Despite a tempestuous macroeconomic environment, Brunswick Corporation (BC -1.07%) delivered better-than-expected results in the first quarter. However, amid a hiccup in consumer confidence, this recreational boat manufacturer faces an uncertain year ahead. Let's look at Brunswick's recent performance and future outlook to determine whether this consumer discretionary stock is a buy.

In business for nearly 200 years

The self-dubbed "world's leader in recreational boats, marine engines, and marine parts and accessories," Brunswick is also one of the oldest publicly traded stocks on the New York Stock Exchange. First listed in 1925, Brunswick boasts a long and rich success story that began 80 years prior.

After John Brunswick immigrated to America from Switzerland's Rhine Valley in 1845, the master woodworker soon developed an affinity for billiards and started making his own tables. His company grew into a well-established institution that has withstood the American Civil War, two world wars, and several boom-and-bust American economic cycles.

Brunswick has since moved on from the billiard industry, having also manufactured for the bar, bowling, hypodermic needle, and now recreational marine industry. Today, the company manufactures and distributes boats and boat accessories via a family of brands, aiming to deliver "innovation that transforms experiences on the water and beyond."

A solid start to 2023

Last quarter, Brunswick generated better sales and earnings per share (EPS) than in any first quarter in company history. Year over year, net sales rose 3% while adjusted EPS gained 2% to reach $2.57 -- beating analyst consensus EPS estimates for the fourth straight quarter. 

Its record sales of over $1.7 billion were thanks to "steady demand, new product performance, and pricing implemented in previous quarters," Brunswick CFO Ryan Gwillim explained during the Q1 earnings call. The company's free cash flow also improved by $135 million versus Q1 of 2022, largely because of less working capital spent during the period.

Out of Brunswick's four operational divisions, its propulsion and boat segments delivered the most outstanding year-over-year results. Propulsion enjoyed 7% top-line sales growth while the boat segment drove 17% higher sales, also generating a double-digit operating margin for the fourth consecutive quarter. 

Operating earnings and margin down in Q1

Brunswick's other two divisions, engine parts and accessories as well as its Navico Group, which supplies integrated systems for boats and RVs, both endured losses in Q1. While engine parts and accessories "had a solid quarter," according to Brunswick CEO David Foulkes, an anticipated drop in sales led to a nearly 13% revenue decrease year over year.

Despite a decline in operating earnings due to lower sales combined with "higher material inflation and temporary margin pressures," Foulkes explained that "the positive impact of major integration and restructuring actions and cost reduction measures" helped to offset the lower sales performance.

Foulkes also mentioned that while engine parts and accessories sales were down last quarter, they were actually up 35% against the first quarter of 2019. And although Brunswick's Navico Group segment had "a challenging start to the quarter," Foulkes also mentioned "notable improvements" for the Navico Group in March. 

Adjusted operating earnings and margin both sank in Q1, but both results actually exceeded Brunswick's expectations for the period. And in spite of lingering supply chain challenges, Brunswick's boat and engine production surpassed prior-year levels.

Looking ahead

Brunswick's supply chain environment has improved sharply, according to Foulkes. Second-quarter net sales are expected to remain flat or up slightly compared to 2022. For the year, management anticipates net sales to reach $6.8 billion to $7.2 billion, meaning anywhere from flat to a 5% to 6% increase over 2022.

With the prime boat selling season directly ahead, Foulkes declared that dealer "inventory levels are healthy and very current," and that "orders remain on track with no signs of material wholesale cancellations."

Why Brunswick stock is worth a look 

In spite of macro concerns for Brunswick and its dealer network, Foulkes reported that the industry remains "cautiously optimistic" moving into peak selling season. 

And while the company continues to break sales and adjusted operating earnings records, its stock trades 34% below its May 2021 all-time high. If Brunswick can weather the current economic climate and stay on course, watch for this stock to reflect company progress. For that reason, I think Brunswick stock is worth adding to your watch list.