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Brunswick’s earnings beat expectations, shares climb

by Mandy Niad
Apr 25, 2013

Brunswick Corp. shares surged Thursday after the Lake Forest-based marine manufacturer reported first-quarter results that exceeded Wall Street expectations due to a modest improvement in gross margin levels.


In the latest quarter, the company posted net earnings of $49.8 million, or 53 cents per diluted share, compared with a year-earlier profit of $39.7 million, or 43 cents per share.


First-quarter sales grew 3.7 percent to $995.3 million from $959.6 million in the year-ago quarter.

Brunswick’s net results reflected the impact of a number of special items, including planned divestitures of two boat businesses. Excluding such items, Brunswick said, income from continuing operations was 76 cents a share, well above the 63 cents a share analysts surveyed by Yahoo! Finance had anticipated.


In New York Stock Exchange trading, Brunswick’s shares closed at $34.51 Thursday, up $1.91 or 5.86 percent.


Brunswick Chairman and CEO Dustan McCoy said, “Solid topline improvement was experienced in our Marine Engine and Fitness segments. This growth was partially offset by declines in our Boat and Bowling segments. From a geographic perspective, consolidated U.S. sales increased by 7 percent.”


“Our first quarter gross margin of 26.3 percent reflected an increase of 150 basis points from the prior year, with the majority of the increase coming from the Marine Engine segment,” said McCoy in a statement. The Marine Engine segment reported operating earnings of $71.5 million for the quarter, up 49.3 percent from $47.9 million in first-quarter 2012.


McCoy said in a conference call that although he is hesitant to name weather as a factor, he believes that colder-than-normal conditions in first-quarter this year compared to warmer-than-normal temperatures in the 2012 quarter caused retail sales to occur earlier last year while this year “they remain potentially deferred to later months.”


James Hardiman, senior equity analyst at Longbow Research, said during the conference call, “We see a pretty big first quarter beat and yet, excluding taxes, the guidance is largely unchanged.”


McCoy responded that maintaining the previous guidance range should not be taken as indicating that the company is not confident about the year. Instead, he said, it's very early in the retail season in the marine business, which has been delayed by weather. The company is simply giving itself “room to take a turn here through this second quarter and begin to get a good view about what’s going to go on at retail,” said McCoy.


Brunswick's four segments are boats, marine engines, fitness, bowling and billiards.