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Quarterly financial reports a bit brighter - Trade Only Today

Quarterly financial reports a bit brighter

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Revenues are up at MarineMax and West Marine; Brunswick cuts inventory while building cash flow

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Many of the marine industry's publicly held companies continued to see improvements in the most recent quarter.

Brunswick Corp., despite a drop in sales, reported significantly lower inventory levels and increased liquidity, while MarineMax saw an increase in revenue and same-store sales. West Marine, too, reported an increase in revenue. Engine builder Cummins, meanwhile, enjoyed the most profitable fourth quarter in its history.

Here is a roundup of the earnings reports:

Brunswick Corp.

Brunswick reported a 22 percent drop in net sales for the fourth quarter, including a 38 percent decrease in net sales in the boat segment. Pipeline reduction and inventory management strategies led to significantly lower dealer inventory levels and cash flow benefits, but had a negative impact on revenue and earnings, the company says.

Brunswick concluded 2009 with more cash on hand, a stronger dealer network with lower inventory levels and a "leaner company with a significantly lower cost structure," says chairman and CEO Dustan McCoy.

Brunswick posted net sales of $657.3 million for the quarter, down from $837.7 million in the year-ago quarter - a net loss of $124 million, or $1.40 a share, compared with a net loss of $66.3 million, or 75 cents a share for the fourth quarter of 2008.

Cash totaled $526.6 million, up from the 2008 year-end balance of $317.5 million. For the year ending Dec. 31, the company had net sales of approximately $2.8 billion, down from approximately $4.7 billion a year earlier.

For 2009, net loss was $586.2 million, or $6.63 a share, compared with a net loss of $788.1 million, or $8.93 a share, for 2008.

The boat segment, which includes 16 brands, recorded net sales of $153.4 million for the fourth quarter, down 38 percent from $248 million in the 2008 fourth quarter. Boat segment operating loss for the quarter was $131.6 million.

The marine engine segment posted net sales of $302.4 million for the quarter, down 11 percent from $340.2 million a year ago. It had an operating loss of $59.4 million, including restructuring charges of $8.2 million. This compares with an operating loss of $12.9 million in the year-ago quarter.

Brunswick reduced the number of units sold to dealers by 20 percent in the fourth quarter and by nearly 55 percent for the year, McCoy says. The quarter ended with 26 weeks of product in the pipeline, compared to 34 weeks in the third quarter. Also, McCoy noted, while the demand fell, the decline was not as sharp as in previous quarters.

McCoy says the company's dealer network is healthy, with the number of dealers down less than 1 percent at the end of 2009.

MarineMax

MarineMax reported an improved financial picture in its first quarter, which ended Dec. 31, with an increase in revenue and same-store sales.

Revenue was $100.4 million for the quarter, compared with $100.2 million for the comparable quarter a year ago. Same-store sales increased approximately 13 percent, compared with a 52 percent decline in the quarter in fiscal year 2009.

Net income for the first quarter of fiscal 2010 was $10.2 million, or 45 cents a share, compared with a net loss of $14.3 million, or 78 cents a share, for the year-ago quarter.

At the end of 2009, inventory was $190.2 million, compared with $440.9 million Dec. 31, 2008, a $250 million, or 57 percent, decline.

The company was able to produce consistent levels of revenue and an increase in same-store sales despite operating with 20 fewer stores than in the prior-year quarter. MarineMax closed 26 stores in fiscal 2009 as a key component in the company's efforts to better match its fixed costs with the decline in business.

"The actions we took during fiscal 2009 to reduce inventory, reduce our work force, streamline expenses and optimize our store count allowed us to report significantly improved results for the first quarter, compared with the year-ago quarter," says chairman, president and CEO William McGill Jr.

McGill says MarineMax has seen positive results so far at the winter boat shows, reporting sales and attendance have been flat or up. He says MarineMax has benefited from the fact that some major manufacturers and dealers have skipped shows.

West Marine

West Marine reported an increase in net revenues for its fourth quarter, which ended Jan. 2, when adjusted to account for an extra week in the fiscal quarter.

The company had net revenues of $104.2 million for its 13-week 2009 fiscal fourth quarter. Adjusted to remove the impact of an extra week in the 2008 fiscal fourth quarter, 2009 fiscal fourth quarter adjusted net revenues increased by $1.7 million, or 1.7 percent, and adjusted comparable-store sales increased by $2.6 million, or 3.2 percent, over last year.

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Without this adjustment, however, net revenues decreased by $6.9 million, or 6.2 percent, to $104.2 million, compared to the 14-week 2008 fiscal fourth quarter, and comparable-store sales decreased by $4.3 million, or 4.8 percent.

Stores opened during fourth quarter 2008 and fiscal year 2009 increased net revenues by $4.6 million. However, the impact of stores closed during fourth quarter 2008 and fiscal year 2009 reduced net revenues by $4.4 million.

"It's certainly noteworthy that despite the still-difficult market environment, when you evaluate the reporting periods so that both 2008 and 2009 are based on the same number of weeks, we've achieved two consecutive quarters of comparable-store and overall company growth," CEO Geoff Eisenberg says in a statement.

Net revenues for the 52 weeks ending Jan. 2 were $588.7 million, a decrease of $42.6 million, or 6.7 percent, from net revenues of $631.3 million for the 53 weeks ending Jan. 3, 2009. This was primarily due to a decline of 3.6 percent, or $18.7 million, in comparable-store sales.

Marine Products Corp.

Marine Products Corp., builder of Chaparral and Robalo boats, reported a 41.5 percent drop in net sales for the fourth quarter, which ended Dec. 31.

The company generated net sales of $13.3 million for the quarter, compared to $22.8 million last year. The decline was the result of a 37.8 percent decrease in the number of boats sold and a 5.8 percent decline in the average selling price, the company says.

Fourth-quarter operating loss was $4.8 million, compared with $1.8 million in the 2008 quarter, because of lower gross profit and higher selling, general and administrative expenses. Net loss for the quarter was $2.8 million, compared to $1.1 million in the prior year. Loss per share for the quarter was 8 cents, compared to a loss of 3 cents a share in the prior year.

Net sales for the 12 months ending Dec. 31 were $48.5 million, a 72.4 percent decrease from 2008. Net loss for the 12-month period was $10.7 million, or 30 cents a per share, compared to net income of $7.6 million, or 21 cents earnings per share, in the prior year.

Caterpillar

Caterpillar announced sales and revenues of $32.4 billion for 2009, a decrease of 37 percent from $51.3 billion in 2008.

Profit per share was $1.43, down 75 percent. Excluding redundancy costs of 75 cents, 2009 profit was $2.18 per share.

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Fourth-quarter sales and revenues were $7.9 billion, down 39 percent from the fourth quarter of 2008. Profit per share for the quarter was 36 cents, down 67 percent from the fourth quarter of 2008. Excluding redundancy costs, profit for the fourth quarter was 41 cents a share.

Sales and revenues for 2009 decreased $18.9 billion from 2008, and profit of $895 million was down 75 percent from $3.6 billion in 2008. The decline in profit was primarily because of significantly lower sales volume.

Caterpillar expects 2010 sales and revenues to be up 10 to 25 percent from 2009 and profit is expected to be about $2.50 per share at the midpoint of the sales and revenues range.

Twin Disc

Twin Disc reported a drop in sales for its fiscal 2010 second quarter, which ended Dec. 25, as well as for the year to date.

Sales for the quarter were $55.2 million, compared with the near-record level of $81.6 million for the fiscal 2009 second quarter. Year-to-date sales were $102.2 million, compared with $154.3 million for the fiscal 2009 first half.

The company recorded a net loss of $490,000 for the fiscal 2010 second quarter, or 4 cents a share, compared to net income of $3.4 million, or 31 cents a share, for the second quarter.

Year-to-date, the company reported a net loss of $2.9 million, or 26 cents a share, compared to net income of $5.9 million, or 52 cents a share, for the fiscal 2009 first half.

Cummins

Cummins says fourth quarter 2009 was the most profitable fourth quarter in company history, eclipsing the previous mark set in 2007.

Sales of $3.4 billion grew 3 percent from $3.3 billion in the 2008 fourth quarter, while net income attributable to Cummins increased to $270 million, or $1.36 a share, from $43 million, or 22 cents a share, a year ago.

For all of 2009, the company reported revenues of $10.8 billion, down 25 percent from $14.3 billion in 2008.

Engine segment sales in the fourth quarter jumped 12 percent from the same period in 2008, while components sales, which are closely tied to engine volumes, grew 8 percent.

Despite the strong fourth quarter results, Cummins says it expects the first half of 2010 to be extremely challenging, especially in the United States and Europe.

Johnson Outdoors

Johnson Outdoors reported a slight increase in net sales for its first quarter, which ended Jan. 1, though it had a loss from continuing operations for the period.

The company announced net sales of $70.5 million for the quarter, up 1 percent compared to $69.8 million for the prior-year quarter.

Loss from continuing operations totaled $4.2 million, or 45 cents a share, compared with a loss of $6.9 million, or 75 cents a share in the prior-year quarter.

At the end of the first quarter, the company reported inventory levels were 25 percent below those of the prior year and net debt had been reduced $20 million compared to the prior-year quarter.

Marine electronics revenues were up 3.5 percent for the quarter, while watercraft sales declined 7 percent, the company says.

This article originally appeared in the March 2010 issue.

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