distribution, dependence on foreign personnel and unions, economic and social instability, and public health crises, including the outbreak of pandemic or contagious disease, such as COVID-19 and variant strains.
Sales outside the United States, especially in emerging markets, are subject to various risks, including government embargoes or foreign trade restrictions, foreign currency effects, tariffs, customs duties, inflation, difficulties in enforcing agreements and collecting receivables through foreign legal systems, compliance with international laws, treaties, and regulations, changes in regulatory environments, disruptions in distribution, dependence on foreign personnel and unions, economic and social instability, and public health crises.
Acquisitions include a number of risks, including our ability to project and evaluate market demand, identify and realize potential synergies and cost savings, and make accurate financial forecasts, as well as diversion of management attention during the pursuit of acquisitions.
However, we cannot assure that suitable acquisitions will be identified or consummated or that, if consummated, they will be successful. Acquisitions include a number of risks, including our ability to project and evaluate market demand, identify and realize potential synergies and cost savings, and make accurate financial forecasts, as well as diversion of management attention during the pursuit of acquisitions.
Climate change could have an impact on longer-term natural weather trends, resulting in environmental changes including, but not limited to, increases in severe weather; changing sea levels; changes in sea, land, and air temperatures; poor water conditions; and reduced access to water, which could disrupt or negatively affect our business. 15 T a ble of Contents Catastrophic events, including natural and environmental disasters, acts of terrorism, or civil unrest, could have a negative effect on our operations and financial results.
Climate change could have an impact on longer-term natural weather trends, resulting in environmental changes including, but not limited to, increases in severe weather; changing sea levels; changes in sea, land, and air temperatures; poor water conditions; and reduced access to water, which could disrupt or negatively affect our business.
However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect, we may be unable to anticipate these techniques or implement adequate preventive measures.
However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect, we may be unable to anticipate these techniques or implement adequate preventive measures. Moreover, the rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
Many factors continue to influence the availability and terms of financing that our dealer floor plan financing providers offer, including: • their ability to access certain capital markets, such as the securitization and the commercial paper markets, and to fund their operations in a cost effective manner; • the performance of their overall credit portfolios; • their willingness to accept the risks associated with lending to marine dealers; • the overall creditworthiness of those dealers; and • the overall aging and level of pipeline inventories.
Entities affiliated with Wells Fargo & Company, including BAC, our 49 percent owned joint venture, finance a significant portion of our boat and engine sales to dealers through floor plan financing to marine dealers. 18 Tab l e of Content s Many factors continue to influence the availability and terms of financing that our dealer floor plan financing providers offer, including: • their ability to access certain capital markets, such as the securitization and the commercial paper markets, and to fund their operations in a cost effective manner; • the performance of their overall credit portfolios; • their willingness to accept the risks associated with lending to marine dealers; • the overall creditworthiness of those dealers; and • the overall aging and level of pipeline inventories.
A breakdown, outage, malicious intrusion, breach, ransom attack, or other disruption of communications could result in erroneous or fraudulent transactions, disclosure of confidential information, loss of reputation and confidence, and may also result in legal claims or proceedings, penalties, and remediation costs.
We exchange information with many trading partners across all aspects of our commercial operations through our IT systems. A breakdown, outage, malicious intrusion, breach, ransom attack, or other disruption of communications could result in erroneous or fraudulent transactions, disclosure of confidential information, loss of reputation and confidence, and may also result in legal claims or proceedings, penalties, and remediation costs.
Adverse economic and capital market conditions could negatively affect our ability to access capital markets or increase the cost to do so, which could adversely impact our business, financial results, and competitive position.
Adverse economic and capital market conditions, market volatility, and regulatory uncertainty could negatively affect our ability to access capital markets or increase the cost to do so, which could adversely impact our business, financial results, and competitive position. Our profitability may suffer as a result of competitive pricing and other pressures.
These risks are exacerbated in the case of single-source suppliers, and the exclusive supplier of a key component could potentially exert significant bargaining power over price, quality, warranty claims, or other terms. As we increase production, our need for raw materials and supplies continues to increase.
These risks are exacerbated in the case of single-source suppliers, and the exclusive supplier of a key component could potentially exert significant bargaining power over price, quality, warranty claims, or other terms. We experienced supply shortages and increases in costs to certain materials in 2023.
We perform an annual review of management succession plans with the Board of Directors, including reviewing executive officer and other important positions to substantially mitigate the risk associated with key contributor transitions, but we cannot ensure that all transitions will be implemented successfully. 17 T a ble of Contents Our ability to continue to execute our growth strategy could potentially be adversely affected by the effectiveness of organizational changes.
We perform an annual review of management succession plans with the Board of Directors, including reviewing executive officer and other important positions to substantially mitigate the risk associated with key contributor transitions, but we cannot ensure that all transitions will be implemented successfully.
Conversely, we may make decisions to reduce our manufacturing footprint in accordance with our business strategy. We must carefully manage these capital improvement projects, expansions, efficiency enhancements, and any consolidation efforts to ensure they meet cost targets, comply with applicable environmental, safety, and other regulations, and uphold high-quality workmanship.
We must carefully manage these capital improvement projects, expansions, efficiency enhancements, and any consolidation or decrease in capacity utilization to ensure the projects meet cost targets, comply with applicable environmental, safety, and other regulations, uphold high-quality workmanship, and meet our business goals.
Our sales could be adversely affected if financing terms change unfavorably or if BAC were to be terminated. This could require dealers to find alternative sources of financing, including our direct financing to dealers, which could require additional capital to fund the associated receivables. We may be required to repurchase inventory or accounts of certain dealers.
Our sales could be adversely affected if financing terms change unfavorably or if BAC were to be terminated. This could require dealers to find alternative sources of financing, including our direct financing to dealers, which could require additional capital to fund the associated receivables. Inventory reductions by major dealers, retailers, and independent boat builders could adversely affect our financial results.
RISKS RELATED TO OUR DEALERS, DISTRIBUTORS, AND FRANCHISEES Our financial results could be adversely affected if we are unable to maintain effective distribution. We rely on third-party dealers and distributors to sell most of our products. Maintaining a reliable network of dealers is essential to our success.
Our failure to successfully do so could have a material adverse effect on our financial condition and results of operations. RISKS RELATED TO OUR DEALERS, DISTRIBUTORS, AND FRANCHISEES Our financial results could be adversely affected if we are unable to maintain effective distribution. We rely on third-party dealers and distributors to sell most of our products.
Although we have implemented plans to comply with these laws, GDPR, CCPA, and future laws and regulations could impose even greater compliance burdens and risks with respect to privacy and data security than prior laws.
For example, we are subject to the General Data Protection Regulation (GDPR) in the European Union (EU) and the California Consumer Privacy Act (CCPA). Although we have implemented plans to comply with these laws, GDPR, CCPA, and future laws and regulations could impose even greater compliance burdens and risks with respect to privacy and data security than prior laws.
Additionally, if such an event occurs near our business locations, manufacturing facilities, or key supplier facilities, business operations and/or operating systems could be interrupted.
If a catastrophic event takes place in one of our major markets, our sales could be diminished or our assets could be damaged. Additionally, if such an event occurs near our business locations, manufacturing facilities, or key supplier facilities, business operations and/or operating systems could be interrupted.
Inventory reductions by major dealers, retailers, and independent boat builders could adversely affect our financial results. If demand begins to decline or if new product introductions are expected to replace existing products, the Company and our dealers, retailers, and other distributors could decide to reduce the number of units they hold.
If demand for our products declines or if new product introductions are expected to replace existing products, our dealers, retailers, and other distributors could decide to reduce the number of units they hold.
We may not be able to recruit or retain sufficient skilled labor or our suppliers may not be able to deliver sufficient quantities of parts and components for us to match production with forecasted demand.
Although we have remained focused on our strategic priorities, our businesses may experience difficulty in meeting demand, particularly in rapidly changing economic conditions. We may not be able to recruit or retain sufficient skilled labor or our suppliers may not be able to deliver sufficient quantities of parts and components for us to match production with forecasted demand.
If credit conditions worsen and adversely affect the ability of customers to finance potential purchases at acceptable terms and interest rates, it could result in a decrease in sales or delay improvement in sales. 12 T a ble of Contents Higher energy and fuel costs can affect our results.
If credit conditions worsen and adversely affect the ability of customers to finance potential purchases at acceptable terms and interest rates, it could result in a decrease in sales or delay improvement in sales. 12 Tab l e of Content s Adverse capital market conditions could have a negative impact on our financial results.
These obligations may be triggered if our dealers default on their payment or other obligations to the finance companies.
In connection with these agreements, we may either have obligations to repurchase our products from the finance company or have recourse obligations. These obligations may be triggered if our dealers default on their payment or other obligations to the finance companies.
We experienced supply shortages and increases in costs to certain materials in 2022. We continue to address these issues by identifying alternative suppliers for key materials and components, working to secure adequate inventories of critical supplies, and continually monitoring the capabilities of our supplier base.
We continue to address these issues by identifying alternative suppliers for key materials and components, working to secure adequate inventories of critical supplies, and continually monitoring the capabilities of our supplier base. In the future, however, we may experience shortages, delayed delivery, and/or increased prices for key materials, parts, and supplies that are essential to our manufacturing operations.
We have previously, and may in the future, make changes to our portfolio which may be material.
As part of our strategy, we continuously evaluate our portfolio of businesses to further maximize shareholder value. We have previously, and may in the future, make changes to our portfolio which may be material.
We face competition from other manufacturers in attracting and retaining distributors and independent boat dealers. A significant deterioration in the number or effectiveness of our dealers and distributors could have a material adverse effect on our financial results. Although at present we believe dealer health to be generally favorable, weakening demand for marine products could hurt our dealers’ financial performance.
Maintaining a reliable network of dealers is essential to our success. We face competition from other manufacturers in attracting and retaining distributors and independent boat dealers. A significant deterioration in the number or effectiveness of our dealers and distributors could have a material adverse effect on our financial results.
Higher fuel prices may also have an adverse effect on demand for our parts and accessories businesses, as they increase the cost of boat ownership and possibly affect product use. Our profitability may suffer as a result of competitive pricing and other pressures.
Higher fuel prices may also have an adverse effect on demand for our parts and accessories businesses, as they increase the cost of boat ownership and possibly affect product use. RISKS RELATED TO OUR BUSINESS AND OPERATIONS Successfully managing our manufacturing operations is critical to our operating and financial results.
Hurricanes, floods, earthquakes, storms, and catastrophic natural or environmental disasters, as well as acts of terrorism or civil unrest, could disrupt our distribution channel, operations, or supply chain and decrease consumer demand. If a catastrophic event takes place in one of our major markets, our sales could be diminished or our assets could be damaged.
Catastrophic events, including natural and environmental disasters, acts of terrorism, or civil unrest, could have a negative effect on our operations and financial results. Hurricanes, floods, earthquakes, storms, and catastrophic natural or environmental disasters, as well as acts of terrorism or civil unrest, could disrupt our distribution channel, operations, or supply chain and decrease consumer demand.
If a release of hazardous substances occurs at or from one of our current or former properties or another location where we have disposed of hazardous materials, we may be held liable for the contamination, regardless of knowledge or whether we were at fault, and the amount of such liability could be material. 23 T a ble of Contents Additionally, we are subject to laws governing our relationships with employees, including, but not limited to, employment obligations as a federal contractor and employee wage, hour, and benefits issues, such as health care benefits.
If a release of hazardous substances occurs at or from one of our current or former properties or another location where we have disposed of hazardous materials, we may be held liable for the contamination, regardless of knowledge or whether we were at fault, and the amount of such liability could be material.
However, our profitability is dependent, in part, on our ability to absorb fixed costs over an increasing number of products sold and shipped.
However, our profitability is dependent, in part, on our ability to absorb fixed costs over an increasing number of products sold and shipped. Decreased demand or the need to reduce inventories can lower our production levels and impact our ability to absorb fixed costs, consequently materially affecting our results.
If a legacy system or another of our key systems were to fail or if our IT systems were unable to communicate effectively, this could result in missed or delayed sales or lost opportunities for cost-reduction or efficient cash management. We exchange information with many trading partners across all aspects of our commercial operations through our IT systems.
However, if a similar event occurred, and if legacy systems or other key systems were to fail or if our IT systems were unable to communicate effectively, this could result in missed or delayed sales or lost opportunities for cost-reduction or efficient cash management.
Any disruption or uncertainty resulting from such changes could have a material adverse impact on our business, results of operations, and financial condition. Much of our future success depends on, among other factors, our ability to attract and retain skilled labor.
Our ability to continue to execute our growth strategy could potentially be adversely affected by the effectiveness of organizational changes. Any disruption or uncertainty resulting from such changes could have a material adverse impact on our business, results of operations, and financial condition.
The Board of Directors has authorized our discretionary repurchase of outstanding common stock, to be systematically completed in the open market or through privately negotiated transaction s. In 2022, we repurchased $450.0 million of shares , and we plan to continue share repurchases in 2023 and b eyond.
RISKS RELATED TO OUR COMMON STOCK The timing and amount of our share repurchases are subject to a number of uncertainties. The Board of Directors has authorized our discretionary repurchase of outstanding common stock, to be systematically completed in the open market or through privately negotiated transactions.
In 2022, nearly all facilities sought to increase production and to hire and retain sufficient skilled hourly labor to meet increased demand for our products. In the future, if we are not successful in these efforts, we may be unable to meet our operating goals and plans, which may impact our financial results.
Much of our future success depends on, among other factors, our ability to attract and retain skilled labor. If we are not successful in these efforts, we may be unable to meet our operating goals and plans, which may impact our financial results.
We may be unable to successfully implement the growth strategies if our franchisees do not participate in the implementation of those strategies or if we are unable to attract a sufficient number of qualified franchisees.
We may be unable to successfully implement the growth strategies if our franchisees do not participate in the implementation of those strategies or if we are unable to attract a sufficient number of qualified franchisees. 19 Tab l e of Content s While our franchisees are required to comply with our franchise and related agreements, our franchisees are independent and manage their boat clubs as independent businesses, responsible for all day-to-day operations of their boat clubs.
In addition, certain customers could try to negotiate more favorable pricing of our products, which could depress earnings. In an effort to mitigate the risk associated with reliance on key customer accounts, we continually monitor these relationships and maintain a complete and competitive product lineup.
In an effort to mitigate the risk associated with reliance on key customer accounts, we continually monitor these relationships and maintain a complete and competitive product lineup. A m aterial portion o f our revenue is derived from international sources, which creates additional uncertainty.
Additionally, plant consolidation or expansion can result in manufacturing inefficiencies, additional expenses, including higher wages or severance costs, and cost inefficiencies, which could negatively impact financial results. A m aterial portion o f our revenue is derived from international sources, which creates additional uncertainty.
Additionally, plant consolidation or expansion can result in manufacturing inefficiencies, additional expenses, including higher wages or severance costs, and cost inefficiencies, which could negatively impact financial results. 13 Tab l e of Content s Loss of key customers could harm our business.
Such volatility could impact our access to capital resources and liquidity in the future, including making credit difficult to obtain or only available on less favorable terms. Impact on our operations could also be material; for example, we could experience elevated absenteeism rates or facility closures.
The COVID-19 pandemic resulted in disruption, uncertainty, and volatility in the global financial and credit markets, and similar future events could do the same. Such volatility could impact our access to capital resources and liquidity in the future, including making credit difficult to obtain or only available on less favorable terms.
Policing unauthorized use of our intellectual property is difficult, particularly outside the U.S., and litigating intellectual property claims may result in substantial cost and divert management’s attention. In addition, we may be required to defend our products against patent or other intellectual property infringement claims or litigation.
In addition, we may be required to defend our products against patent or other intellectual property infringement claims or litigation.
The amount and timing of share repurchases are based on a variety of factors.
In 2023, we repurchased $275.0 million of shares , and we plan to continue share repurchases in 2024 and b eyond. The amount and timing of share repurchases are based on a variety of factors.
In managing our acquisition strategy, we conduct rigorous due diligence, involve various functions, and continually review target acquisitions, all of which we believe mitigates some of our acquisition risks. However, we cannot assure that suitable acquisitions will be identified or consummated or that, if consummated, they will be successful.
Our growth initiatives include making strategic acquisitions when appropriate, which depend on the availability of suitable targets at acceptable terms and our ability to complete the transactions. In managing our acquisition strategy, we conduct rigorous due diligence, involve various functions, and continually review target acquisitions, all of which we believe mitigates some of our acquisition risks.
Our strategic acquisitions pose risks, such as our ability to project and evaluate market demand; maximize potential synergies and cost savings; make accurate accounting estimates; and achieve anticipated business objectives. We acquired Navico, a global leader in marine electronics and sensors, including multi-function displays, fish finders, autopilots, sonar, radar, and cartography, on October 4, 2021.
The inability to successfully integrate acquisitions could negatively impact financial results. Our strategic acquisitions pose risks, such as our ability to project and evaluate market demand; maximize potential synergies and cost savings; make accurate accounting estimates; and achieve anticipated business objectives.
These changes could negatively impact our tax provision, cash flows, and/or tax-related balance sheet amounts, including our deferred tax asset values, and increase the complexity, burden, and cost of tax compliance. RISKS RELATED TO OUR COMMON STOCK The timing and amount of our share repurchases are subject to a number of uncertainties.
In addition, many non-U.S. jurisdictions are implementing local legislation based upon the Organization for Economic Co-operation and Development’s base erosion and profit shifting project. These changes could negatively impact our tax provision, cash flows, and/or tax-related balance sheet amounts, including our deferred tax asset values, and increase the complexity, burden, and cost of tax compliance.
If we fail to timely and successfully integrate acquired businesses, including Navico, into existing operations, we may see higher costs, lost sales, or otherwise diminished earnings and financial results. Failure to execute our strategic plan and growth initiatives could have a material adverse effect on our business and financial condition.
If we fail to timely and successfully integrate acquired businesses into existing operations, we may see higher costs, lost sales, or otherwise diminished earnings and financial results. 17 Tab l e of Content s There can be no assurance that strategic divestitures or restructurings will provide business benefits.
From time to time, contracts with these customers come up for renewal. We cannot be certain we will renew such contracts, or renew them on favorable terms. If we lose a key customer, or a significant portion of its business, we could be adversely affected.
In each segment, we have important relationships with key customers, including White River Marine Group, LLC for the Propulsion and Navico Group segments and MarineMax, Inc. for the Boat segment. From time to time, contracts with these customers come up for renewal. We cannot be certain we will renew such contracts, or renew them on favorable terms.
Furthermore, we must continue to meet or exceed customers' expectations regarding product quality, experiences, and after-sales service or our operating results could suffer. Loss of key customers could harm our business. In each segment, we have important relationships with key customers, including White River Marine Group, LLC and MarineMax, Inc.
Furthermore, we must continue to meet or exceed customers' expectations regarding product quality, experiences, and after-sales service or our operating results could suffer. 15 Tab l e of Content s Our ability to meet demand in a rapidly changing environment may adversely affect our results of operations.
While we have processes in place to help manage dealer inventories at appropriate levels, potential inventory reductions remain a risk to our future sales and results of operations. 19 T a ble of Contents The franchise business model of Freedom Boat Club presents risks. Our franchisees are an integral part of our Freedom Boat Club business and its growth strategies.
The franchise business model of Freedom Boat Club presents risks. Our franchisees are an integral part of our Freedom Boat Club business and its growth strategies.
If our interests are not aligned, it could negatively impact our sales or financial results. RISKS RELATED TO OUR STRATEGIC PLANS The inability to successfully integrate acquisitions, including Navico, could negatively impact financial results.
If our interests are not aligned, it could negatively impact our sales or financial results. 16 Tab l e of Content s RISKS RELATED TO OUR STRATEGIC PLANS Failure to execute our strategic plan and growth initiatives could have a material adverse effect on our business and financial condition.
Although portions of the marine industry experienced positive trends as a result of the unique consumer environment resulting from the coronavirus (COVID-19) pandemic, economic uncertainty caused by rising interest rates, inflation, the Russia-Ukraine conflict, and the macro-economic environment may lead to unfavorable business outcomes.
Economic uncertainty caused by rising interest rates, inflation, international conflicts, and the macroeconomic environment may lead to unfavorable business outcomes.
We have agreements with certain third-party finance companies to provide financing to our customers, enabling them to purchase our products. In connection with these agreements, we may either have obligations to repurchase our products from the finance company or have recourse obligations.
While we have processes in place to help manage dealer inventories at appropriate levels, potential inventory reductions remain a risk to our future sales and results of operations. We may be required to repurchase inventory or accounts of certain dealers. We have agreements with certain third-party finance companies to provide financing to our customers, enabling them to purchase our products.
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Adverse capital market conditions could have a negative impact on our financial results. Adverse global economic conditions, market volatility, and regulatory uncertainty could lead to volatility and disruptions.
Added
Conversely, we may make decisions to decrease production at existing facilities or reduce our manufacturing footprint in accordance with our business strategy.
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Our suppliers must be prepared to ramp-up operations and, in many cases, hire additional workers and/or expand capacity in order to fulfill our orders and those of other customers. Cost increases, defects, or sustained interruptions in the supply of raw materials, parts, or components our suppliers experience as they increase production create risks to our operations and financial results.
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If we lose a key customer, or a significant portion of its business, we could be adversely affected. In addition, certain customers could try to negotiate more favorable pricing of our products, which could depress earnings.
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In the future, however, we may experience shortages, delayed delivery, and/or increased prices for key materials, parts, and supplies that are essential to our manufacturing operations. Successfully managing our manufacturing activity is critical to our operating and financial results.
Added
Impact on our operations could also be material, affecting employee absenteeism rates, facility closures, or adverse effects on customers or suppliers. These impacts could have a negative effect on our business, financial condition, and results of operations. Some of our operations are conducted by joint ventures that are not operated solely for our benefit.
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Demand volatility may be caused by, among other things: the temporary inability of consumers to purchase our products due to illness, quarantine, or other travel restrictions; dealership closures due to illness or government restrictions; a reduction in boating activity as a result of governmental actions or self-quarantine measures; shifts in demand away from discretionary products; and reduced options for marketing and promotion of products.
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Although at present we believe dealer health to be generally favorable, weakening demand for marine products could hurt our dealers’ financial performance. In particular, reduced cash flow from decreases in sales and tightening credit markets could impair dealers' ability to fund operations.
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If such events occur over a prolonged period, they could increase our costs and difficulty of operating our business, including accurately planning and forecasting for our operations and inventory levels, which may adversely impact our results. The COVID-19 pandemic resulted in disruption, uncertainty, and volatility in the global financial and credit markets, and similar future events could do the same.
Added
In June 2023, Brunswick disclosed an IT security incident that impacted some systems and global facilities. We activated our response protocols, which included pausing operations in some locations, engaging leading security experts and coordinating with relevant law enforcement agencies. Normal global business operations resumed over the course of nine days following the incident.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePaul Park, MN (US) Manufacturing Leased P&A Bellingham, WA (US) Manufacturing and distribution Leased P&A Menomonee Falls, WI (US) Light assembly, distribution, office Leased P&A Stuart, FL (US) Manufacturing and distribution Owned P&A Ensenada, Mexico Manufacturing and distribution Owned P&A Brisbane, Australia Distribution Leased P&A Amsterdam, Netherlands Engineering, distribution, office Leased P&A Heerenveen, Netherlands Distribution Leased P&A Bangor, Northern Ireland Manufacturing and office Leased P&A Alicante, Spain Office Leased Boat Edgewater, FL (US) Manufacturing Owned Boat Palm Coast, FL (US) Manufacturing Owned Boat Merritt Island, FL (US) Manufacturing Owned Boat Venice, FL (US) Office Leased Boat Fort Wayne, IN (US) Manufacturing Owned Boat New York Mills, MN (US) Manufacturing Owned Boat Lebanon, MO (US) Manufacturing Owned Boat Knoxville, TN (US) Office Leased Boat Vonore, TN (US) Manufacturing Owned Boat Princeville, Quebec, Canada Manufacturing Owned Boat Reynosa, Mexico Manufacturing Owned Boat Vila Nova de Cerveira, Portugal Manufacturing Owned 25 T a ble of Contents
Biggest changeOur principal properties are as follows: Segment Location Primary Use Ownership Mettawa, IL (US) Corporate headquarters Leased Propulsion and Engine P&A Fond du Lac, WI (US) Manufacturing and office Owned Propulsion and Engine P&A Melbourne, Australia Distribution and office Leased Propulsion, Engine P&A and Boat Petit-Rechain, Belgium Distribution and office Owned Propulsion and Engine P&A Suzhou, China Manufacturing, distribution, office Owned/Leased Propulsion, Engine P&A, Navico Group and Boat Auckland, New Zealand Manufacturing, light assembly, engineering, distribution, office Leased Propulsion and Engine P&A Juarez, Mexico Light assembly and distribution Owned/Leased Engine P&A Brisbane, Australia Distribution Leased Engine P&A Brownsburg, IN (US) Distribution Leased Engine P&A Heerenveen, Netherlands Distribution Leased Navico Group Lowell, MI (US) Manufacturing and office Leased Navico Group Menomonee Falls, WI (US) Light assembly, distribution, office Leased Navico Group Stuart, FL (US) Manufacturing and distribution Owned Navico Group Ensenada, Mexico Manufacturing and distribution Owned Navico Group Amsterdam, Netherlands Engineering, distribution, office Leased Boat Edgewater, FL (US) Manufacturing Owned Boat Palm Coast, FL (US) Manufacturing Owned Boat Merritt Island, FL (US) Manufacturing Owned Boat Venice, FL (US) Office Leased Boat Fort Wayne, IN (US) Manufacturing Owned Boat New York Mills, MN (US) Manufacturing Owned Boat Lebanon, MO (US) Manufacturing Owned Boat Knoxville, TN (US) Office Leased Boat Vonore, TN (US) Manufacturing Owned Boat Princeville, Quebec, Canada Manufacturing Owned Boat Reynosa, Mexico Manufacturing Owned Boat Vila Nova de Cerveira, Portugal Manufacturing Owned
Removed
Our principal properties are as follows: Segment Location Primary Use Ownership Mettawa, IL (US) Corporate headquarters Leased Propulsion and P&A Fond du Lac, WI (US) Manufacturing and office Owned Propulsion Miramar, FL (US) Distribution and office Leased Propulsion St.
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Cloud, FL (US) Light assembly and distribution Owned Propulsion and P&A Melbourne, Australia Distribution and office Leased Propulsion, P&A, Boat Petit-Rechain, Belgium Distribution and office Owned Propulsion and P&A Suzhou, China Manufacturing, distribution, office Owned/Leased Propulsion, P&A, Boat Auckland, New Zealand Manufacturing, light assembly, engineering, distribution, office Leased Propulsion and P&A Juarez, Mexico Light assembly and distribution Owned/Leased Propulsion and P&A Singapore Distribution and office Leased P&A Brownsburg, IN (US) Distribution Leased P&A Lowell, MI (US) Manufacturing and office Leased P&A St.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

13 edited+1 added−1 removed5 unchanged
Biggest changeDenari Executive Vice President and President — Brunswick Boat Group 2020 50 Christopher F. Dekker Executive Vice President, General Counsel, Secretary, and Chief Compliance Officer 2014 54 Brett A. Dibkey Executive Vice President and President — Navico Group 2020 50 John G. Buelow Executive Vice President and President — Mercury Marine 2023 52 Brenna D.
Biggest changeGwillim Executive Vice President and Chief Financial and Strategy Officer 2020 44 John G. Buelow Executive Vice President and President — Mercury Marine 2023 53 Christopher F. Dekker Executive Vice President, General Counsel, Secretary, and Chief Compliance Officer 2014 55 Aine L. Denari Executive Vice President and President — Brunswick Boat Group 2020 51 Brett A.
Altman Senior Vice President and Controller 2019 51 The executive officers named above have been appointed to serve until their successors are chosen and qualified or until the executive officer's earlier resignation or removal. David M. Foulkes was named Chief Executive Officer of Brunswick in January 2019.
Altman Senior Vice President and Controller 2019 52 The executive officers named above have been appointed to serve until their successors are chosen and qualified or until the executive officer's earlier resignation or removal. David M. Foulkes was named Chief Executive Officer of Brunswick in 2019.
Previously, he served as Vice President – Finance and Treasurer from June 2019 to June 2020, and Vice President – Investor Relations from 2017 to 2019. Mr. Gwillim served as Associate General Counsel - International from 2015 to 2017 and held positions of increasing responsibility within the Legal Department since his Brunswick employment began in 2011. Aine L.
Previously, he served as Vice President – Finance and Treasurer from June 2019 to June 2020, and Vice President – Investor Relations from 2017 to 2019. Mr. Gwillim served as Associate General Counsel - International from 2015 to 2017 and held positions of increasing responsibility within the Legal Department since his Brunswick employment began in 2011. John G.
Wrobel was named Executive Vice President and Chief Human Resources Officer in December 2021. Ms. Wrobel was named Brunswick's Vice President, Enterprise Human Resources and Transformation Leader in December 2020 when she joined Brunswick from Walgreens Boots Alliance, Inc., an integrated global pharmacy, healthcare and retail leader. Ms.
Wrobel was named Brunswick's Vice President, Enterprise Human Resources and Transformation Leader in December 2020 when she joined Brunswick from Walgreens Boots Alliance, Inc., an integrated global pharmacy, healthcare and retail leader. Ms.
Foulkes held positions of increasing responsibility at Mercury Marine from the start of his employment in 2007. Ryan M. Gwillim has served as Executive Vice President and Chief Financial Officer of Brunswick since June 2020.
Foulkes held positions of increasing responsibility at Mercury Marine from the start of his employment in 2007. Ryan M. Gwillim has served as Executive Vice President and Chief Financial Officer of Brunswick since June 2020. Mr. Gwillim assumed additional responsibility as Chief Strategy Officer in November 2023.
Preisser has served in her roles as Executive Vice President and President – Business Acceleration and Chief Strategy Officer since 2020. She previously held the role of Chief Human Resources Officer from 2016 to 2021. Ms. Preisser has served in a variety of roles of increasing responsibility since she started with Brunswick in 2004. Jill M.
She previously held the role of Chief Human Resources Officer from 2016 to 2021. Ms. Preisser has served in a variety of roles of increasing responsibility since she started with Brunswick in 2004. Jill M. Wrobel was named Executive Vice President and Chief Human Resources Officer in December 2021. Ms.
Altman has held a series of roles of increasing responsibility within Brunswick since he joined Brunswick in 2003. 28 T a ble of Contents PART II
Altman has held a series of roles of increasing responsibility within Brunswick since he joined Brunswick in 2003. 29 Tab l e of Content s PART II
Item 4. Mine Safety Disclosures Not applicable. 26 T a ble of Contents Information About Our Executive Officers Brunswick's Executive Officers are listed in the following table: Officer Name Present Position First Became an Executive Officer Age David M. Foulkes Chief Executive Officer 2019 61 Ryan M. Gwillim Executive Vice President and Chief Financial Officer 2020 43 Aine L.
Item 4. Mine Safety Disclosures Not applicable. 27 Tab l e of Content s Information About Our Executive Officers Brunswick's Executive Officers are listed in the following table: Officer Name Present Position First Became an Executive Officer Age David M. Foulkes Chief Executive Officer 2019 62 Ryan M.
Dekker served as Brunswick's Associate General Counsel, with responsibilities for litigation, employment, and compliance matters, from the start of his employment with Brunswick in 2010. Brett A. Dibkey has served as Executive Vice President and President – Navico Group since July 2022 and previously served as Executive Vice President and President – Advanced Systems Group from 2020 to 2022. Mr.
Dekker served as Brunswick's Associate General Counsel, with responsibilities for litigation, employment, and compliance matters, from the start of his employment with Brunswick in 2010. Aine L. Denari has served as Executive Vice President and President – Brunswick Boat Group since October 2020. Prior to joining Brunswick, Ms.
He previously served as Vice President of Global Operations, Mercury Marine, from June 2018 to February 2023, and as Vice President Category Management, Mercury Marine, from 2016 to 2018. Prior to 2016, Mr. Buelow served in a variety of positions of increasing responsibility at Mercury Marine since he was hired in 2004. 27 T a ble of Contents Brenna D.
Buelow was named Executive Vice President and President – Mercury Marine in February 2023. He previously served as Vice President of Global Operations, Mercury Marine, from June 2018 to February 2023, and as Vice President Category Management, Mercury Marine, from 2016 to 2018. Prior to 2016, Mr.
Preisser Executive Vice President and President — Business Acceleration, and Chief Strategy Officer 2016 45 Jill M. Wrobel Executive Vice President and Chief Human Resources Officer 2021 42 Randall S.
Dibkey Executive Vice President and President — Navico Group 2020 51 Brenna D. Preisser Executive Vice President and President — Business Acceleration 2016 46 Jill M. Wrobel Executive Vice President and Chief Human Resources Officer 2021 43 Randall S.
Denari previously served in a variety of executive positions within the automotive industry, and in leadership positions at major global consulting firms. Christopher F. Dekker has served as Executive Vice President, General Counsel, Secretary, and Chief Compliance Officer since October 2014. Prior to his appointment, Mr.
Buelow served in a variety of positions of increasing responsibility at Mercury Marine since he was hired in 2004. Christopher F. Dekker has served as Executive Vice President, General Counsel, Secretary, and Chief Compliance Officer since 2014. Prior to his appointment, Mr.
Prior to his career at Whirlpool, Mr. Dibkey worked in a variety of business development and strategic planning roles for Pfizer and Crowe Horwath, LLP. John G. Buelow was named Executive Vice President and President – Mercury Marine in February 2023.
Prior to his career at Whirlpool, Mr. Dibkey worked in a variety of business development and strategic planning roles for Pfizer and Crowe Horwath, LLP. 28 Tab l e of Content s Brenna D. Preisser has served in her role as Executive Vice President and President – Business Acceleration since 2020.
Removed
Denari has served as Executive Vice President and President – Brunswick Boat Group since October 2020. Prior to joining Brunswick, Ms.
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Denari previously served in a variety of executive positions within the automotive industry, and in leadership positions at major global consulting firms. Brett A. Dibkey has served as Executive Vice President and President – Navico Group since July 2022 and previously served as Executive Vice President and President – Advanced Systems Group from 2020 to 2022. Mr.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the three months ended December 31, 2022, we repurchased the following shares of common stock: Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Amount of Dollars that May Yet Be Used to Purchase Shares Under the Program October 2 to October 29 146,706 $ 68.16 146,706 October 30 to November 26 478,284 71.88 478,284 November 27 to December 31 630,773 72.33 630,773 Total 1,255,763 $ 71.67 1,255,763 $ 396,441,430 30 T a ble of Contents
Biggest changeOn January 30, 2024, our Board of Directors approved a $500.0 million increase to our share repurchase authorization. 30 Tab l e of Content s During the three months ended December 31, 2023, we repurchased the following shares of common stock: Period Total Number of Shares Purchased Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program Maximum Amount of Dollars that May Yet Be Used to Purchase Shares Under the Program October 1 to October 28 134,197 $ 74.52 134,197 October 29 to November 25 394,467 70.88 394,467 November 26 to December 31 197,118 86.45 197,118 Total 725,782 75.78 725,782 $ 121,468,669 Item 6.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Brunswick's common stock is traded on the New York and Chicago Stock Exchanges under the symbol "BC". As of February 13, 2023, there were 6,697 shareholders of record of our common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Brunswick's common stock is traded on the New York and Chicago Stock Exchanges under the symbol "BC". As of February 14, 2024, there were 6,418 shareholders of record of our common stock.
All dividends are assumed to be reinvested. Issuer Purchases of Equity Securities On July 19, 2022, our Board of Directors approved a $500.0 million increase to our share repurchase authorization. In 2022, we repurchased $450.0 million of stock under these authorizations and, as of December 31, 2022, the remaining authorization was $396.4 million.
Issuer Purchases of Equity Securities On July 19, 2022, our Board of Directors approved a $500.0 million increase to our share repurchase authorization. In 2023, we repurchased $275.0 million of stock under this authorization and as of December 31, 2023, the remaining authorization was $121.5 million.
Performance Graphs Comparison of Cumulative Total Shareholder Return among Brunswick, S&P 400 Index and S&P 400 Global Industry Classification Standard (GICS) Consumer Discretionary Index 2017 2018 2019 2020 2021 2022 Brunswick 100.00 85.41 112.09 144.55 191.71 141.39 S&P 400 GICS Consumer Discretionary Index 100.00 119.86 98.19 123.65 205.34 162.18 S&P 400 Index 100.00 116.67 103.86 130.73 182.57 159.00 The basis of comparison is a $100 investment made on December 31, 2017 in each of: (i) Brunswick, (ii) the S&P 400 GICS Consumer Discretionary Index and (iii) the S&P 400 Index.
Performance Graph Comparison of Cumulative Total Shareholder Return among Brunswick, S&P 400 Index and S&P 400 Global Industry Classification Standard (GICS) Consumer Discretionary Index 2018 2019 2020 2021 2022 2023 Brunswick 100.00 131.24 169.24 224.46 165.54 225.78 S&P 400 GICS Consumer Discretionary Index 100.00 81.92 103.17 171.32 135.32 169.26 S&P 400 Index 100.00 89.02 112.50 156.48 136.29 160.05 The basis of comparison is a $100 investment made on December 31, 2018 in each of: (i) Brunswick, (ii) the S&P 400 GICS Consumer Discretionary Index and (iii) the S&P 400 Index.
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In 2022, we began using the S&P 400 and S&P 400 GICS Consumer Discretionary Index to align with our proxy statement pay-versus-performance disclosures and because Brunswick is in the S&P 400. 29 T a ble of Contents Comparison of Cumulative Total Shareholder Return among Brunswick, S&P 500 Index and S&P 500 Global Industry Classification Standard (GICS) Consumer Discretionary Index 2017 2018 2019 2020 2021 2022 Brunswick 100.00 85.41 112.09 144.55 191.71 141.39 S&P 500 GICS Consumer Discretionary Index 100.00 100.96 129.04 171.58 213.31 134.54 S&P 500 Index 100.00 95.78 125.68 148.41 190.72 156.34 The basis of comparison is a $100 investment made on December 31, 2017 in each of: (i) Brunswick, (ii) the S&P 500 GICS Consumer Discretionary Index and (iii) the S&P 500 Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe table below summarizes the impact of changes in currency exchange rates and also the impact of acquisitions on our net sales: Net Sales 2022 vs. 2021 2021 vs. 2020 (in millions) 2022 2021 2020 GAAP Currency Impact Acquisitions Impact GAAP Currency Impact Acquisitions Impact Propulsion $ 2,824.0 $ 2,504.7 $ 1,878.4 12.7% (2.4)% —% 33.3% 1.9% —% Parts & Accessories 2,323.7 2,008.1 1,508.8 15.7% (2.3)% 18.8% 33.1% 1.9% 8.9% Boat 2,119.4 1,703.1 1,250.3 24.4% (1.7)% 3.0% 36.2% 1.2% 0.5% Segment Eliminations (454.9) (369.7) (290.0) 23.0% (1.0)% 4.3% 27.5% 0.7% 0.8% Total $ 6,812.2 $ 5,846.2 $ 4,347.5 16.5% (2.2)% 7.1% 34.5% 1.8% 3.2% Results of Operations Consolidated The following table sets forth certain amounts, ratios and relationships calculated from the Consolidated Statements of Operations for 2022, 2021 and 2020: 2022 vs. 2021 2021 vs. 2020 (in millions, except per share data) 2022 2021 2020 $ % $ % Net sales $ 6,812.2 $ 5,846.2 $ 4,347.5 $ 966.0 16.5% $ 1,498.7 34.5% Gross margin (A) 1,947.2 1,666.0 1,213.0 281.2 16.9% 453.0 37.3% Restructuring, exit and impairment charges 25.1 0.8 4.1 24.3 NM (3.3) (80.5)% Operating earnings 947.8 812.9 539.3 134.9 16.6% 273.6 50.7% Loss on early extinguishment of debt (0.1) (4.2) — 4.1 (97.6)% (4.2) NM Transaction financing charges — (4.0) — 4.0 NM (4.0) NM Pension settlement benefit — — (1.1) — NM 1.1 NM Net earnings from continuing operations 681.3 595.4 374.7 85.9 14.4% 220.7 58.9% Diluted earnings per share from continuing operations $ 9.06 $ 7.59 $ 4.70 $ 1.47 19.4% $ 2.89 61.5% Expressed as a percentage of Net sales: Gross margin (A) 28.6 % 28.5 % 27.9 % 10 bpts 60 bpts Selling, general and administrative expense 11.3 % 11.9 % 12.5 % (60) bpts (60) bpts Research and development expense 3.0 % 2.6 % 2.9 % 40 bpts (30) bpts Operating margin 13.9 % 13.9 % 12.4 % — bpts 150 bpts NM = not meaningful bpts = basis points (A) Gross margin is defined as Net sales less Cost of sales as presented in the Consolidated Statements of Operations. 33 T a ble of Contents The following is a reconciliation of our non-GAAP measures, adjusted operating earnings and adjusted diluted earnings per common share from continuing operations: Operating Earnings Diluted Earnings (Loss) Per Share (in millions, except per share data) 2022 2021 2020 2022 2021 2020 GAAP $ 947.8 $ 812.9 $ 539.3 $ 9.06 $ 7.59 $ 4.70 Restructuring, exit and impairment charges 25.1 0.8 4.1 0.25 0.01 0.04 Purchase accounting amortization 65.0 45.7 30.1 0.65 0.46 0.29 Acquisition, integration and IT costs 10.8 24.3 5.4 0.11 0.27 0.05 Sport Yacht & Yachts — 3.8 — — 0.04 — Palm Coast reclassified from held-for-sale — 0.8 — — 0.01 — Loss on early extinguishment of debt — — — — 0.04 — Gain on sale of assets — (1.5) — — (0.01) — Special tax items — — — (0.04) (0.13) — Pension settlement benefit — — — — — (0.01) As Adjusted $ 1,048.7 $ 886.8 $ 578.9 $ 10.03 $ 8.28 $ 5.07 GAAP operating margin 13.9 % 13.9 % 12.4 % Adjusted operating margin 15.4 % 15.2 % 13.3 % 2022 vs. 2021 Net sales increased 16.5 percent during 2022 when compared with 2021.
Biggest changeThe table below summarizes the impact of changes in currency exchange rates and also the impact of acquisitions on our net sales: Net Sales 2023 vs. 2022 2022 vs. 2021 (in millions) 2023 2022 2021 GAAP Currency Impact Acquisitions Impact GAAP Currency Impact Acquisitions Impact Propulsion $ 2,763.8 $ 2,824.0 $ 2,504.7 (2.1)% (0.2)% 0.4% 12.7% (2.4)% —% Engine P&A 1,199.8 1,310.2 1,371.7 (8.4)% (0.4)% —% (4.5)% (1.9)% —% Navico Group 914.7 1,069.3 688.3 (14.5)% —% —% 55.4% (3.0)% 55.0% Boat 1,989.4 2,119.4 1,703.1 (6.1)% (0.1)% 1.0% 24.4% (1.7)% 3.0% Segment Eliminations (466.3) (510.7) (421.6) (8.7)% (0.2)% —% 21.1% (1.0)% 3.8% Total $ 6,401.4 $ 6,812.2 $ 5,846.2 (6.0)% (0.1)% 0.4% 16.5% (2.2)% 7.1% 32 Tab l e of Content s Results of Operations Consolidated The following table sets forth certain amounts, ratios and relationships calculated from the Consolidated Statements of Operations for 2023, 2022 and 2021: 2023 vs. 2022 2022 vs. 2021 (in millions, except per share data) 2023 2022 2021 $ % $ % Net sales $ 6,401.4 $ 6,812.2 $ 5,846.2 $ (410.8) (6.0)% $ 966.0 16.5% Gross margin (A) 1,787.0 1,947.2 1,666.0 (160.2) (8.2)% 281.2 16.9% Restructuring, exit and impairment charges 54.7 25.1 0.8 29.6 NM 24.3 NM Operating earnings 734.9 947.8 812.9 (212.9) (22.5)% 134.9 16.6% Loss on early extinguishment of debt — (0.1) (4.2) 0.1 NM 4.1 (97.6)% Transaction financing charges — — (4.0) — NM 4.0 NM Net earnings from continuing operations 432.6 681.3 595.4 (248.7) (36.5)% 85.9 14.4% Diluted earnings per share from continuing operations $ 6.13 $ 9.06 $ 7.59 $ (2.93) (32.3)% $ 1.47 19.4% Expressed as a percentage of Net sales: Gross margin (A) 27.9 % 28.6 % 28.5 % (70) bps 10 bps Selling, general and administrative expense 12.7 % 11.3 % 11.9 % 140 bps (60) bps Research and development expense 2.9 % 3.0 % 2.6 % (10) bps 40 bps Operating margin 11.5 % 13.9 % 13.9 % (240) bps — bps NM = not meaningful bps = basis points (A) Gross margin is defined as Net sales less Cost of sales as presented in the Consolidated Statements of Operations.
Acquisitions During the second quarter of 2022, we acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $93.9 million. Refer to Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements for further information.
During the second quarter of 2022, we acquired certain Freedom Boat Club franchise operations and territory rights as well as certain marine assets in the Southeast United States for net cash consideration of $93.9 million. Refer to Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements for further information.
We exercise judgment when evaluating whether it is not more likely than not a tax position will be sustained upon examination by the relevant taxing authorities. This evaluation is subject to uncertainty as it involves the interpretation of tax laws and regulations and our interpretation could differ from that of the taxing authorities.
We exercise judgment when evaluating whether it is more likely than not a tax position will be sustained upon examination by the relevant taxing authorities. This evaluation is subject to uncertainty as it involves the interpretation of tax laws and regulations and our interpretation could differ from that of the taxing authorities.
We exercise judgment when determining the level of risk associated with achieving the forecasted revenue. For MPEEM calculations, we exercise judgement in determining the customer attrition rate, which is generally based on historical experience. These estimates are subject to uncertainty as actual results may differ from our forecast.
We exercise judgment when determining the level of risk associated with achieving the forecasted revenue. For MPEEM calculations, we exercise judgment in determining the customer attrition rate, which is generally based on historical experience. These estimates are subject to uncertainty as actual results may differ from our forecast.
Warranty Reserves. We record an estimated liability for product warranties at the time revenue is recognized. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. We exercise judgment when determining the appropriate historical periods to projected claim rates and expected costs per claim.
Warranty Reserves. We record an estimated liability for product warranties at the time revenue is recognized. The liability is estimated using historical warranty experience, projected claim rates and expected costs per claim. We exercise judgment when determining the appropriate historical periods to project claim rates and expected costs per claim.
We recognized equity earnings of $4.0 million and $2.3 million in 2022 and 2021, respectively, which were mainly related to our marine and technology-related joint ventures. We recognized $(6.1) million and $(6.8) million in 2022 and 2021, respectively, in Other expense, net.
We recognized equity earnings of $4.0 million and $2.3 million in 2022 and 2021, respectively, which were mainly related to our marine and technology-related joint ventures. We recognized $(6.1) million and $(6.8) million in 2022 and 2021, respectively, in Other income (expense), net.
These covenants also pertain to termination provisions included in our wholesale financing joint-venture arrangements with Wells Fargo Commercial Distribution Finance. Based on our anticipated earnings generation throughout the year, we expect to maintain sufficient cushion against the existing debt covenants. As of December 31, 2022, we were in compliance with the financial covenants in the Credit Facility and CP Program.
These covenants also pertain to termination provisions included in our wholesale financing joint-venture arrangements with Wells Fargo Commercial Distribution Finance. Based on our anticipated earnings generation throughout the year, we expect to maintain sufficient cushion against the existing debt covenants. As of December 31, 2023, we were in compliance with the financial covenants in the Credit Facility and CP Program.
The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples. We did not record any goodwill impairments in 2022, 2021 or 2020. Other Intangible Assets.
The key uncertainties in these calculations are the assumptions used in determining the reporting unit’s forecasted future performance, including revenue growth and operating margins, as well as the perceived risk associated with those forecasts in determining the Discount Rate, along with selecting representative market multiples. We did not record any goodwill impairments in 2023, 2022 or 2021. Other Intangible Assets.
The 60 basis points decrease in selling, general and administrative expenses as a percentage of revenue in 2022 compared to 2021 reflects the impact of less variable compensation expense (130 bpts) partially offset by increased spending on sales and marketing (40 bpts) and increased purchase accounting intangible asset amortization (30 bpts).
The 60 basis points decrease in selling, general and administrative expenses as a percentage of revenue in 2022 compared to 2021 reflects the impact of less variable compensation expense (130 bps) partially offset by increased spending on sales and marketing (40 bps) and increased purchase accounting intangible asset amortization (30 bps).
"Debt" refers to future cash principal payments. Debt also includes our finance leases as discussed in Note 20 – Leases in the Notes to Consolidated Financial Statements. (B) See Note 20 – Leases in the Notes to Consolidated Financial Statements for additional information. (C) Purchase obligations represent agreements with suppliers and vendors as part of the normal course of business.
"Debt" refers to future cash principal payments. Debt also includes our finance leases as discussed in Note 19 – Leases in the Notes to Consolidated Financial Statements. (B) See Note 19 – Leases in the Notes to Consolidated Financial Statements for additional information. (C) Purchase obligations represent agreements with suppliers and vendors as part of the normal course of business.
The percentage change in net sales expressed on a constant currency basis better reflects the changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Approximately 24 percent of our annual net sales are transacted in a currency other than the U.S. dollar.
The percentage change in net sales expressed on a constant currency basis better reflects the changes in the underlying business trends, excluding the impact of translation arising from foreign currency exchange rate fluctuations. Approximately 23 percent of our annual net sales are transacted in a currency other than the U.S. dollar.
Gross margin percentage increased 10 basis points in 2022 when compared with 2021 driven by increased sales (620 bpts) and acquisitions (60 bpts), partially offset by higher manufacturing costs including material and labor inflation and inefficiencies caused by supply chain disruptions (670 bpts).
Gross margin percentage increased 10 basis points in 2022 when compared with 2021 driven by increased sales (620 bps) and acquisitions (60 bps), partially offset by higher manufacturing costs including material and labor inflation and inefficiencies caused by supply chain disruptions (670 bps).
A “non-GAAP financial measure” is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
A "non-GAAP financial measure" is a numerical measure of a registrant’s historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the consolidated statements of operations, balance sheets or statements of cash flows of the issuer; or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.
Our major sources of funds for capital investments, acquisitions, share repurchase programs and dividend payments are cash generated from operating activities, available cash and marketable securities balances, and potential borrowings.
Our major sources of funds for capital investments, acquisitions, share repurchase programs and dividend payments are cash generated from operating activities, available cash and marketable securities balances, divestitures and borrowings.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations of Brunswick Corporation (we, us, our) are forward-looking statements.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations of Brunswick Corporation (the Company, we, us, our) are forward-looking statements.
We tested our long-lived asset balances for impairment as indicators arose during 2022, 2021 and 2020, resulting in impairment charges of $1.5 million, $0.8 million and $0.9 million, respectively, which are recognized either in Restructuring, exit and impairment charges or Selling, general and administrative expense in the Consolidated Statements of Operations. Income Taxes.
We tested our long-lived asset balances for impairment as indicators arose during 2023, 2022 and 2021, resulting in impairment charges of $1.3 million, $1.5 million and $0.8 million, respectively, which are recognized either in Restructuring, exit and impairment charges or Selling, general and administrative expense in the Consolidated Statements of Operations. Income Taxes.
As part of the annual test, we may perform a qualitative, rather than quantitative, assessment to determine whether the fair values of our reporting units are "more likely than not" to be greater than their carrying values.
As part of the annual test, we may perform a qualitative, rather than quantitative, assessment to determine whether the fair values of our reporting units are "more likely than not" to exceed their carrying values.
If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment is recorded equal to the carrying value of the reporting unit less its fair value, not to exceed the carrying value of goodwill. 45 T a ble of Contents We calculate the fair value of our reporting units considering both the income approach and the guideline public company method.
If the carrying value of the reporting unit exceeds its fair value, a goodwill impairment is recorded equal to the carrying value of the reporting unit less its fair value, not to exceed the carrying value of goodwill. We calculate the fair value of our reporting units considering both the income approach and the guideline public company method.
We have discussed the development and selection of the critical accounting policies with the Audit and Finance Committee of the Board of Directors and believe the following are the most critical accounting policies that could have an effect on our reported results. 44 T a ble of Contents Revenue Recognition and Sales Incentives.
We have discussed the development and selection of the critical accounting policies with the Audit and Finance Committee of the Board of Directors and believe the following are the most critical accounting policies that could have an effect on our reported results. Revenue Recognition and Sales Incentives.
Refer to the Propulsion, P&A, and Boat segments for further details on the drivers of net sales changes.
Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.
Non-GAAP financial measures do not include operating and statistical measures. We include non-GAAP financial measures in Management’s Discussion and Analysis as we believe these measures and the information they provide are useful to investors because they permit investors to view our performance using some of the same tools that we use to evaluate our ongoing business performance.
Non-GAAP financial measures do not include operating and statistical measures. We include non-GAAP financial measures in Management's Discussion and Analysis as management believes these measures and the information they provide are useful to investors because they permit investors to view our performance using the same tools that management uses to evaluate our ongoing business performance.
Refer to Note 15 – Debt in the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2021.
Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2022.
The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 20.2 percent and 19.1 percent for 2022 and 2021, respectively. See Note 11 – Income Taxes in the Notes to Consolidated Financial Statements for a reconciliation of our effective tax rate and statutory Federal income tax rate.
The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 31.2 percent and 20.2 percent for 2023 and 2022, respectively. See Note 10 – Income Taxes in the Notes to Consolidated Financial Statements for a reconciliation of our effective tax rate and statutory Federal income tax rate.
Liquidity and Capital Resources We view our highly liquid assets as of December 31, 2022 and 2021 as: (in millions) 2022 2021 Cash and cash equivalents $ 595.6 $ 354.5 Short-term investments in marketable securities 4.5 0.8 Total cash, cash equivalents and marketable securities $ 600.1 $ 355.3 The following table sets forth an analysis of Total liquidity as of December 31, 2022 and 2021: (in millions) 2022 2021 Cash, cash equivalents and marketable securities $ 600.1 $ 355.3 Amounts available under lending facilities (A) 747.2 497.2 Total liquidity (B) $ 1,347.3 $ 852.5 (A) See Note 15 – Debt in the Notes to Consolidated Financial Statements for further details on our lending facilities.
Liquidity and Capital Resources We view our highly liquid assets as of December 31, 2023 and 2022 as: (in millions) 2023 2022 Cash and cash equivalents $ 467.8 $ 595.6 Short-term investments in marketable securities 0.8 4.5 Total cash, cash equivalents and marketable securities $ 468.6 $ 600.1 The following table sets forth an analysis of Total liquidity as of December 31, 2023 and 2022: (in millions) 2023 2022 Cash, cash equivalents and marketable securities $ 468.6 $ 600.1 Amounts available under lending facilities (A) 741.9 747.2 Total liquidity (B) $ 1,210.5 $ 1,347.3 (A) See Note 14 – Debt in the Notes to Consolidated Financial Statements for further details on our lending facilities.
(D) Amounts primarily represent long-term deferred compensation plans. (E) Other long-term liabilities primarily includes long-term warranty contracts, future projected payments related to our nonqualified pension plans and deferred revenue. Legal Proceedings See Note 12 – Commitments and Contingencies in the Notes to Consolidated Financial Statements.
(D) Amounts primarily represent long-term deferred compensation plans. (E) Other long-term liabilities primarily includes long-term warranty contracts, future projected payments related to our nonqualified pension plans and deferred revenue. 43 Tab l e of Content s Legal Proceedings See Note 11 – Commitments and Contingencies in the Notes to Consolidated Financial Statements.
Refer to the Propulsion, P&A, and Boat segments discussions for further details on the drivers of net sales changes.
Refer to the Propulsion, Engine P&A, Navico Group and Boat segments for further details on the drivers of net sales changes.
We evaluate potential acquisitions, divestitures and joint ventures in the ordinary course of business. 2022 Cash Flow Net cash provided by operating activities of continuing operations in 2022 totaled $580.4 million versus $586.2 million in 2021. The decrease is primarily due to increased working capital, partially offset by higher net earnings.
We evaluate potential acquisitions, divestitures and joint ventures in the ordinary course of business. 2023 Cash Flow Net cash provided by operating activities of continuing operations in 2023 totaled $745.2 million versus $580.4 million in 2022. The increase is primarily due to a decrease in working capital usage, partially offset by lower net earnings.
The components of the Boat segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Volume 12.6 % Product Mix and Price 10.5 % Acquisitions 3.0 % Currency (1.7) % 24.4 % Internationa l sales were 24 percent of th e Boat segment's net sales in 2022, and increased 13 percent on a GAAP basis and 19 percent on a constant currency basis, reflecting increases across all regions.
The components of the Boat segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Volume 12.6 % Product Mix and Price 10.5 % Acquisitions 3.0 % Currency (1.7) % 24.4 % International s ales were 24 percent of the Boat segment's net sales in 2022, and increased 13 percent on a GAAP basis and 19 percent on a constant currency basis.
In performing this qualitative analysis, we consider various factors, including the effect of market or industry changes and the reporting units' actual results compared with projected results. We exercise judgment when evaluating the impact of market and industry changes and when comparing actual results to projected results.
In performing this qualitative analysis, we consider various factors, including the effect of market or industry changes and the reporting units' actual results compared with projected results.
We also completed the acquisitions of substantially all the net assets of RELiON Battery, LLC, SemahTronix, LLC, Fanautic Club, and certain Freedom Boat Club franchise operations and territory rights in the United States during 2021 for net cash consideration of $66.1 million.
We also completed the acquisitions of substantially all the net assets of RELiON Battery, LLC, SemahTronix, LLC, Fanautic Club, and certain Freedom Boat Club franchise operations and territory rights in the United States during 2021 for net cash consideration of $66.1 million. Refer to Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements for further information.
We believe that the non-GAAP financial measure "Total liquidity" is also useful to investors because it is an indication of our available highly liquid assets and immediate sources of financing. Cash, cash equivalents and marketable securities totaled $600.1 million as of December 31, 2022, an increase of $244.8 million from $355.3 million as of December 31, 2021.
We believe that the non-GAAP financial measure "Total liquidity" is also useful to investors because it is an indication of our available highly liquid assets and immediate sources of financing. Cash, cash equivalents and marketable securities totaled $468.6 million as of December 31, 2023, a decrease of $131.5 million from $600.1 million as of December 31, 2022.
Refer to Note 15 – Debt in the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2022. 2021 Cash Flow Net cash provided by operating activities of continuing operations in 2021 totaled $586.2 million versus $800.0 million in 2020.
Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements for further details on our debt activity during the year ended December 31, 2023. 41 Tab l e of Content s 2022 Cash Flow Net cash provided by operating activities of continuing operations in 2022 totaled $580.4 million versus $586.2 million in 2021.
Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and Accrued expenses as presented in the Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments. Accounts and notes receivable increased $74.6 million primarily due to increased sales across all segments.
Working capital is defined as Accounts and notes receivable, Inventories and Prepaid expenses and other, net of Accounts payable and Accrued expenses as presented in the Consolidated Balance Sheets, excluding the impact of acquisitions and non-cash adjustments.
Other expense, net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs. 34 T a ble of Contents Net interest expense increased in 2022 compared with 2021 due to an increase in average daily debt outstanding, which was influenced by debt issuances.
Other income (expense), net primarily includes remeasurement gains and losses resulting from changes in foreign currency rates and other postretirement benefit costs. Net interest expense increased in 2022 compared with 2021 due to an increase in average daily debt outstanding, which was influenced by debt issuances. Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements.
The components of the Propulsion segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Product Mix and Price 12.4 % Volume 2.7 % Currency (2.4) % 12.7 % International sal es w ere 32 percent of the Propu lsion segment's net sales in 2022.
The components of the Propulsion segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Product Mix and Price 12.4 % Volume 2.7 % Currency (2.4) % 12.7 % 36 Tab l e of Content s International sales were 32 percent of the Propulsion segment's net sales in 2022.
Available borrowing capacity under the Credit Facility as of December 31, 2022 totaled $747.2 million, net of $2.8 million of letters of credit outstanding.
Available borrowing capacity under the Credit Facility as of December 31, 2023 totaled $741.9 million, net of $8.1 million of letters of credit outstanding.
Corporate operating expenses increased by $23.1 million in 2021 compared with 2020 due to an increase in spending on certain enterprise initiatives including ACES as well as higher variable compensation expense. 40 T a ble of Contents Cash Flow, Liquidity and Capital Resources The following table sets forth an analysis of free cash flow for the years ended December 31, 2022, 2021 and 2020: (in millions) 2022 2021 2020 Net cash provided by operating activities of continuing operations $ 580.4 $ 586.2 $ 800.0 Net cash (used for) provided by: Plus: Capital expenditures (388.3) (267.1) (182.4) Plus: Proceeds from the sale of property, plant and equipment 11.3 7.2 2.9 Plus: Effect of exchange rate changes on cash and cash equivalents (11.9) (5.5) 8.8 Total free cash flow from continuing operations (A) $ 191.5 $ 320.8 $ 629.3 (A) We define "Free cash flow" as cash flow from operating and investing activities of continuing operations (excluding cash provided by or used for acquisitions, investments, purchases or sales/maturities of marketable securities and other investing activities, net of tax) and the effect of exchange rate changes on cash and cash equivalents.
Cash Flow, Liquidity and Capital Resources The following table sets forth an analysis of free cash flow for the years ended December 31, 2023, 2022 and 2021: (in millions) 2023 2022 2021 Net cash provided by operating activities of continuing operations $ 745.2 $ 580.4 $ 586.2 Net cash (used for) provided by: Plus: Capital expenditures (289.3) (388.3) (267.1) Plus: Proceeds from the sale of property, plant and equipment 14.8 11.3 7.2 Plus: Effect of exchange rate changes on cash and cash equivalents 2.7 (11.9) (5.5) Total free cash flow from continuing operations (A) $ 473.4 $ 191.5 $ 320.8 (A) We define "Free cash flow" as cash flow from operating and investing activities of continuing operations (excluding cash provided by or used for acquisitions, investments, purchases or sales/maturities of marketable securities and other investing activities, net of tax) and the effect of exchange rate changes on cash and cash equivalents.
Recent Accounting Pronouncements See Note 1 – Significant Accounting Policies in the Notes to Consolidated Financial Statements for the recent accounting pronouncements that have been adopted during the year ended December 31, 2022, or will be adopted in future periods.
See Note 10 – Income Taxes in Notes to Consolidated Financial Statements for further details. 46 Tab l e of Content s Recent Accounting Pronouncements See Note 1 – Significant Accounting Policies in the Notes to Consolidated Financial Statements for the recent accounting pronouncements that have been adopted during the year ended December 31, 2023, or will be adopted in future periods.
The components of the P&A segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Acquisitions 18.8 % Product Mix and Price 7.6 % Currency (2.3) % Volume (8.4) % 15.7 % International sales were 33 percent of the P&A segment's net sales in 2022.
The components of the Engine P&A segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Volume (11.7) % Product Mix and Price 9.1 % Currency (1.9) % (4.5) % International sales were 30 percent of the Engine P&A segment's net sales in 2022 .
Operating earnings, while positively affected by the factors affecting all of our segments previously mentioned, were also negatively impacted by increased input costs. 38 T a ble of Contents Boat Segment The following table sets forth Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2022, 2021 and 2020: 2022 vs. 2021 2021 vs. 2020 (in millions) 2022 2021 2020 $ % $ % Net sales $ 2,119.4 $ 1,703.1 $ 1,250.3 $ 416.3 24.4 % $ 452.8 36.2 % GAAP operating earnings $ 212.8 $ 142.3 $ 70.2 $ 70.5 49.5 % $ 72.1 NM Restructuring, exit and impairment charges — 0.1 1.3 (0.1) NM (1.2) (92.3) % Purchase accounting amortization 3.1 1.6 1.4 1.5 93.8 % 0.2 14.3 % Acquisition, integration and IT costs 0.6 6.3 1.7 (5.7) (90.5) % 4.6 NM Sport Yacht & Yachts — 3.8 — (3.8) NM 3.8 NM Palm Coast reclassified from held-for-sale — 0.8 — (0.8) NM 0.8 NM Adjusted operating earnings $ 216.5 $ 154.9 $ 74.6 $ 61.6 39.8 % $ 80.3 NM GAAP operating margin 10.0 % 8.4 % 5.6 % 160 bpts 280 bpts Adjusted operating margin 10.2 % 9.1 % 6.0 % 110 bpts 310 bpts NM = not meaningful bpts = basis points 2022 vs. 2021 Boat segment's net sale s increased $416.3 million or 24.4 percent versus 2021 due to increased sales volumes to dealers and favorable product mix and pricing.
Boat Segment The following table sets forth the Boat segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021: 2023 vs. 2022 2022 vs. 2021 (in millions) 2023 2022 2021 $ % $ % Net sales $ 1,989.4 $ 2,119.4 $ 1,703.1 $ (130.0) (6.1) % $ 416.3 24.4 % GAAP operating earnings $ 155.6 $ 212.8 $ 142.3 $ (57.2) (26.9) % $ 70.5 49.5 % Restructuring, exit and impairment charges 10.5 — 0.1 10.5 NM (0.1) NM Acquisition, integration, and IT related costs 5.2 0.6 6.3 4.6 NM (5.7) (90.5) % Purchase accounting amortization 3.6 3.1 1.6 0.5 16.1 % 1.5 93.8 % IT security incident costs 1.0 — — 1.0 NM — NM Sport Yacht & Yachts — — 3.8 — NM (3.8) NM Palm Coast reclassified from held-for-sale — — 0.8 — NM (0.8) NM Adjusted operating earnings $ 175.9 $ 216.5 $ 154.9 $ (40.6) (18.8) % $ 61.6 39.8 % GAAP operating margin 7.8 % 10.0 % 8.4 % (220) bps 160 bps Adjusted operating margin 8.8 % 10.2 % 9.1 % (140) bps 110 bps NM = not meaningful bps = basis points 39 Tab l e of Content s 2023 vs. 2022 Boat segment's net sale s decreased $130.0 million or 6.1 percent versus 2022 due to decreased sales volumes to dealers, partially offset by favorable product mix and pricing.
The components of the P&A segment's net sales change were as follows: Percent change in net sales compared to the prior year 2021 Volume 20.2 % Acquisitions 8.9 % Product Mix and Price 2.1 % Currency 1.9 % 33.1 % International sales were 31 percent of the P&A segment's net sales in 2021 .
The components of the Engine P&A segment's net sales change were as follows: Percent change in net sales compared to the prior year 2023 Volume (9.4) % Product Mix and Price 3.1 % IT Security Incident (1.7) % Currency (0.4) % (8.4) % International sales were 29 percent of the Engine P&A segment's net sales in 2023.
The Company recorded impairment charges of $17.4 million during the year ended December 31, 2022 related to capitalized software intangible assets that will not be placed into service. The Company did not record any other impairment charges during the year ended December 31, 2022 and 2021.
The Company recorded impairment charges of $16.6 million during the year ended December 31, 2023 including a $13.0 million impairment of the Navico trade name. The Company recorded impairment charges of $17.4 million during the year ended December 31, 2022 related to capitalized software intangible assets that will not be placed into service.
For example, the discussion of our cash flows includes an analysis of free cash flows and total liquidity; the discussion of our net sales includes a discussion of net sales on a constant currency basis; and the discussion of our earnings includes a presentation of operating earnings and operating margin excluding restructuring, exit and impairment charges, purchase accounting amortization, acquisition-related costs and other applicable charges and of diluted earnings per common share, as adjusted.
For example, the discussion of our cash flows includes an analysis of free cash flows and total liquidity; the discussion of our net sales includes net sales on a constant currency basis; the discussion of our net sales includes net sales excluding acquisitions; and the discussion of our earnings includes a presentation of operating earnings and operating margin excluding restructuring, exit and impairment charges, purchase accounting amortization, acquisition, integration and IT-related costs, IT security incident costs, Sport Yacht & Yachts, reclassification of held-for-sale items, gain on sale of assets, TN-BC Holdings LLC joint venture impairment, loss on early extinguishment of debt, special tax items, and other applicable charges and of diluted earnings per common share, as adjusted.
We borrowed $125.0 million under the Amended and Restated Credit Facility (Credit Facility) during 2022, all of which was repaid prior to year-end and thus we did not have any borrowings outstanding under the Credit Facility as of December 31, 2022.
During 2023, the maximum amount utilized under our unsecured commercial paper program (CP Program) was $125.0 million. 42 Tab l e of Content s We borrowed $125.0 million under the Credit Facility during 2022, all of which was repaid prior to year-end and thus we did not have any borrowings outstanding under the Credit Facility as of December 31, 2022.
P ropulsion segment's operating earnings for the year were $522.9 million, an increase of 16.3 percent versus the prior year, as a result of increased sales and lower operating expenses, slightly offset by higher inflationary costs and investments in new products and capacity expansion. 36 T a ble of Contents 2021 vs. 2020 Propulsion segment's net sales increased $626.3 million or 33.3 percent in 2021 versus the prior year due to the factors affecting all of our segments previously mentioned.
Propulsion segment's operating earnings for the year were $522.9 million, an increase of 16.3 percent in 2022 versus the prior year, as a result of increased sales and lower operating expenses, slightly offset by higher inflationary costs and investments in new products and capacity expansion.
Boat segment operating earnings for the year were $212.8 million , an increase of 49.5 percent versus the prior year, due to increased sales together with operational efficiencies and positive mix.
Boat segment's operating earnings were $212.8 million in 2022, an increase of 49.5 percent versus the prior year, due to increased sales together with operational efficiencies and positive mix. The increase was partially offset by inefficiencies resulting from supply chain disruptions and inflation pressures.
Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances indicate that it is more likely than not that an asset may be impaired. The impairment test for indefinite-lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying amount.
Intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate long-lived assets described below. Intangible assets not subject to amortization are assessed for impairment at least annually and whenever events or changes in circumstances indicate that it is more likely than not that an asset may be impaired.
If a position is not sustained upon examination, the impact could be material to our results of operations and cash flows. See Note 11 – Income Taxes in Notes to Consolidated Financial Statements for further details.
If a position is not sustained upon examination, the impact could be material to our results of operations and cash flows.
Due to the factors described in the preceding paragraphs, operating earnings, net earnings from continuing operations, and diluted earnings per common share from continuing operations increased during 2022. Diluted earnings per common share from continuing operations benefited from common stock repurchases in both years. 2021 vs. 2020 Net sales increased 34.5 percent during 2021 when compared with 2020.
Diluted earnings per common share from continuing operations benefited from common stock repurchases in both years. 34 Tab l e of Content s 2022 vs. 2021 Net sales increased 16.5 percent during 2022 when compared with 2021.
Corporate/Other The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2022, 2021 and 2020: 2022 vs. 2021 2021 vs. 2020 (in millions) 2022 2021 2020 $ % $ % GAAP operating loss $ (124.1) $ (114.9) $ (91.8) $ (9.2) 8.0 % $ (23.1) 25.2 % Restructuring, exit and impairment charges 17.4 — 2.0 17.4 NM (2.0) NM Acquisition, integration and IT-related costs 0.5 0.2 3.7 0.3 NM (3.5) (94.6) % Adjusted operating loss $ (106.2) $ (114.7) $ (86.1) $ 8.5 (7.4) % $ (28.6) 33.2 % NM = not meaningful Corporate operating expenses increased by $9.2 million in 2022 compared with 2021 due to the impairment of capitalized software intangible assets as well as an increase in investments in enterprise growth initiatives.
Corporate/Other The following table sets forth Corporate/Other results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021: 2023 vs. 2022 2022 vs. 2021 (in millions) 2023 2022 2021 $ % $ % GAAP operating loss $ (138.0) $ (124.1) $ (114.9) $ (13.9) 11.2 % $ (9.2) 8.0 % Restructuring, exit and impairment charges 7.7 17.4 — (9.7) (55.7) % 17.4 NM IT security incident costs 4.7 — — 4.7 NM — NM Acquisition, integration, and IT related costs 1.7 0.5 0.2 1.2 NM 0.3 NM Adjusted operating loss $ (123.9) $ (106.2) $ (114.7) $ (17.7) 16.7 % $ 8.5 (7.4) % NM = not meaningful 40 Tab l e of Content s Corporate operating expenses increased by $13.9 million in 2023 compared with 2022 due to spending on enterprise growth initiatives, the IT security incident and unfavorable mark-to-market adjustments for deferred compensation arrangements.
The primary drivers of Net cash provided by operating activities of continuing operations in 2022 were net earnings, net of non-cash items, partially offset by increases in working capital.
The decrease is primarily due to increased working capital, partially offset by higher net earnings. The primary drivers of Net cash provided by operating activities of continuing operations in 2022 were net earnings, net of non-cash items, partially offset by increases in working capital. Accounts and notes receivable increased $74.6 million primarily due to increased sales.
The components of the Propulsion segment's net sales change were as follows: Percent change in net sales compared to the prior year 2021 Volume 25.5 % Product Mix and Price 5.9 % Currency 1.9 % 33.3 % International sales were 34 percent of the Propulsion segment's net sales in 2021.
The components of the Navico Group segment's net sales change were as follows: Percent change in net sales compared to the prior year 2022 Acquisitions 55.0 % Product Mix and Price 5.9 % Currency (3.0) % Volume (2.5) % 55.4 % International sal es were 35 percent of the Navico Group segment's net sales in 2022.
The key uncertainties in the RFR and MPEEM calculations, as applicable, are: the selection of an appropriate royalty rate, assumptions used in developing internal revenue growth and expense forecasts, assumed customer attrition rates, as well as the perceived risk associated with those forecasts in determining the discount rate and risk premium.
The key uncertainties in the RFR and MPEEM calculations, as applicable, are: the selection of an appropriate royalty rate, assumptions used in developing internal revenue growth and expense forecasts, assumed customer attrition rates, as well as the perceived risk associated with those forecasts in determining the Discount Rate and risk premium. 45 Tab l e of Content s The costs of amortizable intangible assets are recognized over their expected useful lives, typically between three and fifteen years, using the straight-line method.
International sales increased 22 percent year-over-year on a GAAP basis and 29 percent on a constant currency basis, reflecting increases across all regions.
International sales increased 6 percent year-over-year on a GAAP basis and 13 percent on a constant currency basis.
Due to the factors described in the preceding paragraphs, operating earnings, net earnings from continuing operations and diluted earnings per common share from continuing operations increased during 2021. Diluted earnings per common share from continuing operations benefited from common stock repurchases in both years. Segments We have three reportable segments: Propulsion, P&A, and Boat.
Diluted earnings per common share from continuing operations benefited from common stock repurchases in both years. Segments We have four reportable segments: Propulsion, Engine P&A, Navico Group, and Boat.
Refer to Note 4 – Acquisitions in the Notes to the Consolidated Financial Statements for further information. 32 T a ble of Contents Matters Affecting Comparability Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency reflect the impact that changes in currency exchange rates had on comparisons of net sales.
Matters Affecting Comparability Changes in Foreign Currency Rates. Percentage changes in net sales expressed in constant currency reflect the impact that changes in currency exchange rates had on comparisons of net sales.
If the fair value of a reporting unit does not meet the "more likely than not" criteria discussed above, we perform a quantitative assessment which begins by measuring the fair value of the reporting unit.
We exercise judgment when evaluating the impact of market and industry changes and when comparing actual results to projected results. 44 Tab l e of Content s If the fair value of a reporting unit does not meet the "more likely than not" criteria discussed above, we perform a quantitative assessment which begins by measuring the fair value of the reporting unit.
Total debt as of December 31, 2022 and December 31, 2021 was $2,509.0 million and $1,816.4 million, respectively. Our debt-to-capitalization ratio increased to 55 percent as of December 31, 2022 from 49 percent as of December 31, 2021.
Total debt as of December 31, 2023 and December 31, 2022 was $2,430.4 million and $2,509.0 million, respectively. Our debt-to-capitalization ratio decreased to 54 percent as of December 31, 2023 from 55 percent as of December 31, 2022. There were no borrowings under the Revolving Credit Agreement (Credit Facility) during 2023.
See Note 12 – Commitments and Contingencies in the Notes to Consolidated Financial Statements for a description of these arrangements. 43 T a ble of Contents Contractual Obligations The following table sets forth a summary of our contractual cash obligations as of December 31, 2022: Payments due by period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Contractual Obligations Debt (A) $ 2,544.7 $ 89.0 $ 452.8 $ 162.4 $ 1,840.5 Interest payments on long-term debt 1,755.6 107.8 193.4 188.5 1,265.9 Operating leases (B) 156.7 33.0 49.2 25.0 49.5 Purchase obligations (C) 99.1 94.9 3.5 0.7 — Deferred management compensation (D) 24.3 5.0 6.0 6.0 7.3 Other long-term liabilities (E) 130.8 1.6 79.2 37.8 12.2 Total contractual obligations $ 4,711.2 $ 331.3 $ 784.1 $ 420.4 $ 3,175.4 (A) See Note 15 – Debt in the Notes to Consolidated Financial Statements for additional information on our debt.
Contractual Obligations The following table sets forth a summary of our contractual cash obligations as of December 31, 2023: Payments due by period (in millions) Total Less than 1 year 1-3 years 3-5 years More than 5 years Contractual Obligations Debt (A) $ 2,462.9 $ 455.4 $ 4.4 $ 163.1 $ 1,840.0 Interest payments on long-term debt 1,650.3 98.5 189.4 177.1 1,185.3 Operating leases (B) 223.1 37.2 51.2 37.0 97.7 Purchase obligations (C) 76.4 76.2 0.2 — — Deferred management compensation (D) 27.3 5.0 6.0 6.0 10.3 Other long-term liabilities (E) 146.8 5.8 66.3 47.5 27.2 Total contractual obligations $ 4,586.8 $ 678.1 $ 317.5 $ 430.7 $ 3,160.5 (A) See Note 14 – Debt in the Notes to Consolidated Financial Statements for additional information on our debt.
Refer to Note 15 – Debt and Note 4 – Acquisitions in the Notes to Consolidated Financial Statements for further details. We believe that we have adequate sources of liquidity to meet our short-term and long-term needs. 2023 Capital Strategy We anticipate executing a balanced capital strategy in 2023, leveraging our strong cash position and liquidity.
We believe that we have adequate sources of liquidity to meet our short-term and long-term needs. 2024 Capital Strategy We anticipate executing a balanced capital strategy in 2024, leveraging our strong cash position and liquidity. We anticipate being active with share repurchases with spend in excess of $200 million in 2024.
Parts & Accessories Segment The following table sets forth the Parts & Accessories (P&A) segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2022, 2021 and 2020: 2022 vs. 2021 2021 vs. 2020 (in millions) 2022 2021 2020 $ % $ % Net sales $ 2,323.7 $ 2,008.1 $ 1,508.8 $ 315.6 15.7 % $ 499.3 33.1 % GAAP operating earnings $ 336.2 $ 335.8 $ 275.4 $ 0.4 0.1 % $ 60.4 21.9 % Restructuring, exit and impairment charges 7.7 0.7 0.8 7.0 NM (0.1) (12.5) % Purchase accounting amortization 61.9 44.1 28.7 17.8 40.4 % 15.4 53.7 % Acquisition, integration and IT costs 9.7 17.8 — (8.1) (45.5) % 17.8 NM Gain on sale of assets — (1.5) — 1.5 (100.0) % (1.5) NM Adjusted operating earnings $ 415.5 $ 396.9 $ 304.9 $ 18.6 4.7 % $ 92.0 30.2 % GAAP operating margin 14.5 % 16.7 % 18.3 % (220) bpts (160) bpts Adjusted operating margin 17.9 % 19.8 % 20.2 % (190) bpts (40) bpts NM = not meaningful bpts = basis points 37 T a ble of Contents 2022 vs. 2021 P&A segment's net sales increased by $315.6 million or 15.7 percent in 2022 versus the prior year due to the acquisitions of Navico, RELiON, and SemahTronix and favorable pricing and product mix.
Navico Group Segment The following table sets forth the Navico Group segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021: 2023 vs. 2022 2022 vs. 2021 (in millions) 2023 2022 2021 $ % $ % Net sales $ 914.7 $ 1,069.3 $ 688.3 $ (154.6) (14.5) % $ 381.0 55.4 % GAAP operating earnings $ 5.2 $ 68.2 $ 53.4 $ (63.0) (92.4) % $ 14.8 27.7 % Restructuring, exit and impairment charges 30.5 7.7 0.7 22.8 NM 7.0 NM Purchase accounting amortization 53.0 61.9 44.1 (8.9) (14.4) % 17.8 40.4 % Acquisition, integration, and IT related costs 2.1 9.7 17.8 (7.6) (78.4) % (8.1) (45.5) % IT security incident costs 0.5 — — 0.5 NM — NM Gain on sale of assets — — (1.5) — NM 1.5 NM Adjusted operating earnings $ 91.3 $ 147.5 $ 114.5 $ (56.2) (38.1) % $ 33.0 28.8 % GAAP operating margin 0.6 % 6.4 % 7.8 % (580) bps (140) bps Adjusted operating margin 10.0 % 13.8 % 16.6 % (380) bps (280) bps NM = not meaningful bps = basis points 2023 vs. 2022 Navico Group segment's net sales decreased by $154.6 million or 14.5 percent in 2023 versus the prior year due to lower sales resulting from softer marine OEM orders and the continued weak RV manufacturing environment.
The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 19.1 percent and 20.7 percent for 2021 and 2020, respectively. See Note 11 – Income Taxes in the Notes to Consolidated Financial Statements for a reconciliation of our effective tax rate and statutory Federal income tax rate.
We recognized an income tax provision of $172.3 million and $141.0 million in 2022 and 2021, respectively. The increase is primarily due to increased earnings before income taxes. The effective tax rate, which is calculated as the income tax provision as a percentage of earnings before income taxes, was 20.2 percent and 19.1 percent for 2022 and 2021, respectively.
During 2021, the maximum amount utilized under the CP Program was $100.0 million. Refer to Note 15 – Debt in the Notes to Consolidated Financial Statements for further details. The level of borrowing capacity under our Credit Facility and CP Program is limited by both a leverage and interest coverage test.
Available borrowing capacity under the Credit Facility as of December 31, 2022 totaled $747.2 million, net of $2.8 million of letters of credit outstanding. During 2022, the maximum amount utilized under our CP Program was $300.0 million. The level of borrowing capacity under our Credit Facility and CP Program is limited by both a leverage and interest coverage test.
Off-Balance Sheet Arrangements Guarantees. We have reserves to cover potential losses associated with guarantees and repurchase obligations based on historical experience and current facts and circumstances. Historical cash requirements and losses associated with these obligations have not been significant.
Financial Services Refer to Note 8 – Financing Joint Venture in the Notes to Consolidated Financial Statements for more information about our financial services. Off-Balance Sheet Arrangements Guarantees. We have reserves to cover potential losses associated with guarantees and repurchase obligations based on historical experience and current facts and circumstances.
The components of the Boat segment's net sales change were as follows: Percent change in net sales compared to the prior year 2021 Volume 27.4 % Product Mix and Price 7.1 % Currency 1.2 % Acquisitions 0.5 % 36.2 % International s ales were 26 percent of the Boat segment's net sales in 2021, and increased 52 percent on a GAAP basis and 46 percent on a constant currency basis, reflecting increases across all regions.
The components of the Boat segment's net sales change were as follows: Percent change in net sales compared to the prior year 2023 Volume (12.6) % Product Mix and Price 5.6 % Acquisitions 1.0 % Currency (0.1) % (6.1) % Internationa l sales were 22 percent of the Boat segment's net sales in 2023.
Propulsion segment's operating earnings for the year increased $164.2 million or 57.5 percent in 2021 versus the prior year as benefits from increased pricing, favorable absorption and favorable customer mix were more than able to offset higher manufacturing costs, primarily caused by material inflation.
Propulsion segment's operating earnings for the year were $494.7 million, a decrease of 5.4 percent versus the prior year, as sales declines and higher input costs more than offset benefits from cost-control measures. 2022 vs. 2021 Propulsion segment's net sales increased $319.3 million or 12.7 percent in 2022 versus the prior year due to favorable product mix, pricing and higher sales volume.
Refer to Note 15 – Debt in the Notes to Consolidated Financial Statements. Income tax provision was $172.3 million and $141.0 million in 2022 and 2021, respectively. The increase is primarily due to increased earnings before income taxes.
Net interest expense increased in 2023 compared with 2022 due to an increase in average daily debt outstanding, which was influenced by debt issuances. Refer to Note 14 – Debt in the Notes to Consolidated Financial Statements. We recognized an income tax provision of $196.3 million and $172.3 million in 2023 and 2022, respectively.
Net cash provided by financing activities was $621.8 million, and primarily related to net proceeds from issuances of long-term debt in connection with the Navico acquisition, offset by payments of long-term debt including current maturities, common stock repurchases, and cash dividends paid to common shareholders.
Our capital spending was focused on investments in capacity expansion, new products and technology, although at lower levels than the prior year. Net cash used for financing activities was $487.0 million and primarily related to common stock repurchases, cash dividends paid to common shareholders and payments of long-term debt including current maturities.
This was partially offset by a decrease in variable compensation expense and favorable mark-to-market adjustments for deferred compensation arrangements.
Corporate operating expenses increased by $9.2 million in 2022 compared with 2021 due to the impairment of capitalized software intangible assets as well as an increase in investments in enterprise growth initiatives. This was partially offset by a decrease in variable compensation expense and favorable mark-to-market adjustments for deferred compensation arrangements.
During 2021, we recorded restructuring, exit and impairment charges of $0.8 million compared with $4.1 million in 2020. See Note 4 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details.
See Note 3 – Restructuring, Exit and Impairment Activities in the Notes to Consolidated Financial Statements for further details. We recognized equity (loss) earnings of $(11.4) million and $4.0 million in 2023 and 2022, respectively. The primary driver of the loss in 2023 is the impairment charge taken related to our investment in TN-BC Holdings LLC.
International sales increased 49 percent year-over-year on a GAAP basis and 43 percent on a constant currency basis, reflecting increases across all regions. P&A segment's operating earnings were $335.8 million in 2021 , an increase of 21.9 percent.
International sales increased 72 percent year-over-year on a GAAP basis and 82 percent on a constant currency basis. Navico Group segment's operating earnings were $68.2 million in 2022, an increase of 27.7 percent due to increased sales factors mentioned above, partially offset by increased input costs.
An impairment loss is recognized for the amount by which the carrying value exceeds the fair value of the asset. Refer to Note 4 – Acquisitions and Note 10 – Goodwill and Other Intangibles in the Notes to Consolidated Financial Statements for more information. 46 T a ble of Contents Long-Lived Assets.
The Company did not record any impairment charges during the year ended December 31, 2021. Refer to Note 4 – Acquisitions and Note 9 – Goodwill and Other Intangibles in the Notes to Consolidated Financial Statements for more information. Long-Lived Assets.
Gross margin percentage increased 60 basis points in 2021 when compared with 2020 driven by increased sales (340 bpts) and favorable changes in foreign exchange rates (40 bpts), partially offset by increased manufacturing costs, including material and labor inflation (380 bpts) offset by favorable absorption (60 bpts).
Gross margin percentage decreased 70 basis points in 2023 when compared with 2022 driven by higher manufacturing costs including material and labor inflation (260 bps), depreciation (60 bps), absorption (35 bps), the IT security incident (30 bps), and unfavorable foreign currency exchange-rate fluctuations (25 bps), offset by sales-related drivers (330 bps) and acquisitions (10 bps).
Propulsion Segment The following table sets forth the Propulsion segment results for the years ended December 31, 2022, 2021 and 2020: 2022 vs. 2021 2021 vs. 2020 (in millions) 2022 2021 2020 $ % $ % Net sales $ 2,824.0 $ 2,504.7 $ 1,878.4 $ 319.3 12.7 % $ 626.3 33.3 % Operating earnings 522.9 449.7 285.5 73.2 16.3 % 164.2 57.5 % Operating margin 18.5 % 18.0 % 15.2 % 50 bpts 280 bpts bpts = basis points 2022 vs. 2021 Propulsion segment's net sales increased $319.3 million or 12.7 percent in 2022 versus the prior year due to favorable product mix, pricing and higher sales volume.
Refer to Note 5 – Segment Information in the Notes to Consolidated Financial Statements for details on the segment operations. 35 Tab l e of Content s Propulsion Segment The following table sets forth the Propulsion segment results and a reconciliation to our non-GAAP measure of adjusted operating earnings for the years ended December 31, 2023, 2022 and 2021: 2023 vs. 2022 2022 vs. 2021 (in millions) 2023 2022 2021 $ % $ % Net sales $ 2,763.8 $ 2,824.0 $ 2,504.7 $ (60.2) (2.1) % $ 319.3 12.7 % GAAP operating earnings $ 494.7 $ 522.9 $ 449.7 (28.2) (5.4) % 73.2 16.3 % Restructuring, exit and impairment charges 2.7 — — 2.7 NM — NM IT security incident costs 3.4 — — 3.4 NM — NM Acquisition, integration, and IT related costs 2.5 — — 2.5 NM — NM Purchase accounting amortization 0.9 — — 0.9 NM — NM Adjusted operating earnings $ 504.2 $ 522.9 $ 449.7 (18.7) (3.6) % 73.2 16.3 % GAAP operating margin 17.9 % 18.5 % 18.0 % (60) bps 50 bps Adjusted operating margin 18.2 % 18.5 % 18.0 % (30) bps 50 bps NM = not meaningful bps = basis points 2023 vs. 2022 Propulsion segment's net sales decreased $60.2 million or 2.1 percent in 2023 versus prior year due to cautious OEM ordering patterns in the second half of the year, partially offset by continued market share gains in outboard engines, positive mix and pricing as well as the acquisition of Fliteboard.
The components of the consolidated net sales change were as follows: Percent change in net sales compared to the prior year 2021 Volume 26.0 % Product Mix and Price 3.5 % Acquisitions 3.2 % Currency 1.8 % 34.5 % Sales in each segment benefited from increased volume due to strong global demand for marine products, market share gains, and higher pricing.
The components of the Propulsion segment's net sales change were as follows: Percent change in net sales compared to the prior year 2023 Volume (14.1) % Product Mix and Price 13.4 % IT Security Incident (1.6) % Acquisitions 0.4 % Currency (0.2) % (2.1) % International sal es w ere 32 percent of the Propulsion segment's net sales in 2023.
International sales increased 6 percent on a GAAP basis and 13 percent on a constant currency basis from the prior year, primarily due to increases in all regions except Asia-Pacific.
International sales decreased 12 percent year-over-year on a GAAP and on a constant currency basis.
The decrease is primarily due to increased working capital, partially offset by higher net earnings during 2021. 41 T a ble of Contents The primary drivers of Net cash provided by operating activities of continuing operations in 2021 were net earnings, net of non-cash items, partially offset by the impact of increasing working capital, including increasing inventory levels to help ensure manufacturing continuity and rebuilding pipeline inventories.
The primary drivers of Net cash provided by operating activities of continuing operations in 2023 were net earnings, net of non-cash items, partially offset by working capital usage. Accounts and notes receivable decreased $54.5 million primarily due to lower sales and timing of collections. Accounts payable decreased $86.1 million, primarily due to lower purchasing resulting from reduced production.
International sales increased 29 percent on a GAAP basis and 23 percent on a constant currency basis from the prior year, primarily due to increases in all regions except Asia-Pacific.
International sales decreased 4 percent year-over-year on a GAAP basis and 3 percent on a constant currency basis.
Removed
The 60 basis points decrease in selling, general and administrative expenses as a percentage of revenue in 2021 compared to 2020 is due to better leverage on sales and marketing expenses (40 bpts) and technology initiatives (30 bpts) partially offset by higher variable compensation expense (10 bpts).
Added
IT Security Incident As previously announced on June 13, 2023, the Company experienced an IT security incident that impacted some of its systems and global facilities.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed6 unchanged
Biggest changeThe estimated reduction in fair market value that we would incur on our derivative financial instruments from a 10 percent adverse change in quoted foreign currency rates are $71.6 million and $53.4 million for the years 2022 and 2021, respectively. Item 8. Financial Statements and Supplementary Data See Index to Financial Statements and Financial Statement Schedule on page 54 .
Biggest changeThe estimated reduction in fair market value that we would incur on our derivative financial instruments from a 10 percent adverse change in quoted foreign currency rates are $91.7 million and $71.6 million for the years 2023 and 2022, respectively.
We manage foreign currency exposure of certain assets or liabilities through the use of derivative financial instruments such that the gain or loss on the derivative financial instrument offsets the loss or gain recognized on the underlying asset or liability, respectively. 47 T a ble of Contents We use fixed-to-floating interest rate swaps to convert a portion of our long-term debt from fixed-to-floating rate debt.
We manage foreign currency exposure of certain assets or liabilities through the use of derivative financial instruments such that the gain or loss on the derivative financial instrument offsets the loss or gain recognized on the underlying asset or liability, respectively. We use fixed-to-floating interest rate swaps to convert a portion of our long-term debt from fixed-to-floating rate debt.
We use foreign currency forward and option contracts to manage foreign exchange rate exposure related to anticipated transactions, and assets and liabilities that are subject to risk from foreign currency rate changes. Our principal currency exposures mainly relate to the Euro, Australian dollar, Japanese yen, and the Canadian dollar.
We use foreign currency forward and option contracts to manage foreign exchange rate exposure related to anticipated transactions, and assets and liabilities that are subject to risk from foreign currency rate changes. Our principal currency exposures mainly relate to the Euro, Canadian dollar, Australian dollar, and the Brazilian Real.
Removed
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.

Other BC 10-K year-over-year comparisons