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Boat and marine manufacturer Brunswick (NYSE:BC) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 21.7% year on year to $1.37 billion. On the other hand, next quarter's revenue guidance of $1.55 billion was less impressive, coming in 3.5% below analysts' estimates. It made a non-GAAP profit of $1.35 per share, down from its profit of $2.57 per share in the same quarter last year.
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Brunswick (BC) Q1 CY2024 Highlights:
- Revenue: $1.37 billion vs analyst estimates of $1.37 billion (small miss)
- EPS (non-GAAP): $1.35 vs analyst estimates of $1.35 (small beat)
- Revenue Guidance for Q2 CY2024 is $1.55 billion at the midpoint, below analyst estimates of $1.61 billion
- EPS (non-GAAP) Guidance for Q2 CY2024 is $1.95 at the midpoint, below analyst estimates of $2.04
- The company reconfirmed its revenue guidance for the full year of $6.1 billion at the midpoint
- Gross Margin (GAAP): 27.4%, down from 29% in the same quarter last year
- Free Cash Flow was -$204.5 million, down from $227.1 million in the previous quarter
- Market Capitalization: $5.85 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 GrowthReviewing a company's long-term performance can reveal insights into its business quality. Any business can have short-term success, but a top-tier one sustains growth for years. Brunswick's annualized revenue growth rate of 7.5% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Brunswick's recent history shines a dimmer light on the company as its revenue was flat over the last two years.
This quarter, Brunswick reported a rather uninspiring 21.7% year-on-year revenue decline to $1.37 billion of revenue, in line with Wall Street's estimates. The company is guiding for a 8.9% year-on-year revenue decline next quarter to $1.55 billion, a deceleration from the 7.3% year-on-year decrease it recorded in the same quarter last year. Looking ahead, Wall Street expects sales to grow 3.6% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf 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.
Over the last two years, Brunswick has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 5.3%, subpar for a consumer discretionary business.
Brunswick burned through $204.5 million of cash in Q1, equivalent to a negative 15% margin, reducing its cash burn by 87.1% year on year.
Key Takeaways from Brunswick's Q1 ResultsIt was good to see Brunswick's full-year revenue forecast beat analysts' expectations. We were also glad its full-year earnings guidance exceeded Wall Street's estimates. On the other hand, its operating margin missed and its revenue guidance for next quarter came in slightly below Wall Street's estimates. Overall, this was a mediocre quarter for Brunswick. The company is down 2.4% on the results and currently trades at $84 per share.