Brunswick Boat Group reported revenues of US$1.98 billion for its 2023 fiscal year.
Feb 6, 2024
Boat and engine builder’s fourth quarter and full year financials don’t match record 2022 numbers, but come surprisingly close in a soft market
By Craig Ritchie
Financial analysts were watching carefully last week as Brunswick Corp released its 2023 fourth quarter and full year financial results, eager to see how the world’s largest boat builder held up in a market kneecapped by inflationary pressures and interest rate hikes.
Everyone knew the numbers would be down – 2022 was, after all, an all-time record year for the parent to Mercury, Sea Ray, Boston Whaler and near 60 other major boat and equipment brands. But what no one saw coming was Brunswick reporting the second-highest sales and adjusted earnings per share in its history.
Yet that’s precisely what it did. For the fourth quarter of its 2023 fiscal year, Brunswick reported net sales of US$1.31 billion, a figure 14% behind the record $1.58 billion in net sales it generated in the fourth quarter of 2022.
By segment, Brunswick’s propulsion business reported sales of $590.7 million, down 12% from the fourth quarter of FY2022, while engine parts and accessories revenues dipped by 1% to $237.7 million. Sales for Navico Group came in at $196.2 million for a 17% year-over-year decrease, while Brunswick Boat Group posted revenues of $424.8 million to end the quarter 22% behind the previous fourth quarter. Most of that decline was in entry-level products, as sales of premium saltwater products actually grew by 5% compared to the previous fourth quarter.
The inflationary pressures and higher interest rates that impacted boat buyers also impacted Brunswick, of course, leading to higher selling, general and administrative expenses. While these were offset in part by a lower cost of sales reflecting lower volumes, the result was operating earnings of $108.3 million for the fourth quarter, some 43% below the $191.6m reported one year earlier. Net earnings of $60.9 million were down 57% from the year before.
Remember again, that’s compared against the all-time high water mark.
For its full 2023 fiscal year Brunswick reported consolidated net sales of $6.40 billion, falling just 6% behind the record $6.81 billion it earned in 2022.
Broken down by segment, full year revenues included by segment, net sales of $2.76 billion for Brunswick’s propulsion segment, representing a mere 2% decrease from the record $2.82 billion reported one year ago. Engine parts and accessories revenues of $1.19 billion came in 8% below the $1.31 billion earned in 2022, while Navico Group revenues of $914.7 million trailed the $1.06 billion reported for 2022 by 14%. Brunswick Boat Group revenues of $1.98 billion were just 6% behind the $2.1 billion for the 2022 fiscal year.
Increases in expenses reflecting inflationary pressures and higher interest rates led to operating earnings for the year of $734.9 million, compared against operating earnings of $947.8 million in 2022. The company finished the year with net earnings of $420.4 million, compared against $677 million for the prior fiscal year.
Those numbers are definitely respectable, but they don’t tell the full story.
“Brunswick delivered another successful year in which we achieved the second-highest sales and adjusted EPS in company history, despite market headwinds,” said Brunswick CEO, David Foulkes. “We also continued to gain market share, increase our operational efficiency, launch exceptional new products, actively control costs and progress our strategic initiatives, including our ACES strategy.
“Mercury Marine continued to capture solid market share, with full‐year US outboard retail share up 50 basis points versus prior year. 2023 US new boat market unit retail sales are anticipated to finish in line with our estimates of down mid‐ to high‐single‐digits, with Brunswick brands outperforming the market in many segments. And as we moved out of the core 2023 retail selling season, we worked closely with our marine channel partners to actively manage boat field inventory levels. We closed the year with 36.7 weeks on hand in the US, which is in‐line with our target and with historical norms.”
Foulkes added that early signs through the winter boat show season offer hope for a stronger 2024.
“Overall boat retail sales are trending slightly above 2023, but unit sales in the month of January are always a small contribution to the year,” he said. “Global early‐season boat shows are generally encouraging, with good traffic, interested buyers, and healthy lead generation. Normalized inventory levels are allowing consumers to shop for the models of their choice, and incentives continue to be important in stimulating interest and assisting dealers in closing sales.”
So what lies ahead for 2024? Foulkes said the company maintains a cautious outlook for the year ahead, anticipating retail unit sales to be roughly flat to 2023 levels and net sales of between $6.0 billion and $6.2 billion. First-quarter revenues for Brunswick are expected to fall in the range of $1.3 billion to $1.4 billion.
“2024 has the potential to be a year of steadily easing financial conditions and while we enter the year with a cautious outlook, particularly in the first quarter, we have already launched more than 15 new products across our businesses,” said Foulkes. “We are extremely pleased with the enormous excitement generated by Brunswick’s presence at CES in early January, and at the early-season boat shows including the positive momentum coming out of the Düsseldorf, Toronto and Minneapolis Boat Shows, all of which positions us well entering 2024.”
Brunswick will look to further secure its position for 2024 with the introduction of five new Bayliner Trophy models designed to compete on affordability.
The company’s all-new Trophy Pilothouse and Explorer lines – to be formally launched at the Miami International Boat Show – are based on existing models from Brunswick’s Quicksilver boat brand sold in Europe. That includes two fishing-focused pilothouse models in 23 foot and 25 foot lengths, along with 23 foot, 25 foot and 29 foot Explorer models with larger cabins and additional, family-friendly features.