Brunswick Corporation looked to its Marine division to post a 16.8% increase in revenues to $1.40 billion for the first quarter from $1.20 billion in Q1 last year. However, the Fitness division, which includes the Life Fitness, Hammer Strength, and ParaBody fitness equipment brands, and the Bowling division were both a drag on operating income for the quarter. The sale of MarineMax stock resulted in a pre-tax gain of $38.7 million, equivalent to 32 cents per diluted share in the quarter, which helped to boost net income 97.1% to $94.6 million versus $48.0 million in Q1 last year.
Fitness Segment sales slipped 2% in the quarter to $127.5 million, a sales decline for which the company pointed to the divestiture of the Omni Fitness retail stores completed in late 2004. Excluding Omni sales in the year-ago quarter, fitness equipment sales were up 5%. However, operating earnings fell 30% for the period to $6.4 million compared with $9.2 million in the first quarter of 2004, due primarily to “significantly higher steel prices”, competitive pricing in the international scene, and a shift in product mix towards lower margin, strength equipment.
The Bowling & Billiards Segment, which includes results from retail bowling centers and bowling equipment, as well as billiards, Air Hockey, and foosball tables, saw sales increase 1.0% to $111.5 million. Operating earnings fell 18% to $11.1 million in Q1. BC attributed the drop to in segment operating earnings to “legal expenses associated with an ongoing arbitration proceeding in China.”
Marine Segment sales were up 21% to $1.16 billion in the quarter versus $959.7 million in Q1 last year, while operating earnings increased 36% to $101.5 million versus $74.6 million in Q1 last year.
Based on the first quarter performance, Brunswick upped EPS guidance five cents for the year to $3.52 to $3.67 per share. The new estimate includes approximately 10 cents per share related to the completion of a four-year tax return audit.
