Companies post mixed results, but many of their financial reports project an improving climate
Publicly held marine companies posted mixed results for the most recent quarter, with many saying there are signs their economic situations are improving.
Brunswick Corp. reported a 36 percent drop in sales, but a reduction in inventory levels and an improved cash position. West Marine had a nearly 7 percent decline in net revenue, but said it is debt-free for the first time in its history.
MarineMax had a net loss for the quarter but saw a same-store sales increase for the first time in two years. Electronics manufacturer Garmin saw a drop in total revenue, but its marine segment was up 3 percent.
Here is a roundup of the results.
Brunswick Corp. reported a 36 percent decline in sales for the third quarter, attributed primarily to a 40 percent drop in marine sales from year-ago levels. However, the company also reported the lowering of inventory levels to 21 weeks of supply in the pipeline, an improved cash position (up by more than $300 million from the 2008 year-end balance) and a reduction in debt.
Net sales totaled $665.8 million, down from $1.03 billion in 2008. The company reported an operating loss of $109.4 million, which included $28.8 million of restructuring charges. In the third quarter of 2008, the company had an operating loss of $566.3 million, which included $534.2 million of impairment and restructuring charges.
Net loss was $114.3 million, or $1.29 a share, compared to a net loss of $729.1 million, or $8.26 a share, for the 2008 quarter. Cash totaled $624.1 million, up from the 2008 year-end balance of $317.5 million.
"We continue to make great strides in improving our overall liquidity position, reducing our marine dealer pipeline, and executing our cost-reduction program," says chairman and CEO Dustan McCoy. "These significant accomplishments have been achieved against a global marine market that has experienced its lowest level of demand in more than 45 years."
Brunswick's marine engine segment reported net sales of $363.5 million, down 29 percent from $515.2 million in the year-ago third quarter. Operating loss for the engine segment was $13.4 million, including restructuring charges of $18.8 million. This compares with an operating loss of $9.7 million in the year-ago quarter, which included $18.6 million of impairment and restructuring charges. Sales were off across all marine engine operations, with sterndrives experiencing a greater decline than outboards.
The boat segment, which includes 17 brands, reported net sales of $118.2 million, down 62 percent from $314.2 million in the third quarter of 2008. Operating loss for the boat segment was $86.7 million, including restructuring charges of $6.6 million. This compares with an operating loss of $536.3 million, including impairment and restructuring charges of $491.6 million, in the third quarter of 2008.
"As we enter 2010, the majority of our boat and engine manufacturing facilities will begin to ramp up production," McCoy says. "This is primarily the result of dealer inventories being at historically low levels, which means we will need to increase our wholesale shipments of boats and engines to meet retail demand. Increased production, combined with higher wholesale shipments, should provide improved revenue and reduced losses throughout 2010."
MarineMax saw a 25 percent increase in revenue and a same-store sales increase of about 41 percent for its fourth quarter, which ended Sept. 30, but it reported a net loss of $33 million for the period. The increase in same-store sales was the first in more than two years, says chairman, president and CEO William McGill Jr.
For the fiscal year, the company reported a net loss of $76.8 million, or $4.11 a share, compared to a net loss of $134.3 million, or $7.30 a share, for fiscal 2008. Revenue was $588.6 million, compared to $885.4 million for fiscal 2008. Same-store sales declined approximately 29 percent, compared to a 28 percent decline the previous fiscal year.
Fourth-quarter revenue was $207.2 million, compared to $165.6 million for the 2008 quarter. Net quarterly loss was $33 million, or $1.72 a share, compared to a net loss of $11.1 million, or 60 cents a share, for the comparable quarter last year.
At the end of the fourth quarter, inventory declined 56 percent, or $262.7 million, to $205.9 million, compared to $468.6 million as of Sept. 30, 2008. Short-term borrowings declined 62 percent, or $230 million, to $142 million, compared to $372 million as of Sept. 30, 2008.
"Our planned strategy to reduce our inventory levels and strengthen our competitive position was very successful during the fourth quarter," says McGill. "We reported our largest sequential inventory reduction to date, dropping significantly from the June quarter and over $262 million from last year-end."
Clearwater, Fla.-based MarineMax closed an additional 11 stores during the quarter, bringing the total store closures to 26 during fiscal 2009. MarineMax now has a total of 55 stores, down from 93 stores at the company's peak. McGill said the company is no longer in Northern California or Utah, though it could re-enter those markets in the future.
CFO Michael H. McLamb estimated that, historically, MarineMax has seen about $13 million a year in revenue per store, and that should go up with fewer stores and fewer competitors.
"We're seeing a lot of fallout in the market and we believe there will be even more," McGill says.
Marine Products Corp.
Marine Products Corp., manufacturer of Chaparral and Robalo boats, reported a 72.3 percent decrease in net sales and a 75.7 percent drop in the number of boats sold for the 2009 third quarter, which ended Sept. 30.
Marine Products generated net sales of $8.73 million, compared to $31.58 million in the same quarter of 2008. Contributing to the decline in net revenue, in addition to the 75.7 percent decrease in the number of boats sold, was a 2.5 percent decrease in the average gross selling price per boat because of a change in model mix.
"During the third quarter we supported our dealers to maintain low inventories while also preparing for our 2010 model year and another winter boat show season," CEO Richard A. Hubbell said in a statement. "While our financial results were negatively impacted by low sales to dealers and our financial support of their inventory reduction efforts, this was an investment to prepare for better times in the future."
Gross profit for the quarter was $1.14 million, or 13 percent of net sales, compared to $5.1 million, or 16.2 percent of net sales in the prior year. Unit sales among all models declined significantly from the prior year because dealers met most of their retail demand by liquidating existing inventory, the company says.
Operating loss for the quarter was $3.34 million, compared to an operating profit of $1.02 million in the third quarter last year. This was attributed to lower gross profit and higher selling costs as well as increases in general and administrative expenses.
Net loss for the quarter was $1.61 million, compared to net income of $684,000 in the prior year. Diluted loss per share for the quarter was 4 cents, compared to 2 cents diluted earnings per share in the prior year.
Net sales for the nine months ending Sept. 30 were $35.16 million - a 77 percent decline from the first nine months of 2008. Net loss for the nine-month period was $7.93 million, or 22 cents a share, compared with net income of $8.71 million, or 24 cents a share, in the prior year.
West Marine reported a 6.7 percent drop in net revenues for the third quarter, but officials say the company is free of debt for the first time in its history, with a cash balance of $22.3 million.
For the quarter that ended Oct. 3, net revenues dropped to $168.2 million from $180.2 million in the year-ago period. The decrease was attributed to the fiscal calendar shift from last year, meaning fewer peak-season days in the third quarter. Also, store closings in the third and fourth quarters of 2008 and in the first three quarters of 2009 reduced net revenues by $8.9 million versus last year. However, the decline was offset by $5.9 million in net revenues by new stores opened during the same time period as the store closings.
So far this year, eight new stores have opened, including an international location in Turkey and two U.S. flagship stores. West Marine closed 15 stores, but only two were for economic reasons, officials say. There are currently 344 West Marine stores.
Earnings per share for the third quarter were 38 cents, compared to 16 cents for the same period last year, an increase of 13 percent. Year-to-date earnings per share were $1.13, compared to a loss of 45 cents for the same period last year.
Net revenues in the 39 weeks ending Oct. 3 were $484.5 million, a 6.9 percent decrease from net revenues of $520.2 million for the 39 weeks ending Sept. 27, 2008. Comparable store sales also declined 3.4 percent from a year ago, and revenue for the first nine months of this year were not impacted materially by the fiscal calendar shift.
- Garmin reported total revenue was down 10 percent for the third quarter, though its marine segment increased 3 percent to $45 million, as market share gains offset ongoing weakness in the industry. Total revenue for the quarter was $781 million - down from $870 million in the third quarter of 2008. Diluted earnings per share for the quarter increased 30 percent to $1.07 from 82 cents in third-quarter 2008; pro forma earnings per share increased 17 percent to $1.02 from 87 cents in the same quarter in 2008. Total revenue year-to-date was $1.89 billion. That's down 23 percent from $2.45 billion year-to-date in 2008. The marine segment decreased 16 percent to $144 million year-to-date.
- Cobra Electronics Corp. reported a net loss of $509,000, or 8 cents per share, for the third quarter, compared to net income of $142,000, or 2 cents per share, in the same period of 2008. Cobra, a global designer and marketer of mobile communications and navigation products, said sales declined to $27.4 million from $33.2 million in the prior year. On a year-to-date basis, Cobra reported a net loss of $12 million, or $1.86 per share, compared to net income of $1.9 million, or 30 cents per fully diluted share, in the prior year. On a year-to-date basis, consolidated net sales for the nine-month period declined to $72.5 million from $96.4 million, or 24.8 percent.
- Teleflex Inc. announced an 8 percent overall decline in revenues for the third quarter. Revenues from continuing operations were $461.5 million, compared to $504 million in the third quarter of 2008. The decline resulted from a decrease in core revenue of 6 percent and an unfavorable currency impact of 2 percent.
Commercial segment revenues declined 20 percent in the third quarter to $59.8 million from $74.6 million in the same period last year. Reductions in core revenue, which accounted for 16 percent of the decline, were principally a result of a decrease in rigging and marine OEM products sales, partially offset by sales of the modern burner unit to the U.S. military. The impact of the marine gauge business divestiture contributed 4 percent to the decline. Income from continuing operations, excluding special items, increased 12 percent to $35.2 million, or 88 cents per diluted share, compared to $31.4 million, or 78 cents per diluted share, in the prior year quarter. For the first nine months of 2009, Teleflex revenues from continuing operations decreased 12 percent to $1.375 billion from $1.57 billion in the first nine months of 2008.
- KVH Industries reported a 44 percent increase in revenue for the third quarter.
Revenue for the quarter was $22.6 million, while net income for the period was $400,000, or 3 cents per diluted share. During the same period last year, the company reported a net loss of $800,000, or 6 cents on a per-share basis.
For the nine months ending Sept. 30, revenue was $62.8 million, up 3 percent, compared to $61.2 million for the nine months ending Sept. 30, 2008. KVH reported a net loss of $2 million, or 14 cents on a per-share basis, for the first nine months of 2009. During the same period last year, the company reported net income of $2.8 million, or 19 cents on a per-diluted-share basis.
- Caterpillar announced a third-quarter profit of 64 cents a share - down 75 cents a share from the third quarter of 2008. Sales and revenues of $7.3 billion were down 44 percent from $12.98 billion in the third quarter of 2008. Third-quarter profit of $404 million was down from $868 million in the 2008 quarter. The decline was primarily because of significantly lower sales volume, the company says. Caterpillar expects 2009 sales and revenues of $32 billion to $33 billion. The 2009 profit outlook range has improved to $1.10 to $1.30 per share, compared to the previous range of 40 cents to $1.50 a share.
Staff writer Elizabeth Ellis contributed to this report.
This article originally appeared in the December 2009 issue.