Brunswick reports 2nd Quarter earnings

For the second quarter of 2019, Brunswick reported consolidated net sales of $1,163.5 million, up from $1,148.7 million a year ago. The Marine Engine segment, which manufactures and distributes marine propulsion systems and related parts and accessories, reported net sales of $871.5 million in Q2 2019, up 4.5% from $834.3 million in the second quarter of 2018. The Power Products acquisition contributed approximately 8% to the growth rate in the quarter. International sales, which represented 30% of total segment sales in the quarter, were up 9% compared to the prior year period. The boat segment, which manufactures and distributes recreational boats, reported net sales of $366.6 million for the second quarter of 2019, a decrease from $394.9 million in the second quarter of 2018.

“From a margin perspective, we are projecting solid improvements in gross and operating margins,” said Brunswick Chief Executive Officer David Foulkes. “This performance reflects benefits from new products, overall improved manufacturing efficiencies, cost reduction and containment initiatives, and acquisition contributions, while tariffs and currency fluctuations remain headwinds. We have appropriately adjusted our cost structure to compensate for lower demand, while prioritizing investment in new products and profit enhancing initiatives. We anticipate adjusted operating earnings to increase by a low-to-mid-single digit percent.

“The second quarter represents a pivotal point in Brunswick’s transition to a pure-play marine company, and we have tremendous confidence in the future of our business. Completing the Fitness
transaction allows us to center our strategy and message on our unparalleled marine platform.

“The demand environment in the first-half of 2019 was challenging in certain of our businesses, due in significant part to unfavorable weather across many regions of the U.S. and Canada. Muted market demand affected both our Marine Engine and Boat segments, mostly through reduced demand for value boats and lower horsepower outboard engines. However, the contributions from Power Products along with our continued focus on new product development, technology leadership, operational excellence, our stable parts and accessories business, and business model evolution all enabled strong margin performance and strengthened our overall growth profile.

“Our Marine Engine segment posted modest top-line growth, led by benefits from the Power Products acquisition and continued robust demand for, and market share gains in, higher horsepower outboard engine products. These sales gains, along with steady margin accretion and cost management actions, supported strong earnings growth in the quarter.”

Foulkes added that after considering market performance in the first half of 2019, they anticipate U.S. marine industry retail unit demand for the year being down mid-single digit percent versus 2018.

“Despite near-term market challenges, our longer-term outlook remains very positive and consistent with our established strategic plan,” said Foulkes. “Our marine businesses remain healthy and, as a result of steady investment in new products and technology, we continue to gain market share throughout our premium product categories that significantly contribute to our earnings growth. Our P&A business is a formidable, aftermarket-focused asset that provides stable top-line and earnings performance in all market conditions, and we are now the leader in the emerging boating shared access market through our acquisition of Freedom Boat Club, which was completed in the second quarter and is performing to plan.”

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