Second-quarter revenue rose 6 percent at Brunswick Corp. and boat sales were up 8 percent from last year.
The increase in boat sales, which totaled $349.3 million, was driven largely by growth in fiberglass boats and was partially offset by declines in aluminum boats. The segment reported $20.9 million in operating earnings, up 2 percent from $19.9 million last year.
Brunswick reported total revenue of $1.14 billion for the quarter that ended July 4, compared with $1.07 billion a year earlier, and a profit of $117.8 million, or $1.25 a diluted share, up 33 percent from $88.6 million, or 93 cents a share, last year.
“Our reported second-quarter revenues increased by 6 percent; 11 percent on a constant currency basis, with each segment reporting double-digit growth rates,” Brunswick chairman and CEO Dustan E. McCoy said in a statement. “Our top line reflected strong growth rates in our fiberglass sterndrive/inboard boats, the marine parts and accessories business, fiberglass outboard boats and outboard engines. This growth also included a solid performance by our fitness equipment segment.”
Operating earnings in the boat segment benefited from higher sales, partially offset by planned cost increases associated with new-product introductions, plant expansions and production ramp-up, along with an unfavorable impact from foreign exchange.
Mercury Marine Group reported sales of $689.2 million, up 6 percent from the second quarter of 2014. Operating earnings totaled $131.8 million.
Sales increases in the quarter were led by the segment’s parts and accessories businesses, which included revenue from acquisitions completed in the second and third quarters of 2014, as well as the second quarter this year. Higher revenue and a more favorable product mix contributed to the increase in operating earnings in the second quarter. Partially offsetting these positive factors were the unfavorable effects of foreign exchange and increased investments for long-term growth initiatives.
“The successful execution of our growth plan is leading to market share gains in many of our key product categories and enabling our view of continued solid earnings growth in 2015,” McCoy said.
In addition to the strong dollar negatively affecting the bottom line, the company said costs associated with production expansions and new-product integration and continued increases in investment adversely affected earnings.
“Adjusted operating earnings in the second quarter increased by 9 percent, as compared to the prior year, reflecting an adjusted operating margin increase of 30 basis points,” McCoy said. “Our full-year plan reflects more favorable earnings growth rates and margin expansion in the second half of 2015, as the aforementioned factors negatively affecting the first-half comparisons are expected to be either less significant or become favorable in the third and fourth quarters.”
The company plans to stay on target for yearly guidance despite the negative factors, McCoy said.
“We continue to target 2015 to be another year of strong earnings growth, with outstanding free cash flow generation,” McCoy said. “Our plan reflects 6 percent to 8 percent annual sales growth, which includes benefits from the success of our new products, the continuation of solid growth in the U.S. and completed acquisitions, partially offset by the negative impact of a stronger U.S. dollar and weakness in certain international markets.”
“As previously stated, our earnings growth will be more heavily weighted to the second half of the year,” he said. “For the full year, we continue to anticipate a slight improvement in gross margin levels and solid gains in operating margins as we plan to continue to benefit from volume leverage, modest positive product mix factors and cost-reduction activities.
“Our guidance for 2015 continues to reflect adjusted pretax earnings growth of 15 percent to 20 percent, and we are maintaining the range for our expectations of diluted EPS, as adjusted, of $2.75 to $2.85,” McCoy said. “Finally, for the full year, we expect to generate positive free cash flow in the range of $180 million to $200 million.”