LAKE FOREST, Ill. — Boat, engine and marine parts & accessories builder Brunswick Corp. reported improved third quarter financial results, compared to the same quarter of last year, according to financial figures released in a press release from the company.
Net sales for the quarter were $815.4 million, up 22 percent versus third quarter 2009. Brunswick reported a net loss of $7.2 million, or $0.08 per diluted share, which includes $0.14 per diluted share of restructuring, exit and impairment charges. That’s a substantial improvement from a net loss of $114.3 million, or $1.29 per diluted share, for the third quarter of 2009.
Operating earnings totaled $25.2 million, a $134.6-million improvement from third quarter 2009. And cash totaled $676.5 million, up from 2009 year-end balance of $526.6 million.
In addition, Brunswick pointed out its increased production and wholesale shipments versus prior year levels, resulting from low beginning-of-year marine dealer inventories.
"Throughout the first nine months of 2010, we have successfully executed against our strategic initiatives," said Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. "This is evidenced by the outstanding operating leverage that we have demonstrated on our revenue growth during the year. For the nine months ended Oct. 2, 2010, excluding restructuring charges, our operating earnings increased by more than $410 million, as compared to 2009. In addition, we have achieved our objective of being cash flow positive during this period. All of this has been accomplished against the backdrop of a very difficult marine market.”
McCoy said that the factors that positively affected its third quarter results included lower discounts required to facilitate retail boat sales, improved fixed-cost absorption as a result of higher overall unit production and higher sales levels in its marine businesses.
“During the quarter, we also benefited from lower restructuring, exit and impairment charges, a reduction in variable compensation expense and lower pension expense. Partially offsetting these factors were higher income taxes," McCoy added.
The Marine Engine segment, consisting of the Mercury Marine Group, including the marine service, parts and accessories businesses, reported net sales of $429.2 million in the third quarter, up 18 percent from $363.5 million in the third quarter of 2009.
For the quarter, the Marine Engine segment reported operating earnings of $49.0 million, including restructuring charges of $1.7 million. This compares with an operating loss of $13.4 million in the year-ago quarter, which included $18.8 million of restructuring and impairment charges.
Sales were higher across all of the segment's main operations, including a high single-digit increase in the domestic marine service, parts and accessories businesses, which represented 32 percent of total segment sales in the quarter. The segment's sterndrive engine business experienced the greatest percentage of sales growth, according to the company.
The Boat segment, which is comprised of the Brunswick Boat Group and includes 16 boat brands, reported net sales of $209.2 million for the third quarter of 2010, an increase of 77 percent compared with $118.2 million in the third quarter of 2009.
For the third quarter of 2010, the Boat segment reported an operating loss of $26.3 million, including restructuring, exit and impairment charges of $10.2 million. This compares with an operating loss of $86.7 million, including restructuring, exit and impairment charges of $6.6 million, in the third quarter of 2009.
Boat manufacturing facilities significantly increased production during the quarter, compared to the third quarter of 2009, to address inventory requirements of their dealers. Reduced discounts required to support retail sales by dealers, increased fixed-cost absorption, higher sales and a reduction in variable compensation expense were the primary factors affecting the segment's reduction in operating losses in the quarter, according to Brunswick.
Moving forward, McCoy said the company has “expanded its focus on those actions necessary to accomplish our goal of returning to profitability,” which it aims to achieve in 2011.
“Although the economy and specific markets in which our businesses operate may remain challenging, becoming profitable requires that we remain disciplined to: generate positive free cash flow, perform better than the market in each of our business segments, and demonstrate outstanding operating leverage,” stated McCoy. “Our free cash flow and operating leverage through the first three quarters of 2010 give us the confidence that we have the discipline and operating capabilities to generate strong earnings and improvements in cash flow as the world's economies improve.”
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