Brunswick Corp. today reported third-quarter sales of $976.6 million, a 6.5 percent decrease compared to the same period a year ago. Operating earnings dropped 2.6 percent for the quarter to $135.8 million.
CEO David Foulkes said in a statement that Brunswick’s gross and operating margins expanded during the quarter, “despite anticipated decreases in sales, demonstrating the positive effects of our cost-reduction activities, as well as the strength of our overall business portfolio, including the Power Products business acquired in August of last year.”
Retail trends, according to Foulkes, “turned more positive” in the third quarter. Boston Whaler, he said, “in particular enjoyed strong retail sales, especially boats over 33 feet. Higher-horsepower outboard engine demand remains strong, and our capacity investments related to these engines, which will enable us to satisfy pent-up demand and expand market share, remain on target for completion in the fourth quarter.”
The Marine Engine segment reported a 4 percent decrease in sales to $770.2 million for the quarter, with operating earnings of $146.4 million. The company said that planned reductions in outboards below 150 hp and lower sterndrive sales were offset by gains in higher-horsepower engines and sales from last year’s Power Products acquisition.
Boat Group sales of $277.1 million were off 14.1 percent compared to the same period a year earlier. Operating earnings were down 50.9 percent to $8 million. Brunswick said this quarter’s results were impacted by the exit of the Sport Yacht and Yacht business in the second half of 2018. Sales primarily decreased because of planned reductions in wholesale unit shipments in its saltwater fishing, pontoons and value aluminum products. The Freedom Boat Club acquisition added 2 percent to overall sales.
Brunswick projects U.S. marine industry retail unit demand in 2019 will be down in the mid-single digits compared to 2018. “Marine Engine segment global sales are expected to grow between 2 and 3 percent and Boat segment global sales are expected to be down between 6 and 7 percent,” Foulkes said.
Foulkes expects “strong sales contributions” from the company’s acquisitions. “We anticipate growth in higher-horsepower outboard engines and certain of our premium boat brands, and expect stable performance by the parts-and-accessories business. Anticipated headwinds include lower sales of outboard engines 150 hp and below, value-boat products and purposeful reductions in in wholesale shipments of certain Boston Whaler product lines in advance of multiple, impending new product launches,” Foulkes said in the statement.
The 2019 plan “positions us well” for 2020, said Foulkes, who forecasts an EPS target of $5 to $5.50, assuming “relatively steady macro-economic conditions” and a flat retail marine market compared to 2019.
“This confidence is bolstered by our capital strategy as well as our organic growth opportunities, including benefits from increased high-horsepower outboard engine capacity, stable pipelines versus reductions in 2018, the steady growth of our parts and accessories business, and the impacts of new products and services," Foulkes said.
Brunswick plans to release several new Boston Whaler and Sea Ray models at next week’s Fort Lauderdale International Boat Show.