METTAWA, Ill. – Brunswick Corporation (NYSE: BC) released its third quarter 2022 financial resultshighlighted by net sales of $1,698.2 million.
Among many companies and brands in the maritime sector, Brunswick is also the parent company of several RV-related companies, including RELiON Battery LLC, Progressive Industries, Marinco ParkPowerand Distribution land and sea.
Comments from CEO David Foulkes
“We delivered an outstanding third quarter as our new products, strategic investments, continued operational efficiency and prudent cost control in a challenging macro-economic environment, as well as a resilient marine market, drove sales, record operating margins and earnings for all third quarter in our history.
“We delivered the quarter despite additional challenges, with Hurricane Ian significantly impacting our many Florida facilities and operations late in the quarter, some specific supply chain shortages at Mercury and Navico Group which n could not be fully resolved by the end of the quarter, and unfavorable exchange rate movements negatively impacted sales and earnings more than expected. On the positive side, aside from a distribution facility and about ten Freedom Boat Club locations, our Florida facilities are back up and running, demand for our products remains strong, and boat inventory levels are improving, as pipeline inventory remains nearly 40% lower at the end of the quarter compared to the same period in 2019. of the quarter.
“Our propulsion business continues to deliver exceptional results, with sequentially higher operating profit and operating margin driven by operational efficiencies, market share gains and higher production driven by capacity expansion. During the quarter, Mercury Marine gained 100 basis points of U.S. outboard propulsion retail market share and continues to grow its outboard propulsion market share in the United States. many global markets, as seen recently at the Cannes Boat Show, where Mercury had a record 65% share of outboard motors on the water.
“Mercure was notably impacted by a few low-key supply chain issues during the quarter, one of which led to nearly 2,500 mid-range outboard motors awaiting completion of a component at the end of the period, which we believe will be mostly resolved in the fourth quarter.Despite these challenges, our propulsion business generated accretive operating margins, with operating investments and cost control offsetting the challenges of In addition, the previously mentioned new high-horsepower outboard motor capacity at the Fond du Lac, Wis. plant is on budget and on track for commissioning in the fourth quarter of this year.
“Our parts and accessories business delivered strong sales growth, driven by the benefits of acquisitions made in 2021, strong engine P&A sales and strong Navico Group OEM sales. P&A segment operating profit decreased slightly from the prior year, primarily due to unfavorable exchange rate movements and continued slow replenishment patterns from retailers and distributors despite strong consumer sales. disrupted by Hurricane Ian as transportation and some warehouse locations were unavailable during the last week of the quarter Finally, recently announced Navico Group operating model changes are essentially completed and should begin to generate expected synergies in the fourth quarter.
“Our boat business delivered robust revenue and profit growth, with double-digit operating margins for the second consecutive quarter. We have closed our boat manufacturing facilities in Florida for most of last week of the third quarter due to Hurricane Ian, with minimal damage to facilities allowing manufacturing and shipping operations to resume the following week Freedom Boat Club saw a record increase in membership sales in identical stores in the quarter, but its operations in southwest Florida were significantly impacted by Hurricane Ian, with more than 100 boats damaged and a small number of locations unlikely to reopen before 2023. However , Freedom continues on its growth trajectory in the United States and Europe, and now has more than 360 sites, nearly 54,000 agreements membership spanning 84,000 network-wide members and a fleet size of over 5,000 boats, while generating exceptionally strong sales synergies across our maritime portfolio,” Foulkes concluded.
Third quarter 2022 results
For the third quarter of 2022, Brunswick reported consolidated net sales of $1,698.2 million, compared to $1,427.2 million in the third quarter of 2021. Diluted EPS for the quarter was $2.26 on on a GAAP basis and $2.67 on an adjusted basis. All segments recorded sales growth driven by solid demand, new product performance and pricing in place since the third quarter of 2021, partially offset by unfavorable foreign exchange movements, the impact of the Ian and supply chain challenges. The strong operating profit growth was also enabled by these factors, as well as the benefits of cost containment measures, slightly tempered by continued high inflationary pressures for materials and freight and by spending on initiatives growth, including capacity expansion, ACES and new product development.
In addition, compared to the third quarter of 2021:
The propulsion segment recorded a 14% increase in sales due to higher sales volume resulting from strong global demand, capacity increases and market share gains. The robust operating profit growth was enabled by higher sales and lower operating expenses, slightly offset by investments in capacity and product development.
The Parts and Accessories segment recorded a 19% increase in sales thanks to acquisitions made in 2021, with growth in all geographies excluding foreign exchange impacts. Segment operating profit declined slightly as the profit impact of increased sales was offset by outsized headwinds from unfavorable foreign exchange rates and continued material and freight inflation .
The boat segment saw a 27% increase in sales as higher dealer sales volumes throughout the quarter more than offset the impact of Hurricane Ian on production and shipments.
Freedom Boat Club, part of Business Acceleration, had another strong quarter, contributing about 7% of segment sales. The segment’s operating profit and operating margin growth was driven by increased sales volumes, a favorable product mix and sustained operating efficiencies, partially offset by plant-related closures. Hurricane Ian and ongoing supply chain disruptions.
Review of cash flow and balance sheet
Cash and marketable securities totaled $503.6 million at the end of the third quarter, up $136.1 million from year-end 2021 levels.
Net cash provided by operating activities for the first nine months of the year of $313.8 million includes net income net of non-cash items and the seasonal impact of working capital build-up.
Investing and financing activities resulted in a net cash use of $187.8 million in the first nine months of 2022, including the issuance of $750.0 million of 10 and 30 years in the first quarter for general corporate purposes, net of $360.0 million in share repurchases, $299.3 million in capital expenditures, $95.7 million in cash paid for acquisitions businesses, net of cash acquired, $82.4 million in dividend payments and $58.4 million in long-term debt repayments.
“2022 will likely be a banner year for Brunswick. We continue to deliver historically strong financial results for our shareholders despite a turbulent macro-economic climate, and we are making smart cost decisions without sacrificing the investments needed to drive our strategic plan,” said Foulkes.
“Over the coming quarters, we’ll be showcasing a barrage of exciting new products coming to market, and we hope you’ll join us at Lake X on November 16 to experience first-hand our new products and technologies, and our synergies of company in action.Despite external headwinds, including increasingly unfavorable exchange rates, cost inflation, remaining supply chain disruptions and the uncertain medium-term impacts of Hurricane Ian, we We still believe we will deliver a record-breaking 2022, which will result in the following updated forecast for a full-year 2022. We expect approximately:
- Net sales of $6.9 billion;
- Adjusted Diluted EPS of $10.00; and
- Growth in adjusted diluted EPS in the fourth quarter of 2022 of more than 30% compared to the fourth quarter of 2021.
“Finally, while we have discussed the impact of Hurricane Ian on our business operations and results, our approximately 4,000 employees located in Florida have endured the greatest hardship resulting from this storm. I want to express my deepest gratitude and thanks to everyone in Brunswick who has worked tirelessly to support their colleagues and our business partners during this very difficult time,” Foulkes concluded.
For more information, visit brunswick.com.