Brunswick Corp. reported a 7 percent increase in fourth-quarter revenue, with sales growth driven by improvements in outboard boat sales and engines and marine parts and accessories, but offset in part by continued declines in sterndrive sales.
The Boat Group reported an operating loss of $4.1 million — including restructuring charges of $200,000 — compared with a $21.9 million loss in the fourth quarter of 2013 and restructuring charges of $5.8 million.
The marine engine segment reported net sales of $465 million, up 10 percent from the fourth quarter of 2013. For the quarter, the segment reported operating earnings of $31.6 million, compared with $18.1 million in the fourth quarter of 2013. Sales increases in the quarter were led by the segment’s parts and accessories and outboard engine businesses.
For the year that ended Dec. 31, the company reported net sales of $3.8 billion, up from $3.6 billion in 2013.
For the year, operating earnings were $328.5 million, which included a $27.9 million pension settlement charge related to lump-sum payouts and $4.2 million of restructuring, exit and impairment charges. In 2013 the company reported operating earnings of $281.8 million, which included $16.5 million of restructuring, exit and impairment charges.
“Our results in 2014 represent the fifth consecutive year of strong improvements in operating performance,” Brunswick chairman and CEO Dustan E. McCoy said in a statement. “These outstanding results reflect the strong execution of our business strategy by our global work force.”
For 2014 the company reported net earnings of $194.9 million, or $2.05 a diluted share, compared with $756.8 million, or $8.07 a diluted share, in 2013.
“Revenue increased by 7 percent, with U.S. and international sales up 8 percent and 4 percent, respectively. Sales growth was driven by improvements in outboard boats and engines, marine parts and accessories, fitness equipment and fiberglass sterndrive/ inboard boats, partially offset by revenue declines in sterndrive engines. Our revenue performance benefited from recent investments in growth initiatives, with several new products being introduced into the marketplace. Sales growth also reflects parts and accessories acquisitions made during the year.
“Our 2014 gross margin of 27.0 percent reflects an increase of 60 basis points from the prior year and represents the highest annual level achieved since 2000,” McCoy said. “Operating expenses increased by 4 percent due to higher research and development expense and other growth-related investments primarily associated with companywide strategic initiatives.
“Strong improvement in adjusted operating earnings, combined with lower net interest expense and higher other income, led to a 32 percent increase in adjusted pretax earnings. This increase was offset by a higher effective tax rate, resulting in $2.42 diluted EPS, as adjusted,” McCoy said.
The company’s 2015 outlook reflects “a slight improvement” in gross margin levels and solid gains in operating margins, McCoy said.
“We expect our businesses' top-line performance will continue to benefit from several recent product introductions, along with increases in production rates and capacity,” he said. “Market acceptance of these products has been excellent, and as a result our plan reflects revenue growth rates in 2015 to be in the range of 6 percent to 8 percent.”
Read more about Brunswick’s earnings in Trade Only Today on Friday.