Analyst: Brunswick is positioned well for the future

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Brunswick’s actions should position the company to be the low-cost producer with a strong brand portfolio that will drive material share gains within the context of a much smaller U.S. boat market, according to analyst Tim Conder with Wells Fargo Securities.

The comments come on the heels of Brunswick’s second quarter results, which were released Thursday.

Brunswick reported total sales of $718.3 million for the second quarter of 2009, down 52 percent versus 2008, primarily the result of marine sales that dropped by 56 percent from year-ago levels.

The company reported a net loss of $163.7 million, or $1.85 per diluted share, which includes 40 cents per diluted share of restructuring charges and five cents per diluted share of non-cash benefits from special tax items.

Cash on hand at quarter’s end was $461.2 million, up from a 2008 year-end balance of $317.5 million.

The boat segment reported net sales for the quarter of $138.8 million, down 77 percent compared to $591.7 million in the second quarter of 2008. International sales, which represented 49 percent of total segment sales in the quarter, decreased by 75 percent during the period.

Management indicated that the company will continue to produce well below the rate of retail sales to adjust to a ”new normalized” industry, Conder noted, and current restructuring charges will likely expand pending additional cost reduction opportunities.

Brunswick will likely have additional restructuring charges related to Mercury engines and other boat plant closures, Conder noted. “However, from a cash perspective, we would note that the likely weaker earnings per share will be offset by 1) greater than expected working capital benefit, and 2) likely additional cost savings.”

“In our opinion, investors still concerned about viability should move on,” he said, adding that Brunswick should be well-positioned heading into 2010 when year-to-year results should benefit from higher production and less restructurings.

Brunswick stock climbed more than 27 percent Thursday, following the release of its quarterly results. Shares closed at $6.56.

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