Slide 1: Brunswick Earnings Conference Call Q1, 2015
Brunswick Earnings Conference Call Q1, 2015 April 29, 2015 Helping Active People Live Active Lives
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. Such statements are based on current expectations, estimates and projections about Brunswick’s business.
Slide 3: Use of Non-GAAP Financial Information; Constant Currency Reporting
Brunswick Corporation – Earnings Release Use of Non-GAAP Financial Information; 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 cash
Slide 4: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 4 April 29, 2015
Slide 5: Overview of First Quarter 2015
Brunswick Corporation – Earnings Release Overview of First Quarter 2015 • Revenue increased 10 percent -- on a constant currency* basis, sales increased by 14 percent; Growth in marine parts and accessories, outboard boats and engines, fiberglass sterndrive/inboard boats, fitness equipment and stern
Slide 6: Q1 Net Sales increased by $90.8 million, or 10%
Brunswick Corporation – Earnings Release Q1 Net Sales increased by $90.8 million, or 10% Net Sales Three Months Ended % Change Segment (#039;s in millions) April 4, 2015 March 29, 2014 GAAP1 Constant Currency Marine Engine $ 562.2 $ 505.1 11 % 16 % Boat 318.0 282.8 12 % 15 % Marine eliminations (80.1)
Slide 7: Q1 Operating Earnings increased by $6.8 million
Brunswick Corporation – Earnings Release Q1 Operating Earnings increased by $6.8 million Operating Earnings Three Months Ended April 4, March 29, Segment (#039;s in millions) 2015 2014 Change Marine Engine $ 74.2 $ 61.7 $ 12.5 Boat 7.7 8.4 (0.7) Total Marine 81.9 70.1 11.8 Fitness 25.8 29.7 (3.9) Pensi
Slide 8: Q1 Pretax Earnings increased by $9.8 million, or 13%
Brunswick Corporation – Earnings Release Q1 Pretax Earnings increased by $9.8 million, or 13% Pretax Earnings Three Months Ended April 4, March 29, (#039;s in millions) 2015 2014 Change Operating earnings $ 88.7 $ 81.9 $ 6.8 Net interest expense (6.5) (7.7) 1.2 Other income 2.7 0.9 1.8 Pretax earnings
Slide 9: U.S. Powerboat Industry – Percentage Change in Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Units Q1-14 Q2-14 Q3-14 Q4-14 FY-14 Q1-15 March AL – Fish 2.5% 6.1% 5.6% 8.7% 5.4% 8.7% 5.3% AL - Pontoon 4.0% 5.0% 4.8% 8.2% 5.0% 9.7% 6.8% FG - Outboard 5.9% 9.7% 11.8% 15.7% 10.2% 9.7% 12.3% Outboard Boats 4.5
Slide 10: 2014 Revenue By Region – Marine Segments Only
Brunswick Corporation – Earnings Release 2014 Revenue By Region – Marine Segments Only Latin America 5% Africa & Middle East 2% Asia Pacific 7% Canada 9% Europe 12% U.S. 65% International sales 35% 10 April 29, 2015
Slide 11: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 11 April 29, 2015
Slide 12: Marine Engine segment – Q1 sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – Q1 sales by region % Change Q1-2015 % Region of Sales* GAAP Constant Currency United States 68% 19 % 19 % Europe 14% 3% 21 % Rest-of-World 18% (3)% 5% Total 100% 11 % 16 % • U.S. sales increased in all major product categories • Europe
Slide 13: Q1 Outboard and Sterndrive engines
Brunswick Corporation – Earnings Release Q1 Outboard and Sterndrive engines Outboard • Favorable retail demand environment continues in overall U.S. outboard boat and engine categories, including recently launched products • Growth in Rest-of-World and Europe • Market share gains achieved, including
Slide 14: Q1 Marine Engine segment's Parts & Accessories
Brunswick Corporation – Earnings Release Q1 Marine Engine segment’s Parts & Accessories Service Parts Boating Accessories Propellers • Growth in most major markets • Revenue benefited from recent acquisitions, new product launches and market share gains Oil & Lubes Trolling Motors Controls/Rigging •
Slide 15: Factors affecting Marine Engine segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q1 operating earnings Key Factors • Higher sales - - favorable product mix benefit from P&A growth and recently launched outboard products • Foreign exchange had an unfavorable impact • Increase in investment spending
Slide 16: Boat segment – Q1 sales by region
Brunswick Corporation – Earnings Release Boat segment – Q1 sales by region Q1 - 2015 % Change Region % of Sales GAAP Constant Currency United States 69% 21% 21% Europe 10% 5% 21% Rest-of-World 21% (7)% (3)% Total 100% 12% 15% • U.S. sales continue to benefit from overall retail growth in outboard bo
Slide 17: Review of Brunswick Boat segment metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment metrics Wholesale and Retail Metrics • In the first quarter, Brunswick’s global retail unit sales increased by 12 percent compared to prior year; global wholesale unit shipments increased by 4 percent • Wholesale unit growth r
Slide 18: Factors affecting Boat segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q1 operating earnings Key Factors • Higher sales, including several new product introductions • Increasing costs associated with new product integrations, capacity expansions and production ramp-up • Foreign exchange had an un
Slide 19: Fitness segment – Q1 sales by region
Brunswick Corporation – Earnings Release Fitness segment – Q1 sales by region Q1 - 2015 % Change Region % of Sales GAAP Constant Currency United States 53% 5% 5% Europe 19% (8)% 3% Rest-of-World 28% 9% 12% Total 100% 3% 6% • Growth in sales reflects gains in the U.S. at health clubs and hospitality
Slide 20: Factors affecting Life Fitness segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Life Fitness segment’s Q1 operating earnings Key Factors • Higher sales • Absence of a favorable warranty adjustment in 2014 • Unfavorable foreign exchange impact • Costs associated with planned capacity expansion and new product integration
Slide 21: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 21 April 29, 2015
Slide 22: Review of foreign currency impact
Brunswick Corporation – Earnings Release Review of foreign currency impact1 40% 35% LA/Other First Quarter 2015: • Unfavorable impact on sales of 30% 4 percent and operating earnings of approximately $10 million Pacific Asia 25% International Sales % of Total Sales Outlook 2015: International sales
Slide 23: Tax provision
Brunswick Corporation – Earnings Release Tax provision Q1 (#039;s in millions) 2015 2014 Effective tax rate - GAAP 33.3% 34.6% Effective tax rate, as adjusted* 34.0% 34.1% Effective tax rates for 2015, exclude any potential benefit from extension of U.S. R&D tax credit Estimated full-year 2015: Effecti
Slide 24: Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Cash Flow – Continuing Operations Three Months Ended April 4, March 29, (#039;s in millions) 2015 2014 Net earnings* $ 56.6 $ 49.1 Depreciation and amortization 21.9 18.0 Pension (funding), net of expense (58.0) 3.1 Changes in certain current assets and current
Slide 25: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations Three Months Ended April 4, March 29, (#039;s in millions) 2015 2014 Net cash used for operating activities* $ (125.9) $ (124.1) Net cash provided by (used for): Capital expenditures (33.8) (21.0) Proceeds from sale of prop
Slide 26: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Main factors affecting cash balances $636 • Free cash flow of $(168) million • Share repurchases of $(20) million $426 (approximately 374K shares) $’s in millions • Dividends paid of $(12) million • Discontinued operations cash
Slide 27: 2015 Outlook – P&L, as adjusted
Brunswick Corporation – Earnings Release 2015 Outlook – P&L, as adjusted • Depreciation and amortization estimate of approximately $90 million • Pension expense of approximately $13 million, a decrease of $2 million • Net interest expense of approximately $26 million • Combined equity earnings and o
Slide 28: 2015 Outlook: Cash Flow Assumptions
Brunswick Corporation – Earnings Release 2015 Outlook: Cash Flow Assumptions • Pension cash contributions of approximately $70 million to $75 million • Current plan anticipates working capital changes to result in a modest usage of cash of $20 million to $40 million • Capital expenditure levels of a
Slide 29: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 29 April 29, 2015
Slide 30: Outlook for Brunswick 2015
Outlook for Brunswick 2015 2015 Financial Targets • Revenue growth of approximately 6 percent to 8 percent • Slight improvement in gross margin levels • Operating expenses, as a percent of sales, to be lower than prior year • Solid gains in operating margins • Adjusted pretax earnings growth of 15 p
Slide 31: Outlook for Brunswick 2015: Second Quarter Early Forecast
Outlook for Brunswick 2015 Second Quarter – Early Forecast • Revenue growth in the 6 to 8 percent range • Consolidated operating margin to be flat compared to prior year 31 April 29, 2015
Slide 32: Marine Engine Segment
Marine Engine Segment Continued Revenue and Operating Earnings Growth Summary of Growth Strategy Financial Targets • Drive consistent, profitable growth • 2014 to 2016 Targets • Product leadership • Be the best partner • Revenue CAGR in mid-single • Enhance the winning culture digit percent range •
Slide 33: Boat Group Segment
Boat Group Segment Gain Market Share and Improve Profitability Summary of Growth Strategy Financial Targets • Establishing product leadership • 2014 to 2016 Targets through repeated product feature • Revenue CAGR in mid-single to innovation on key consumer values high-single digit range • Leveraging
Slide 34: Fitness Segment
Fitness Segment Continued Revenue Growth with Strong Margins Summary of Growth Strategy Financial Targets • Aggressively leverage innovation to • 2014 to 2016 Targets achieve competitive differentiation • Revenue CAGR in mid-single to • Develop new products and services high-single digit range compl
Slide 35: Capital Strategy - 2015 to 2016
Capital Strategy - 2015 to 2016 2015 to 2016 Plan • Maintain strong cash and liquidity positions and regain investment grade credit rating • Strengthen Marine and Fitness segments: • Investing in growth is first priority • Pursue acquisition opportunities with initial focus on Mercury parts and acce
Slide 36: Earnings Conference Call Q1, 2015
Brunswick Earnings Conference Call Q1, 2015 Helping Active People Live Active Lives
Slide 37: Appendix
Appendix Helping Active People Live Active Lives
Slide 38: U.S. Powerboat Industry – 2014 & 2013
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – 2014 & 2013 2014 - Units Q1-14 Q2-14 Q3-14 Q4-14 YTD AL – Fish 8,500 17,802 9,783 3,297 39,382 AL - Pontoon 4,781 21,518 11.014 1,851 39,164 FG - Outboard 8,385 16,052 11,245 5,159 40,841 Outboard Boats 21,666 55,372 32,042 10,307 11
Slide 39: 2014 Consolidated Statements of Operations, as adjusted
Brunswick Corporation – Earnings Release 2014 Consolidated Statements of Operations, as adjusted* 2014 Q1 Q2 Q3 Q4 Net Sales $ 894.9 $ 1,073.1 $ 932.1 $ 938.6 Cost of sales 651.6 768.8 672.9 708.6 Selling, general and administrative expense 133.0 134.9 134.9 153.8 Research and development expense 28
Slide 40: 2014 Consolidated Statements of Operations, GAAP
Brunswick Corporation – Earnings Release 2014 Consolidated Statements of Operations, GAAP 2014 Q1 Q2 Q3 Q4 Net Sales $ 894.9 $ 1,073.1 $ 932.1 $ 938.6 Cost of sales 651.6 768.8 672.9 708.6 Selling, general and administrative expense 133.0 134.9 134.9 153.8 Research and development expense 28.4 28.0