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Brunswick boat sales up 10 percent in Q2

July 2011 News
LAKE FOREST, Ill. - A 10-percent increase in boat sales helped Brunswick Corporation record an 8-percent increase in net sales and an increase in its net earnings of $55.6 million, in the second quarter of 2011, when compared to the same quarter of last year. 

"Our second quarter results reflected higher marine wholesale shipments compared to the prior year, together with outstanding operating leverage achieved by our operating businesses," said Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. "Shipments of boats and engines were supported by solid retail growth experienced at our dealers, reflecting a stable marine market combined with market share growth in our boat and marine engine segments. Our Life Fitness segment also generated significant growth in the quarter." 

For the second quarter of 2011, Brunswick reported net sales of $1,096.3 million, up from $1,014.7 million a year earlier and operating earnings of $107.9 million, which included a gain from restructuring activities of $0.3 million, primarily resulting from the sale of certain idled marine properties. In the second quarter of 2010, Brunswick reported operating earnings of $55.7 million, which included $24.2 million of restructuring and impairment charges. During the quarter, Brunswick reported net earnings of $69.3 million, compared with net earnings of $13.7 million for the second quarter of 2010. 

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"The factors that positively affected our revenues and earnings in the second quarter of 2011, compared to the previous year," McCoy said, "included higher sales levels in our marine and fitness businesses, lower restructuring and impairment charges, companywide fixed-cost reductions and lower net interest expense. Partially offsetting these factors were higher material costs and variable compensation expense." 

Boat Segment 

The Boat segment, which is comprised of the Brunswick Boat Group, and includes 16 boat brands, reported net sales of $326.7 million for the second quarter of 2011, an increase of 10 percent compared with $296.6 million in the second quarter of 2010. International sales, which represented 39 percent of total segment sales in the quarter, increased by 14 percent during the period. For the quarter, the Boat segment reported operating earnings of $9.4 million. This compares with an operating loss of $23.6 million, including restructuring charges of $21.7 million, in the second quarter of 2010. 

Brunswick said that boat segment production and wholesale shipments increased during the quarter, compared with the second quarter of 2010, in response to solid retail demand and market share gains among Brunswick boat brands. Revenue growth resulted from an increase in wholesale unit shipments, partially offset by the effect of a slightly greater mix of smaller boat sales. Higher sales, lower restructuring, exit and impairment charges, increased fixed-cost absorption, and fixed-cost reductions all had a positive effect on the segment's improved quarterly results, Brunswick said. 

Marine Engines 

The Marine Engine segment, consisting of the Mercury Marine Group, including the marine parts and accessories businesses, reported net sales of $618.5 million in the second quarter of 2011, up 7 percent from $579.2 million in the second quarter of 2010. International sales, which represented 41 percent of total segment sales in the quarter, increased by 6 percent. For the quarter, the Marine Engine segment reported operating earnings of $95.5 million, which included a gain from restructuring activities of $0.3 million, primarily related to the sale of certain idled properties. This compares with operating earnings of $89.2 million in the second quarter of 2010, which included $2.1 million of restructuring charges. 

The segment's domestic outboard engine product category experienced the greatest percentage sales growth during the quarter. Higher sales and cost reductions had a positive effect on operating earnings during the quarter. Partially offsetting these positive factors were a less favorable product mix, higher variable compensation costs, and an increase in research and development spending, Brunswick said. 

"In 2011, our strategy is to remain disciplined to generate substantial free cash flow, perform better than the market and demonstrate outstanding operating leverage," McCoy said. "The retail marine market for 2011 is unfolding generally as we expected. We continue to believe that the significant decline in overall industry marine retail demand bottomed in 2010. The range of 2011 revenue and earnings growth expectations for the Company's results will continue to be governed primarily by marine retail demand, as well as by the success of the Company's efforts to improve market share in all of its business segments."

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