Slide 1: Brunswick Earnings Conference Call Q3, 2017
Brunswick Earnings Conference Call Q3, 2017 October 26, 2017
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: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer October 26, 2017 4
Slide 5: Overview of Third Quarter 2017
Brunswick Corporation - Earnings Release Overview of Third Quarter 2017 • Global marine market is healthy and performing in line with our expectations • Challenges in the boat segment related to large fiberglass sterndrive / inboard boat category and hurricane activity • Changing global market envir
Slide 6: Overview of Third Quarter 2017
Brunswick Corporation - Earnings Release Overview of Third Quarter 2017 • Revenue increased 4.4 percent over third quarter 2017 • Gross margin of 27.4 percent • Diluted EPS, as adjusted1, of $0.91, equal to third quarter 2016 • Strong growth in the outboard engine and aluminum outboard boat business
Slide 7: U.S. Powerboat Industry - Percentage Change in Retail Units
Brunswick Corporation - Earnings Release U.S. Powerboat Industry - Percentage Change in Retail Units Q1-17 Q2-17 Q3-17 YTD-17 YTD-16 AL – Fish 4% 3% 5% 4% 3% AL - Pontoon 5% 10% 4% 7% 8% FG - Outboard 8% 7% 0% 5% 5% (1) Outboard Boats 6% 7% 3% 6% 5% FG – SD/IB (14-30 ft.) (6)% (3)% (12)% (6)% (4)% F
Slide 8: Review of Brunswick Boat segment retail sales metrics
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment retail sales metrics Retail Boat (units) Growth Rates1 U.S. Global Q3 2017 9% 4% YTD 2017 4% 3% FY 2015 9% 3% FY 2016 8% 3% Brunswick's internal boat registrations continue to show year-over-year retail growth in the U.S. and
Slide 9: Year-to-date Revenue By Region - Marine Segments
Brunswick Corporation - Earnings Release Year-to-date Revenue By Region - Marine Segments 2017 vs. 2016 Region Growth Rates 1 2016 Mix 2 U.S. 6% 71% Europe 10% 11% Canada 6% 7% Asia Pacific 8% 7% Latin America 12% 3% Africa & Middle East 1% 1% Total 6% 100% Global revenue in our combined marine segm
Slide 10: Year-to-date Revenue By Region - Fitness Segment
Brunswick Corporation - Earnings Release Year-to-date Revenue By Region - Fitness Segment 2017 vs. 2016 Region Growth Rates 1 2016 Mix 2 U.S. 1% 56% Europe (5)% 18% Asia Pacific 19% 13% Latin America 13% 5% Africa & Middle East (1)% 4% Canada (14)% 4% Total 2% 100% Global revenue in our Fitness segm
Slide 11: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer October 26, 2017 11
Slide 12: Q3 Net Sales increased by $48.5 million, or 4%
Brunswick Corporation - Earnings Release Q3 Net Sales increased by $48.5 million, or 4% Net Sales Three Months Ended Sep 30, Oct 1, % Change Segments (#039;s in millions) 2017 2016 GAAP1 Marine Engine $ 669.2 $ 625.7 7.0% Boat 309.3 307.0 0.7% Marine eliminations (79.8) (77.3) Total Marine 898.7 855.4
Slide 13: First Nine Months Net Sales increased by $248.3 million, or 7%
Brunswick Corporation - Earnings Release First Nine Months Net Sales increased by $248.3 million, or 7% Net Sales Nine Months Ended Sep 30, Oct 1, % Change Segments (#039;s in millions) 2017 2016 GAAP1 Marine Engine $ 2,067.2 $ 1,940.9 6.5% Boat 1,104.1 1,011.9 9.1% Marine eliminations (246.4) (233.0)
Slide 14: Marine Engine segment - Q3 sales by region
Brunswick Corporation - Earnings Release Marine Engine segment - Q3 sales by region Q3 - 2017 % Change Region % of Sales GAAP Constant Currency United States 70% 4% 4% Europe 10% 7% 4% Rest-of-World 20% 18% 16% Total 100% 7% 6% • Solid growth in the U.S. and Europe driven by outboard engines and par
Slide 15: Q3 Outboard and Sterndrive Engines
Brunswick Corporation - Earnings Release Q3 Outboard and Sterndrive Engines Outboard • Favorable retail demand, particularly in higher horsepower categories • Benefits from market share gains in targeted saltwater, repower and commercial markets reflecting recently launched products Sterndrive • Unf
Slide 16: Q3 Marine Engine segment's Parts & Accessories
Brunswick Corporation - Earnings Release Q3 Marine Engine segment's Parts & Accessories Boating Accessories Service Parts • Solid sales growth in the Propellers quarter, with strong increases in international markets • Revenue benefited from recent acquisitions, new product launches and Oil & Lubes
Slide 17: Factors affecting Marine Engine segment's Q3 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Marine Engine segment's Q3 operating earnings Key Factors • Higher sales • Cost efficiencies • Favorable foreign exchange impacts • Increases in growth-related investments in advance of new product introductions Q3 operating margin at 17.2%
Slide 18: Boat segment - Q3 sales by region
Brunswick Corporation - Earnings Release Boat segment - Q3 sales by region Q3 - 2017 % Change Region % of Sales GAAP Constant Currency United States 78% (1)% (1)% Europe 8% 28% 22% Rest-of-World 14% (1)% (2)% Total 100% 1% 0% • Strong sales growth in the aluminum outboard boat business • Demand-rela
Slide 19: Review of Brunswick Boat segment sales metrics versus prior year
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment sales metrics versus prior year Third Quarter YTD Global U.S. Global U.S. Wholesale (units) 6% 8% 7% 8% Net Sales (dollars)1 0% (1)% 9% 9% 1 Growth in constant currency. October 26, 2017 19
Slide 20: Review of Brunswick Boat segment pipeline metrics
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment pipeline metrics Ending Change Pipeline % Change in % Change in Weeks on Versus Wholesale Levels Units Retail Units Hand Prior Year YTD 15 27 Flat 4% 4% YTD 16 26 -1 week 2% 4% YTD 17 27 +1 week 7% 3% FY 15 35 Flat 2% 4% FY 16
Slide 21: Boat Segment Ending Weeks On Hand
Brunswick Corporation - Earnings Release Boat Segment Ending Weeks On Hand 45 40 35 30 25 20 Q1 Q2 Q3 Q4 2013 2014 2015 2016 2017 October 26, 2017 21
Slide 22: Factors affecting Boat segment's Q3 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Boat segment's Q3 operating earnings1 Key Factors • Slightly higher sales • Unfavorable changes in sales mix • Manufacturing inefficiencies, including costs related to the hurricane preparation and recovery efforts. Year-to-date as adjusted
Slide 23: Fitness segment - Q3 sales by region
Brunswick Corporation - Earnings Release Fitness segment - Q3 sales by region % Change Q3 - 2017 Constant Ex. Region % of Sales GAAP Currency Acquisition United States 53% 5% 5% 3% Europe 19% (2)% (5)% (9)% Rest-of-World 28% (0)% 1% (1)% Total 100% 2% 2% (0)% • Revenue increases resulted from the IC
Slide 24: Factors affecting Fitness segment's Q3 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Fitness segment's Q3 operating earnings1 Key Factors • Benefits from acquisitions and cost reduction efforts • More challenging competitive dynamics in certain international markets • Unfavorable changes in sales mix Q3 as adjusted operating
Slide 25: Review of foreign currency impact
Brunswick Corporation - Earnings Release Review of foreign currency impact1 40% Q3 2017: • Favorable impact on sales of less than 35% one percent • Favorable impact on operating earnings 30% LA/Other of approximately $4 million 25% Canada Outlook 2017: % of Total Sales International Sales • Slightly
Slide 26: Tax Provision
Brunswick Corporation - Earnings Release Tax Provision Q3 Year-to-date 2017 2016 2017 2016 Effective tax rate - GAAP 27.5% 27.8% 27.3% 29.8% Effective tax rate, as adjusted (1) (2) 29.1% 30.5% 27.9% 30.8% Effective tax rate, ex. share-based comp. tax 29.2% 30.5% 29.9% 30.8% benefits (2) Estimated 20
Slide 27: Cash Flow - Continuing Operations
Brunswick Corporation - Earnings Release Cash Flow - Continuing Operations Nine Months Ended (#039;s in millions) 2017 2016 Net earnings1 $ 263.3 $ 256.6 Depreciation and amortization 83.2 77.0 Pension funding, net of expense (51.0) (61.7) Changes in certain current assets and current liabilities (100.
Slide 28: Free Cash Flow - Continuing Operations
Brunswick Corporation - Earnings Release Free Cash Flow - Continuing Operations Nine Months Ended (#039;s in millions) 2017 2016 Net cash provided by operating activities1 $ 255.1 $ 293.2 Net cash provided by (used for): Capital expenditures (153.4) (131.9) Proceeds from sale of property, plant and equ
Slide 29: 2017 Outlook - P&L
Brunswick Corporation - Earnings Release 2017 Outlook - P&L 2017 Estimate Change from Prior Guidance Depreciation and amortization ~$115 - $120 million Change Pension expense ~$10 million No change Net interest expense ~$25 million No change Combined equity earnings Higher than 2016 No change and ot
Slide 30: 2017 Outlook: Cash Flow Assumptions
Brunswick Corporation - Earnings Release 2017 Outlook: Cash Flow Assumptions 2017 Estimate Change from Prior Guidance Greater than $250 Free cash flow No change million Working capital usage ~$30 - $50 million No change Capital expenditures ~$185 - $195 million No change Pension cash contributions ~
Slide 31: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer October 26, 2017 31
Slide 32: Outlook for Brunswick 2017
Outlook for Brunswick 2017 2017 Financial Targets • Revenue growth of approximately 7 percent • Operating expenses, as a percent of sales, to be lower than prior year • Modest decline in operating margins • Operating leverage of mid-to-high-single digit percentage • 2017 Diluted EPS, as adjusted, of
Slide 33: Outlook for Brunswick 2018
Outlook for Brunswick 2018 2018 Financial Target • 2016-2018 plan, previously communicated, included 2018 Diluted EPS, as adjusted, target to $4.55 to $4.95 • Updated 2018 Diluted EPS, as adjusted, guidance of $4.20 to $4.401 1 Includes estimated share repurchases of $100 million in 2018, but exclud
Slide 34: Marine Engine Segment
Marine Engine Segment Solid Revenue Growth and Strong Margins 2017 Financial Targets • Revenue growth of 6 to 7 percent • Modest improvement in operating margin October 26, 2017 34
Slide 35: Boat Group Segment
Boat Group Segment Strong Revenue Growth with Continued Profitability 2017 Financial Targets • Revenue growth of 7 to 8 percent • Decrease in operating margin October 26, 2017 35
Slide 36: Fitness Segment
Fitness Segment Solid Revenue Growth with Decreased Margins 2017 Financial Targets • Revenue growth of 5 to 6 percent • Decrease in operating margin October 26, 2017 36
Slide 37: Earnings Conference Call Q3, 2017
Brunswick Earnings Conference Call Q3, 2017
Slide 38: Appendix
BRUNSWICK Appendix
Slide 39: Q3 Adjusted Operating Earnings decreased by $6.4 million, or 5%
Brunswick Corporation - Earnings Release Q3 Adjusted Operating Earnings decreased by $6.4 million, or 5% Operating Earnings - Excluding Charges Three Months Ended September 30, October 1, Segment (#039;s in millions) 2017 2016 Change Marine Engine $ 115.2 $ 109.5 $ 5.7 Boat 0.1 6.8 (6.7) Total Marine 1
Slide 40: First Nine Months Adjusted Operating Earnings increased by $7.8 million
Brunswick Corporation - Earnings Release First Nine Months Adjusted Operating Earnings increased by $7.8 million, or 2% Operating Earnings - Excluding Charges Nine Months Ended September 30, October 1, Segment (#039;s in millions) 2017 2016 Change Marine Engine $ 351.9 $ 326.8 $ 25.1 Boat 39.6 45.9 (6.
Slide 41: Other factors affecting GAAP pre-tax earnings
Brunswick Corporation - Earnings Release Other factors affecting GAAP pre-tax earnings Q3 Year-to-date $ in millions 2017 2016 2017 2016 Restructuring, exit and integration charges $6.8 $2.4 $27.7 $8.8 In 2017, we are planning to incur $33 to $34 million of restructuring, exit and integration costs