Brunswick Corporation saw growth across the board in the second quarter ended June 30, with each of its three reporting segments posting gains in sales, earnings, and operating margins. For the company as a whole, net sales increased 12% to $1.6 billion, up from $1.4 billion in the year-ago period. Excluding the effect of acquisitions, sales were up 10% in the quarter. Operating margins improved to 10.7% from 9.8%, a 90 basis point gain. Net earnings totaled $114.1 million, or $1.15 per diluted share, up 27% from $90.1 million, or 93 cents per diluted share, for Q2 last year.
Fitness equipment sales increased 2% in the quarter, excluding sales from the Omni retail stores that were sold in late 2004. The Fitness segment is comprised of the Life Fitness Division, which manufactures and sells Life Fitness, Hammer Strength, and ParaBody fitness equipment. Segment sales in the second quarter of 2005 reached $120.4 million, down from $122.3 million in the year-ago quarter, which included Omni retail sales. Fitness segment operating earnings for the quarter totaled $5.1 million, up 76% from $2.9 million in the second quarter of 2004, and operating margins advanced 180 basis points to 4.2% from 2.4% a year ago. The increase in fitness equipment sales was driven by strong demand in the domestic commercial markets, but was offset by a decline in European sales where the company continues to face competitive pricing pressure. Management noted a focus on manufacturing and supply chain efficiencies, as well as general expense controls, as major factors in the earnings and margins increases.
The Bowling & Billiards segment, comprised of the Brunswick retail bowling centers; bowling equipment and products; and billiards, Air Hockey and foosball tables, saw segment sales for the second quarter total $114.9 million, up 9% compared with $105.8 million in the year-ago quarter. Year-over-year operating earnings advanced 24% to $5.2 million in the second quarter versus $4.2 million, and operating margins improved to 4.5% compared with 4.0% in 2004. The company pointed out the response to its larger bowling entertainment centers, which are more like living room furniture than traditional bowling alley plastic seats, as they continue to grow at rates that “eclipse traditional locations.”
Marine Segment sales were up 14% to $1.4 billion in the quarter versus $1.2 billion in Q2 last year, while operating earnings increased 19% to $181.8 million versus $152.6 million in Q2 last year.
Based on the second quarter performance, Brunswick upped EPS guidance for the year to $3.62 to $3.72 per share. This compares with $2.77 per diluted share for 2004. This would imply earnings for the second half in the range of $1.51 to $1.61 per diluted share, which the company expects to be more or less evenly divided between the third and fourth quarters.
