Brunswick Reports Third Quarter Results


Brunswick Corporation today reported its results for the third quarter of 2010:

  • Net sales of $815.4 million, up 22 percent versus third quarter 2009. ?
  • Net loss of $7.2 million, or $0.08 per diluted share, which includes $0.14 per diluted share of restructuring, exit and impairment charges.
  • Operating earnings of $25.2 million, a $134.6 million improvement from third quarter 2009.
  • Cash totaled $676.5 million, up from 2009 year-end balance of $526.6 million.
  • Increased production and wholesale shipments versus prior year levels, resulting from low beginning-of-year marine dealer inventories.

“Throughout the first nine months of 2010, we have successfully executed against our strategic initiatives,” said Brunswick Chairman and Chief Executive Officer, Dustan E. McCoy. “This is evidenced by the outstanding operating leverage that we have demonstrated on our revenue growth during the year. For the nine months ended Oct. 2, 2010, excluding restructuring charges, our operating earnings increased by more than $410 million, as compared to 2009. In addition, we have achieved our objective of being cash flow positive during this period. All of this has been accomplished against the backdrop of a very difficult marine market.

“The factors that positively affected our revenues and earnings in the third quarter of 2010, compared to the previous year, included lower discounts required to facilitate retail boat sales, improved fixed-cost absorption as a result of higher overall unit production and higher sales levels in our marine businesses. During the quarter, we also benefited from lower restructuring, exit and impairment charges, a reduction in variable compensation expense and lower pension expense. Partially offsetting these factors were higher income taxes,” McCoy said.

For the third quarter of 2010, the company reported net sales of $815.4 million, up from $665.8 million a year earlier. For the quarter, the company reported operating earnings of $25.2 million, which included $12.2 million of restructuring, exit and impairment charges. In the third quarter of 2009, the company had an operating loss of $109.4 million, which included $28.8 million of restructuring, exit and impairment charges.

For the third quarter of 2010, Brunswick reported a net loss of $7.2 million, or $0.08 per diluted share, compared with a net loss of $114.3 million, or $1.29 per diluted share, for the third quarter of 2009. The diluted loss per share for the third quarter of 2010 included restructuring, exit and impairment charges of $0.14 per diluted share. The loss per diluted share for the third quarter of 2009 included $0.32 per diluted share of restructuring, exit and impairment charges, and a $0.24 per diluted share benefit from special tax items.

The Marine Engine segment, consisting of the Mercury Marine Group, including the marine service, parts and accessories businesses, reported net sales of $429.2 million in the third quarter of 2010, up 18 percent from $363.5 million in the third quarter of 2009. International sales, which represented 38 percent of total segment sales in the quarter, increased by 5 percent. For the quarter, the Marine Engine segment reported operating earnings of $49.0 million, including restructuring charges of $1.7 million. This compares with an operating loss of $13.4 million in the year-ago quarter, which included $18.8 million of restructuring and impairment charges.

Sales were higher across all of the segment's main operations, including a high single- digit increase in the domestic marine service, parts and accessories businesses, which represented 32 percent of total segment sales in the quarter. The segment's sterndrive engine business experienced the greatest percentage of sales growth.

Mercury's manufacturing facilities continued to increase production during the quarter in response to customer inventory requirements. Higher sales, lower restructuring, exit and impairment charges, reduced pension expense, fixed-cost reductions, lower bad debt expense, increased fixed-cost absorption and improved operating efficiencies, all had a positive effect on operating earnings during the quarter. Partially offsetting these positive factors were gains from favorable settlements reached during the prior-year quarter.

The Brunswick Boat Group reported net sales of $209.2 million for the third quarter of 2010, an increase of 77 percent compared with $118.2 million in the third quarter of 2009. International sales, which represented 34 percent of total segment sales in the quarter, increased by 39 percent during the period. For the third quarter of 2010, the Boat segment reported an operating loss of $26.3 million, including restructuring, exit and impairment charges of $10.2 million. This compares with an operating loss of $86.7 million, including restructuring, exit and impairment charges of $6.6 million, in the third quarter of 2009.

Boat manufacturing facilities significantly increased production during the quarter, compared to the third quarter of 2009, to address inventory requirements of their dealers. Reduced discounts required to support retail sales by dealers, increased fixed- cost absorption, higher sales and a reduction in variable compensation expense were the primary factors affecting the segment's reduction in operating losses in the quarter.