Brunswick reports gain in market share in 1Q

Brunswick Corp. boat brands gained a full point of market share in the first quarter, driven by new products being brought to market.
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Brunswick Corp. boat brands gained a full point of market share in the first quarter, driven by new products being brought to market.

Much of the growth was driven by smaller boat models that brands such as Sea Ray and Boston Whaler have “quietly” brought to market, CEO Dustan E. McCoy said during the Baird 2015 Growth Stock Conference in Chicago on Thursday.

"In the boat business, we finished the first quarter gaining a full point of share in the United States, and that’s really hard to do with 1,100 boat manufacturers out there," McCoy said. "So the new product's really driving sales for both the engine and the boat business."

Aluminum fishing and pontoon boat share has grown from the high teens to almost the mid-20s on a plan that 30 percent of what is sold in the space is new or completely refreshed product, McCoy said.

For Boston Whaler, the saltwater outboard brand, the company made the decision to invest in big new product, McCoy said.

“But also very quietly, because Whaler has been — many of you who grew up on the water come up and tell us, ‘Yeah, I had a 13-foot Whaler and it changed my life, I lived on that boat’ — so we moved very hard to invest in 20 [feet] on down, and we see Whaler taking a lot of share while we very quietly brought those things to market,” McCoy said.

Although much has been discussed and written about the big backlogs of Sea Ray’s new larger models, such as the 65-foot L Class model, “we very quietly made significant amounts of investment in the 25-foot-on-down [segment] in the Sea Ray brand,” McCoy said. “Those have begun to hit the market. A lot of those are outboard-based, driven by all the great new outboards we’ve been bringing to market on the engine side.”

McCoy and COO Mark Schwabero also discussed in more detail the company’s decision to manufacture its own sterndrive engine blocks.

As Mercury Marine has rolled out a host of new products — with something new hitting the market every six weeks, according to McCoy — the company has simultaneously taken control of the sterndrive engine business.

“We have 75 percent global market share in gasoline sterndrive,” McCoy said. “We and our competitor had been buying engine blocks from GM — cast-iron blocks. GM, in trying to meet CAFE standards, has moved to aluminum-based engines. We decided that’s not where we want to go, primarily because we were going to get new engines coming at us from GM at an ever faster pace and we would have to marinize those, and it didn’t make sense for us. So we now have purpose-built sterndrive engines.”

“That market continues to be declining, but we are holding onto share and that will be a great investment for us as we go forward,” McCoy added.

Schwabero reiterated the company’s plan to acquire parts and accessories businesses that expand the company’s geographic reach, as well as prime the company for moving into adjacent markets, such as RV.

“One example is Whale,” Schwabero said. “That got us into water systems, which has good margins. It got us into a category where we didn’t have product representation, but also product that’s used in the RV business, as well. And it also had an international manufacturing [presence], which was of interest.”

“P&A is not affected by marine cyclicality,” McCoy added. “Even through the recession, people still want to boat, and as the average age of boats increases, P&A increases. That tends to be nice margins. Having that is a real grower, and it protects margins in the engine business.”

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