Brunswick Corp. reported stronger than expected third quarter results, posting double digit gains in revenue across all segments and posted earnings per share of $1.80 — beating the street’s estimate of $1.38.
The company reported net sales of $1.2 billion, a 26.3 percent increase over 2019, and nearly a 50 percent increase in operating earnings.
Boat pipeline inventories were 14 weeks on hand, with 48 percent fewer boats in dealer inventory versus the end of the third fiscal quarter of 2019.
"The power of our marine platform and our investments in operational excellence were on full display as we accelerated production levels to both meet retail demand, which continues to be elevated even as we exit the primary selling season in the U.S., and begin the process of replenishing historically-low pipeline inventory levels,” said Brunswick CEO David Foulkes in a statement.
“Our extraordinarily strong free cash flow generation provides us with the flexibility to execute our capital strategy which, amongst other things, encompasses our planned investments in growth initiatives, including developing new products, advancing our ACES — Autonomy, Connectivity, Electrification and Shared access — strategy, and maximizing the reach of Freedom Boat Club,” said Foulkes.
The propulsion segment saw net sales grow 32.7 percent to nearly $460 million, and operating earnings jumped 61.7 percent in the category due to high demand of outboard engines, as well as market share gains, according to the company.
The boat segment grew 18.3 percent to $328.1 million due to increased demand.
"While we remain very cognizant of macroeconomic headwinds and pandemic-related uncertainties, our continued strong performance in a robust marine retail environment has created improved visibility into our substantial growth opportunities for the remainder of 2020 and 2021," said Foulkes. "Elevated production levels over time will be required to rebuild boat and engine pipelines, and together with significant upcoming new product offerings, are anticipated to drive wholesale growth through 2021 and beyond.”
The company anticipates the U.S. marine industry overall will be up in high single digits for the year in terms of unit retail demand, and expects fourth quarter revenue to increase low to mid-teens over the fourth quarter of 2019.
Assuming the industry remains flat in 2021, the company projected net sales between $4.7 and $4.9 billion for the year, adjusted operating leverage of high teens to low twenties percent; and adjusted diluted EPS in the range of $5.75 to $6.25