Offshoreonly.com - Brunswick/Mercury earnings

The Marine Engine segment, consisting of the Mercury Marine Group, reported sales of $426.2 million in the third quarter of 2002, up 12 percent compared with $380.7 million in the year-ago third quarter. Operating earnings in the third quarter rose 41 percent to $51.7 million versus $36.7 million a year ago. Operating margins improved to 12.1 percent compared with 9.6 percent in the third quarter of 2001.

"Sales were up across the board with a particularly strong performance coming from domestic outboard and sterndrive engines. The increase was primarily due to customers restocking their inventories at more normal rates than in the year-ago quarter when they were limiting their purchases and meeting retail demand by selling out of inventory. Despite this pick up in wholesale shipments, however, they were still below depressed retail sales levels, thus lowering field inventories. Consequently, inventory in the field currently represents about 17 weeks of supply compared with 21 weeks at the same time a year ago," Buckley explained.

"Higher volumes helped drive the improvement in operating earnings and margins, offsetting the shift in product mix to low-emission outboard engines," Buckley commented.

Boat Segment

The Brunswick Boat Group comprises the Boat segment and includes the Sea Ray, Bayliner, Maxum, Hatteras, Sealine, Meridian, Baja, Boston Whaler, Trophy and Princecraft boat brands. The Boat segment reported sales for the third quarter of $333.9 million, up 10 percent compared with $304.1 million in the year-ago third quarter. Operating earnings totaled $0.2 million, down from $1.1 million. Operating margins in the third quarter were 0.1 percent versus 0.4 percent a year ago.

"The sales gain was driven primarily by the acquisition of Hatteras Yachts, which was not in the year-ago quarter. Absent the acquisition, sales for the Boat segment were up slightly with growth in smaller boats offsetting continued weakness in larger boat sales. We've continued our efforts to reduce inventories, both our own as well as those of our dealers. Excluding Hatteras, our Boat segment inventories are down 16 percent versus a year ago. Field inventories currently represent about 20 weeks of supply compared with 27 weeks at this time a year ago," Buckley said.

"The Boat segment's operating performance was adversely affected by costs associated with the reinvention of our US Marine division, which had an operating loss of about $7 million in the quarter. We continue to make progress toward improving the operating performance of this unit while moving ahead on the new product front," Buckley continued. "During the quarter, we launched a new line of yachts under the Meridian brand. We are currently offering seven models ranging from 34 to 58 feet including pilothouse, sedan and aft cabin configurations. We believe this line fills the needs of those boaters who spend more time on the water than at the dock. We're also seeing continued success with our Bayliner 175, our 17-foot entry-level runabout that features a boat, engine and trailer package with an MSRP of $9,995. We're still in the position of demand exceeding our ability to produce these boats as the response from our dealers and consumers has been overwhelming."