Brunswick Corp. CEO Dustan E. McCoy stressed that the company is poised to grow both organically and through acquisitions during a conference call discussing third-quarter earnings Thursday.
“Our first priority is not acquisitions. Our first priority, and … perhaps I wasn't clear earlier, is growth, and it's both organic and acquisitive,”McCoy told investors and analysts during the call.
A share repurchase that Brunswick officials announced last week was a source of much discussion as analysts asked why McCoy had reversed his feelings on the subject.
“I admitted pretty publicly it would be over my dead body that we’d do a share repurchase and I haven’t been murdered, I’m still here,” McCoy said.
The repurchase reflects that Brunswick has gotten progressively stronger since the recession began in 2008.
“My personal position on a share repurchase program was frankly to keep the wolves away from the door, looking for a share repurchase program to give us time to get growth initiatives solidified in the company, to get spending ramped up that we need to do to drive those growth initiatives,” McCoy said.
The fact that the company is not tagging additional cash for anything else “ought to be an indication that we think we've got lots of growth potential going forward,” McCoy said.
“We're working very hard on growth adjacencies and we want to make sure that we've got the powder to go do those when we want them on our terms, on the timing that we want to do them,” he said. “While we’re not afraid to go to that market for a great adjacency, to move organically or through acquisitions, our view is right now we’re going to be able to do many things with that available cash and have a lot of borrowing capacity for the rainy day or the big one that comes along.”
McCoy also stressed that the company hasn’t had a “ramp-up issue”in new products that have seen a backlog because of demand.
“It’s a high-class issue in that demand is exceeding our ability to make the boats right now,” McCoy said. “In round numbers in our boat business we sell 35,000 boats, and as we’re looking up to the ramp-up and entire integration, I think we’re going to miss one boat this year versus our plan. That’s not bad. We’ll take that all day.”
“We've got a bunch of boats that are sold out as we go into the fourth quarter next year,”he said. “So we’ve just got to sit there and make them, and if demand were to continue to ramp up, we have to make decisions about whether we can make more. But right now we're sticking with our plan.”