Brunswick Corp. had 3.6 percent growth in GAAP revenue, which included the entire Sea Ray business, and 6.3 percent growth in adjusted revenue in the second quarter.
The marine business saw GAAP revenue grow 4.3 percent, versus 7.7 percent on an adjusted basis.
The company raised its 2018 guidance to between 8 and 9 percent, and narrowed its diluted earnings per share guidance, which is projected at $4.55 to $4.65.
Operating earnings decreased by 38 percent for the quarter and were down 32 percent for the combined marine business.
Results of the entire Sea Ray business were reported in continuing operations for GAAP purposes; as adjusted, non-GAAP results exclude the Sea Ray sport yacht and yacht operations, which are being phased out.
Engine segment
The marine engine segment reported net sales of $834.3 million in the second quarter, up 9 percent from $766.2 million in the same quarter of 2017.
International sales, which represented 29 percent of total segment sales in the quarter, were up 11 percent compared to the prior year.
The segment reported operating earnings of $149.1 million, which includes $2.5 million of acquisition-related costs, compared with operating earnings of $148.3 million in the second quarter of 2017.
Shipments of V-6 and V-8 engines from 175 to 300 hp began in the quarter as expected, the company said in a statement. “However, ramp-up to full run-rate production will continue into the third quarter,” the company said. “There is substantial demand for these [engines] that is far exceeding expectations.”
Growth in the outboard and parts and accessories businesses drove sales increases in the quarter.
Operating earnings comparisons were affected by increases in sales volumes, as well as favorable impacts from changes in sales mix and foreign currency exchange rates, although these were smaller than anticipated.
Changes in operating earnings also include higher than expected costs related to unfavorable plant efficiencies associated with production ramp-up for new products and warehouse management systems integration, as well as planned spending increases for new product promotion and development.
Boat segment
The boat segment reported operating losses of $32.2 million, which included $33.5 million of restructuring, exit, integration and impairment charges and losses of $27.4 million related to the Sea Ray sport yacht and yacht operations in excess of restructuring charges.
This compares with operating earnings of $24.7 million in the second quarter of 2017, which included $3.4 million of operating losses in the sport yacht and yacht operations and $1.2 million of restructuring, exit, integration and impairment charges.
The boat segment reported net sales of $394.9 million for the second quarter, a decrease from $412.1 million in the same quarter last year.
Net sales included $19.9 million and $53.1 million of sport yacht and yacht sales in the second quarter of 2018 and 2017, respectively.
Growth in aluminum freshwater and Boston Whaler helped offset “significant declines” in the yacht and sport yacht segments, Brunswick said.
“For the full-year, we continue to anticipate improvement in both gross and operating margins in our combined marine business, as we plan for ongoing benefits from new products and volume leverage,” chairman and CEO Mark Schwabero said in a statement. “These factors, along with certain pricing actions, should more than offset impacts related to cost inflation, as well as enacted tariffs and known trade policy changes.”
