Brunswick Corporation reported net sales of $974.2 million for the first quarter, down from $985.9 million a year earlier. Operating earnings reached $67.6 million, including $200,000 of restructuring, exit and impairment charges. That compared to  operating earnings of $67.0 million, which included $5.3 million of restructuring, exit and impairment charges in the first quarter of 2011.

For the first quarter of 2012, Brunswick reported net earnings of $39.7 million, or 43 cents per diluted share, compared with $27.5 million, or 30 cents per diluted share, for the first quarter of 2011.

The earnings per diluted share for the first quarter of 2012 included a 2 cents per diluted share charge from special tax items. The earnings per diluted share for the first quarter of 2011 included 5 cents per diluted share of restructuring, exit and impairment charges, and a 5 cents per diluted share loss on early extinguishment of debt.

“As anticipated, our first quarter consolidated sales were modestly lower due to specific factors affecting our Marine Engine and Life Fitness segments,” said Brunswick Chairman and Chief Executive Officer Dustan E. McCoy. “Our first quarter gross margin of 24.2 percent reflects an increase of 20 basis points from the prior year. Selling, general and administrative expense, combined with research and development expense, increased by 3 percent, which is inclusive of company-wide investments in growth initiatives. Lower net interest expense and a reduced income tax provision during the quarter contributed to our higher reported net earnings.”

Marine Engine Segment
The Marine Engine segment, consisting of the Mercury Marine Group, including the marine parts and accessories businesses, reported net sales of $489.4 million in the first quarter of 2012, down 2 percent from $501.1 million in the first quarter of 2011.

International sales, which represented 39 percent of total segment sales in the quarter, decreased by 7 percent. For the quarter, the Marine Engine segment reported operating earnings of $47.9 million, including restructuring charges of $1.7 million. This compares with operating earnings of $57.7 million in the first quarter of 2011, which included $4.3 million of restructuring charges.

Sales were higher in the segment’s U.S. outboard and parts and accessories businesses. This growth was more than offset by global sales declines in the segment’s sterndrive engine product category.

During the quarter, Mercury’s manufacturing facilities, when compared to the prior year, increased production of its outboard engines in response to market demand. Mercury produced fewer sterndrive units in the quarter versus the prior year quarter, as it experienced operating constraints resulting from sterndrive ramp-up issues following its recently completed plant consolidation. In addition, the absence of a gain on the sale of a distribution facility and a favorable recovery against an insurance policy in 2011 contributed to the decrease in operating earnings in the first quarter of 2012. Partially offsetting these factors was the effect of lower variable compensation expense, successful cost reduction activities and lower restructuring charges.

Boat Segment
The Boat segment is comprised of the Brunswick Boat Group, and includes 18 boat brands. The Boat segment reported net sales of $306.4 million for the first quarter of 2012, an increase of one percent compared with $303.5 million in the first quarter of 2011.

International sales, which represented 38 percent of total segment sales in the quarter, decreased by 7 percent during the period. For the first quarter of 2012, the Boat segment reported operating earnings of $2.8 million, including a gain of $1.5 million from restructuring activities. This compares with an operating loss of $4.8 million, including restructuring charges of $1.0 million, in the first quarter of 2011.

Boat segment production and wholesale shipments increased during the quarter, compared with the first quarter of 2011. The increase in wholesale unit shipments was partially offset by the effect of a higher mix of smaller boat sales and the absence of sales from the Sealine brand, which was divested on Aug. 30, 2011. Higher sales and lower restructuring, exit and impairment charges had a positive effect on the segment’s improved quarterly results.

Fitness Segment
The Fitness segment is comprised of the Life Fitness Division, which designs, manufactures, and sells Life Fitness and Hammer Strength fitness equipment. Fitness segment sales in the first quarter of 2012 totaled $157.1 million, up slightly from $156.4 million in the first quarter of 2011.

International sales, which represented 48 percent of total segment sales in the quarter, decreased by 13 percent. For the quarter, the Fitness segment reported operating earnings of $23.7 million. This compares with operating earnings of $23.4 million in the first quarter of 2011.
 
Sales increased slightly when compared with the prior year’s first quarter, despite commercial equipment sales and operating earnings benefiting from a large order from one of its customer categories in the first quarter of 2011. Operating earnings increased by one percent in the first quarter of 2012, when compared with 2011, as a result of the modest increase in revenues and reduced operating expenses.

Bowling & Billiards Segment
The Bowling & Billiards segment is comprised of Brunswick retail bowling centers, bowling equipment and products, and billiards tables and accessories. Segment sales in the first quarter of 2012 totaled $89.9 million, up 3 percent compared with $87.3 million in the year-ago quarter.

International sales, which represented 19 percent of total segment sales in the quarter, decreased by 5 percent. For the quarter, the segment reported operating earnings of $14.4 million, compared with operating earnings of $14.2 million in the first quarter of 2011.
For the quarter, bowling products experienced a solid increase in sales, while equivalent-center sales for retail bowling were down slightly. The improvement in operating earnings in the first quarter of 2012, when compared with 2011, reflects contributions from higher sales.

Outlook
“On the basis of our solid performance in the first quarter, and early season improvements in the retail marine marketplace, we are increasing our 2012 earnings per share expectation to a range of $1.30 to $1.50 per diluted share,” said McCoy, noting growing U.S. retail demand and strong growth in the aluminum and fiberglass outboard product categories. “Although a number of the factors that negatively affected sales and earnings in the first quarter will continue into the second, we are planning for significant sales and earnings growth in the second half of this year.

“Each of our business segments will continue to concentrate their efforts on maintaining a favorable cost position and generating growth through market share gains and the execution of organic growth initiatives. In addition, our 2012 plan continues to reflect the generation of positive free cash flow, the further reduction of debt outstanding and improvements to the funded status of our pension liabilities.

“Our outlook beyond 2012 remains consistent with the growth plans we described during our February 16, 2012, investor event. Over the next few years, these plans build on our recent financial progress, and further anticipate the successful execution of our various operational and capital structure strategic initiatives,” McCoy concluded.