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Brunswick targets mid-single-digit 2012 revenue growth

This will be another challenging year for the marine industry, and Brunswick Corp. is targeting mid-single-digit revenue growth in a flat market for the year, chairman and CEO Dusty McCoy said Thursday in a call with analysts.

McCoy said he expected a slow start to the year, with revenues likely down in the mid-single-digit range in the first quarter.

Brunswick released its fourth-quarter and 2011 fiscal-year results Thursday, reporting sales up for the quarter and the year, operating losses declining and a reduction in its debt levels. It reported a 9 percent increase in retail sales of boats for the year, McCoy said.

“In 2011, our company made significant progress in growing our revenue and improving our earnings,” McCoy said in a statement. “We achieved double-digit revenue growth and an increase in operating earnings of $176 million despite a flat overall marine market and challenging global economic conditions.

“Our ability to achieve market share gains throughout our segments, combined with continuing success in improving production and operating efficiencies, enabled us to report our highest level of operating earnings since 2006,” he added. “In addition, we continued to reduce our debt levels, ending 2011 with net debt at $185 million.”

Timothy Conder, senior analyst with Wells Fargo Securities, said of Brunswick’s report, “All else equal [Brunswick] should
continue posting solid market share gains in multiple segments. Near-term we see [Brunswick] shares potentially consolidating recent gains, but within an upward fundamental trend. We continue to be buyers of this quality cyclical name and see pullbacks as shallow.”

In the call with analysts, McCoy said he expected that sales of aluminum boats, outboard fiberglass and small sterndrive product would see increases in 2012. Although there are no plans to sell any more of Brunswick’s boat lines, McCoy said there is one brand that’s not profitable at this time, though there are plans to turn it around.

He did not name the brand.

Asked what factors could affect Brunswick’s expectations for 2012, McCoy said a worsening economic situation in Europe could do so, as well as any unknown adverse ways the presidential election could affect the economy.

Dealers, he said, are focusing on maintaining good inventory levels, adding that “none of us are pie in the sky” as to sales expectations. McCoy is hearing from dealers that there is not enough good used product available to satisfy demand, as
people are holding on to boats longer.

A good used boat may have a waiting list, he said, and selling prices are back to pre-2008 historical norms.

“We’re pleased with ’11. We’ve got a good plan for ’12. We know we’ve got a lot of work to do, our
sleeves are rolled up and we’re at it,” McCoy said.

- Beth Rosenberg



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