Brunswick Corp.’s reported results for the first quarter 2018 include a 9 percent net sales increase for the company’s marine engine segment and a 7 percent net sales increase in the boat segment.
"Our first quarter performance was an excellent start to what we believe will be another year of successful execution of our strategy and creation of shareholder value," said Brunswick Chairman and Chief Executive Officer Mark Schwabero.
The company’s marine businesses continue to benefit from strong demand for outboard boats and engines, successful new products, and the company's strategy to grow its parts and accessories businesses, Schwabero added.
As a result, Brunswick’s marine businesses had revenue growth of 8 percent in the quarter, with a very strong increase in operating earnings versus first quarter 2017, Schwabero said.
"At this early point in the marine season, our current outlook on the global marine market remains in line with our initial expectations. While unfavorable weather conditions in certain markets, including the Northeast and Midwest regions of the U.S. as well as Europe, have contributed to a slightly slower start to boating activity and the marine retail selling season, we remain confident in our view of the industry for 2018," Schwabero said.
Brunswick continues to focus on product leadership as evidenced by Mercury’s launch of the 175-225 horsepower V6 outboard engines, the first in a series of major outboard engine launches that are planned for 2018, Schwabero said.
These products will begin shipping in the second quarter, along with other new products within the company’s other marine categories, Schwabero said.
For the first quarter of 2018, Brunswick reported overall net sales of $1,155.4 million, up from $1,082.1 million a year earlier.
For the quarter, Brunswick reported operating earnings of $115.4 million, which included $1.7 million of costs related to the planned Fitness business separation and $1.2 million of restructuring, exit, integration, and impairment charges. In the first quarter of 2017, Brunswick had operating earnings of $103.4 million, which included $8.3 million of restructuring, exit, integration, and impairment charges.
For the first quarter of 2018, Brunswick reported net earnings of $80.5 million, compared with net earnings of $74.2 million, for the first quarter of 2017.
Marine Engine Segment
The Marine Engine segment, which manufactures and distributes marine propulsion systems and related parts and accessories, reported net sales of $687.1 million in the first quarter of 2018, up 9 percent from $631.8 million in the first quarter of 2017.
International sales, which represented 31 percent of total segment sales in the quarter, were up 10 percent compared to the prior year period. For the quarter, the Marine Engine segment reported operating earnings of $95.7 million. This compares with operating earnings of $87.7 million in the first quarter of 2017.
Sales increases in the quarter were driven by strong growth in propulsion, led by increases in outboard engines, and solid growth in the parts and accessories businesses.
The increase in operating earnings in the first quarter was primarily due to benefits from higher net sales and favorable movements in foreign exchange rates, which were partially offset by the unfavorable impact from planned spending increases stemming from new product introductions, capacity expansion, and product development, Brunswick reported.
The Boat segment, which manufactures and distributes recreational boats, reported net sales of $304.0 million for the first quarter of 2018, an increase from $284.9 million in the first quarter of 2017.
International sales, which represented 28 percent of total segment sales in the quarter, increased by 14 percent compared to the prior year period.
For the first quarter of 2018, the Boat segment reported operating earnings of $24.7 million. This compares with operating earnings of $16.2 million in the first quarter of 2017.
The Boat segment's revenue reflected strong growth in the fiberglass freshwater boat businesses, comprised of our Bayliner brand along with the company’s European brands Quicksilver and Uttern, and solid growth in the aluminum freshwater boat businesses.
Revenue for the fiberglass saltwater boat business was comparable to a very strong first quarter of 2017, Brunswick reported.
The increase in segment operating earnings was primarily the result of higher net sales and timing benefits resulting from the adoption and implementation of the new revenue recognition standard.
"Our outlook for 2018 remains generally consistent with our recently provided three-year strategic plan and reflects another year of outstanding revenue and earnings growth, with excellent cash flow generation," Schwabero said. “We expect our marine businesses' top-line performance to benefit from the continuation of solid global market growth, along with the success of new products.”
Brunswick’s three-year plan assumes that inflation factors are mostly offset by price; however, the impact of trade policy changes could possibly create some additional pressure moving forward, which business segments would address accordingly.
Brunswick will host a conference call today at 10 a.m. CDT, hosted by Schwabero, William L. Metzger, senior vice president and chief financial officer, and Ryan M. Gwillim, vice president - investor relations. The call will be broadcast over the Internet at ir.brunswick.com.
To listen to the call, go to the website at least 15 minutes before the call to register, download and install any needed audio software.