Brunswick Corp., in its first report since spinning off its fitness segment, reported consolidated net sales of $1.16 billion, up from $1.15 billion a year earlier.
Sales grew 1.3 percent on a reported basis and 3.1 percent on an adjusted basis.
Diluted EPS for the quarter was $1.28 on a GAAP basis against 77 cents a year ago. EPS was $1.45 on an as adjusted basis versus $1.33 a year ago.
“The second quarter represents a pivotal point in Brunswick’s transition to a pure-play marine company, and we have tremendous confidence in the future of our business,” said Brunswick Chief Executive Officer David Foulkes. “Completing the Fitness transaction allows us to center our strategy and message on our unparalleled marine platform. In addition, the combination of deploying sales proceeds, reinforced by today’s announcement of more aggressive share repurchases, and the decisive actions announced earlier this week and last month regarding the structural reduction of approximately $50 million in annual run-rate costs across the enterprise, enables us to substantially enhance our long-term earnings power under a range of potential market scenarios.
“The demand environment in the first-half of 2019 was challenging in certain of our businesses, due in significant part to unfavorable weather across many regions of the U.S. and Canada. Muted market demand affected both our Marine Engine and Boat segments, mostly through reduced demand for value boats and lower horsepower outboard engines. However, the contributions from Power Products along with our continued focus on new product development, technology leadership, operational excellence, our stable parts and accessories business, and business model evolution all enabled strong margin performance and strengthened our overall growth profile.
“Our Marine Engine segment posted modest top-line growth, led by benefits from the Power Products acquisition and continued robust demand for, and market share gains in, higher horsepower outboard engine products. These sales gains, along with steady margin accretion and cost management actions, supported strong earnings growth in the quarter. The boat business reported slight sales and earnings declines, with gains in premium offerings, including Lund and Sea Ray Sport Boats and Cruisers, and cost management actions, offset by sales declines in value aluminum products and pontoons.
“Importantly, assuming market conditions consistent with this year, we remain confident in our 2020 earnings targets given the anticipated full-year benefits of the cost reduction and share repurchase actions discussed above, along with continued operating improvements and second-half 2019 pipelines adjustments,” Foulkes continued.
Capital Strategy Actions
“As previously discussed, we plan to be very aggressive in deploying the proceeds from the sale of our Fitness business to enhance shareholder returns,” said Foulkes. “Our board has increased our existing share repurchase authorization to $600 million and we plan to repurchase $330 million of shares in the second-half of 2019, bringing the fullyear total to $400 million. This increased authorization also provides flexibility to continue with an aggressive share repurchase schedule beyond this year as market conditions allow.
“In addition, we continue to execute against planned actions to strengthen our balance sheet and, earlier this month, we called our $150 million of outstanding 2021 senior notes to be redeemed in August, and completed the exit of our defined benefit pension plans. Lastly, we continue to evaluate acquisition opportunities, primarily within our parts and accessories business.”
