Brunswick Corp.’s fitness segment, which is comprised of Life Fitness and Hammer Strength, had fourth quarter 2011 revenue of $180 million and year 2011 revenue of $635.2 million, the company announced.
The fourth quarter sales numbers represent an increase of 11 percent from $162 million in fourth quarter 2010 while the year-end numbers are an increase of 17 percent from $541.9 million for 2010.
For fourth quarter 2011, U.S. sales, which represent 55 percent of the total sales in this division, increased by 14 percent while international sales increased by 7 percent. Commercial sales increased during the quarter, too.
The fitness segment had operating earnings of $28.3 million compared to $24.4 million in fourth quarter 2010. Improved operating earnings in the fourth quarter of 2011 resulted from higher sales and a more favorable product mix, partially offset by higher variable compensation expense.
For the year, operating earnings were $93.4 million compared to $59.6 million, an increase of 57 percent over 2010.
Brunswick Chairman and Chief Executive Officer Dustan E. McCoy said in a call with analysts after the release of the financials last week that the company’s fitness business unit “is operating incredibly well right now.”
He attributed the growth in the division to several factors.
“As we’ve introduced new product, we have begun to have this great ability to tier our product offering to clubs, and we make great money in the entire tiering, but it also permits us to serve various price requirements for club owners,” he said.
Some of the growth also stems from club operators needing to replenish their equipment, McCoy said. However, he also attributed Life Fitness’ increases to difficulties that some competitors have faced, although he did not name any competitors.
“Some of our competitors have gone through some difficulty, and our team has done a great job of taking advantage of that and making sure that we secure a good place in all global markets,” he said.
McCoy expressed excitement about Life Fitness’ potential in 2012, particularly around the investment the company is making in new products, but he shared concern about facing pricing pressures from competitors.
“It may be difficult when one begins to get the share we’ve gotten to hold onto the margins we have because sometimes people need to attack the share with pricing,” McCoy said. “And our expectation is, in the coming months and years, there will be some pricing pressures. So, it may be hard to maintain operating margin of 15 percent, but [the margins are] not going to deteriorate a whole lot.”
For the fourth quarter of 2011, Brunswick reported net sales of $789.1 million, up from $728.8 million a year earlier. Also for the quarter, the company reported an operating loss of $18.1 million, which included restructuring, exit and impairment charges of $4.5 million. In fourth quarter 2010, Brunswick had an operating loss of $74.7 million, which included $18.5 million of restructuring, exit and impairment charges.
For the year, Brunswick had net sales of $3.7 billion, up from $3.4 billion a year earlier. Also for the year, operating earnings were $192.4 million, which included $22.7 million of restructuring, exit and impairment charges. In 2010, Brunswick reported operating earnings of $16.3 million, which included $62.3 million of restructuring, exit and impairment charges.
“The factors that positively affected our earnings in the fourth quarter of 2011, compared to the previous year, included higher sales levels resulting from market share gains in our marine businesses, as well as in our fitness and bowling and billiards segments, combined with company-wide cost reductions and lower warranty costs, restructuring charges and tax provisions,” McCoy said.