### At a Glance Management reported second-quarter results that exceeded expectations, with all business segments achieving year-over-year sales growth for the fourth consecutive quarter. However, they emphasized that performance was significantly impacted by IEEPA tariff refunds; excluding this effect, operating profit still substantially surpassed guidance.

### Key Data - Total net sales: $1.6 billion, up 8% year-over-year - Adjusted EPS: $1.56, up 34% year-over-year

### Business Progress The company is advancing its product mix toward premium and core brands while actively reducing value-tier product lines. As a result, marine retail unit volumes were roughly flat on an adjusted basis, but margins improved. The Propulsion segment (Mercury Marine) posted 8% sales growth, driven by strong OEM demand and market share gains internationally, particularly in Brazil. Navico Group's operating margin expanded 680 basis points year-over-year (including the tariff refund); excluding it, the margin still grew 260 basis points. Freedom Boat Club member outings increased 13% year-over-year, reaching 450 global network locations.

### Guidance & Outlook Full-year adjusted EPS guidance was raised to $4.35–$4.75 (midpoint $4.55), representing growth of nearly 40% year-over-year. Full-year free cash flow guidance was raised to over $400 million. Management expects operating margin expansion across all segments in the second half, with the Propulsion segment's full-year margin growth exceeding 100 basis points. The guidance does not include potential Phase 4 tariff refunds, which could contribute an additional $0.20 or more.

### Risk/Highlight Signals Management explicitly noted that ongoing geopolitical uncertainty and inflation continue to pressure consumer confidence, particularly among value-tier product buyers. New Section 301 tariffs and Canadian tariffs are expected to have a net negative impact of approximately $5 million. Full-year tariff impacts total roughly $40 million, concentrated in the first half.