Brunswick improves liquidity in 2009
A Brunswick bowling alley in Niles, Ill. The company holds a dominant market share in bowling, and net sales in that segment were $82.2 million for the most recent quarter.
BY MICHAEL BELLER – MEDILL NEWS SERVICE
Brunswick Corp.’s emphasis on improving liquidity continued last quarter, as the company reported cash on hand of $526.6 million for the year ended Dec. 31, 2009, up 65.9 percent from $317.5 million a year ago.
“We will continue to focus on maintaining strong liquidity at our current net debt levels, taking all reasonable actions to strengthen our dealer network, and doing the work necessary to come out of this downturn stronger than when we began the period,” CEO Dustan McCoy said in a conference call with financial analysts.
With discretionary spending at an extreme low, Brunswick began to focus on keeping enough cash around to stay afloat, resulting in dramatic cuts in the number of boats it provided to wholesalers. To that end, the company took a net loss of $124 million, or $1.40 per diluted share, for the three months ended Dec. 31. Net sales for the quarter fell 21.5 percent to $657.3 million from $837.7 million.
However, the company’s net loss of $586.2 million, or $6.63 per diluted share, for the entire year shrank from $788.1 million, or $8.93 per diluted share, in 2008.
“Although we think some of the liquidity pressures on the firm have eased, we expect the road ahead to be bumpy, and Brunswick’s short-term focus will remain on strengthening its balance sheet and preserving liquidity,” said Philip Gorham, analyst with Morningstar Inc. in Chicago, in a note to investors.
With the company’s current strategy in mind, the health of its balance sheet is paramount. The company’s total assets declined 16 percent to $2.71 billion from $3.22 billion. While debt was down to $324 million from the end of 2008, it rose 11 percent sequentially from $292 million the previous quarter.
Gorham went on to say that with “no significant debt maturing until late 2011, Brunswick looks likely to survive the remainder of the downturn,” but that the company probably won’t return to profitability until then either.
