Brunswick sales down 22 per cent, first quarter 2024

A Boston Whaler boat on a calm sea, the company reported exceptional retail at boat shows (strong sales) for 2024

Although gross margins have remained resilient and the company delivered a solid first quarter consistent with guided expectations, Brunswick has announced its net sales in the quarter of 2024 were down 22 per cent versus the first quarter of 2023.

“The impact of continued measured wholesale ordering patterns by dealers and OEMs coupled with higher discounts in some business segments, was only partially offset by annual price increases market share gains and benefits from well received new products,” says Ryan Gwillim, chief financial officer.

“Adjusted operating earnings were down [versus prior year] as a result of the impact of lower net sales, unfavourable changes in foreign exchange rates and slightly higher input costs, which more than offset benefits from significant cost control measures throughout the enterprise.”

Dave Foulkes, CEO, says Brunswick had a solid start to the year delivering sales, margin, and adjusted earnings per share consistent with expectations despite continued customer caution in the face of the economic uncertainty.

“Our performance benefited from continued market share gains, the wealth of recently launched and well-received new products, and comprehensive cost control measures across our businesses, offset higher promotions and discounts on some product lines.”

“Despite the challenges, retail is currently proceeding more or less in line with our expectations,” says Foulkes. “Field inventory levels remain extremely well balanced. So, we don’t have excess inventory and we think we’re really set up well for the balance of the year.”

Freedom Boat Club steady

Freedom Boat Club had another solid quarter while seeing very steady membership levels despite the macroeconomic uncertainty,” says Foulkes. “Freedom continues to benefit from not having been subject to the cumulative inflation impact that boats certainly have from a purchase perspective, and also not really subject to the higher interest rate environment.”

He says that nobody – or a very few people – are ‘financing’ their entry fee, which may make it immune to the broader macroeconomic stuff that’s impacting durable goods purchases. “Freedom continues to expand . . . the model is working very well and certainly helps our boat business pulling through additional units.

“We’re delighted with the performance of Freedom, not just in the domestic market, but also now in the European market, where there’s a heavy presence on the Australian market. And you should expect to see us expanding to other region, other geographies as well, since the model seems to be very robust in those areas.

“The original data that we got when we were contemplating the acquisition of Freedom,” implied “that was that very few Freedom members were contemplating buying a new boat. But one of the things that we do benefit from now is that Freedom has a concierge service so that anybody who’s in Freedom and wants to buy a new boat is directed to one of our brands. So that’s extremely helpful. Freedom continues to grow and we anticipate solid growth through the balance of the year.”

Navico Group’s lower earnings

Navico Group reported a sales decrease of 24 per cent driven by reduced sales to Marine OEMs.

“As expected Navico Group had lower sales and earnings versus the first quarter of 2023,” says Foulkes, “but delivered sequential sales growth and consistent earnings versus the prior quarter. Navico Group continues to focus on investment in new products including the recently launched Simrad NSX Ultrawide multifunction display which has been very well received by customers and is preparing for several important new product launches in the remainder of the year.”

Mercury Marine capturing market share

Mercury Marine continued to capture market share.

“The impact of 2023 pricing gains and aggressive cost control measures partially offset the impact of lower sales, and unfavourable changes in foreign currency exchange rates,” says Gwillim.

The engine parts and accessories business continued its steady performance with sales and earnings down modestly from the first quarter of 2023 as anticipated, but sequentially increasing over the prior quarter. Sales in the high margin products business were down very slightly while year over year distribution sales trends continued to improve.

Brunswick sales outlook 2024

“We are seeing a higher proportion of buyers with high credit scores financing their purchases than in recent prior periods. An interest in the recently launched Brunswick retail finance program continues to increase with more than 35 per cent of Brunswick boat dealers having enrolled,” says Foulkes.

“Overall boat show results were encouraging with interested buyers, strong lead generation and sales above prior year levels on a unit basis and with a richer product mix. Our Boston Whaler [pictured above] and Sea Ray businesses demonstrated exceptional retail performance at early boat shows with new models supporting market share gains.

As you saw, despite the challenges, retail is currently proceeding more or less in line with our expectations. And we delivered a very solid quarter. I think the resilience of our portfolio is very much on display. Gross margins held up really well. And our cost control discipline is on display as well. I think we did a really nice job in the quarter and we’ll continue to do that.

“Field inventory levels remain extremely well balanced. So, we don’t have excess inventory and we think we’re really set up well for the balance of the year. Our free cash flow continues to be strong. And obviously, we did a really timely debt issuance. So, that allows us to increase share repurchases at a time when today I’m pleased that we’re going to be in the market with more share repurchases early in the year. So, overall, I think a solid quarter and a very balanced view of the year ahead.”

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This article was written and/or edited by the UK-based MIN team.

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