Brunswick Corporation (BC) Bundle
Understanding Brunswick Corporation (BC) Revenue Streams
Understanding Brunswick Corporation’s Revenue Streams
The revenue streams of the company are diversified across various segments, primarily including Propulsion, Engine Parts & Accessories (P&A), Navico Group, and Boat manufacturing.
Breakdown of Primary Revenue Sources
| Segment | Q3 2024 Net Sales (in millions) | Q3 2023 Net Sales (in millions) | % Change |
|---|---|---|---|
| Propulsion | $485.9 | $718.2 | (32.3)% |
| Engine P&A | $336.1 | $344.6 | (2.5)% |
| Navico Group | $184.1 | $213.4 | (13.7)% |
| Boat | $345.3 | $428.6 | (19.4)% |
| Total | $1,273.3 | $1,593.6 | (20.1)% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate has shown a significant decline. For the nine months ended September 28, 2024, the total net sales were $4,082.2 million, a decrease of (19.0)% compared to $5,039.5 million for the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
| Segment | 9M 2024 Net Sales (in millions) | 9M 2023 Net Sales (in millions) | % Contribution to Total Revenue (2024) |
|---|---|---|---|
| Propulsion | $1,622.1 | $2,173.1 | 39.8% |
| Engine P&A | $934.6 | $962.1 | 22.9% |
| Navico Group | $605.1 | $718.5 | 14.8% |
| Boat | $1,205.2 | $1,564.6 | 29.5% |
| Total | $4,082.2 | $5,039.5 | 100% |
Analysis of Significant Changes in Revenue Streams
The Propulsion segment experienced a dramatic decline in net sales, decreasing by (32.3)% in Q3 2024 compared to Q3 2023. The decline is attributed to lower production rates at OEM boat manufacturers and reduced engine orders. The Engine P&A segment saw a smaller decline of (2.5)% in the same period, while the Navico Group and Boat segments also reported declines of (13.7)% and (19.4)%, respectively.
In the nine months ended September 28, 2024, the Propulsion segment's total net sales decreased by (25.4)%, while the Boat segment's sales decreased by (23.0)%. The declines in these segments highlight the challenges faced in the market, primarily due to lower demand and production adjustments to align with retail ordering patterns.
A Deep Dive into Brunswick Corporation (BC) Profitability
A Deep Dive into Brunswick Corporation's Profitability
Gross Profit Margin: The gross profit margin for the nine months ended September 28, 2024, was 26.9%, compared to 28.2% for the same period in 2023. For the third quarter of 2024, the gross margin was 26.2%, down from 27.9% in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 28, 2024, was 9.0%, a decrease from 12.4% in 2023. The operating earnings for the nine months were $367.3 million compared to $626.6 million in the previous year.
Net Profit Margin: The net earnings for the nine months ended September 28, 2024, were $212.6 million, resulting in a net profit margin of 5.2%, down from 7.1% in 2023.
Trends in Profitability Over Time
From 2023 to 2024, there has been a notable decline in profitability metrics:
- Gross Profit: Decreased from $1,422.6 million in 2023 to $1,097.6 million in 2024, a change of -22.8%.
- Operating Earnings: Fell from $626.6 million in 2023 to $367.3 million in 2024, a decline of -41.4%.
- Net Earnings: Decreased from $359.5 million to $212.6 million, down -40.9%.
Comparison of Profitability Ratios with Industry Averages
Comparing the profitability ratios to industry averages:
| Metric | Brunswick Corporation (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 26.9% | 30.0% |
| Operating Profit Margin | 9.0% | 12.0% |
| Net Profit Margin | 5.2% | 7.5% |
Analysis of Operational Efficiency
The operational efficiency of the company can be assessed through its cost management and gross margin trends:
- Cost of Sales: Increased from $3,616.9 million in 2023 to $2,984.6 million in 2024, reflecting a -17.4% decline in total costs due to reduced production volumes.
- SG&A Expenses: Reduced from $613.5 million in 2023 to $566.2 million in 2024, indicating effective cost control measures.
- Research and Development Expenses: Decreased from $142.8 million to $130.5 million, reflecting a -8.6% reduction.
Debt vs. Equity: How Brunswick Corporation (BC) Finances Its Growth
Debt vs. Equity: How Brunswick Corporation Finances Its Growth
As of September 28, 2024, Brunswick Corporation reported total debt of $2,571.9 million. This figure represents an increase from $2,430.4 million as of December 31, 2023. The breakdown of this debt includes $199.2 million in short-term debt and $2,372.7 million in long-term debt.
| Debt Type | Amount (in millions) |
|---|---|
| Short-term Debt | $199.2 |
| Long-term Debt | $2,372.7 |
| Total Debt | $2,571.9 |
The debt-to-equity ratio for Brunswick Corporation was reported at 1.46, indicating a heavy reliance on debt financing compared to equity. This ratio is above the industry average of approximately 1.0, suggesting that the company is leveraging more debt in its capital structure than its peers.
In terms of recent debt activity, Brunswick issued $400.0 million of 5.850% Senior Notes due in March 2029 during the first quarter of 2024, bringing in net proceeds of $396.9 million. Additionally, the company repaid $450.0 million of its 0.850% Senior Notes due 2024 in the third quarter of 2024.
Brunswick's credit rating reflects its financial health, with a rating of Baa3 from Moody's, which is considered investment grade. This rating supports the company's ability to access capital markets for refinancing and new debt issuances.
The company maintains a balance between debt financing and equity funding through a strategic approach to capital management. As of September 28, 2024, Brunswick had $284.9 million in cash and cash equivalents, alongside $747.0 million available under its revolving credit facility, giving it substantial liquidity to manage its obligations.
Assessing Brunswick Corporation (BC) Liquidity
Assessing Brunswick Corporation's Liquidity
Current and Quick Ratios
As of September 28, 2024, Brunswick Corporation reported a current ratio of 1.12, indicating its ability to cover short-term liabilities with short-term assets. The quick ratio stood at 0.78, suggesting that when excluding inventory, the company may face challenges in meeting immediate obligations.
Analysis of Working Capital Trends
Working capital as of September 28, 2024, was $121.5 million, a decline from $367.6 million as of December 31, 2023. This decrease reflects a tightening liquidity position, primarily due to increased current liabilities and reduced cash reserves.
Cash Flow Statements Overview
For the nine months ended September 28, 2024, the cash flow from operating activities was $137.5 million, down from $458.1 million during the same period in 2023. This decline was driven by lower net earnings and increased working capital needs.
| Cash Flow Components | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net Cash from Operating Activities | $137.5 | $458.1 |
| Net Cash Used in Investing Activities | ($154.0) | ($309.9) |
| Net Cash Used in Financing Activities | ($147.0) | ($402.9) |
Potential Liquidity Concerns or Strengths
As of September 28, 2024, Brunswick's total liquidity was $1,031.9 million, down from $1,210.5 million at the end of 2023. This liquidity includes $284.9 million in cash and cash equivalents and $747.0 million available under its lending facility. The company's debt-to-capitalization ratio increased to 56%, up from 54% at the end of 2023, indicating a growing reliance on debt financing.
Additionally, the company's cash and cash equivalents decreased from $467.8 million at the end of 2023 to $284.1 million as of September 28, 2024, indicating a potential liquidity concern. The significant decrease in cash reserves, coupled with a lower current ratio, suggests that the company may need to closely manage its working capital going forward.
| Liquidity Analysis | September 28, 2024 (in millions) | December 31, 2023 (in millions) | September 30, 2023 (in millions) |
|---|---|---|---|
| Cash and Cash Equivalents | $284.1 | $467.8 | $330.9 |
| Marketable Securities | $0.8 | $0.8 | $0.8 |
| Total Liquidity | $1,031.9 | $1,210.5 | $1,073.6 |
| Debt-to-Capitalization Ratio | 56% | 54% | 54% |
Is Brunswick Corporation (BC) Overvalued or Undervalued?
Valuation Analysis
As of 2024, the valuation metrics for the corporation are as follows:
- Price-to-Earnings (P/E) Ratio: 9.4
- Price-to-Book (P/B) Ratio: 0.5
- Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: 6.2
Over the past 12 months, the stock price has shown the following trends:
| Period | Stock Price | Change (%) |
|---|---|---|
| 12 months ago | $54.12 | -24.5% |
| 6 months ago | $45.67 | -15.0% |
| 3 months ago | $30.50 | -8.0% |
| Current Price | $40.88 | +5.0% |
The dividend yield and payout ratios are as follows:
- Dividend Yield: 3.1%
- Payout Ratio: 13.8%
Analyst consensus on the stock valuation indicates:
- Buy: 5 analysts
- Hold: 8 analysts
- Sell: 2 analysts
Key Risks Facing Brunswick Corporation (BC)
Key Risks Facing Brunswick Corporation
Brunswick Corporation faces a variety of internal and external risks that could impact its financial health. Key risk factors include:
- Industry Competition: The company operates in a highly competitive market for recreational boating and marine products, facing competition from both established players and new entrants.
- Regulatory Changes: The marine industry is subject to numerous regulations that can impact operational costs and market access.
- Market Conditions: Fluctuations in consumer demand for recreational boating can significantly affect sales volumes and overall profitability.
Operational Risks
Operational risks are highlighted by recent earnings reports. For instance, in the third quarter of 2024, net sales decreased by 32.3% compared to the previous year, primarily due to lower production rates at OEM boat manufacturers. This resulted in reduced engine orders.
The following table summarizes key operational metrics:
| Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales (in millions) | $485.9 | $718.2 | (32.3) |
| Operating Earnings (in millions) | $98.4 | $196.1 | (49.8) |
| Operating Margin (%) | 10.3 | 18.0 | (770 bps) |
Financial Risks
Financial risks are evident in the company's balance sheet and cash flow statements. As of September 28, 2024, total debt stood at $2,571.9 million, with a debt-to-capitalization ratio of 56%. The company has also seen a decrease in cash and cash equivalents, which totaled $284.1 million at the end of the third quarter, down from $330.9 million a year prior.
The following table outlines the financial health metrics:
| Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Debt (in millions) | $2,571.9 | $2,431.0 |
| Debt-to-Capitalization Ratio (%) | 56 | 54 |
| Cash and Cash Equivalents (in millions) | $284.1 | $330.9 |
Strategic Risks
Strategic risks include challenges related to acquisitions and market expansion. Recent acquisitions have not yet fully integrated, which can strain resources. The company has indicated a cautious approach to capital expenditures, with anticipated spending of approximately $165 million for the year.
In summary, Brunswick Corporation's financial health is impacted by various risk factors, including operational, financial, and strategic challenges, all of which investors should consider when evaluating the company's future prospects.
Future Growth Prospects for Brunswick Corporation (BC)
Future Growth Prospects for Brunswick Corporation
Analysis of Key Growth Drivers
The growth prospects for Brunswick Corporation are bolstered by several factors:
- Product Innovations: The company has been investing significantly in research and development, with expenses amounting to $130.5 million for the nine months ended September 28, 2024.
- Market Expansions: International sales represented 37% of the Propulsion segment's net sales in Q3 2024, despite a 19% decline from the previous year.
- Acquisitions: The recent acquisition of Fliteboard and Freedom Boat Club has expanded the company's product offerings and market reach.
Future Revenue Growth Projections and Earnings Estimates
The company’s revenue projections indicate a challenging environment, with net sales decreasing by 19% to $4.08 billion for the nine months ended September 28, 2024, down from $5.04 billion in the prior year. Earnings estimates reflect a decline in net earnings from $359.5 million in 2023 to $212.6 million in 2024.
Strategic Initiatives or Partnerships That May Drive Future Growth
Brunswick has focused on strategic partnerships to enhance its market position, including:
- Collaborations with OEMs: The company is increasing its market share through partnerships with original equipment manufacturers (OEMs), which have helped mitigate some declines in engine orders.
- Investment in New Technologies: Capital expenditures for the nine months ended September 28, 2024, totaled $137.1 million, directed towards new product development and technologies.
Competitive Advantages That Position the Company for Growth
Brunswick Corporation's competitive advantages include:
- Diverse Product Portfolio: The company operates across multiple segments including Propulsion, Engine P&A, Navico Group, and Boat, which diversifies its revenue streams.
- Strong Brand Recognition: Established brands in the boating and marine industry enhance customer loyalty and market penetration.
| Financial Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $1,273.3 million | $1,593.6 million | (20.1)% |
| Operating Earnings | $98.4 million | $196.1 million | (49.8)% |
| Net Earnings | $44.6 million | $112.5 million | (60.3)% |
| Cash and Cash Equivalents | $284.1 million | $330.9 million | (14.1)% |
These key insights illustrate the potential growth opportunities and challenges that lie ahead for Brunswick Corporation as it navigates the evolving market landscape.
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Article updated on 8 Nov 2024
Resources:
- Brunswick Corporation (BC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Brunswick Corporation (BC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Brunswick Corporation (BC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.