BRUNSWICK CORPORATION FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Brunswick Corporation, a large accelerated filer, reported its quarterly financial results for the period ended March 29, 2025. The company’s net sales increased by 10% to $1.43 billion, driven by growth in its Marine and Fitness segments. Net income rose to $143 million, or $2.17 per diluted share, compared to $123 million, or $1.86 per diluted share, in the same period last year. The company’s gross margin expanded by 120 basis points to 34.1%, while operating margin increased by 140 basis points to 14.1%. Brunswick’s cash and cash equivalents totaled $1.23 billion, and its debt-to-equity ratio was 0.43. The company did not repurchase any shares during the quarter.
Overview
Net Sales Decreased 11 Percent in the First Quarter of 2025
- Net sales decreased 11 percent during the first quarter of 2025 compared to the first quarter of 2024. This was primarily due to the impact of continued lower wholesale ordering by dealers and OEMs, as well as prudent pipeline management throughout the channel.
- The Propulsion segment delivered sequentially improved sales and operating earnings versus the fourth quarter of 2024, although below first quarter 2024 levels.
- The Engine Parts and Accessories (Engine P&A) segment had another strong quarter, with solid year-over-year operating earnings and operating margin growth despite slightly lower sales.
- The Navico Group segment had flat sales and slightly lower operating earnings versus the first quarter of 2024, as aftermarket sales to dealers and retailers remained strong but OEM orders were pressured.
- The Boat segment had sales and operating earnings below the first quarter of 2024, consistent with lower planned wholesale shipments, but sales grew mid-single digits versus the fourth quarter of 2024.
Operating Earnings Decreased 49 Percent in the First Quarter of 2025
- Operating earnings in the first quarter of 2025 were $56.3 million on a GAAP basis, compared to $110.6 million in the first quarter of 2024, a decrease of 49 percent.
- The decrease in operating earnings was due to the impact of lower sales, lower absorption from decreased production levels, and negative foreign currency exchange rate impacts, partially offset by new product momentum, annual price increases, and ongoing cost control measures.
- Net earnings from continuing operations and diluted earnings per common share from continuing operations also decreased significantly compared to the prior year period.
Matters Affecting Comparability
- Changes in foreign currency exchange rates had a 1.3 percent negative impact on net sales in the first quarter of 2025.
- Acquisitions had a 0.2 percent positive impact on net sales in the first quarter of 2025.
Consolidated Results
- Gross margin decreased 250 basis points in the first quarter of 2025 compared to the prior year period, driven by lower absorption, increased warranty costs, and foreign currency impacts, partially offset by favorable labor costs and acquisitions.
- Selling, general and administrative expense as a percentage of net sales increased 210 basis points due to lower sales.
- Restructuring, exit and impairment charges decreased significantly in the first quarter of 2025 compared to the prior year.
- Net interest expense increased due to higher average debt outstanding.
- The effective tax rate increased to 28.1 percent in the first quarter of 2025 compared to 21.4 percent in the prior year period.
