Brunswick Corporation reported results for the second quarter of 2017, with 12 percent growth in boat sales and 6 percent growth in engine sales.
“Our second quarter revenues increased by 8.8 percent,” said Brunswick Chairman and Chief Executive Officer Mark Schwabero. “Our top line reflected strong growth rates in all three of our primary boat categories, and the outboard engine and fitness businesses. Additionally, our parts and accessories businesses contributed solid growth in the quarter.”
For the second quarter of 2017, the company reported net sales of $1,352.0 million, up from $1,242.2 million a year earlier. For the quarter, the company reported operating earnings of $168.6 million, which included $5.7 million of restructuring, exit and integration charges. In the second quarter of 2016, the company had operating earnings of $161.9 million, which included $2.6 million of restructuring, exit and integration charges.
“Our performance in the second quarter reflected continued successful execution of our growth strategy, including our focus on product leadership,” Schwabero said. “Marine market data indicates a healthy U.S. marketplace, which is consistent with our assumptions entering the year."
Marine engine segment
The Marine Engine segment, consisting of the Mercury Marine Group, including the marine parts and accessories businesses, reported net sales of $766.2 million in the second quarter of 2017, up 6 percent from $719.7 million in the second quarter of 2016.
“The marine market is largely performing consistent with our expectations thus far in 2017. Our emphasis on product leadership positions us to capitalize on this growing marine market," said Schwabero in an earnings call discussing the second quarter results.
International sales, which represented 28 percent of total segment sales in the quarter, were up 11 percent compared to the prior year period. For the quarter, the Marine Engine segment reported operating earnings of $148.2 million. This compares with operating earnings of $139.0 million in the second quarter of 2016.
Sales increases in the quarter were led by the outboard engine business as well as solid growth from the parts and accessories businesses, which included revenue of 2 percentage points from a parts and accessories business acquisition completed in the fourth quarter of 2016, partially offset by declines in the sterndrive engine business. Higher revenues and improved cost efficiencies contributed to the increase in operating earnings in the second quarter of 2017.
Partially offsetting these factors were the unfavorable impact from foreign exchange and planned increases in growth investments.
The Boat segment, comprised of 15 boat brands, reported net sales of $412.1 million for the second quarter of 2017, an increase of 12 percent compared with $368.1 million in the second quarter of 2016. International sales, which represented 27 percent of total segment sales in the quarter, increased by 11 percent compared to the prior year period. For the second quarter of 2017, the Boat segment reported operating earnings of $24.7 million, which included $1.2 million of restructuring, exit and integration charges. This compares with operating earnings of $22.7 million in the second quarter of 2016.
The Boat segment's revenue reflected strong growth in all three of the company’s primary boat categories. The increase in operating earnings benefited from higher sales, which was partially offset by increased warranty and legal expenses in the fiberglass sterndrive/inboard boat business.
Schwabero said the category of fiberglass sterndrive/inboard boats 41 to 65 feet is one where Brunswick noted weak trends in the first quarter 2017 call, and those continued and carried over into the second quarter. "This is a place where demand has underperformed versus our initial view of 2017.”
Brunswick's overall operating plans and assumptions for 2017 remain largely consistent with the longer-term assumptions included in the 2018 plan the company communicated in its investor day in November 2015 and what the company reiterated on the first quarter call.
"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.”
For more information, visit www.brunswick.com.