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Boat and marine manufacturer Brunswick (NYSE:BC) missed analysts' expectations in Q2 CY2024, with revenue down 15.2% year on year to $1.44 billion. Next quarter's revenue guidance of $1.25 billion also underwhelmed, coming in 21% below analysts' estimates. It made a non-GAAP profit of $1.80 per share, down from its profit of $2.35 per share in the same quarter last year.
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Brunswick (BC) Q2 CY2024 Highlights:
- Revenue: $1.44 billion vs analyst estimates of $1.55 billion (6.9% miss)
- EPS (non-GAAP): $1.80 vs analyst expectations of $1.90 (5.4% miss)
- Revenue Guidance for Q3 CY2024 is $1.25 billion at the midpoint, below analyst estimates of $1.58 billion
- The company dropped its revenue guidance for the full year from $6.1 billion to $5.3 billion at the midpoint, a 13.1% decrease
- EPS (non-GAAP) Guidance for Q3 CY2024 is $1.20 at the midpoint, below analyst estimates of $2.20
- Gross Margin (GAAP): 27.1%, down from 27.7% in the same quarter last year
- Free Cash Flow of $172.3 million is up from -$207.4 million in the previous quarter
- Market Capitalization: $4.97 billion
Leisure ProductsLeisure products cover a wide range of goods in the consumer discretionary sector. Maintaining a strong brand is key to success, and those who differentiate themselves will enjoy customer loyalty and pricing power while those who don’t may find themselves in precarious positions due to the non-essential nature of their offerings.
Sales GrowthA company's long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last five years, Brunswick grew its sales at a weak 6.5% compounded annual growth rate. This shows it failed to expand in any major way and is a rough starting point for our analysis.
Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Brunswick's history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5% annually.
This quarter, Brunswick missed Wall Street's estimates and reported a rather uninspiring 15.2% year-on-year revenue decline, generating $1.44 billion of revenue. The company is guiding for a 21.6% year-on-year revenue decline next quarter to $1.25 billion, a deceleration from the 6.2% year-on-year decrease it recorded in the same quarter last year. Looking ahead, Wall Street expects sales to grow 7.7% over the next 12 months, an acceleration from this quarter.
Cash Is King If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Brunswick has shown weak cash profitability over the last two years, putting it in a pinch as it gave the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin averaged 5.3%, subpar for a consumer discretionary business.
Brunswick's free cash flow clocked in at $172.3 million in Q2, equivalent to a 11.9% margin. This quarter's margin was in line with the comparable period last year.
Key Takeaways from Brunswick's Q2 Results We struggled to find many positives in these results. Its revenue and EPS fell short of analysts' estimates and it lowered its full-year guidance for both metrics. Overall, this quarter shows the business is facing some headwinds. The stock traded down 4.4% to $70.26 immediately following the results.
