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Analyst predicts solid 3Q for Brunswick

At least one analyst is predicting that Brunswick Corp. will report an increase in engine and boat sales Thursday when it releases its third-quarter results.

Jimmy Baker, with B. Riley & Co., wrote that engine sales are expected to be up 4 percent this quarter, compared with the same period last year, and that boat sales should be up 11 percent year over year, driven largely by a solid uptick in wholesale volume.

“On a consolidated basis, we believe industry retail sales for boats in Brunswick’s categories were up low single digits in terms of units and that, due to continued share gains, Brunswick brands overcame a negative mix shift to post mid-single-digit unit growth at retail,” Baker wrote. “The gap in our 11 percent revenue growth estimate and retail sales is primarily explained by existing dealer restocking and the addition of new Sea Ray and Meridian dealers during the quarter.

“As the marine selling season winds to an end, we anticipate Brunswick will report continued, methodical progress in its marine businesses,” Baker wrote. ”This progress is likely to be coupled with significant growth and operating leverage from the increasingly relevant fitness group, and steady cash generation from the bowling and billiards business.”

Boat sales expectations for 2012 call for a repeat of 2011’s modest growth, he added.

“Our sense is that industry (particularly dealer) sentiment is markedly different than this time last year. Heading into the 2010-2011 boat show season, dealers were generally optimistic the economy was slowly turning the corner and that boat sales would be on the rise, thanks to pent-up demand,” Baker wrote. “While 2011 exceeded our expectations, dealers seem collectively disappointed. Our sense is that dealers now largely accept a low growth industry backdrop, though some [Brunswick] dealers are certainly bucking that trend through market share gains.”

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