Brunswick Corp. on Thursday reported sales growth for the first quarter of 2017, with 14 percent growth in boat sales and a 6 percent sales increase in the engine segment.
“Our first quarter revenues increased by 8 percent,” said Brunswick Chairman and CEO Mark Schwabero. “Our top line reflected strong growth rates in all three of our primary boat categories, as well as in our marine parts and accessories, fitness and outboard engine businesses."
Schwabero said during a call Thursday discussing the earnings report that early results from the marine segments have been encouraging, with the market off to a "strong start" for 2017.
“We believe that the market growth is strong and that we are outperforming the market," he said.
First quarter results
For the first quarter of 2017, the company reported net sales of $1,160.3 million, up from $1,070.3 million a year earlier. For the quarter, the company reported operating earnings of $89.0 million, which included $15.2 million of restructuring, exit and integration charges. In the first quarter of 2016, the company had operating earnings of $96.0 million, which included $3.8 million of restructuring, exit and integration
For the first quarter of 2017, Brunswick reported net earnings of $64.9 million, or $0.71 per diluted share, compared with net earnings of $63.2 million, or $0.68 per diluted share, for the first quarter of 2016. Diluted EPS for the first quarter of 2017 included $0.14 per diluted share of restructuring, exit and integration charges and a $0.01 per diluted share benefit from special tax items. The diluted EPS for the first quarter of 2016 included $0.03 per diluted share of restructuring, exit and integration charges.
Marine Engine Segment
The Marine Engine segment, consisting of the Mercury Marine Group, including the marine parts and accessories businesses, reported net sales of $631.8 million in the first quarter of 2017, up 6 percent from $595.5 million in the first quarter of 2016.
Sales were up 5 percent in the U.S. and Europe, and up 12 percent for the rest of world.
Sales increases in the quarter were led by the segment’s parts and accessories businesses, which included revenue from an acquisition completed in the fourth quarter of 2016, and by the outboard engine business, partially offset by declines in the sterndrive engine business.
Higher revenues, favorable product mix and improved cost efficiencies contributed to the increase in operating earnings in the first quarter of 2017, the company said.
Partially offsetting these factors were the unfavorable impact from foreign exchange and planned increases in growth investments, said CFO Bill Metzger.
The Boat segment is comprised of the Brunswick Boat Group and includes 15 boat brands. The Boat segment reported net sales of $382.7 million for the first quarter of 2017, an increase of 14 percent compared with $336.8 million in the first quarter of 2016.
U.S. sales were up 15 percent, with a 10 percent increase in Europe and 9 percent for the rest of the world.
Despite the increase in sales, earnings were down significantly for the boat segment due to product mix and higher materials costs, Metzger said.
The Boat segment's revenue reflected growth in the fiberglass and aluminum outboard categories. Sales of the fiberglass sterndrive/inboard boat category increased, in spite of anticipated declines in large fiberglass sterndrive/inboard boats, Metzger said.
"Our outlook for 2017 continues to be generally consistent with our three-year strategic plan and reflects another year of outstanding earnings growth, with excellent cash flow generation,” said Schwabero. “We believe we are well positioned to generate strong sales and adjusted earnings per share growth in 2017 and beyond."
Schwabero said the company expects that growth to continue across all segments.
“We expect our marine businesses’ top-line performance will benefit from the continuation of solid market growth in the U.S. and Europe and the success of our new products," he said. "The Fitness segment is expected to benefit from overall growth in global commercial fitness markets, as well as contributions from new products, particularly in the second half of 2017. As a result, our consolidated plan continues to reflect revenue growth rates in 2017 in the range of 6 to 8 percent. In total, acquisitions are expected to account for about one percent of 2017’s projected growth, reflecting the impact of completed transactions."