Brunswick talks inventory

Brunswick released its third quarter earnings report this morning for the nine months ended Oct. 2 and shared at least some encouraging news, including net sales up 22 percent vs. third quarter 2009. Boating Industry will have full coverage of the report in Friday’s e-news (to download a PDF of Brunswick’s report click here). But one of the most interesting aspects of the release was the information the company shared regarding its inventory pipeline.

Brunswick said its boat manufacturing facilities “significantly increased production during the quarter, compared to the third quarter of 2009, to address inventory requirements of their dealers” and cited higher overall unit production and higher sales levels in its marine businesses, as factors that positively affected its revenues and earning in the third quarter. The company said its performance has been excellent in addressing three fundamental requirements: improving and maintaining its liquidity, taking all reasonable actions to protect the health of its dealer network, and accomplishing the actions necessary to come out of this downturn stronger than when we began the period,”

“Our significant cash position, strong dealer network with healthy pipelines and low percentage of aged inventory in the pipelines, along with dramatically lower fixed costs are evidence of our success in carrying out these requirements,” Brunswick Chairman and Chief Executive Officer Dustan E. McCoy said in the release.

The company included an informative supplemental chart (click here to download the PDF) with its report titled “Boat Dealer Pipeline Inventory” that illustrated how units have been reduced through the dealer pipeline beginning in 2008.

“For the remainder of 2010, our production and wholesale shipments will be at levels necessary to achieve our dealers’ minimum stocking requirements,” McCoy said. “As a result, and in light of the weak retail demand in larger boats, we are planning that the rate of our Boat segment’s sales increase in the fourth quarter versus 2009, will be less than that experienced in the third quarter and more in line with that experienced in the first quarter of 2010. Also, due to reduced fixed-cost absorption resulting from our planned fourth quarter plant shutdowns, the Boat segment’s operating leverage will be less than that experienced in the previous three quarters.

“We continue to remain focused on meeting all of the requirements we have identified for ourselves in these difficult economic and market conditions, and subject to the state of the global economy and retail marine markets, we maintain our objective of returning to profitability in 2011.”

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Brunswick held a conference call this morning to further discuss the results hosted by McCoy, Peter B. Hamilton, senior vice president and chief financial officer, and Bruce J. Byots, vice president – corporate and investor relations. A replay of the conference call will be available through midnight CDT Nov. 4 by calling 888-286-8010 (passcode: 91925417) or international dial 617-801-6888 (passcode: 91925417). The replay will also be available at www.brunswick.com.

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