Brunswick Corp., Mettawa, Illinois, reported $254 million in 2018 third quarter revenue for its Life Fitness Division, which includes Life Fitness and Cybex International, according to financial earnings released by the company on Oct. 25. This represents a year-over-year increase of 4.6 percent, bolstered by a 7 percent jump in international sales, which comprised 48 percent of the quarter’s total business.
The quarter’s revenue reflects Life Fitness’ strong international presence as well as modest increases in American sales, particularly with value-oriented health clubs, Brunswick Chairman and CEO Mark Schwabero said in the release.
Schwabero made two announcements to end the quarter. First, he will retire at the end of the year after 14 years with the company (three as CEO), and he will be replaced by David Foulkes, president of Brunswick Marine Consumer Solutions. Second, as part of Brunswick’s plan to spin off the Life Fitness Division, the company’s board of directors has formed a management board consisting of two Brunswick outside directors who will directly oversee the division’s management team and its spin-off—currently slated to occur in the first quarter of 2019.
“David Everitt and David Singer have deep management, operational and financial experience across consumer products and manufacturing industries, and they will work closely with the Life Fitness management team to ensure that our Fitness business is best positioned to develop and execute its plans, grow into a strong standalone company and create long-term shareholder value,” Schwabero said in the company’s quarterly conference call. “The creation of the management board also allows the Brunswick management to focus its attention on the development and execution of the marine strategy which we and the board believe will provide attractive return opportunities for shareholders.”
Prior to the announcement of the management board, sources close to Life Fitness told Club Industry that Fitness Division president Jaime Irick was on a leave of absence. When asked to clarify Irick's role moving forward, a Life Fitness spokesperson provided the following statement to Club Industry on Oct. 19:
“We recognize the need to continuously improve our business operations and quickly adjust to changing market conditions. Therefore, we felt the need to make some changes. More information and specific details regarding these changes will be forthcoming in the coming weeks. Through this transition, Life Fitness remains focused on delivering the highest-quality products and services and ensuring positive outcomes for our customers.”
Irick, who replaced Chris Clawson as Fitness Division president in January 2017, is still listed on Brunswick's website. He recently told Club Industry that Life Fitness' future as a standalone company lies in technology.
Schwabero said Brunswick executives are still considering exactly how they’ll separate the fitness business, although a spin-off remains planned for early 2019.
"Our board remains committed to completing the separation by the end of the first quarter of 2019 or as promptly thereafter as practical within a timeframe that maximizes the value to our shareholders," Schwabero said in the quarterly conference call. "A spin remains one of the primary options available to us, but we are also working with our advisors to evaluate other separation options that optimize shareholder value including the outright sale of the business. We'll keep you posted on our progress to complete this separation."
Life Fitness' spin-off was approved by Brunswick's board of directors on March 1, 2018, just over a month after activist investor Owl Creek Asset Management issued a scrutinizing letter to Brunswick executives encouraging them to separate Life Fitness from its parent company.