Brunswick Corporation: Bayliner to Reposition Product Portfolio and Enter New Categories
Brunswick Will Also Consolidate U.S. Cruiser Production, Recognize Impairment Charges on Certain Boat Brands
"The complexion of the global marine marketplace continues to evolve, and so does Brunswick," explained Dustan E. McCoy, Brunswick's chairman and chief executive officer. "Our continuing challenge is to adapt our brands, models and technologies to best appeal to today's boating consumers as well as the shifting global marine marketplace."
"Our current plan reflects a change in focus for Bayliner's global product portfolio to emphasize and expand its leadership across a broader set of recreational day boat craft types," explained Andrew E. Graves, president of the Brunswick Boat Group. "In doing so, we continue Bayliner's legacy of successfully anticipating and adapting to the marketplace for more than 50 years. Over the next several months, we will introduce an all new line of bowriders, a new series of deckboats with innovative and modern design, and we will launch the "Element," our newest concept in affordable boating. In 2013, Bayliner will enter the jet boat category with a new series of boats. We believe this effort will solidify our position in the market and offer dealers and boaters a wide variety of choices and models.
"Additionally, Bayliner will make its Brazil operations the center for its cruiser business, but will suspend the brand's cruiser sales and production outside of South America. We will continue to maintain our leadership position in the North American cruiser segment with our Sea Ray brand," Graves explained. "This strategic repositioning of Bayliner further reduces the need to maintain the Brunswick Boat Group's current cruiser production capacity in the U.S., particularly in view of current market weakness for cruisers. As a result, we will consolidate our U.S. cruiser production for Sea Ray into our Palm Coast, Fla., and Vonore, Tenn., facilities, while producing Bayliner cruisers in Brazil. This will be more efficient and still allow us to retain capacity equal to three times our current worldwide cruiser demand, enabling us to adequately increase production when the market improves."
As a result of this consolidation, Brunswick's cruiser plant near Knoxville, Tenn., will cease production by the end of 2012. The plant currently has a full-time workforce of approximately 225. The Company estimates that the above actions will save approximately $10 million - $12 million a year once implemented.
"Though the U.S. marine marketplace has improved recently, the recovery has been uneven across the various market segments," McCoy said. "While sales of smaller boats, such as popular fishing boats and pontoons, have improved, demand for cruisers and larger boats remains weak. We believe this is due to a number of factors, including continuing economic uncertainty as well as a cautious and evolving consumer. The actions announced today are a necessary step in enabling us to reach our near-term operational and financial objectives, while positioning the Company to exploit future market growth in the fiberglass boat segment."
Separately, the Company also concluded that a portion of its long-lived assets pertaining to certain boat brands, including Hatteras, Cabo and its European and Asia-Pacific boat brands, have been impaired and that impairment charges related to these brands will be recognized in the third quarter.
The Company's estimate of total restructuring and impairment charges in the third quarter will be in the range of $25 million to $32 million pretax. These charges primarily include non-cash asset write-downs, but also include charges for severance, facility closing and other costs. Further, the Company anticipates that additional charges pertaining to these actions will be recognized in future periods.
Headquartered in Lake Forest, Ill., Brunswick Corporation endeavors to instill "Genuine Ingenuity"(TM) in all its leading consumer brands, including Mercury and Mariner outboard engines; Mercury MerCruiser sterndrives and inboard engines; MotorGuide trolling motors; Attwood marine parts and accessories; Land 'N' Sea, Kellogg Marine, and Diversified Marine parts and accessories distributors; Bayliner, Boston Whaler, Brunswick Commercial and Government Products, Cabo Yachts, Crestliner, Cypress Cay, Harris FloteBote, Hatteras, Lowe, Lund, Meridian, Princecraft, Quicksilver, Rayglass, Sea Ray, Trophy, Uttern and Valiant boats; Life Fitness and Hammer Strength fitness equipment; Brunswick bowling centers, equipment and consumer products; Brunswick billiards tables and foosball tables. For more information, visit http://www.brunswick.com.