Slide 1: Earnings Conference Call Q2 2021
Earnings Conference Call Q2 2021
Slide 2: Forward-Looking Statements
Brunswick Corporation - Earnings Release Forward-Looking Statements Certain statements in this presentation are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections abou
Slide 3: Use of Non-GAAP Financial Information and Constant Currency Reporting
Brunswick Corporation – Earnings Release Use of Non-GAAP Financial Information and Constant Currency Reporting In this presentation, Brunswick uses certain non-GAAP financial measures, which are numerical measures of a registrant’s historical or future financial performance, financial position or ca
Slide 4: Business Overview
BUSINESS OVERVIEW Dave Foulkes – CEO |4 ©2021 Brunswick Co. Confidential and all rights reserved.
Slide 5: Q2 2021 in Review
Brunswick Corporation – Q2 2021 in Review Outstanding Performance Across the Company Historically strong Growth across all U.S. marine retail unit Increasing 2021 financial results: businesses: demand surge guidance: • Adjusted EPS of $2.52 1 • Significant Mercury continues: • U.S. retail market up
Slide 6: Favorable Demographic Trends Continue in 1st Half of 2021
Brunswick Corporation – Earnings Release Favorable Demographic Trends Continue in 1st Half of 2021 BRUNSWICK IS OUTPERFORMING the industry in attracting younger and more female boaters FTBBs ALL BOAT BUYERS FREEDOM MEMBERS First-time boat buyers (FTBB) of The average age of a Brunswick The ave
Slide 7: Awards and Milestones
Brunswick Corporation – Earnings Release Awards and Milestones 6 2nd 3 TOP PRODUCTS AWARDS YEAR IN BRUNSWICK EMPLOYEES A ROW HONORED IN 2021 |7 ©2021 Brunswick Co. Confidential and all rights reserved.
Slide 8: Propulsion Segment – Q2 2021 Overview
Brunswick Corporation – Earnings Release Propulsion Segment – Q2 2021 Overview Sales up 64.3%, operating margins of 18.8%, up 670 bps • U.S. and international retail market share gains continue in the first half of 2021: Strong share gains in each horsepower category over 75hp Significant share
Slide 9: Parts & Accessories Segment – Q2 2021 Overview
Brunswick Corporation – Earnings Release Parts & Accessories Segment – Q2 2021 Overview 1 Sales up 42.0%, adjusted operating margins of 23.2%, up 60 bps • Strong sales growth across all aftermarket P&A businesses due to increased boat usage and service needs • Boat builders continue to increase prod
Slide 10: Boat Segment – Q2 2021 Overview
Brunswick Corporation – Earnings Release Boat Segment – Q2 2021 Overview 1 Sales up 79.7%, adjusted operating margins of 10.5%, up 920 bps • Second consecutive quarter with adjusted double-digit operating margins • FY 2021 production plan remains on schedule – targeting ~38,000 wholesale boats • Pip
Slide 11: Certain Operating Headwinds Continue into 2nd Half of 2021
Brunswick Corporation – Earnings Release Certain Operating Headwinds Continue into 2nd Half of 2021 • Continued active management and mitigation of supply chain disruption and inflation Propulsion & P&A – semiconductors, electrical components, resin, steel Boat Group – foam (floatation and uphol
Slide 12: Q2 Sales Growth Rates and Mix By Region
Brunswick Corporation – Earnings Release Q2 Sales Growth Rates and Mix By Region1 International sales up 49 percent on a Q2 2021 BC SALES constant currency GROWTH VS. basis FY REGION Q2 2020 Q2 2019 2020 MIX All segments experienced United States 55% 25% 69% significant Europe 49% 40% 12% intern
Slide 13: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units 1H 2021 U.S. industry retail unit 1H 2021 VS FY FY sales up: CATEGORY 2020 2019 2020 2019 +17% vs. 1H 2020 +13% vs. 1H 2019 Outboard Boats 15% 13% 14% (3)% Fiberglass SD/IB Boats 9% (7)% 8% (11
Slide 14: Financial Overview
FINANCIAL OVERVIEW Ryan Gwillim - CFO | 14 ©2021 Brunswick Co. Confidential and all rights reserved.
Slide 15: Overview of Second Quarter 2021
Brunswick Corporation – Earnings Release Overview of Second Quarter 2021 Consolidated results on an as adjusted basis1: Diluted EPS of $2.52, Net sales of $1.55B, up Operating margin of up 154.5% 57.4% 17.1%, up 520 bps Operating earnings of Operating leverage of Free cash flow of $266.4M, up 126.0%
Slide 16: Overview of First Half 2021
Brunswick Corporation – Earnings Release Overview of First Half 2021 Consolidated results on an as adjusted basis1: Diluted EPS of $4.76, Net sales of $2.99B, up Operating margin of up 142.9% 53.0% 17.0%, up 520 bps Operating earnings of Operating leverage of Free cash flow of $509.4M, up 121.1% 27.
Slide 17: Propulsion Segment – Q2 Performance
Brunswick Corporation – Earnings Release Propulsion Segment – Q2 Performance % CHANGE VS PRODUCT CATEGORY SALES ($M) 2020 2019 Outboard Engines $494.2 57% 40% Sterndrive Engines $59.2 112% 19% Controls, Rigging and Propellers $96.1 81% 66% Total $649.5 64% 41% OPERATING MARGIN OPERATING EARNINGS • O
Slide 18: Parts & Accessories Segment – Q2 Performance
Brunswick Corporation – Earnings Release Parts & Accessories Segment – Q2 Performance1 % CHANGE VS PRODUCT CATEGORY SALES ($M) 2020 2019 Engine Parts and Accessories $155.4 43% 36% Distribution $255.2 34% 46% Advanced Systems Group $138.3 59% 15% Total $548.9 42% 34% OPERATING MARGIN OPERATING EARNI
Slide 19: Boat Segment – Q2 Performance
Brunswick Corporation – Earnings Release Boat Segment – Q2 Performance1 % CHANGE VS PRODUCT CATEGORY SALES ($M) 2020 2019 Aluminum Freshwater $190.1 102% 18% Recreational Fiberglass $154.2 72% 28% Saltwater Fishing $93.0 58% 13% Business Acceleration $15.3 84% NM Total $449.12 80% 22% OPERATING MARG
Slide 20: Pipeline Metrics
Brunswick Corporation – Earnings Release Pipeline Metrics Production increases during ENDING CHANGE UNITS IN CHANGE Q2 resulted in YEAR WEEKS ON VERSUS PRIOR PIPELINE VERSUS PRIOR HAND YEAR (WOH) (THOUSANDS) YEAR (UNITS) ~9,800 units sold at wholesale 21 9.2 -13.6 weeks 7.4 (50)% Up 71% vs Q2’20
Slide 21: Updated 2021 Assumptions and Guidance
Updated 2021 Assumptions and Guidance* U.S. marine industry retail unit demand up high-single digit percent from 2020 levels Revenue between $5.65B and $5.75B Operating margin growth between 150 and 180 bps Operating expenses as a % of sales lower than 2020 EPS of ~$8.00 5 FCF in excess of $450
Slide 22: 2019 to 2021 - 1st Half vs 2nd Half Comparisons
Brunswick Corporation – Earnings Release 2019 to 2021 - 1st Half vs 2nd Half Comparisons ($M) ($M) Op Margin % 1H’21 vs 1H’20 Op Margin % 2H’21 vs 2H’20 Tailwinds Increased production volumes, currency, Tailwinds Increased production volumes, price favorable absorption and sales mix increases Headwi
Slide 23: 2021 Outlook – P&L and Cash Flow Assumptions
Brunswick Corporation – Earnings Release 2021 Outlook – P&L and Cash Flow Assumptions CHANGE FROM PRIOR 2021 ESTIMATES CONFERENCE CALL ESTIMATE Working capital increase ~$80 - $100 million Unchanged Depreciation and ~$140 million Slightly Higher amortization1 Acquisition intangible ~$30 million Unch
Slide 24: 2021 Outlook – Capital Strategy and Other Assumptions
Brunswick Corporation – Earnings Release 2021 Outlook – Capital Strategy and Other Assumptions CHANGE FROM 2021 PRIOR CONFERENCE ESTIMATES CALL ESTIMATE Debt retirement ~$100 million Unchanged Capital expenditures ~$270 - $300 million Higher Share repurchases ~$80 - $120 million Unchanged Quarterly
Slide 25: Outlook
OUTLOOK Dave Foulkes – CEO | 25 ©2021 Brunswick Co. Confidential and all rights reserved.
Slide 26: Operating and Strategic Priorities
Brunswick Corporation – Earnings Release Operating and Strategic Priorities BOATS & PARTS & PROPULSION BUSINESS ENTERPRISE ACCESSORIES ACCELERATION • Continue global share • Optimize global operating • Focus on operational • Accelerate Brunswick-wide growth, especially in model and distribution exce
Slide 27: Strong 'Next Wave' Momentum and Multiple Proof-Points
Brunswick Corporation – Earnings Release Strong ‘Next Wave’ Momentum and Multiple Proof-Points ACQUISITION MERCURY M YWHAL E R & FREEDOM BOAT L AUNCH OF OF MARINE S EARAY+ CLUB EUROPEAN HE YDAY N AV I C O V12 APPS E X PA N S I O N H22 ©2021 Brunswick Co. Confidential and all rights reserved.
Slide 28: Appendix
Appendix | 28
Slide 29: 2021 Outlook – Segment Guidance
Brunswick Corporation – Earnings Release 2021 Outlook – Segment Guidance APRIL 2021 UPDATED GUIDANCE GUIDANCE Propulsion 28% - 32% 32+ percent Parts & Accessories 18% - 20% 20+ percent Boat 30+ percent Unchanged Propulsion Up 120+ bps Up 140+ bps Parts & Accessories Up 20 to 50 bps Up 40 to 60 bps B
Slide 30: GAAP to Non-GAAP Reconciliations (Q2)
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations Operating Earnings Diluted Earnings per Share (in millions, except per share data) Q2 2021 Q2 2020 Q2 2021 Q2 2020 GAAP $250.2 $107.0 $2.29 $0.89 Restructuring, exit and impairment charges 0.2 2.1 0.00 0.02 Purchase accounting
Slide 31: GAAP to Non-GAAP Reconciliations (YTD)
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations Operating Earnings Diluted Earnings per Share (in millions, except per share data) YTD 2021 YTD 2020 YTD 2021 YTD 2020 GAAP $482.1 $210.2 $4.44 $1.77 Restructuring, exit and impairment charges 0.7 2.5 0.00 0.02 Purchase accoun
Slide 32: Q2 Net Sales increased by $567.0 million, or 57.4 percent
Brunswick Corporation – Earnings Release Q2 Net Sales increased by $567.0 million, or 57.4 percent Segments Q2 2021 Q2 2020 % Change Propulsion $649.5 $395.4 64.3% Parts & Accessories 548.9 386.5 42.0% Boat 449.1 249.9 79.7% Segment Eliminations (92.7) (44.0) Total $1,554.8 $987.8 57.4% Q2 2021 Cons
Slide 33: YTD Net Sales increased by $1,034.7 million, or 53.0 percent
Brunswick Corporation – Earnings Release YTD Net Sales increased by $1,034.7 million, or 53.0 percent Segments YTD 2021 YTD 2020 % Change Propulsion $1,307.3 $844.0 54.9% Parts & Accessories 1,008.5 688.1 46.6% Boat 868.6 541.4 60.4% Segment Eliminations (196.4) (120.2) Total $2,988.0 $1,953.3 53.0%
Slide 34: Q2 2021 vs. Q2 2020
Brunswick Corporation – Earnings Release Q2 2021 vs. Q2 2020 Parts & Propulsion Accessories Boat Brunswick Organic 59% 38% 76% 53% Acquisitions - - 0% 0% Currency 5% 4% 4% 4% 2021 Net Sales - GAAP 64% 42% 80% 57% Parts & Propulsion Accessories Boat Brunswick US - GAAP 80% 33% 71% 55% International -
Slide 35: YTD 2021 vs. YTD 2020
Brunswick Corporation – Earnings Release YTD 2021 vs. YTD 2020 Parts & Propulsion Accessories Boat Brunswick Organic 51% 43% 58% 49% Acquisitions - - 0% 0% Currency 4% 4% 2% 4% 2021 Net Sales - GAAP 55% 47% 60% 53% Parts & Propulsion Accessories Boat Brunswick US - GAAP 60% 39% 57% 51% International
Slide 36: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision Q2 2021 Q2 2020 Estimated 2021 Effective Tax Rate - GAAP 23.5% 19.8% effective book tax Effective Tax Rate - As Adjusted 1 21.0% 19.5% rate, as adjusted, is expected to be approximately 22 percent based on tax guidance issued to date YTD 2021
Slide 37: Free Cash Flow – YTD June
Brunswick Corporation – Earnings Release Free Cash Flow – YTD June (in millions) YTD 2021 YTD 2020 Net cash provided by operating activities from $350.5 $215.7 continuing operations Net cash (used for) provided by: Capital expenditures (110.3) (90.7) Proceeds from sale of property, plant, equipment