Slide 1: Brunswick Earnings Conference Call Q2, 2017
Brunswick Earnings Conference Call Q2, 2017 July 27, 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: Presenters: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer July 27, 2017 4
Slide 5: Overview of Second Quarter 2017
Brunswick Corporation - Earnings Release Overview of Second Quarter 2017 • Revenue increased 8.8 percent with acquisitions contributing approximately 2 percent of growth • Strong growth rates in all three primary boat categories as well as in our outboard engine and Fitness businesses, as well as so
Slide 6: U.S. Powerboat Industry - Percentage Change in Retail Units
Brunswick Corporation - Earnings Release U.S. Powerboat Industry - Percentage Change in Retail Units FY 15 FY 16 1H-16 2H-16 Q1-17 Q2-17 1H-17 AL – Fish 8% 4% 4% 2% 3% 2% 2% AL - Pontoon 8% 9% 11% 3% 1% 7% 6% FG - Outboard 9% 6% 6% 2% 6% 6% 6% (1) Outboard Boats 8% 5% 7% 2% 4% 5% 5% FG – SD/IB (14-3
Slide 7: Review of Brunswick Boat segment retail sales metrics
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment retail sales metrics Second Quarter YTD Global U.S. Global U.S. Retail (units) 0% (2)% 3% 2% July 27, 2017 7
Slide 8: 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* 2016 Mix** U.S. 8% 71% Europe 10% 11% Canada 7% 7% Asia Pacific 7% 7% Latin America 15% 3% Africa & Middle East (9)% 1% Total 8% 100% Global revenue in our combined marine seg
Slide 9: 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* 2016 Mix** U.S. 0% 56% Europe 3% 18% Asia Pacific 17% 13% Latin America 8% 5% Africa & Middle East 15% 4% Canada (9)% 4% Total 4% 100% Global revenue in our fitness segment ex
Slide 10: Presenters: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer July 27, 2017 10
Slide 11: Q2 Net Sales increased by $109.8 million, or 9%
Brunswick Corporation - Earnings Release Q2 Net Sales increased by $109.8 million, or 9% Net Sales Three Months Ended July 1, July 2, % Change Acquisition Segments (#039;s in millions) 2017 2016 GAAP1 Contribution Marine Engine $ 766.2 $ 719.7 6.5% 0.9% Boat 412.1 368.1 12.0% 1.5% Marine eliminations (
Slide 12: First Half Net Sales increased by $199.8 million, or 9%
Brunswick Corporation - Earnings Release First Half Net Sales increased by $199.8 million, or 9% Net Sales Six Months Ended July 1, July 2, % Change Acquisition Segments (#039;s in millions) 2017 2016 GAAP1 Contribution Marine Engine $ 1,398.0 $ 1,315.2 6.3% 1.0% Boat 794.8 704.9 12.8% 1.3% Marine elim
Slide 13: Marine Engine segment - Q2 sales by region
Brunswick Corporation - Earnings Release Marine Engine segment - Q2 sales by region Q2 - 2017 % Change Region % of Sales GAAP Constant Currency United States 72% 5% 5% Europe 12% 4% 8% Rest-of-World 16% 16% 17% Total 100% 6% 7% Based on Constant Currency • Strong U.S. growth in outboard engines and
Slide 14: Q2 Outboard and Sterndrive Engines
Brunswick Corporation - Earnings Release Q2 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 • Unfa
Slide 15: Q2 Marine Engine segment's Parts & Accessories
Brunswick Corporation - Earnings Release Q2 Marine Engine segment's Parts & Accessories Boating Accessories Service Parts • Solid sales growth in the Propellers quarter with most of the increase in international markets • Revenue benefited from a recent acquisition, new Oil & Lubes Trolling Motors C
Slide 16: Factors affecting Marine Engine segment's Q2 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Marine Engine segment's Q2 operating earnings Key Factors • Higher sales • Cost efficiencies • Unfavorable foreign exchange impacts • Increases in growth-related investments Q2 operating margin at 19.3% July 27, 2017 16
Slide 17: Boat segment - Q2 sales by region
Brunswick Corporation - Earnings Release Boat segment - Q2 sales by region Q2 - 2017 % Change Region % of Sales GAAP Constant Currency United States 73% 12% 12% Europe 10% 7% 11% Rest-of-World 17% 13% 14% Total 100% 12% 12% • Strong sales growth in each of our three primary boat categories • Growth
Slide 18: Review of Brunswick Boat segment sales metrics versus prior year
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment sales metrics versus prior year Second Quarter YTD Global U.S. Global U.S. Wholesale (units) 2% 3% 7% 8% Net Sales (dollars)* 12% 12% 13% 14% *Growth in constant currency July 27, 2017 18
Slide 19: Review of Brunswick Boat segment pipeline metrics
Brunswick Corporation - Earnings Release Review of Brunswick Boat segment pipeline metrics Ending Change % Change in Pipeline % Change in Weeks on Versus Wholesale Levels Retail Units Hand Prior Year Units YTD 15 31 -3 weeks 2% 7% YTD 16 29 -2 weeks (1)% 6% YTD 17 30 +1 week 7% 3% FY 15 35 Flat 2% 4
Slide 20: Factors affecting Boat segment's Q2 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Boat segment's Q2 operating earnings* Key Factors • Higher sales • Unfavorable increases in warranty costs and legal expenses Q2 adjusted operating margin at 6.3%; On a GAAP basis at 6.0% *As adjusted, excluding restructuring, exit and integ
Slide 21: Fitness segment - Q2 sales by region
Brunswick Corporation - Earnings Release Fitness segment - Q2 sales by region % Change Q2 - 2017 Constant Ex. Region % of Sales GAAP Currency Acquisition United States 52% 3% 3% 1% Europe 18% 9% 14% 6% Rest-of-World 30% 22% 22% 16% Total 100% 9% 10% 6% • Sales in the U.S. (excluding acquisitions) be
Slide 22: Factors affecting Fitness segment's Q2 operating earnings
Brunswick Corporation - Earnings Release Factors affecting Fitness segment's Q2 operating earnings* Key Factors • Higher sales • Acquisition benefits and cost reduction actions • Net unfavorable margin impact of changes in sales mix • Impact of planned costs associated with capacity expansions, new
Slide 23: International Sales - Review of foreign currency impact
Brunswick Corporation - Earnings Release Review of foreign currency impact1 35% Q2 2017: • Unfavorable impact on sales of less than 30% one percent LA/Other • Unfavorable impact on operating earnings of approximately $4 million 25% Canada Outlook 2017: % of Total Sale International Sales 20% • Minim
Slide 24: Tax Provision
Brunswick Corporation - Earnings Release Tax Provision Q2 Year-to-date 2017 2016 2017 2016 Effective tax rate - GAAP 28.3% 30.8% 27.3% 30.8% Effective tax rate, as adjusted (1) (2) 28.9% 30.9% 27.4% 30.9% Effective tax rate, ex. share-based comp. tax 30.3% 30.9% 30.2% 30.9% benefits (2) Change in se
Slide 25: Cash Flow - Continuing Operations
Brunswick Corporation - Earnings Release Cash Flow - Continuing Operations Six Months Ended (#039;s in millions) 2017 2016 Net earnings* $ 184.3 $ 171.3 Depreciation and amortization 55.2 50.6 Pension funding, net of expense (37.5) (29.5) Changes in certain current assets and current liabilities (88.8)
Slide 26: Free Cash Flow - Continuing Operations
Brunswick Corporation - Earnings Release Free Cash Flow - Continuing Operations Six Months Ended (#039;s in millions) 2017 2016 Net cash provided by operating activities* $ 171.8 $ 221.3 Net cash provided by (used for): Capital expenditures (107.9) (90.0) Proceeds from sale of property, plant and equip
Slide 27: 2017 Outlook - P&L
Brunswick Corporation - Earnings Release 2017 Outlook - P&L 2017 Estimate Change from Prior Conference Call Depreciation and amortization ~$120 million No change Pension expense ~$10 million No change Net interest expense ~$25 million Change Combined equity earnings Higher than 2016 Change and other
Slide 28: 2017 Outlook: Cash Flow Assumptions
Brunswick Corporation - Earnings Release 2017 Outlook: Cash Flow Assumptions 2017 Estimate Change from Prior Usage of Conference Call Working capital usage ~$30 - $50 million No change Capital expenditures ~$185 - $195 million No change Pension cash contributions ~$75 million No change Low-to-mid-te
Slide 29: Presenters: Mark Schwabero and Bill Metzger
Brunswick Corporation - Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer July 27, 2017 29
Slide 30: Outlook for Brunswick 2017
Outlook for Brunswick 2017 2017 Financial Targets • Revenue growth of 7 to 8 percent • Operating expenses, as a percent of sales, to be lower than prior year • Slight improvement in operating margins • Operating leverage of mid-teen percentage • Diluted EPS, as adjusted, of $4.00 to $4.10 July 27, 2
Slide 31: Marine Engine Segment
Marine Engine Segment Solid Revenue Growth and Strong Margins 2017 Financial Targets • Revenue growth in the mid-single digits • Solid improvement in operating margin July 27, 2017 31
Slide 32: Boat Group Segment
Boat Group Segment Strong Revenue Growth with Improved Profitability 2017 Financial Targets • Revenue growth in the high-single digits • Improvement in operating margin July 27, 2017 32
Slide 33: Fitness Segment
Fitness Segment Strong Revenue Growth with Strong Margins 2017 Financial Targets • Revenue growth in the high-single digits • Slight reduction in operating margins July 27, 2017 33
Slide 34: Earnings Conference Call Q2, 2017
Brunswick Earnings Conference Call Q2, 2017
Slide 35: Appendix
BRUNSWICK Appendix
Slide 36: Q2 Adjusted Operating Earnings increased by $9.8 million, or 6%
Brunswick Corporation - Earnings Release Q2 Adjusted Operating Earnings increased by $9.8 million, or 6% Operating Earnings - Excluding Charges Three Months Ended July 1, July 2, Segment (#039;s in millions) 2017 2016 Change Marine Engine $ 148.2 $ 139.0 $ 9.2 Boat 25.9 22.7 3.2 Total Marine 174.1 161.
Slide 37: First Half Adjusted Operating Earnings increased by $14.2 million, or 5%
Brunswick Corporation - Earnings Release First Half Adjusted Operating Earnings increased by $14.2 million, or 5% Operating Earnings - Excluding Charges Six Months Ended July 1, July 2, Segment (#039;s in millions) 2017 2016 Change Marine Engine $ 236.7 $ 217.3 $ 19.4 Boat 39.5 39.1 0.4 Total Marine 27
Slide 38: Other factors affecting GAAP pre-tax earnings
Brunswick Corporation - Earnings Release Other factors affecting GAAP pre-tax earnings Q2 Year-to-date $ in millions 2017 2016 2017 2016 Restructuring, exit and integration charges $5.7 $2.6 $20.9 $6.4 In 2017, we are planning to incur $26 to $28 million of restructuring, exit and integration costs
Slide 39: Year-to-Date U.S. Boat Market Regional Trends
Brunswick Corporation - Earnings Release Year-to-Date U.S. Boat Market Regional Trends OB Region % of Total SSI Registrations Southeast 39% 6% 9% Northeast 14% (2)% 5% Midwest 28% 3% 8% Southwest 8% 4% 4% Northwest 12% (3)% 3% Total 100% 3% 7% July 27, 2017 39