Brunswick Corp. reported earnings rose 32 % on an adjusted foundation within the fourth quarter. Gross sales grew 5.7 % as a 13.9 % achieve within the marine phase offset a 2.four % decline within the health phase.
“Our mixed marine portfolio had a implausible 2018, which led to the corporate’s ninth consecutive yr of adjusted EPS progress,” stated Brunswick Chief Government Officer David Foulkes. “The monetary outcomes reveal the excellent execution of our marine technique, the place our give attention to product and know-how management, together with capability investments and operational excellence, generated robust enhancements. We leveraged our profitable efficiency in a gentle marine market into vital top-line progress, margin enlargement, and report earnings,” Foulkes continued.
“Within the fourth quarter, Mercury’s propulsion enterprise continued to excel behind highly effective demand for brand spanking new outboard merchandise, which generated 20 % income progress within the quarter. The elements and equipment enterprise, which was augmented by the primary full quarter of outcomes from the Energy Merchandise acquisition, additionally delivered spectacular topline and earnings progress. As well as, the boat enterprise achieved strong earnings enhancements, led by wholesome progress in Boston Whaler, Harris pontoons, and Sea Ray Sport Boats and Cruisers. Lastly, our Health enterprise continues to work by means of the separation course of, and reported top-line and gross margin outcomes comparatively according to our expectations for the quarter,” Foulkes continued.
“As I step into my new position as CEO, I’m wanting ahead to executing towards our strategic goals and main the corporate and our over 15,000 devoted staff to even higher success in 2019 and past,” Foulkes concluded.
Presentation of Sea Ray Sport Yacht and Yacht Outcomes
Because of the June 25, 2018 announcement relating to Sea Ray, the outcomes of all the Sea Ray enterprise are once more being reported in persevering with operations for GAAP functions. Nevertheless, as adjusted, non-GAAP outcomes exclude the Sea Ray Sport Yacht and Yacht operations which are being wound down. Subsequently, for all durations introduced on this launch, all figures and outlook statements incorporate these modifications until in any other case famous. For extra info, please see the Type Eight-Okay dated July 19, 2018, which incorporates metrics on a GAAP and as adjusted foundation reflecting these modifications.
2018 Full-Yr Outcomes
For the yr ended Dec. 31, 2018, Brunswick reported internet gross sales of $5,159.2 million, up from $four,835.9 million a yr earlier, with $49.four million and $151.6 million of gross sales associated to Sport Yacht and Yacht operations in 2018 and 2017, respectively. Diluted EPS in 2018 was $2.98 on a GAAP foundation versus $four.77 on an as adjusted foundation.
Comparative full-year earnings outcomes, together with reconciliations of GAAP to as adjusted quantities, are proven under:
2018 Fourth Quarter Outcomes
For the fourth quarter of 2018, Brunswick reported internet gross sales of $1,248.9 million, up from $1,182.1 million a yr earlier, with $5.four million and $38.three million of gross sales associated to Sport Yacht and Yacht operations within the fourth quarter of 2018 and 2017, respectively. Diluted EPS for the quarter was $zero.47 on a GAAP foundation versus $zero.98 on an as adjusted foundation. Comparative fourth quarter earnings outcomes, together with reconciliations of GAAP to as adjusted quantities, are proven under:
Evaluate of Money Movement and Stability Sheet
Money and marketable securities totaled $304.2 million on the finish of 2018, down $154.Eight million from year-end 2017 ranges. The discount consists of internet money offered by working actions in the course of the yr of $337.zero million, which decreased by $64.6 million versus the prior yr, primarily as a consequence of deliberate will increase in pension contributions, partially offset by decrease tax funds. Free money move was $208.Eight million in 2018. As well as, investing and financing actions resulted in a internet money utilization of $486.Eight
million throughout 2018, which lowered money and marketable securities balances.
Investing and financing actions in the course of the year-to-date interval included a $909.6 million expenditure for the Energy Merchandise acquisition, $793.5 million of internet proceeds for issuances of debt associated to the acquisition, $193.four million of capital expenditures, $75.zero million of widespread inventory repurchases, and $67.Eight million of dividend funds.
Marine Engine Phase
The Marine Engine phase, which manufactures and distributes marine propulsion techniques and associated elements and equipment, reported internet gross sales of $669.5 million within the fourth quarter of 2018, up 18.6 % from $564.6 million within the fourth quarter of 2017. The Energy Merchandise acquisition contributed roughly 9 % to the expansion fee within the quarter. Worldwide gross sales, which represented 31 % of complete phase gross sales within the quarter, have been up 18 % in comparison with the prior yr interval. For the quarter, the Marine Engine phase reported working earnings of $81.5 million, which included $11.Eight million of buy accounting amortization and $zero.Eight million of transaction prices, every associated to the Energy Merchandise acquisition. This compares with $59.2 million of working earnings within the fourth quarter of 2017.
Vital progress in each the outboard engine and elements and equipment companies, together with the outcomes of the current Energy Merchandise acquisition, drove gross sales will increase within the quarter. Working earnings progress was positively affected by these gross sales will increase, in addition to favorable impacts from modifications in gross sales combine and new merchandise.
The Boat phase, which manufactures and distributes leisure boats, reported internet gross sales of $377.three million for the fourth quarter of 2018, a lower from $386.5 million within the fourth quarter of 2017. Internet gross sales included $5.four million and $38.three million of Sport Yacht and Yacht gross sales within the fourth quarter of 2018 and 2017, respectively.
Worldwide gross sales, which represented 20 % of complete phase gross sales within the quarter, decreased by 24 % in comparison with the prior yr, primarily as a result of decrease gross sales into Canada because of the influence of retaliatory tariffs on wholesale shipments. For the fourth
quarter of 2018, the Boat phase reported working earnings of $10.three million, which included $Eight.6 million of restructuring, exit, integration, and impairment costs, as properly as further losses in extra of restructuring costs of $11.zero million associated to the Sport Yacht and Yacht operations. This compares to working losses of $22.7 million within the fourth quarter of 2017 which included $36.9 million of restructuring, exit, integration, and impairment expenses and $10.7 million of working losses, every associated to Sport Yachts and Yachts.
The Boat phase’s quarterly working earnings confirmed significant enchancment reflecting advantages from greater internet gross sales, with progress at Boston Whaler, Harris pontoons, and Sea Ray Sport Boats and Cruisers. The phase’s income and earnings comparisons have been influenced by the outcomes of Sport Yacht and Yacht operations famous above.
The Health phase, which manufactures and distributes cardiovascular and power health gear and lively recreation merchandise, reported internet gross sales within the fourth quarter of 2018 of $287.7 million, a lower from $304.Eight million within the fourth quarter of 2017. Worldwide gross sales, which represented 49 % of complete phase gross sales within the quarter, elevated 1 % when in comparison with the fourth quarter of 2017. For the quarter, the Health phase reported working losses of $2.7 million, which included restructuring, exit, integration, and impairment expenses of $15.2 million, considerably all of which pertains to an extra impairment of the Cybex commerce identify, $6.four million of expenses associated to different non-recurring gadgets, and $2.2 million of separation prices. This compares with working earnings of $7.9 million within the fourth quarter of 2017, which included $16.7 million of restructuring, exit, integration, and impairment fees, and a $13.5 million cost associated to different non-recurring gadgets.
The Health phase’s income comparisons mirrored decrease gross sales to value-oriented well being golf equipment as anticipated. The decline in working earnings resulted from the nonrecurring gadgets mentioned above, together with different working elements together with an unfavorable influence from modifications in gross sales combine, further stock value changes primarily associated to product transitions, elevated freight prices, and different value inflation and inefficiencies.
“We’re diligently executing towards our marine technique, and anticipate the operational, strategic, and progress developments achieved by our marine enterprise to steer us to higher success in 2019,” stated Foulkes. “With the pending separation of the Health phase, we’re offering further outlook feedback and steerage for the corporate unique of the Health enterprise. This presentation supplies elevated visibility into the expectations for the efficiency of the marine operations and can reduce
changes to our outlook at separation.
“In our mixed marine enterprise, we anticipate top-line efficiency to profit from a gentle international marine market, together with ongoing advantages from buyer migration to larger horsepower engines and boats with elevated know-how and content material. In
addition, we anticipate market share positive aspects due partially to the continued robust demand and acceptance of latest outboard merchandise. The elements and equipment enterprise will even proceed to bolster its wholesome aftermarket enterprise, whereas investing in increasing product classes, similar to controls, rigging and electrical methods, to extend gross sales to boat producers. Consequently, absent vital modifications within the international macroeconomic local weather, our plan displays general income progress charges in 2019 within the vary of 9 to 11 %, together with an approximate four % profit from accomplished acquisitions.
“For the full-year, we anticipate robust enchancment in each gross and working margins in our mixed marine enterprise, given ongoing advantages from new merchandise and acquisitions, quantity leverage, and price discount actions. Working bills are estimated to say no barely versus 2018 on a proportion of gross sales foundation. Working earnings for the marine enterprise are anticipated to develop by a high-teens % for the yr.
“For 2019, we anticipate Health internet gross sales to say no mid-single digit % from 2018 ranges, reflecting decrease gross sales to value-oriented well being golf equipment and secure market demand. Whereas we anticipate gross margin ranges to stay in step with 2018 ranges, the plan
displays working margin declines on account of deliberate investments in new merchandise and modernizing info know-how platforms, offset by sure value discount initiatives, that are meant to place the Health enterprise to succeed as an unbiased entity.
“Given the elements mentioned above, our steerage for 2019 as adjusted diluted EPS, excluding the Health enterprise, is within the vary of $four.50 to $four.70, which compares to a 2018 results of $four.13 on an analogous, marine-only foundation. Inclusive of the estimated full-year outcomes of the Health enterprise, our steerage for 2019 as adjusted diluted EPS is within the vary of $four.80 to $5.05,” Foulkes concluded.
Brunswick’s manufacturers embrace Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines; MotorGuide trolling motors; Ancor, Attwood, BEP, Blue Sea Techniques, Czone, Del Metropolis, Garelick, Lenco Marine, Marinco, Mastervolt, Mercury, NAUTIC-ON, Park Energy, Progressive Industries, ProMariner, Quicksilver and Whale marine elements and equipment; Land ‘N’ Sea, Kellogg Marine, Lankhorst Taselaar, Payne’s Marine and BLA elements and equipment distributors; Bayliner, Boston Whaler, Brunswick Business and Authorities Merchandise, Crestliner, Cypress Cay, Harris, Lowe, Lund, Princecraft, Quicksilver, Rayglass, Sea Ray, Thunder Jet and Uttern boats; Life Health, Hammer Power, Cybex, Indoor Biking Group and SCIFIT health gear; and Brunswick billiards tables, equipment and recreation room furnishings.