Brunswick Corp. Reports Operating Results (10-Q)
Brunswick Corp has a market cap of $2.38 billion; its shares were traded at around $24.87 with a P/E ratio of 22 and P/S ratio of 0.6. The dividend yield of Brunswick Corp stocks is 0.2%.
Highlight of Business Operations:Operating earnings in the first quarter of 2012 were $67.6 million, with an operating margin of 6.9 percent. These results included $0.2 million of restructuring, exit and impairment charges recorded during the first quarter of 2012. In the three months ended April 2, 2011, the Company recorded quarterly operating earnings of $67.0 million, with an operating margin of 6.8 percent, which included restructuring, exit and impairment charges of $5.3 million. The improvement in operating earnings during the first quarter of 2012 when compared with the first quarter of 2011 included the benefits of lower restructuring, exit and impairment charges, lower variable compensation expense, successful cost-reduction efforts, lower depreciation and reduced pension expense. These items were almost fully offset by lower marine sales resulting from sterndrive ramp-up issues following recently completed plant consolidation activities in the Company's Marine Engine segment, as well as the absence of favorable gains and recoveries in the Marine Engine segment impacting operating earnings in the first quarter of 2011 and increasing company-wide investments in growth initiatives during the first quarter of 2012.
Restructuring, exit and impairment charges. The Company implemented initiatives to improve its cost structure, better utilize overall capacity and improve general operating efficiencies. During the first quarter of 2012, the Company recorded a charge of $0.2 million related to these restructuring activities as compared with $5.3 million in the first quarter of 2011. Included in the first quarter of 2012 and 2011 restructuring, exit and impairment charges are gains on the sales of certain Boat segment facilities of $1.3 million and $0.4 million, respectively. See Note 2 – Restructuring Activities in the Notes to Condensed Consolidated Financial Statements for further details.
In the first quarter of 2011, net cash used for operating activities totaled $83.1 million. The primary driver of the cash used for operating activities was a seasonal increase in working capital. Accounts and notes receivable increased $147.5 million during the first quarter of 2011, due primarily to increased sales in the Marine Engine, Boat and Fitness segments. Net inventories increased $23.3 million during the three months ended April 2, 2011, due mostly to increased production in advance of the marine selling season. The decrease in Accrued expenses of $49.2 million during the first quarter of 2011 was driven primarily by the payment of the prior year's variable compensation which had been accrued as of December 31, 2010. Partially offsetting these items was an increase in Accounts Payable of $51.1 million, which was a result of increased production in the Company's Marine Engine and Boat segments. Further offsetting the cash used by operating activities was earnings adjusted for non-cash expenses.
Net cash used for investing activities during the three months ended April 2, 2011, totaled $20.1 million, which included capital expenditures of $13.2 million. The Company is focusing its capital spending on high priority, profit-maintaining investments and investments required to reduce operating costs or for new product introductions. The Company also used cash to make net purchases of marketable securities of $19.7 million. See Note 10 - Investments in Notes to Condensed Consolidated Financial Statements for further discussion. Partially offsetting the use of cash for investing activities was $10.4 million in proceeds from the sale of property, plant and equipment in the normal course of business, including a Marine Engine distribution facility in Australia.
Cash, cash equivalents and marketable securities totaled $426.9 million as of March 31, 2012, a decrease of $80.9 million from $507.8 million as of December 31, 2011, and a decrease of $121.8 million from $548.7 million as of April 2, 2011. Total debt as of March 31, 2012, December 31, 2011, and April 2, 2011 was $696.0 million, $692.8 million and $811.7 million, respectively. As a result, the Company's Net debt increased to $269.1 million as of March 31, 2012, from $185.0 million at December 31, 2011, and from $263.0 million as of April 2, 2011. The Company's debt-to-capitalization ratio decreased to 89.4 percent as of March 31, 2012, from 95.7 percent as of December 31, 2011 due primarily to the effect of earnings on Shareholders' equity. The Company's debt-to-capitalization ratio of 89.4 percent as of March 31, 2012, increased in the first quarter of 2012 from 86.8 percent as of April 2, 2011, mainly resulting from a decline in shareholders' equity caused by higher Accumulated other comprehensive losses resulting from the remeasurement of the Company's defined benefit plan obligations at December 31, 2011, partially offset by earnings and reduced debt levels.
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