Yahoo Finance Brunswick Corp (BC) (Q1 2024) Earnings Call Transcript Highlights: Navigating Market Challenges ...
Net Sales: $1.4 billion in Q1 2024.
Adjusted Earnings Per Share (EPS): $1.35.
U.S. Outboard Market Share: Increased by 200 basis points.
Debt Issuance: $400 million for refinancing near-term debt.
Inventory Levels: 36.1 weeks on hand in the U.S., aligned with historical norms.
Freedom Boat Club: Expanded to 413 worldwide locations; mid-single-digit percent sales increase.
Global Revenue Decline: 22% on a constant currency basis, excluding acquisitions.
U.S. Retail Performance: New boat unit sales declined 9% in Q1 versus prior year.
Adjusted Operating Expenses: Decreased by $11 million versus Q1 2023.
Free Cash Flow: Performed better than anticipated.
Dividend: Increased by 5% to $1.68 for the full year.
Share Repurchases: Anticipated spending of $250 million throughout the year.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Could you elaborate on the visibility today that you have in the second quarter relative to the back half wholesale orders? A: (David M. Foulkes - CEO & Director, Brunswick Corporation) Visibility is less for value product and more for premium product. For larger products like premium boats, orders are already strong for Q3 as these take longer to build. The main drivers are retailers not wanting to hold more current model year inventory than necessary before the model year changeover in June, due to the need for additional discounting on older models.
Q: Have you seen any change on the credit side, whether it's the creditworthiness of customers coming in? A: (David M. Foulkes - CEO & Director, Brunswick Corporation) People with high credit scores are returning to the market and financing more than in recent periods. There hasn't been any significant tightening of credit recently; the environment has been relatively stable for the last six months.
Q: What are you doing to address affordability in your model year '25 product line? A: (David M. Foulkes - CEO & Director, Brunswick Corporation) Brunswick is controlling base content to potentially add more accessible options. The broad product line already allows various entry points for consumers, from very affordable to premium models. Adjustments might be made to base content to introduce more accessible options without significantly impacting resale value.
Q: What is driving the cautious OEM build schedules and how are you managing costs to offset related absorption headwinds? A: (Ryan M. Gwillim - EVP, CFO & Chief Strategy Officer, Brunswick Corporation) The caution is due to retailers managing current model year inventory ahead of the model year changeover. Brunswick has taken $11 million of OpEx out versus the same quarter last year across all business units, focusing on both manageable costs and maintaining strong gross margins.
Q: How does the flattish U.S. marine industry outlook for this year reconcile with Q1 being down 10%? A: (David M. Foulkes - CEO & Director, Brunswick Corporation) The expectation does not necessarily anticipate multiple rate hikes. Factors like weather and macroeconomic clarity could influence consumer behavior positively. Transaction prices are being managed through targeted discounting and promotions, particularly on value product lines.
Q: What are your expectations for the Freedom Boat Club's growth and its impact on traditional boat sales? A: (David M. Foulkes - CEO & Director, Brunswick Corporation) Freedom Boat Club is expected to continue solid growth through the year, benefiting from not being subject to the cumulative inflation impact and higher interest rates affecting new boat purchases. It's unclear if members are deferring boat purchases for membership, but the club directs members interested in purchasing to Brunswick brands.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
