Slide 1: Earnings Conference Call Q4 2019
Earnings Conference Call Q4 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: Discontinued Operations
Brunswick Corporation – Earnings Release Discontinued Operations On June 27, 2019, Brunswick completed the sale of its Fitness business. Starting with the second quarter of 2019, the historical and future results of this business are now reported as discontinued operations. Therefore, for all period
Slide 5: Business Overview
BUSINESS OVERVIEW Dave Foulkes – CEO |5 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 6: 2019 in Review
Brunswick Corporation – 2019 in Review Strong Performance in Response to Early-Season Market Challenges Top line growth as Boat pipeline Marine retail Meaningful anticipated, solid inventory environment advances in margin accretion essentially in line improved in marine technology with 2018 on sec
Slide 7: Marine Engine Segment – 2019 Overview
Brunswick Corporation – Earnings Release Marine Engine Segment – 2019 Overview1 Top-line up 2.7%, adjusted operating margin improvement of 100 bps • Record earnings • Strong increases in gross and operating margins • Continued robust demand and market share gains in 175+ horsepower outboard engine c
Slide 8: Boat Segment – 2019 Overview
Brunswick Corporation – Earnings Release Boat Segment – 2019 Overview1 Adjusted net sales down 6.1%, adjusted operating margins of 5.9% with healthy dealer pipelines and significant new product activity • Strong sales growth at Sea Ray and increases at Lund • Operating margins influenced mostly by l
Slide 9: FY Revenue Growth Rates By Region
Brunswick Corporation – Earnings Release FY Revenue Growth Rates By Region1 Consolidated Region Engines Boats Total BC 2019 Mix revenue grew U.S. (4)% (8)% (4)% 69% by 1 percent; Europe 7% (8)% 4% 13% Canada (5)% 0% (2)% 7% Asia-Pacific 9% (8)% 7% 7% On a constant Rest-of-World 8% (2)% 6% 4% cur
Slide 10: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units Category 1H-19 2H-19 FY-19 FY-18 Outboard Boats (7)% 3% (3)% 5% Fiberglass SD/IB 2019 industry (10)% (14)% (11)% (4)% Boats unit volume for Main Powerboat the main (7)% 1% (4)% 4% Segments powerboa
Slide 11: Capital Strategy Update
Brunswick Corporation – Earnings Release Capital Strategy Update We successfully executed our capital plan including fully deploying the proceeds from the Fitness sale • Completed $400 million of share repurchases • Exited defined benefit pension plans, resulting in a ~$310 million after-tax, non- c
Slide 12: Financial Overview
FINANCIAL OVERVIEW Bill Metzger – CFO | 12 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 13: Overview of Full-Year 2019
Brunswick Corporation – Earnings Release Overview of Full-Year 20191 Consolidated results on an as adjusted basis vs. FY 2018: Diluted EPS of $4.33, Operating margin of 12.9 Net sales up 1 percent up 5 percent percent, up 50 bps Operating earnings Operating leverage of increased 6 percent 75 percent
Slide 14: Overview of Fourth Quarter 2019
Brunswick Corporation – Earnings Release Overview of Fourth Quarter 20191 Consolidated results on an as adjusted basis vs. Q4 2018: Diluted EPS of $0.82, Net sales down 4 Operating margin of 10.0 up 6 percent percent percent, down 70 bps Operating earnings Operating deleverage of decreased 10 percen
Slide 15: Marine Engine Segment – Q4 Performance
Brunswick Corporation – Earnings Release Marine Engine segment – Q4 Performance1 Product Category Sales ($M) % Change Propulsion $335.2 (5)% Parts & Accessories $330.6 4% Total $665.8 (1)% Operating Margin Operating Earnings - Adjusted @ 13.7 percent, down 40 bps - Adjusted of $91.5M, down 3 percent
Slide 16: Boat Segment – Q4 Performance
Brunswick Corporation – Earnings Release Boat segment – Q4 Performance1 % Change in Product Category Sales ($M) Adjusted Net Sales Aluminum Freshwater $124.4 (21)% Recreational Fiberglass 107.3 (1)% Saltwater Fishing 76.9 (27)% Business Acceleration 8.2 NM Total $316.8 (15)%2 Operating Earnings Oper
Slide 17: Boat Segment Pipeline Metrics
Boat Segment pipeline metrics Ending Change Units in Change As expected, Year Weeks on Versus Prior Pipeline Versus Prior pipelines have Hand Year (WOH) (thousands) Year (Units) returned to normal and are well- 19 36.6 +0.4 week 23.7 (7)% positioned to begin the boat show 18 36.2 +0.4 week 25.4 1%
Slide 18: Other Factors Affecting GAAP Operating Earnings
Brunswick Corporation – Earnings Release Other factors affecting GAAP operating earnings1 $ in millions Q4 Full-Year 2019 2018 2019 2018 Restructuring, exit, impairment, and other $3.8 $8.6 $21.0 $54.8 charges Purchase accounting amortization 7.5 11.8 29.5 21.2 Acquisition-related Costs 0.8 0.8 2.6
Slide 19: 2020 Guidance
2020 Guidance 2020 diluted EPS, as adjusted, range of $5.10 to $5.40 Revenue growth of 6 to 8 percent Operating margin improvements of 40 to 60 bps Operating earnings growth of low-double digit percent; Operating expense to decrease as % of sales 5 2020 FCF in excess of $325 million Q1: Challenging
Slide 20: Tariff Update
Brunswick Corporation – Earnings Release Tariff Update Change from Q3 call We anticipate 2020 estimates incorporate tariffs paid on 40 a net impact to 60 horsepower outboard engines assembled in our Suzhou, China facility More Negative to 2020 pre- tax earnings Assumes Waves 1- 3 staying at 25% ra
Slide 21: 2020 Outlook – P&L and Cash Flow
Brunswick Corporation – Earnings Release 2020 Outlook – P&L and Cash Flow 2020 Estimates Free cash flow Exceeding $325 million Working capital usage ~$30 - $50 million Depreciation and amortization1 ~$120 - $130 million Acquisition intangible amortization2 ~$30 million Combined equity earnings and o
Slide 22: 2020 Outlook – Capital Strategy Assumptions
Brunswick Corporation – Earnings Release 2020 Outlook – Capital Strategy Assumptions 2020 Estimates Debt retirement ~$100 million Capital expenditures ~$200 - $220 million Share repurchases ~$100 million Quarterly dividends $0.24 per share Net interest expense ~$65 million | 22 ©2019 Brunswick Co. C
Slide 23: 2020 Outlook
2020 OUTLOOK Dave Foulkes – CEO | 23 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 24: Changes to Reporting Segments
Brunswick Corporation – Earnings Release Changes to Reporting Segments Mercury Engine Parts & Distribution Recreational Aluminum Consumables Fiberglass Fish Outboard Engines Propulsion P&A Boats Business Acceleration Saltwater Controls & Sterndrive/IB Advanced Systems Fish Rigging Group $1.7B ~14% $
Slide 25: Propulsion Segment
Propulsion Segment Strength in Outboard Engines and Propulsion Control Systems Along with Sterndrive Enhancements Operating and Strategic Priorities Capitalize on share Continued technology gain opportunity with leadership capacity expansion Strong new product Sterndrive product pipeline enhancement
Slide 26: Parts & Accessories Segment
Parts & Accessories Segment Strong Power Products Growth and Steady Aftermarket Sales Supported by Broad Distribution Footprint Operating and Strategic Priorities Capitalize on Identify M&A targets to normalized broaden technology and aftermarket sales product profile Expand Power Growth in Advanced
Slide 27: Boat Segment
Boat Segment New Product Introductions and Margin Improvements Lead to Strong Earnings Growth Operating and Strategic Priorities Focus on operational New product launches excellence and margin and technology improvement leadership Expand Freedom Leverage scale Boat Club and service businesses 2020 S
Slide 28: CES 2020 Highlights
Brunswick CES 2020 Highlights • Brunswick exhibited at CES for first time • New product launch -- Sea Ray SLX-R 400e • Extremely heavy traffic throughout event “We have booth envy” (car executive); many said it was the best exhibit of the show • ~75,000 images of the boat/engine captured in 4 days
Slide 29: Slide 29
Slide 30: Appendix
Appendix | 30
Slide 31: GAAP to Non-GAAP Reconciliations
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations | 31 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 32: Q4 Adjusted Net Sales decreased by $38.1 million, or 4.0 percent
Brunswick Corporation – Earnings Release Q4 Adjusted Net Sales decreased by $38.1 million, or 4.0 percent ($ in millions) Net Sales - GAAP Net Sales - As Adjusted 1 % % Segment Q4 2019 Q4 2018 Change Q4 2019 Q4 2018 Change Marine Engine $ 665.8 $ 669.5 (0.6)% $ 665.8 $ 669.5 (0.6)% Boat 316.8 377.3
Slide 33: FY Adjusted Net Sales increased by $37.6 million, or 0.9 percent
Brunswick Corporation – Earnings Release FY Adjusted Net Sales increased by $37.6 million, or 0.9 percent ($ in millions) Net Sales - GAAP Net Sales - As Adjusted 1 Segment FY 2019 FY 2018 % Change FY 2019 FY 2018 % Change Marine Engine $ 3,073.5 $ 2,993.6 2.7% $ 3,073.5 $ 2,993.6 2.7% Boat 1,333.8
Slide 34: Q4 Adjusted Net Sales
Brunswick Corporation – Earnings Release Q4 Adjusted1 Net Sales 1Excludes net sales related to Sea Ray Sport Yacht and Yacht operations, see today's Form 8-K for reconciliation to GAAP figures and for information on marine eliminations . | 34 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 35: FY Adjusted Net Sales
Brunswick Corporation – Earnings Release FY Adjusted1 Net Sales . 1Excludes net sales related to Sea Ray Sport Yacht and Yacht operations, see today's Form 8-K for reconciliation to GAAP figures and for information on marine eliminations | 35 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 36: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision Estimated 2020 effective book Q4Full-Year tax rate, as 2019 2018 2019 2018 adjusted, is Effective tax rate - GAAP (22.0)% 16.1% 72.5% 18.4% Effective tax rate, as adjusted (1) 12.7% 20.3% 20.3% 21.1% between 21 and 22 percent on tax guidance i
Slide 37: Review of Foreign Currency Impact
Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q4 2019: • Unfavorable impact on sales of less than 1 LA/Other percent • Unfavorable impact on operating earnings of Canada approximately $4 million Outlook for Full-Year 2020: Asia Pacific • Neutral impact on consolidated s
Slide 38: Free Cash Flow
Brunswick Corporation – Earnings Release Free Cash Flow Full Year ($ in millions) 2019 2018 Net cash provided by operating activities from continuing operations $ 475.3 $ 274.5 Net cash provided by (used for): Plus: Capital expenditures (232.6) (180.2) Plus: Proceeds from sale of property, plant and