Brunswick Corp. 'B-' Rating Placed On CreditWatch Positive
- We are increasingly confident that U.S.-based recreational marine and fitness products company Brunswick will be able to continue to improve EBITDA in 2011.
- We are placing our 'B-' corporate credit rating for the company on CreditWatch with positive implications.
- The CreditWatch listing reflects our expectation that the company can sustain credit metrics in line with a higher rating.
NEW YORK (Standard & Poor's) Feb. 22, 2011--Standard & Poor's Ratings Services today placed its 'B-' corporate credit rating for Lake Forest, Ill.-based Brunswick Corp., as well as all related issue-level ratings, on CreditWatch with positive implications. "The CreditWatch listing reflects our increasing confidence that Brunswick will be able to continue to improve EBITDA in 2011 and sustain credit metrics in line with a higher rating," said Standard & Poor's credit analyst Emile Courtney. This is primarily due to the company's rationalization of its dealer inventory of boats over the past few years, and our belief that retail boat demand could begin to grow modestly by the second half of 2011. Our view for potential retail boat demand growth is based on our economist's forecast for U.S. GDP growth of just over 3% in 2011, following near 3% growth in 2010. Retail demand for boats tends to strengthen as economic growth gains a firmer hold, and our economists anticipate that moderate U.S. GDP growth will continue over the next several years. Our measure of reported EBITDA for Brunswick improved to $165 million in 2010 from negative $304 million in 2009, due to growth in marine engine and boat revenue in 2010 of 31%, which drove the elimination of significant operating losses in these units in 2009. Significant gross margin improvement, stemming from a more efficient manufacturing platform and lower selling, general, and administrative expenditures in 2010 also contributed to the EBITDA improvement. Brunswick ended 2010 with our measure of lease- and pension-adjusted leverage at just over 5x and EBITDA coverage of interest at 2x. Cash and short-term investments were $636 million at December 2010, providing the company very good liquidity support at the current rating. We could raise our rating on Brunswick by one notch or more (as we previously stated in December 2010) if our review confirms our confidence that the company can sustain our measure of adjusted debt to EBITDA at below 5x over the intermediate term. We expect to resolve the CreditWatch listing within the next 30 days. RELATED CRITERIA AND RESEARCH
- Use Of CreditWatch And Outlooks, Sept. 14, 2009
- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.
| Primary Credit Analyst: | Emile Courtney, CFA, New York (1) 212-438-7824; emile_courtney@standardandpoors.com |
| Secondary Contact: | Ariel Silverberg, New York (1) 212-438-1807; ariel_silverberg@standardandpoors.com |
No content (including ratings, credit-related analyses and data, valuations, model, software, or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced, or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees, or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness, or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED, OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.
Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses, and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment, and experience of the user, its management, employees, advisors, and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.
To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw, or suspend such acknowledgement at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal, or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.
S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.
S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.spglobal.com/ratings (free of charge), and www.ratingsdirect.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.spglobal.com/usratingsfees.
Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com.