NEW YORK (AP) -- Moody's Investors Service upgraded boat maker Brunswick Corp.'s rating outlook on Monday to "stable" from "negative" based on a belief that Brunswick's credit will not deteriorate further and might even improve over the near- to midterm.
At the same time, Moody's raised Brunswick's speculative-grade liquidity rating to "SGL1."
"We believe Brunswick's strong liquidity profile, improved cost structure, enhanced health of its dealership network and increased wholesale shipments should enable it to maintain its current credit profile, even if retail demand in 2010 declines more than the 10 percent the company is currently planning for and despite the burgeoning sovereign debt crisis," said Kevin Cassidy, senior credit officer at Moody's in a statement.
Moody's said the liquidity upgrade indicates that Moody's believes Brunswick will maintain its strong liquidity profile for at least 12 months, including cash balances around $550 million, an expectation of positive free cash flow in 2010 even if retail demand falls 20 percent, and access to over $125 million in credit.
Brunswick reported last month that its first-quarter loss was much smaller than a year earlier, surprising Wall Street analysts. And it said its quarterly revenue climbed for the first time in more than two years.
The company lost $13 million, or 15 cents per share, during the quarter that ended April 3. That compares with a loss of $184.2 million, or $2.08 per share, during the same period last year.
Sales climbed 15 percent to $844.4 million -- the first time revenue increased at the suburban Chicago company since the fourth quarter of 2007. Meanwhile, the company posted an operating profit for the first time in two years.
Brunswick, which also makes boat engines and fitness equipment, cut costs and closed factories as the recession ate into its business.
It said sales rose in virtually every category except bowling and billiards. Boat sales rose 19 percent and boat engine sales 30 percent.
Brunswick is based in the Chicago suburb of Lake Forest, Ill. Its brands include Mercury and Mariner engines; Bayliner, Hatteras, SeaRay boats and Life Fitness workout equipment.
After rising more than 9 percent by midday Monday, Brunswick's shares were down 3 cents Monday afternoon, trading at $18.50.
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