NEW YORK – Moody's Investors Service has changed Brunswick Corp.'s (NYSE: BC) rating outlook to positive from stable and affirmed the company's existing Baa2 senior unsecured ratings, according to a Moody’s press release this morning.
The change in rating outlook reflects what Moody's called its “expectation that Brunswick's credit statistics are likely to improve over the next twelve months.”
Moody’s cited three reasons for those expectations:
New product introductions like the Bayliner 175 entry-level boat and the Verado engine family are expected to help drive demand for the company’s boats and engines, Moody’s said.
The change in outlook also considers the positive impact of actions taken by the company “to rationalize productive capacity and reduce unit manufacturing costs enabling Brunswick to generate free cash flow through the downturn in the marine industry,” Moody’s said.
Throughout 2003 Brunswick reported improving sales (+11 percent) and margin (up 70 basis points) trends due to both organic growth and acquisitions. In the first quarter of 2004 sales and earnings growth accelerated faster than expected. Retained cash flow to total adjusted debt has improved to about 24 percent while total coverage approximates 5.7x on a trailing 12-month basis, according to Moody’s.