NEW YORK - Shares of Brunswick Corporation (NYSE:BC) fell 4.4% as the company reported second-quarter earnings and revenue that missed Wall Street expectations and slashed its outlook for the rest of the year.
The manufacturer of marine engines and boats cited high interest rates and a challenging macroeconomic environment as key factors impacting consumer spending and dealer ordering patterns.
For the second quarter, Brunswick posted adjusted earnings per share (EPS) of $1.80, falling short of the analyst consensus of $1.89. Revenue also came in lower than expected at $1.44 billion, compared to the anticipated $1.55 billion. Compared to the same quarter last year, the company's net sales decreased by approximately 15%, from $1.70 billion in the second quarter of 2023.
CEO David Foulkes highlighted the pressures on the boating industry, noting slower retail sales and increased discounting as primary challenges. Despite these headwinds, the company's engine parts and accessories segment reported a 2% increase in sales, and its propulsion business continued to gain market share in the U.S. outboard market.
Looking ahead, Brunswick's guidance for the third quarter is significantly below analyst estimates. The company expects Q3 EPS to range between $1.15 and $1.25, compared with the consensus of $2.24, and forecasts sales between $1.2 billion and $1.3 billion, well below the expected $1.62 billion.
For the full year, Brunswick anticipates EPS between $5.00 and $5.50 on sales of $5.2 to $5.4 billion, compared to the consensus estimates of $7.13 EPS on $5.96 billion in sales.
The revised full-year guidance reflects an anticipated decrease in boat unit inventory by approximately 7% compared to the previous year, as the company aims to align inventory levels with market demand.
Foulkes expressed confidence in the resilience of Brunswick's recurring revenue businesses, such as the engine parts and accessories business and Freedom Boat Club, to support the company through the remainder of the challenging fiscal year.
Despite the downturn in the stock following the earnings release, Brunswick remains committed to its strategic plan and long-term growth initiatives, aiming to leverage new product launches and manage inventory levels effectively.
The company's focus on cost control measures and strong cash flow generation allowed for $170 million in share repurchases year-to-date, underscoring its dedication to shareholder value.
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