Fitness financials: Brunswick’s strong Q1 sends stock to new high, plus Amer Sports

Brunswick’s strong first quarter sent its stock to a 30-month high, and Amer Sports said its first-quarter sales rebounded despite a drop in sales from its fitness segment.
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Brunswick’s strong Q1 sends stock to new high

Brunswick Corp. (NYSE: BC), parent of Life Fitness and Hammer Strength, reported a narrower first-quarter loss, and said its revenue climbed for the first time in more than two years. Its shares hit a 30-month high.

During the quarter that ended April 3, the company lost $13 million, or $0.15 per share, compared to a loss of $184.2 million, or $2.08 per share, during the same period last year.

Results included an $0.08 per share charge from restructure and a $0.02 per share gain from special tax items, bringing the company's adjusted loss to $0.09 per share. The previous year's results included $0.85 per share in one-time charges.

Sales climbed 15 percent to $844.4 million -- the first time revenue increased at the company since the fourth quarter of 2007. It also posted an operating profit for the first time in two years.

"The successful execution of our strategic initiatives over the past several quarters was a key factor in our improved first quarter results," said Dusty McCoy, Brunswick's chairman and CEO, in a statement.

Fitness segment sales in the first quarter totaled $119.0 million, up slightly from $118.6 million in the year-ago quarter. International sales, which represented 52 percent of total segment sales in the quarter, increased 15 percent. For the quarter, the fitness segment reported operating earnings of $9.5 million. This compares with operating earnings of $0.3 million in the first quarter of 2009, which included restructuring charges of $1.0 million.

Brunswick said commercial and consumer equipment sales were flat during the quarter. Higher operating earnings in the first quarter of 2010, when compared with 2009, reflected the favorable effect of lower material and freight costs and other cost efficiencies in the fitness segment, it added.

On the day of the earnings release, the company’s stock hit a 30-month high of $22.75. It closed on April 29 at $22.69, up $4.87, or 21.4 percent, from the previous day’s trading on a volume of 7.3 million.

Amer’s Q1 rebounds despite fitness segment sales drop

Amer Sports, parent of Precor, reported a 5-percent increase in its overall sales for the first quarter, but reported disappointing results in its fitness segment, including a 5-percent drop in segment sales.

“Difficult market conditions continued in the fitness segment,” said Pekka Paalanne, Amer’s executive vice president and CFO, in a statement. “Financing remained tight, and fitness clubs continued to be cautious about opening new facilities. Ancillary revenues earned by clubs providing services for their members did, however, increase during Q1.”

For the company as a whole, net sales were EUR 372.6 million (USD $491.4 million) versus EUR 355.3 million (USD $468.6 million) in the same period last year. Net sales also improved by 5 percent in local currency terms. The sales trend in the Americas stabilized, it said.

Group EBIT of EUR 9.5 million (USD $12.5 million) improved by EUR 16.4 million (USD $21.6 million), with the main contributors being improved gross profit margins of EUR 8.1 million (USD $10.6 million) and sales growth of EUR 7.6 million (USD $10.0 million).

Earnings before taxes totaled EUR 0.4 million (USD $0.52 million) versus a loss of EUR 14.4 million (USD $18.9 million) last year, and earnings per share were a loss of EUR 0.01 (USD $0.013) versus a loss of EUR 0.12 (USD $0.15).

For the fitness segment, net sales were EUR 45.5 million (USD $60.0 million), down 5 percent from EUR 48 million (USD $63.3 million) in the same period last year. Amer said fitness net sales remained at last year's level in local currencies due to difficult market conditions in the United States.

EBIT improved to a loss of EUR 0.7 million (USD $0.9 million), compared to a loss of EUR 3.4 million (USD $4.4 million) last year. The narrowed loss was a result of improved gross profits and lower operating expenses.

Of the fitness division, Amer said in a statement, “With credit markets continuing to be tight and consumer spending uncertain, most clubs and institutions are still holding off their expansion plans in 2010. Many have chosen to reduce their costs by extending the service life of their existing equipment. Sales of premium consumer equipment continued to suffer from the broader trend of reduced discretionary spending.”

Looking ahead, Amer Sports expects the sporting goods market to recover moderately, but with significant regional and sports area specific differences. It also expects its 2010 EBIT margin to improve to the mid-single-digit level.

(Conversion of Euros into U.S. dollars is for information only, is not necessarily relative to earnings, and is based on the currency rate as of April 29.)

--Compiled by Wendy Geister

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