Brunswick(BC)2021-05-01 15:36Financial Data and Key Metrics Changes - First quarter net sales increased by 48% year-over-year, with operating earnings on an adjusted basis rising by 116% [22][23] - Adjusted operating margins reached 17%, and adjusted EPS was 23 million, significantly improved from 159 million in Q1 2019 [22][23] Business Line Data and Key Metrics Changes - Propulsion business revenue increased by 47%, benefiting from strong demand and market share gains across all customer channels [23][24] - Parts and Accessories segment revenues rose by 52%, with adjusted operating earnings up by 83% [24][25] - Boat segment sales increased by 44%, achieving adjusted operating leverage of 31% and margins of 10.9% [26][27] Market Data and Key Metrics Changes - International sales were up 42%, while U.S. sales increased by 47% [19] - The main powerboat segments reported retail gains of 34% in the first quarter, with outboard engine unit registrations up by 21% [20][21] - Retail demand remains strong, with dealer orders received with customer names attached approximately three times higher than the same time last year [21] Company Strategy and Development Direction - The company aims to satisfy outboard engine demand and expand market share, particularly in dealer and international channels [33] - Focus on optimizing the global operating model in the Parts and Accessories segment, leveraging advanced battery technology and digital systems [33] - The Boat segment will continue to improve operational excellence and launch new products while refilling pipelines in a robust retail environment [34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to perform well for the rest of the year, citing robust consumer demand and operational execution [32] - The company anticipates U.S. Marine industry retail unit demand to grow mid to high-single-digit percent versus 2020 [28] - Despite challenges in supply chain and labor conditions, the company has managed to keep production plans on track [17][18] Other Important Information - The company has been recognized by Forbes as one of the Best Employers for Diversity for the second consecutive year [9] - The 2020 Sustainability Report highlighted the lowest recordable incident rate in company history [10] - The company plans to spend 270 million on capital expenditures to support growth initiatives [31] Q&A Session Summary Question: How did the company achieve significant production increases in Q1? - Management attributed the production increase to hiring 1,000 new employees and ramping up production across all businesses, mitigating supply chain disruptions [40][41] Question: How sustainable are the margin expansions? - Management believes margins are sustainable due to increased volume, fixed cost management, and new product introductions at higher gross margins [42][44][45] Question: What is the retail market outlook as the company moves through April? - Retail demand remains strong, with early season starts in northern markets driving significant sales [49] Question: What is the strategy regarding Freedom Boat Club acquisitions? - The company selectively repurchases territories with high growth potential and is successfully integrating Brunswick boats into the Freedom fleet [56][57] Question: How does the company view the marine market outlook with low inventories? - Management believes the unconstrained retail market potential is double-digits, but acknowledges supply constraints will impact inventory levels [62] Question: What are the plans for capital deployment and M&A? - The company plans to maintain share repurchases and debt repayments while remaining flexible for larger M&A opportunities [66]