Brunswick Corporation recently reported results for the second quarter of 2022.
"For the second quarter, we delivered our first ever quarter with $300 million of adjusted operating earnings, and together with record revenue and EPS, continued our trend of exceptional performance in a challenging macro-economic landscape. We maintained our strong focus on cost control and operational efficiencies, while still continuing to invest in new capacity, new product programs, and ACES initiatives necessary to fuel growth and market share gains," said Brunswick CEO David Foulkes. "Consumer demand for our products remained strong as we worked through a period of tougher year-over-year retail comparisons versus a particularly strong first-half of 2021, while being impacted by continued low field inventory and some enduring supply chain disruptions. Global boat field inventory levels were 55% lower at the end of the second quarter 2022 versus the same time in 2019, with inventory levels in certain product categories, including Saltwater Fish and Recreational Fiberglass, remaining at historic lows and with substantial backlogs of retail-ordered product."
For the second quarter of 2022, Brunswick reported consolidated net sales of $1,835.6 million, up from $1,554.8 million in the second quarter of 2021. Diluted EPS for the quarter was $2.61 on a GAAP basis and $2.82 on an as adjusted basis. The company reported sales in each segment benefited from higher prices implemented since the second quarter of 2021, partially offset by unfavorable changes in foreign currency exchange rates and supply chain inefficiencies, while each segment's operating earnings were also impacted by continued material, freight, and labor inflationary pressures and spending on growth-related initiatives. In addition, versus the second quarter of 2021:
The propulsion segment reported a 13% increase in sales due to continued strong global demand and sales volume increases for all product categories. Robust operating earnings growth was enabled by increased sales and lower operating expenses, slightly offset by investments in capacity and product development.
"Our propulsion business continues to deliver outstanding results, with record sales, operating earnings, and operating margins enabled by increased production and operating efficiencies. Mercury Marine continues to expand outboard propulsion retail market share around the globe, led by gains in high-horsepower categories, and has now gained share in each of the last five years in outboard engines above 75hp in the U.S., capturing an increase of almost 600 basis points. As the additional outboard engine capacity at the Fond du Lac, Wis. facility comes online towards the end of this year, and supply constraints are alleviated, we expect further global market share gains," Foulkes said.
The parts and accessories segment reported a 19% increase in sales driven by acquisitions completed in 2021 and strength in the base ASG businesses. Operating earnings were flat as the benefits from acquisitions were offset from outsized material and freight inflation headwinds. Boat segment reported a 27% increase in sales due to increased sales volumes to dealers.
"Our parts and accessories businesses delivered strong sales growth, as benefits from acquisitions completed in 2021, steady engine P&A sales in the U.S., and strong OEM sales from our Advanced Systems Group helped to offset headwinds related to early-quarter poor weather in certain northern
locations, constrained supply of some third-party product-lines to our distribution businesses, and retailers returning to more normal stocking patterns," Foulkes said. "Segment earnings were flat against an extremely strong second quarter 2021 but were far in excess of 2019 as boating participation remains significantly elevated and continues to drive our aftermarket businesses."
The boat segment reported a 27% increase in sales due to increased sales volumes to dealers. Freedom Boat Club, which is part of Business Acceleration, contributed approximately 6% of sales to the segment in the quarter. Growth in segment operating earnings and operating margin was enabled by increased sales volumes, together with operational efficiencies and positive changes in product mix, partially offset by inefficiencies resulting from supply chain disruptions, and the production ramp-up of the new Boston Whaler Flagler facility which will be substantially complete by the end of the third quarter.
"Our boat business posted robust top-line growth in the quarter, with double-digit operating margins
which increased sequentially for the third consecutive quarter. Each product category delivered strong top-line growth, with our Aluminum Fishing and Recreational Fiberglass brands also significantly expanding operating margins," Foulkes said. "Finally, Freedom Boat Club continues on its growth trajectory in the U.S. and Europe, and now has more than 360 locations, over 50,000 membership agreements covering 80,000 members network-wide, and a fleet of almost 5,000 boats, all while generating exceptionally strong synergy sales across our marine portfolio."
"We continue to deliver historically strong financial results for our shareholders despite a turbulent macro-economic climate", said Foulkes. "We are confident in our ability to continue successfully executing our strategic plan and delivering significant shareholder returns. The barrage of exciting new products that are already coming to market and will be launched in the balance of the year, coupled with our operational excellence, cost control, and focused investment in capacity and ACES technology, all enabled by prudent capital strategy actions, position us well to deliver strong results in 2022 and progress us towards our 2025 targets."
Read the full Q2 report from Brunswick here.