Yahoo Finance's Alexis Christoforous and Brian Sozzi speak with Brunswick CEO David Foulkes about how business is faring amid COVID-19.

Video Transcript

ALEXIS CHRISTOFOROUS: Welcome back to "The First Trade." Looks like the boat business is booming during this pandemic, and for many folks, it's their first time buying a boat. Joining us now is top boat-maker Brunswick CEO David Foulkes. David, good to have you here. Just give us a feel for what-- I'm sure it has been a whirlwind for you, what has business been like? And have you been able to keep up with demand?

DAVID FOULKES: Thank you for having me this morning, Alexis. We're trying to keep up with demand right now. Obviously, we went through this cycle of early part of the second quarter having some of our businesses down. But then we came up very rapidly mid-April, accelerated through May, and June was super strong in terms of retail sales-- about 40% above last year. And July has continued about the same-- really strong sales.

So we have ramped up our production facilities, obviously with all the COVID protocols, but as quickly as we possibly could to try and keep up with demand. We're getting there, but actually our field inventory pipelines are at 20-year historical lows right now and will continue to decline a bit through the third quarter. So we're going very fast, but it will take us a while to rebuild all those inventory, certainly this year and probably most of next year to get our field imagery levels back where they should be historically.

BRIAN SOZZI: David, who's buying all these boats?

DAVID FOULKES: Well, it's an interesting question. So in June, which was the big month, about 40% of all of our boats were sold to new boaters-- people who'd never owned a boat before. Another significant increment-- a big increment were people who had been a boater in the past but not recently owned a boat. So we call them lax boaters, if you like-- so huge numbers of people either entering boating or returning to boating after some period of time, which is obviously great for us now but also great for the future of boating over a considerable period of time.

Those people who are joining the new boaters tend to be younger, tend to have larger families, and there are also more women involved as well. Typically, bigger households by a slightly different kind of boat-- more of a runabout or maybe a pontoon-type boat. But we're just delighted to have those people into boating, and we'll work hard to persist with them.

ALEXIS CHRISTOFOROUS: Along with that, David, what kinds of boats are you seeing demand for? I know that fishing has become quite a popular activity, because it allows for easy social distancing during the pandemic. What are you seeing in terms of types of boats?

DAVID FOULKES: We're seeing the uplift really across the board-- everything from small aluminum fishing boats that you just mentioned through pontoons-- we have a lot of brands in both of those areas-- right up through a premium brands like Sea Ray, which is more of a cruising type boat, a general purpose boat, and also Boston Whaler, which is a premium saltwater fishing boat-- I would say particular strong demand in the premium area, but really an uplift across everything right now. If you think about it, there are a lot of people who would have bought a boat as a repeat purchase this year who probably can't get one. And they will be buying probably into next season.

BRIAN SOZZI: David, you are very much an international business. Canada is your second-largest market, Asia your third-biggest market. The Trump administration just raised the tariffs on aluminum. You use aluminum in your boats. And now we're ratcheting up-- Trump administration is ratcheting up trade tensions with China. How are these things impacting your business? Is it raising the costs of production?

DAVID FOULKES: Not measurably right now. A lot of our aluminum is domestically sourced. If there is any retaliation from Canada, that could potentially affect us. But I don't see this as material to us right now. Asia markets, they bounced back from the pandemic pretty quickly. They have been particularly strong. Canada has rebounded now a little after the US but is now on a strong rebound, and the same situation in Europe, which is a big market for us. We're seeing a little bit later, a little bit more delayed, but at the same-- a significant rebound in demand in all of the geographic regions.

ALEXIS CHRISTOFOROUS: What about the next generation boat? I mean, you have so many automakers now looking at environmentally friendly or friendlier cars and electric cars. Boats are typically-- I think people think of them as gas guzzlers. What are you doing in that area?

DAVID FOULKES: Well, our boats are very, very efficient. Our propulsion division, Mercury Marine, is the biggest marine propulsion provider in the US and a huge maker of marine engines globally. We work to make every engine we make more efficient than the last, from an emissions and a fuel economy perspective. So on our conventional engines, we do everything we possibly can to make them super efficient.

Electrification is penetrating a little into boating, but more into smaller boats and specific maybe commercial-- small commercial type applications. It's coming in, but not nearly as fast as in some other verticals. So our main concentration here is making the propulsion systems we provide right now as efficient as we possibly can. And they are, indeed, very, very efficient.

BRIAN SOZZI: When I think boats, I think the big, beautiful boat conventions where you can show off all this new technology. But are you still holding these events? And what does 2021 look like for you?

DAVID FOULKES: We're not really holding many of those events right now for obvious reasons with COVID. So a lot of boat shows in this part of the season have been canceled, both domestically and internationally. But they're being replaced by virtual events. For example, we held a virtual boat show just a few weeks ago. We had about 10,000 people attend. They were able to attend virtual stands for each of our boat brands, for our propulsion brands, and even for some partner brands.

We had great participation-- equivalent levels to a typical boat show. So we would anticipate that that virtual boat show kind of concept and more digital marketing and engagement generally will be present with us for a long period of time, if not indefinitely supplementing physical shows when they return. The good news for us, of course, is shows are demand generators, and right now, we have plenty of demand.