Figures from Brunswick, MarineMax and Fountain reflect the extent of the soft economy
Brunswick Corp., Fountain Powerboat Industries and MarineMax all recently reported quarterly earnings. Here is a synopsis of those reports.
Brunswick Corp.’s 42 percent decline in total sales for the fourth quarter of 2008 was due in large part to a 50 percent drop in marine sales.
Total sales for the fourth quarter were $837.7 million, Brunswick says, compared to approximately $1.4 billion in the same sales period of 2007.
For the fourth quarter, Brunswick reported a net loss of $66.3 million, or 75 cents a share, compared to net earnings of $12.1 million, or 14 cents a share for the fourth quarter of 2007.
“The continued decline in global recreational marine markets experienced throughout the first nine months of the year increased during the fourth quarter of 2008, driven by the accelerating decline in global economic conditions,” says Brunswick chairman and CEO Dustan E. McCoy. “We also began to see the weakening global economy affect our fitness and bowling and billiards segments in the quarter.”
In 2008, Brunswick reduced the dealer pipeline by 6,700 units — a 22 percent reduction — and ended the year with 34.5 weeks of product in the pipeline on a trailing 12-months retail basis, compared with 34 weeks at the end of 2007, McCoy says.
The boat segment reported net sales for the fourth quarter of $293.7 million — down 54 percent from $645.2 million in the fourth quarter of 2007. International sales, which represented 57 percent of total segment sales in the quarter, increased by 6 percent.
The marine engine segment, consisting of the Mercury Marine Group, reported net sales of $297.5 million in the quarter — down 46 percent from $548.6 million in the year-ago period. International sales, which represented 55 percent of total segment sales, declined by 42 percent on a year-to-year basis.
McCoy says the company reduced costs by $160 million in 2008, and reduced the overall company work force by 27 percent. In marine and corporate operations, there was a 40 percent reduction in the work force, he says, and that figure is expected to rise to about 46 percent this year.
In 2008, eight marine plants were closed and another three mothballed.
For the year ending Dec. 31, the company had net sales of $4.7 billion, compared to $5.67 billion in 2007. Net loss for the year was $788.1 million, or $8.93 a share.
For 2008, boat segment sales were down approximately 25 percent to around $2 billion, from approximately $2.7 billion in 2007. International sales, which represented 38 percent of total segment sales in 2008, increased by 13 percent on a year-to-year basis.
For the full year, marine engine segment net sales were down 17 percent to nearly $2 billion from $2.35 billion. International sales, which represented 53 percent of total segment sales in 2008, declined by 8 percent on a year-to- year basis.
Fountain Powerboat Industries reported a 61 percent drop in net sales for its fiscal 2009 second quarter, which ended Dec. 31.
“The global economic downturn, finance industry collapse and stock market crash had [a] significant detrimental effect on marine markets during the quarter,” said Reginald M. Fountain Jr., chairman, CEO and president, in a statement. “Retail financing for boats tightened, and floorplan financing for boat dealers became very difficult. With dealers reluctant to replenish their inventories and retail sales stymied, orders for offseason production became scarce.”
Net sales for the second quarter were $5.8 million, compared with $15.2 million for the fiscal 2008 quarter. Net loss for the 2009 quarter was $3.2 million, or 73 cents a share, compared with $765,055, or 16 cents a share, for the year-ago quarter.
Net sales for the first six months of fiscal 2009 were $23.4 million, compared with $33.2 million for the first six months of fiscal 2008. Net loss was $3.1 million, or 71 cents a share, compared with $491,676, or 10 cents a share, for the year-ago period.
The report followed news that the company’s stock will be suspended from trading on NYSE Alternext US, the successor to the American Stock Exchange.
“In light of current economic conditions in general and, in particular, conditions within the marine industry, the company does not believe it can regain compliance with the exchange’s continued listing standards in the near term,” Fountain declared at the time of the announcement. “As a result, the company’s board of directors has elected not to appeal the staff’s determination.”
As a result of the delisting, Fountain’s outstanding shares will be quoted in the Pink Sheets under a new trading symbol, which has yet to be publicly announced.
MarineMax reported a 53 percent drop in revenue and widened its net loss for the first quarter, which ended Dec. 31.
Revenue was $100.2 million, compared with $215.3 million for the year-ago quarter. Same-store sales declined about 52 percent, compared to a 9 percent decrease in the comparable quarter last year.
Net loss for the recent quarter was $14.3 million, or 78 cents a share, compared with $6.4 million, or 35 cents a share, for the first quarter of 2008.
MarineMax attributed the sales decline to the economic downturn and the volatility in the financial markets. But the company continued to streamline its cost structure and reduced inventory levels by more than $90 million on a year-over-year basis, according to William H. McGill Jr., chairman, president and CEO.
“While we have done our fair share of cost-cutting, the industry will likely continue to be impacted by the soft economy,” McGill says. “The good news is that our customers’ passion for the lifestyle of boating has not faltered, as they enjoy boating as a recreation with their families.”
This article originally appeared in the March 2009 issue.