Brunswick reports 15% revenue decrease in Q2
Brunswick Corporation today reported results for the second quarter of 2024, including consolidated net sales of $1,443.9 million, down from $1,702.3 million in the second quarter of 2023.
“With high interest rates continuing to pressure consumer budgets and suppress discretionary spending, the introduction of new model year products at the beginning of the important month of June did not catalyze boat purchases as we had anticipated, and our second quarter results were slightly below expectations,” said Brunswick Chief Executive Officer, David Foulkes. “Continued slower retail sales, combined with higher levels of discounting and carrying costs, have increased pressure on dealer and channel partner profit margins resulting in ongoing conservative wholesale ordering patterns which, in turn, is causing OEMs to maintain lower boat production rates through the main selling season, impacting Propulsion and Navico Group OEM orders. With significantly slower retail sales in the peak sales months, we now expect full year retail unit sales to be down approximately 10% versus our original forecast of flat.”
The company’s propulsion segment reported a 21% decrease in sales resulting from the enterprise factors listed above, partially offset by the impact of annual pricing.
Brunswick’s engine parts and accessories segment reported a 2% increase in sales versus the same period last year. The Products business sales were up 7%, and Distribution business sales were down slightly, at 1% compared to prior year, with both components of the segment delivering another quarter of sequential sales growth. Segment operating earnings were up versus prior year resulting from the higher sales, cost control across the businesses, and better operating efficiency as the company’s transition to its Brownsburg, Indiana facility is now complete.
The Navico Group segment reported a sales decrease of 8%, primarily driven by reduced sales to marine OEMs as they balance production levels to match retail ordering patterns, partially offset by strong new product momentum and slightly improved RV sales trends. Segment operating earnings decreased as the impact from lower sales and increased discount activity was only partially offset by lower operating expenses.
The company’s boat segment reported a 23% decrease in sales resulting from softer wholesale orders, as its channel partners continued to order cautiously, and higher incentives and discounting, partially offset by the favorable impact of modest model-year pricing and share gains. On the flip side, Freedom Boat Club reported another strong quarter, contributing approximately 10% of segment sales. The segment delivered adjusted operating margins within expectations as the impact of net sales declines and lower absorption from the reduced production was partially offset by pricing and continued cost control.
“With the majority of the retail selling season behind us, it is evident that the 2024 U.S. marine retail market is underperforming in peak season versus our initial expectations and is likely to end the year at unit levels similar to 2010. The macro-economic environment remains uncertain, and while there is now a higher probability of interest rate relief beginning in September, this would occur after the main selling season and will likely have an immaterial impact on our 2024 results, but potentially provide a tailwind for 2025,” Foulkes said. “In this environment, our OEM customers and channel partners continue to order cautiously and we do not now foresee this pattern changing significantly through the remainder of this season. In these challenging conditions our resilient, recurring revenue businesses and channels, including the engine P&A business, Propulsion’s repower business, Freedom Boat Club, and Navico Group’s aftermarket sales, are demonstrating their earnings and cash flow power. Through the balance of the year, we will continue to launch many exciting new products to support future share gains while focusing on delivering year-end inventory levels in line with historical norms, executing our strategic plan, investing in our long-term growth initiatives, and driving resilient EPS and free cash flow. Meeting anticipated retail boat unit sales for the balance of the year and ending the year with appropriate inventory levels will result in Brunswick reducing full-year ending boat unit inventory by approximately 7% or 1,500 units versus prior year inventory levels.”
The full Q2 results from Brunswick can be found on the company’s investor relations webpage.
