Boat sales drive Brunswick’s record results

LAKE FOREST, Ill. – Marine industry giant Brunswick Corp. (NYSE: BC) saw net earnings increase to $88.3 million, or $0.90 per diluted share, for the fourth quarter of 2005 ended Dec. 31,from net earnings of $58.8 million, or $0.59 per diluted share, for the year-ago quarter. Net sales increased 12 percent to $1,489.5 million, up from $1,333.8 million a year earlier.

“It was a solid finish to a record sales and earnings year for Brunswick, as we approached nearly $6 billion in annual sales,” commented new Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. “All of our business segments contributed to the 12 percent sales gain in the fourth quarter, led by strong performances from Sea Ray, Boston Whaler, Bayliner and Hatteras, as well as significant growth from Brunswick New Technologies. Sales also benefited from acquisitions, which accounted for half the sales increase in the fourth quarter.”

During the quarter, operating earnings rose 22 percent to $101.9 million, compared with $83.4 million in the year-ago quarter, and operating margins improved to 6.8 percent from 6.3 percent.

For the year ended Dec. 31, the company had net sales of $5,923.8 million, up 13 percent from $5,229.3 million in 2004. Excluding the benefit of acquisitions, sales were up 8 percent. Operating earnings reached $478.6 million for the year, up 19 percent from $400.7 million in 2004, and operating margins reached 8.1 percent versus 7.7 percent a year ago. Net earnings for 2005 increased 43 percent to $385.4 million, or $3.90 per diluted share, compared with $269.8 million, or $2.77 per diluted share, in 2004.

For the year, the company said that the benefits from higher sales, effective cost management and lower variable compensation costs were partially offset by the impact of the transition to low-emission outboard engines, investments in several new manufacturing plants, the costs of fully integrating acquisitions, increased research and development spending, and higher spending to support new product introductions.

Boat sales up substantially

Brunswick’s boat sales for the quarter and for the year were up substantially, even when contributions from acquisitions were excluded.

Brunswick’s boat segment, which includes 19 boat brands and a marine parts and accessories business, reported sales for the fourth quarter of $667.4 million, up 19 percent compared with $561.9 million in the fourth quarter of 2004. Excluding contributions from acquisitions, boat segment sales increased 6 percent in the quarter. Operating earnings for the boat segment increased to $29.8 million, up 23 percent from $24.2 million reported in the fourth quarter of 2004, and operating margins rose to 4.5 percent from 4.3 percent.

For 2005, boat segment sales were up 22 percent to $2,769.8 million from $2,271.1 million in 2004. Excluding incremental sales from acquisitions, Boat segment sales were up 11 percent for the year. Operating earnings for the boat segment were up 29 percent to $192.1 million from $149.3 million in 2004, and operating margins improved to 6.9 percent compared with 6.6 percent a year ago.

“We continued to play to our strengths in the boat segment during 2005,” McCoy explained. “Our multi-tiered strategy of filling in the ‘white space’ in our product portfolio, improving the overall quality of our products, stressing technological innovation and nurturing stronger ties with our dealer network, is continuing to produce results. Well-known brands such as Sea Ray, Boston Whaler and Hatteras all had double-digit sales increases. The Boat Group’s parts and accessories business also registered a double-digit increase for the year, enhanced by the acquisitions of Benrock and Kellogg Marine. Boat parts and accessories accounted for approximately $237 million of the boat segment’s sales in 2005.”

He added that improvement in operating margins from volume gains and cost reduction activities was partially offset by the lowering of production levels at some of its boat plants.

“Maintaining inventories at healthy levels is important for a seasonal business. At the end of the year, there were 30 weeks of supply of boats in the dealer channel, which was even with where they were a year ago and, as with our marine engine business, at levels appropriate for this point in the boating season,” he concluded.

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