Record Q1 revenues for Brunswick

Net sales exceeding US$1.7bn and adjusted earnings of $262m highlight strong first quarter for world’s largest marine company

Illinois, US-based Brunswick Corp released its 2023 first-quarter financial results on Thursday reporting record revenues exceeding US$1.7bn driven in part by strong winter boat show results. For the quarter ended April 2, 2023, Brunswick reported net sales of $1.74bn, representing a 3% year-over-year increase above revenues of $1.69bn earned in the first quarter of FY2022.

A 2% increase in COGS – to $1.23bn – and a 10% increase in selling, general and administrative expenses resulted in operating earnings of $262m, for a 2% YoY decline from earnings of $268m reported for the previous first quarter. Adjusted operating margin of 15% was down by 80 basis points from the prior Q1 and was attributed to higher costs and unfavourable currency exchange.

Diluted EPS for the quarter was $2.57 on an adjusted basis, up by 2% from the $2.53 reported for Q1 2022. The company also reported significant gains in free cash flow, improving 55% versus first quarter in 2022 driven by working capital improvements across the business.

Reporting by segment, Brunswick’s propulsion system earned first-quarter revenues of $751.6m for a 7% YoY increase. Operating margin of 20.1% was up 230 basis points compared to the prior Q1, while operating earnings of $151.1m larked a 21% YoY gain.

Brunswick’s engine P&A segment earned Q1 revenues of $288.6m for a 13% YoY decline compared against FY2022 but a 35% increase over 2019 figures. A 1% increase in US sales was offset by lower international revenues, leading to a 21% decline in operating earnings to $48.5m.

Navico Group performance was similar to that of the engine P&A Group, with revenues down 11% YoY. OEM sales to boat builders were flat to a historic 2022 Q1, with aftermarket channels down approximately 11%.

Brunswick’s boat segment enjoyed a strong first quarter with a 17% YoY increase in net sales to $575.2m, an 80 basis point gain in operating margin to 10.6%, and a 27% gain in adjusted operating earnings to $61.1m.

This marks the fourth consecutive quarter of double-digit operating margins for the boat group. Looking forward, Brunswick anticipated second quarter earnings to be flat or slightly improved compared to Q1, and no change to its previously released guidance calling for full year revenues in the range of $6.8bn to $7.2bn.

“Our businesses had a strong start to the year, as continued outstanding new products, and prudent cost management in environment resulted in sales, margin, and EPS performance that exceeded expectations for the quarter,” said Brunswick CEO, David Foulkes. “Our propulsion business delivered exceptional results, with increased high-horsepower outboard engine production, enabled by the recent capacity expansion, allowing us to increase shipments to many international customers and OEM partners.

Our engine parts and accessories businesses delivered a steady quarter, but as expected, saw sales and earnings declines versus the record first quarter of 2022, although sales were up 35% versus first quarter of 2019. As anticipated, Navico Group had a challenging start to the quarter, with lower sales into the retail channel and unfavourable foreign currency exchange rates leading to top-line declines early in the quarter but with notable improvement in March.

And our boat business posted robust top-line and earnings growth, with double-digit adjusted operating margins for the fourth consecutive quarter.” Foulkes noted that a strong winter boat show season saw Brunswick continue to gain share in its Mercury outboard engine business, while new model introductions and the full operation of its second Boston Whaler production facility helped drive boat group revenues.

“Boat field inventory is at an appropriate level in most categories going into the core retail season, and we exited the first quarter with 21,500 global pipeline units”

– Brunswick Corp CEO, David Foulkes

“Our business continued to leverage our investments in new products, technology, and innovation across the enterprise – high‐horsepower outboard manufacturing capacity and premium boat manufacturing capacity – while taking significant actions to reduce structural costs in a macro‐economic environment that continues to be challenging,” said Foulkes. ''Boat field inventory is at an appropriate level in most categories going into the core retail season, and we exited the first quarter with 21,500 global pipeline units''. Our boat and engine production levels finished above prior year, despite some supply chain challenges.”