Brunswick reports 4Q results


Brunswick Corp. today reported a 22 percent drop in net sales for the fourth quarter of 2009, 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 company cash flow benefits, while having a negative impact on revenue and earnings, the company said.

Brunswick exited 2009 with more cash on hand, a stronger dealer network with lower inventory levels and "a leaner company with a significantly lower cost structure," chairman and CEO Dustan McCoy said this morning in a conference call with analysts.

Brunswick reported net sales of $657.3 million for the quarter, down from $837.7 million in the year-ago quarter: a net loss of $124.0 million, or $1.40 per diluted share, compared with a net loss of $66.3 million, or 75 cents per diluted share for the fourth quarter of 2008.

Cash totaled $526.6 million, up from the 2008 year-end balance of $317.5 million.

At midday, Brunswick stock was trading at $11.31 per share, down from an open of $12.31 per share. Its 52-week high and low are $13.90 and $2.06 respectively.

"The factors that negatively affected our revenues and earnings in the fourth quarter of 2009, compared to the previous year, included: lower overall unit sales levels across the company; higher discounts to facilitate retail boat sales, particularly of older boat models; and a reversal of variable compensation and defined contribution retirement accruals that benefited the fourth quarter of 2008," McCoy said.

For the year ended Dec. 31, 2009, the company reported net sales of approximately $2.77 billion, down from approximately $4.70 billion a year earlier.

For 2009 the company reported a net loss of $586.2 million, or $6.63 per diluted share, as compared with a net loss of $788.1 million, or $8.93 per diluted share, for 2008.

The boat segment, which includes 17 boat brands, reported net sales of $153.4 million for the fourth quarter of 2009, down 38 percent compared with $248.0 million in the fourth quarter of 2008. For the fourth quarter of 2009, the boat segment reported an operating loss of $131.6 million.

The marine engine segment reported net sales of $302.4 million in the fourth quarter of 2009, down 11 percent from $340.2 million in the year-ago fourth quarter. For the quarter, the marine engine segment reported 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.

Boat manufacturing facilities began to ramp up production during the quarter to address inventory requirements of dealers, although production levels remained below the prior year quarter.

"Although our plans reflect a modest reduction in retail marine demand, our boat facilities will gradually increase wholesale shipments throughout the year because dealer inventories are at historically low levels," McCoy said. "The increase in wholesale boat shipments will require us to raise production rates throughout the year.

Brunswick reduced the number of units sold to dealers by 20 percent in the fourth quarter versus last year, and by nearly 55 percent for the year, McCoy said. The quarter ended with 26 weeks of product in the pipeline, compared to 34 weeks in the previous quarter.

Also, he noted, while the demand fell, the decline was not as sharp as in previous quarters.

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

"We're comfortable with our dealer network," he said. "We think it's becoming a competitive advantage."

- Beth Rosenberg


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