Brunswick Corporation (NYSE:BC) Q4 2014 Earnings Conference Call - Final Transcript
Jan 29, 2015 • 11:00 am ET
Good morning, and welcome to Brunswick Corporation 2014 Fourth Quarter Earnings Conference Call. [Operator Instructions]
I would now like to introduce Bruce Byots, Vice President, Investor Relations.
Bruce J. Byots
Good morning, and thank you for joining us. On the call this morning is Dusty McCoy, Brunswick's Chairman and CEO; and Bill Metzger, CFO. Also with us today is Mark Schwabero, President and Chief Operating Officer.
Before we begin with our prepared remarks, I would like to remind you that during this call, our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For the details on the factors to consider, please refer to our recent SEC filings and today's press release. All these documents are available on our website at brunswick.com.
During our presentation, we are using certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in this presentation as well as in supplemental information sections of the consolidated financial statements accompanying today's results. I would also like to remind you that the figures in this presentation reflect continuing operations only, unless otherwise noted.
On July 17, 2014, the company announced the signing of an agreement to sell its Retail Bowling business and its intention to sell its Bowling Products business. On September 18, 2014, the sale of the Retail Bowling business was completed. As a result, the historical and future results of these businesses are reported as discontinued operations, and the historical and future results of the Billiards business, which remains with the company, are reflected in the company's Fitness segment. Therefore, for all periods in this presentation, all figures and outlook statements incorporate these changes and reflect continuing operations only, unless otherwise noted.
I'd now like to turn the call over to Dusty.
Dustan E. McCoy
Thanks, Bruce. Good morning, everyone. I'll start with an overview of our full year results. Revenue in 2014 increased 7%. We experienced growth in outboard boats and engines, marine parts and accessories, fitness equipment and fiberglass sterndrive/inboard boats, which was partially offset by a decline in sterndrive/inboard engines.
Our gross margin increased by 60 basis points compared to the prior year, driven by volume leverage, favorable warranty comparisons in new products, partially offset by costs associated with production and new product ramp-ups. Operating expenses increased by 4% as we continue to invest in numerous strategic initiatives at increasing levels. 2014 operating expense was approximately 17.6% of sales, and that was in line with our guidance.
Adjusted operating earnings increased by 21% versus last year. Our net interest expense was reduced by $11.8 million. Adjusted pretax earnings increased by 32%, which is slightly above our guidance range. Diluted EPS, as adjusted, of $2.42 reflected a $0.06 benefit from the recently extended U.S. R&D credit. Extending -- I'm sorry, excluding the benefit of the credit, EPS, as adjusted, was $2.36, $0.01 above the high end of our guidance.
Our 2014 revenue performance benefited from recent investments in growth initiatives, with several new