Brunswick Corporation released its 2010 fourth quarter and full year financial results today, reporting higher revenues and improved operating earnings while forecasting a return to profitability in 2011 with the continued generation of positive free cash flow.
The company reported overall Q4 net sales of $728.8 million, an 11 percent improvement over the fourth quarter of 2009. Its operating loss improved by $113.5 million year-over-year, while cash and marketable securities totaled $657.1 million, up from 2009 year-end balance of $527.4 million.
For the year ended December 31, 2010, the company reported net sales of $3,403.3 million, up from $2,776.1 million a year earlier, and operating earnings of $16.3 million. For 2010, Brunswick reported a net loss of $110.6 million, compared to an operating loss of $570.5 million in 2009 (which included $172.5 million of restructuring, exit and impairment charges).
“Throughout the past several years, Brunswick has undergone a profound transformation against the backdrop of very difficult global economic and marine
markets,” said Dustan McCoy, Brunswick Chairman and CEO. “In 2010, we continued to make significant strides in rationalizing our manufacturing footprint and executing against strategies that have allowed us to operate our businesses more efficiently, contributing to strong levels of operating leverage. During 2010, our annual revenues increased by 23 percent and, excluding restructuring charges, our operating earnings increased by approximately $477 million as compared to 2009. In addition, we achieved our objective of being free cash flow positive during 2010.”
The Marine Engine segment, including the marine parts and accessories businesses, reported net sales of $353.3 million in the fourth quarter of 2010, up 17 percent from $302.4 million in the fourth quarter of 2009. International sales, which represented 51 percent of total segment sales in the quarter, increased by 15 percent. The Marine Engine segment reported an operating loss of $17.4 million for the quarter, including restructuring charges of $7.4 million. This compares with an operating loss of $59.4 million in Q4 2009, which included $8.2 million of restructuring and impairment charges.
Sales were higher across all of the segment's main operations, including a 10 percent increase in the domestic marine parts and accessories businesses, which represented 21 percent of total segment sales in the quarter. The segment's outboard engine business experienced the greatest percentage sales growth.
Mercury's manufacturing facilities continued to increase production during the quarter in response to customer requirements. Lower bad debt and pension expenses, incentives associated with Mercury's plant consolidation activities, higher sales, fixed-cost reductions, increased fixed-cost absorption and improved operating efficiencies, all had a positive effect on operating earnings during the quarter.
The Boat segment, including 16 brands, reported net sales of $163.6 million for the fourth quarter of 2010, an increase of seven percent compared with $153.4 million in the fourth quarter of 2009. International sales, which represented 40 percent of total segment sales in the quarter, increased by eight percent during the period. For the fourth quarter of 2010, the boat segment reported an operating loss of $69.3 million, including restructuring, exit and impairment charges of $10.0 million. This compares with an operating loss of $131.6 million, including restructuring, exit and impairment charges of $58.3 million, in the fourth quarter of 2009.
Boat segment production increased during the quarter, compared to the low levels in the fourth quarter of 2009, in response to the inventory requirements of dealers. Lower restructuring, exit and impairment charges, reduced discounts required to support retail sales by dealers and higher sales had a positive effect on the segment's reduction in operating losses in the quarter.
“We currently expect to have positive earnings per share in 2011, beginning in the first quarter,” said McCoy. “We believe the significant decline in overall industry marine retail demand has bottomed in 2010, but at this early point in the marine selling season, we are unable to determine if 2011 marine retail demand will remain consistent with 2010 or improve.
“We are also unable to determine the specific timing of any improvement and how each boat category will perform versus 2010 levels. Without a clear view of 2011 marine demand, we are currently expecting modest revenue growth for the consolidated company. In our marine segments, we believe that wholesale and production units will closely match retail demand on an annual basis. Therefore, the level of 2011 revenue and earnings growth will be primarily governed by marine retail demand.”