Brunswick Corp., increased revenue 8.8 percent in the second quarter, reflecting strong growth rates in all three primary boat categories, outboard engines and fitness, the company reported today.
The company reported net sales of $1.35 billion, up from $1.24 billion last year, and operating earnings of $168.6 million, which included $5.7 million of restructuring, exit and integration charges.
Sales increased 7.1 percent excluding the impact of acquisitions, and operating earnings increased by four percent on a GAAP basis. Adjusted operating earnings were up six percent.
Gross margins declined due to factors in the fitness segment, as well as the impacts from warranty adjustments and legal costs in the fiberglass sterndrive/inboard boat business. Margin performance in the engine segment “remained strong,” Brunswick chairman and CEO Mark Schwabero said.
“Our top line reflected strong growth rates in all three of our primary boat categories, and the outboard engine and fitness businesses,” Schwabero said in a statement.. “Additionally, our parts and accessories businesses contributed solid growth in the quarter.”
“Our performance in the second quarter reflected continued successful execution of our growth strategy, including our focus on product leadership,” Schwabero said. “Marine market data indicates a healthy U.S. marketplace, which is consistent with our assumptions entering the year. Overall demand in non-U.S. marine markets was also strong, led by gains in Europe and Canada as well as improving conditions in other regions.”
Diluted earnings per share of $1.32 increased by $0.15 compared to last year, and adjusted EPS was $1.35, a $0.16 increase.
Boat and engine segments
The engine group reported net sales of $766.2 million in the second quarter of 2017, up six percent from $719.7 million in the second quarter of 2016. International sales, which represented 28 percent of total segment sales in the quarter, were up 11 percent compared to the prior year period.
Sales increases in the quarter were led by the outboard engine business as well as solid growth from the parts and accessories businesses, which included revenue from an acquisition completed in the fourth quarter of 2016, partially offset by declines in the sterndrive engine business.
The boat group, comprised of 15 brands, reported net sales of $412.1 million for the second quarter of 2017, an increase of 12 percent compared with $368.1 million in the second quarter of 2016. International sales, which represented 27 percent of total segment sales in the quarter, increased by 11 percent compared to the prior year period.
2017 outlook
The company expects its marine businesses’ top-line performance will benefit from the continuation of solid growth in the U.S. and international markets and the success of new products, Schwabero said.
It is also narrowing its full-year expectations of diluted EPS to the $4.00 to $4.10 range.
“For the full-year, we anticipate a slight improvement in operating margins as we plan to continue benefiting from volume leverage and cost reductions related to efficiency initiatives,” Schwabero said in a statement.
“Gross margin trends over the second half are expected to improve, but will be down for the year,” he said. “Operating expenses are estimated to increase in 2017 as we continue to fund incremental investments to support growth, with second half increases slightly below the first half. However, on a percentage of sales basis, they are expected to be at lower levels than 2016.”
