Boaters marooned by coronavirus sap Brunswick's summer inventory

First-time buyers and lapsed boaters accounted for half of new vessel sales

Brunswick Corp.'s boat stockpiles were wiped out as the COVID-19 pandemic spurred a surge in demand at the same time factories were closed to help slow the spread of the virus.

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The conditions caused a 34 percent decline in boat inventory and left the Lake Forest, Illinois-based leisure products manufacturer with the lowest mid-season levels in almost 20 years.

The company's second-quarter net sales fell 15.1 percent year-over-year to $987.8 million, outpacing the $807.28 million that analysts surveyed by Refintiv were expecting. Adjusted earnings of 99 cents per share topped estimates of 45 cents.

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BCBRUNSWICK CORP.76.20+0.13+0.17%

“Demand in the U.S. retail marine market accelerated into May and June, resulting in robust new boat and engine sales, with sales to first-time purchasers or returning lapsed boaters representing approximately half of new boat sales,” CEO David Foulkes said in a statement. “All our businesses outperformed our expectations in the quarter.”

Brunswick's boat segment revenue tumbled 32 percent to $249.9 million as COVID-19 lockdowns snarled production in April and the ramp-up in May. The company's Freedom Boat Club exceeded company expectations by adding more than 4,600 memberships during the quarter and contributing 2 percent of revenue.

Revenue from the propulsion segment slumped 14 percent to $395.4 million as strong demand was curtailed by suspended production.

The company's parts and accessories unit saw revenue slip 5.7 percent to $386.6 million as strong demand in its distribution business was offset by weakness in other units.

Brunswick ended the quarter with $553.9 million cash and marketable securities, up $221.2 million from a year ago. The increase was mostly due to the company accessing a credit facility as a precaution.

Looking ahead, Brunswick sees second-half revenue and operating earnings outpacing performance from the same period last year amid steady performance from its parts and accessories business and higher output from its propulsion and boat segments.

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Shares were up 21 percent year-to-date through Wednesday, outperforming the S&P 500's 0.85 percent advance.