Slide 1: Earnings Conference Call Q1, 2019
Earnings Conference Call Q1, 2019
Slide 2: Forward-Looking Statements
Brunswick Corporation – Earnings Release Forward-Looking Statements Certain statements in this presentation are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections about Brunswick
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
Slide 5: Overview of Q1 2019
Brunswick Corporation – Earnings Release Overview of Q1 2019 Marine business Strong leverage Anticipate global Significant progress operating earnings resulting from marine market on Fitness and EPS in-line with product leadership, will deliver separation, strong guidance, with operational modest un
Slide 6: Marine Engine Segment – Q1 Overview
Brunswick Corporation – Earnings Release Marine Engine Segment – Q1 Overview1 Top-line growth of 11.5%, adjusted operating margin improvement of 180 bps • Outboard engine sales increased by 10 percent, led by robust demand for 175+ horsepower categories • Planned capacity investments on target for Q
Slide 7: Boat Segment – Q1 Overview
Brunswick Corporation – Earnings Release Boat Segment – Q1 Overview1 Adjusted top-line growth of 3.3%, adjusted operating margin decline of 50 bps • Entering prime retail selling season, anticipate modest retail market unit growth for remainder of 2019 • Sales growth led by strong performance in pre
Slide 8: Q1 Revenue Growth Rates By Region – Marine segments
Brunswick Corporation – Earnings Release Q1 Revenue Growth Rates By Region1 – Marine segments Region Engines Boats Total Marine 2018 Mix2 Global revenue in U.S. 2% 5% 5% 71% our combined Europe 16% (9)% 9% 11% marine business Canada 10% 8% 8% 7% grew by 10 Asia-Pacific 12% (13)% 9% 7% percent, with
Slide 9: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units Category Q1-19 Q1-18 FY-18 FY-17 Outboard Boats (7)% 5% 5% 6% Fiberglass SD/IB Q1 2019 industry Boats (7)% (10)% (4)% (5)% unit volume for Main Powerboat (7)% 4% 4% 5% the main Segments powerboat Tot
Slide 10: Fitness Segment – Q1 Overview
Brunswick Corporation – Earnings Release Fitness Segment – Q1 Overview Performance as anticipated, significant progress made on separation • Significant progress made on the separation Very encouraged by the strong level of buyer interest in the sales process Continue to maintain preparedness fo
Slide 11: Financial Overview
FINANCIAL OVERVIEW Bill Metzger – CFO | 11
Slide 12: Overview of First Quarter 2019
Brunswick Corporation – Earnings Release Overview of First Quarter 20191 Marine Business on an as adjusted basis vs. Q1 2018: Diluted EPS of $0.94, Operating margin of 11.8 Net sales up 10 percent percent, up 80 bps up 6 percent Operating earnings Operating leverage of increased 18 percent 20 percen
Slide 13: Marine Engine segment – Q1 Performance
Brunswick Corporation – Earnings Release Marine Engine segment – Q1 Performance1 Product Category Sales ($M) % Change Propulsion $400.0 6% P&A Businesses 366.0 19% Total $766.0 11%2 Operating Margin Operating Earnings - Adjusted @ 15.7 percent, up 180 bps - Adjusted of $120.1M, up 25 percent - GAAP
Slide 14: Boat segment – Q1 Performance
Brunswick Corporation – Earnings Release Boat segment – Q1 Performance1 % Change in Product Category Sales ($M) Adjusted Net Sales Aluminum Freshwater $166.2 3% Recreational Fiberglass 115.0 2% Saltwater Fishing 90.2 5% Total $373.3 3% Operating Margin Operating Earnings - Adjusted @ 6.4 percent, do
Slide 15: Review of Brunswick Boat segment pipeline metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment pipeline metrics Pipeline Ending Weeks Levels on Hand Change Versus Prior Year Pipelines remain well-positioned for the primary 19 40 +1 week marine retail selling season, 18 39 +1 week considering the impact of 17 38 No chang
Slide 16: Other factors affecting GAAP operating earnings
Brunswick Corporation – Earnings Release Other factors affecting GAAP operating earnings1 Q1 $ in Millions 2019 2018 Restructuring, exit, integration, and impairment charges $141.5 $3.8 Separation costs 7.8 1.7 Purchase accounting amortization 7.2 - Sport Yacht & Yacht operations - 8.1 Total $156.5
Slide 17: 2019 Marine Business Guidance
2019 Marine Business Guidance1 Diluted EPS, as adjusted, range of $4.50 - $4.70 (vs. $4.13 in 2018 on a comparable Unchanged basis) Revenue growth between 8 and 10 percent Slightly lower Strong improvement in gross and operating margins Unchanged Operating earnings growth of high-teens Unchanged per
Slide 18: Tariff Update
Brunswick Corporation – Earnings Release Tariff Update 2019 estimates incorporate exclusion Unchanged The marine granted on 40 to 60 horsepower engines business anticipates an Assumes Wave 3 staying at 10% rate, does not assume any impact for Wave 4 (minimal Improved impact to 2019 to marine) pre-ta
Slide 19: 2019 Outlook – Marine Business P&L and Cash Flow
Brunswick Corporation – Earnings Release 2019 Outlook – Marine Business P&L and Cash Flow1 Change from Prior 2019 Estimates Conference Call Estimate Free cash flow2 In excess of $300 million No Change Working capital usage ~$10 - $30 million No Change Depreciation and ~$100 - $110 million No Change
Slide 20: 2019 Outlook – Marine Business Capital Strategy Assumptions
Brunswick Corporation – Earnings Release 2019 Outlook – Marine Business Capital Strategy Assumptions1 Change from Prior 2019 Estimates Conference Call Estimate Debt reduction ~$150 - $200 million No Change Capital expenditures ~$240 - $260 million No Change TBD pending Fitness Share repurchases No C
Slide 21: 2019 Outlook
2019 OUTLOOK Dave Foulkes – CEO | 21
Slide 22: Marine Engine Segment
Marine Engine Segment Strong Revenue Growth and Margin Improvement Operating and Strategic Priorities Continue growing Capacity initiatives market share in to enable growth outboard engines Integration of Power New product Products and pipeline organic P&A growth 2019 Segment Financial Target Net Sa
Slide 23: Boat Segment
Boat Segment Modest Revenue Growth and Margin Improvement Operating and Strategic Priorities Operational Targeted capacity efficiency expansion & vertical improvements integration New products and Consumer technology engagement enhancements activities 2019 Segment Financial Target Net Sales Growth L
Slide 24: Slide 24
Slide 25: Appendix
Appendix | 25
Slide 26: GAAP to Non-GAAP Reconciliations
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations | 26 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 27: Q1 Adjusted Net Sales increased by $79.6 million, or 6.7%
Brunswick Corporation – Earnings Release Q1 Adjusted Net Sales increased by $79.6 million, or 6.7% Net Sales - GAAP Net Sales - As Adjusted 1 Segments (in millions) Q1 2019 Q1 2018 % Change Q1 2019 Q1 2018 % Change Marine Engine $ 766.0 $ 687.1 11.5% $ 766.0 $ 687.1 11.5% Boat 373.3 376.5 (0.8)% 373
Slide 28: Q1 Adjusted Net Sales
Brunswick Corporation – Earnings Release Q1 Adjusted1 Net Sales First Quarter 2019 vs. First Quarter 2018 Sales Growth Drivers Engine Boat Marine Fitness Brunswick Organic (constant currency) 5% 4% 6% (6)% 4% Acquisitions 8% — 6% — 5% Currency (2)% (1)% (2)% (2)% (2)% Q1 2019 Adjusted Net Sales 11%
Slide 29: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision Estimated 2019 Q1 2019 2018 effective book tax Effective tax rate - GAAP 23.9% 27.2% rate, as adjusted, Effective tax rate, as adjusted (1) 20.2% 20.8% is approximately Effective tax rate, as adjusted for 21.5% 20.9% 23 percent on tax the marine
Slide 30: Review of Foreign Currency Impact
Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q1 2019: • Unfavorable impact on sales of approximately 2 LA/Other percent • Unfavorable impact on operating earnings of Canada approximately $3 million Outlook for Full-Year 2019: Asia Pacific • Unfavorable impact on consol
Slide 31: Free Cash Flow
Brunswick Corporation – Earnings Release Free Cash Flow Q1 (#039;s in millions) 2019 2018 Net cash provided by operating activities $ (79.4) $ (67.1) Net cash provided by (used for): Plus: Capital expenditures (88.1) (37.1) Plus: Proceeds from sale of property, plant and equipment — 0.1 Plus: Effect of