Brunswick Corp. reported net sales of $1.6 billion in the first quarter, up from $1.07 billion a year earlier. Net sales grew 8.4 percent versus first quarter 2016; excluding the impact of acquisitions, sales increased 5.9 percent.

For the quarter, the company reported operating earnings of $89.0 million, which included $15.2 million of restructuring, exit and integration charges. In the first quarter of 2016, the Company had operating earnings of $96.0 million, which included $3.8 million of restructuring, exit and integration charges.

Net earnings reached $64.9 million, or 71 cents per diluted share, compared with net earnings of $63.2 million, or 68 cents per diluted share, for the first quarter of 2016. Diluted EPS for the first quarter of 2017 included 14 per diluted share of restructuring, exit and integration charges and a 1 cent per diluted share benefit from special tax items. The diluted EPS for the first quarter of 2016 included 3 cents per diluted share of restructuring, exit and integration charges.

“Our first quarter revenues increased by 8 percent,” said Brunswick Chairman and Chief Executive Officer Mark Schwabero. “Our top line reflected strong growth rates in all three of our primary boat categories, as well as in our marine parts and accessories, Fitness and outboard engine businesses.

“Our performance in the first quarter reflected continued successful execution of our growth strategy, including our focus on product leadership and the associated market share gains,” Schwabero continued. “Although it is still early in the marine season, initial marine market data indicates a healthy U.S. marketplace, which is consistent with our assumptions entering the year. Overall demand in non-U.S. marine markets was also strong, led by gains in Europe and improving conditions in other regions.

“Our Fitness business continues to successfully execute against its integration and transformation plans, which in 2017 include new product introductions, changes to the manufacturing footprint and further cost realignment actions. The benefits from these activities will begin to favorably impact segment growth rates and margin performance in the second half of 2017.

“Adjusted operating earnings increased by 4 percent compared to the prior year quarter. An improvement in the effective tax rate, combined with higher operating earnings and fewer shares outstanding, led to an 18 percent increase in diluted earnings per common share, as adjusted,” Schwabero concluded.

Marine Engine Segment
The Marine Engine segment, consisting of the Mercury Marine Group, including the marine parts and accessories businesses, reported net sales of $631.8 million in the first quarter of 2017, up 6 percent from $595.5 million in the first quarter of 2016. International sales, which represented 31 percent of total segment sales in the quarter, were up 9 percent compared to the prior year period. For the quarter, the Marine Engine segment reported operating earnings of $88.5 million. This compares with operating earnings of $78.3 million in the first quarter of 2016.

Sales increases in the quarter were led by the segment’s parts and accessories businesses, which included revenue from an acquisition completed in the fourth quarter of 2016, and by the outboard engine business, partially offset by declines in the sterndrive engine business. Higher revenues, favorable product mix and improved cost efficiencies contributed to the increase in operating earnings in the first quarter of 2017. Partially offsetting these factors were the unfavorable impact from foreign exchange and planned increases in growth investments.

Boat Segment
The Boat segment is comprised of the Brunswick Boat Group, and includes 15 boat brands. The Boat segment reported net sales of $382.7 million for the first quarter of 2017, an increase of 14 percent compared with $336.8 million in the first quarter of 2016. International sales, which represented 24 percent of total segment sales in the quarter, increased by 9 percent compared to the prior year period. For the first quarter of 2017, the Boat segment reported operating earnings of $3.2 million, which included $10.4 million of restructuring, exit and integration charges. This compares with operating earnings of $16.4 million in the first quarter of 2016.

The Boat segment’s revenue reflected strong growth in the fiberglass and aluminum outboard categories. Sales of the fiberglass sterndrive/inboard boat category increased, in spite of anticipated declines in large fiberglass sterndrive/inboard boats. The decline in operating earnings included higher restructuring, exit and integration charges. In addition, comparisons were also affected by the aforementioned reduction in sales volumes and unfavorable reserve adjustments in large fiberglass sterndrive/ inboard boats, along with the net unfavorable impact of changes in sales mix and higher commodity costs in our aluminum boat business. These factors more than offset favorable performance in the fiberglass outboard boat business.

Fitness Segment
The Fitness segment designs, manufactures and sells strength and cardiovascular fitness equipment and active recreation products. Fitness segment sales in the first quarter of 2017 totaled $235.6 million, up 8 percent from $218.3 million in the first  quarter of 2016. International sales, which represented 46 percent of total segment sales in the quarter, increased by 11 percent. Excluding the impact of acquisitions, Fitness segment sales on a constant currency basis increased by one percent in the quarter compared to the prior year.

For the quarter, the Fitness segment reported operating earnings of $18.3 million, including restructuring, exit and integration charges of $2.4 million. This compares with operating earnings of $20.1 million which included $3.8 million of restructuring, exit and integration charges in the first quarter of 2016. Sales in the U.S. were down, excluding the impact of acquisitions, reflecting anticipated declines in Cybex revenues, while overall commercial fitness revenue trends were stable. Overall international sales were strong, led by the benefits of the ICG acquisition and growth in Asia Pacific. The decline in operating earnings resulted mostly from the unfavorable impact of changes in sales mix, as well as planned costs associated with capacity expansions, new product introductions and manufacturing transitions. These factors more than offset contributions from acquisitions, including synergy benefits from the Cybex acquisition.

2017 Outlook
“Our outlook for 2017 continues to be generally consistent with our three-year strategic plan and reflects another year of outstanding earnings growth, with excellent cash flow generation,” said Schwabero. “We believe we are well-positioned to generate strong sales and adjusted earnings per share growth in 2017 and beyond.

“We expect our marine businesses’ top-line performance will benefit from the continuation of solid market growth in the U.S. and Europe and the success of our new products. The Fitness segment is expected to benefit from overall growth in global commercial Fitness markets, as well as contributions from new products, particularly in the second half of 2017. As a result, our consolidated plan continues to reflect revenue growth rates in 2017 in the range of 6 to 8 percent. In total, acquisitions are expected to account for about one percent of 2017’s projected growth, reflecting the impact of  completed transactions

“For the full-year, we anticipate improvement in both gross margins and operating margins as we plan to continue benefiting from volume leverage and cost reductions related to efficiency initiatives. Operating expenses are estimated to increase in 2017 as we continue to fund incremental investments to support growth; however, on a percentage of sales basis, they are expected to be at slightly lower levels than 2016,” Schwabero said.

“We are increasing the range for our full-year expectations of diluted EPS, as adjusted, from $3.90 to $4.05 to a range of $3.95 to $4.10. The increase in full-year guidance includes the benefits from a lower effective tax rate and reflects our overall confidence that the underlying assumptions for business performance are playing out in line with our expectations. Finally, for 2017, our expectation remains that we will generate positive free cash flow in excess of $250 million,” Schwabero concluded.