Brunswick Corp. reported sales in its Fitness segment, which includes Life Fitness and Hammer Strength equipment, rose 3.1 percent in the first quarter to $185.6 million and advanced 6 percent on a currency-neutral (c-n) basis.
On a conference call with analysts, Mark Schwaber, president and COO, said the 6 percent gain on a c-n business by the Life Fitness brand was due to higher sales to U.S. health clubs and hospitality customers, as well as sales gains in international markets, particularly certain developing regions. International sales, which represented 47 percent of total segment sales in the quarter, increased 1 percent. Partially offsetting this growth was lower sales to local and federal government customers.
Life Fitness continued to benefit from new product introductions in all regions, with this quarter representing its tenth consecutive quarter of year-over-year revenue growth.
“Life Fitness continues to develop new products and services that drive market share growth in their commercial, cardio, and strength categories,” said Schwaber. Recent strong launches included the Explore Console for the Elevation series, the PowerMill Climber, the FlexStrider, the E Series Cross-Trainers, and the multi-purpose synergy family of training systems.
Operating earnings in the Fitness segment slid 13.1 percent to $25.8 million, reflecting the absence of a favorable warranty expense adjustment in first quarter of 2014 and an unfavorable impact from foreign exchange. In addition, Life Fitness incurred costs associated with the planned capacity expansion activities and new product introductions.
Companywide, earnings were flat in the quarter at $57 million, or 61 cents a share. Sales rose 10.1 percent to $985.7 million.
In its other segments, Marine Segment revenues improved 11.3 percent to $562.2 million, and gained 16 percent on a c-n basis. The gains were led by the segment’s parts and accessories, which included acquisitions, and outboard engine businesses. Marine Segment operating profits advanced 20.3 percent to $74.2 million.
Boat segment revenues leapt 12.4 percent to $318 million and gained 15 percent on a c-n basis. The gains reflected higher average selling prices, compared with the first quarter of 2014, combined with an increase in wholesale unit shipments. Boat earnings dipped 8.3 percent to 7.7 million, impacted by the planned costs associated with new product introductions, plant expansions and production ramp-up, along with an unfavorable impact from foreign exchange.
Looking ahead, Brunswick continues to expect sales to grow 6 to 8 percent this year. New product introductions across the portfolio and the continuation of solid growth in the U.S. is expected to make up for the negative impact of a stronger U.S. dollar and weakness in certain international markets. Pretax earnings growth is projected to range between 15 percent to 20 percent. Management narrowed its EPS expectations to a range of $2.75 to $2.85, from 2.70 to $2.85 previously.
Said Dusty McCoy, chairman and CEO, “As the year is unfolding, the challenges of the increasingly volatile global economic landscape and the intensifying headwinds of foreign occur present risk, but they also offer opportunities for Brunswick to leverage our fundamental advantages into the marketplace.”
