Slide 1: Brunswick Earnings Conference Call Q1, 2014
Brunswick Earnings Conference Call Q1, 2014 April 24, 2014 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
Brunswick Corporation – Earnings Release Use of Non-GAAP Financial Information 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 flows that exclude amounts, o
Slide 4: Overview of First Quarter, 2014
Brunswick Corporation – Earnings Release Overview of First Quarter, 2014 • Revenue decreased 3 percent as growth in fitness equipment and outboard boats was more than offset by revenue declines in outboard and sterndrive engines, fiberglass sterndrive/inboard boats and bowling and billiards • Gross
Slide 5: Q1 Net Sales decreased by $26.1 million, or 3%
Brunswick Corporation – Earnings Release Q1 Net Sales decreased by $26.1 million, or 3% Net Sales Three Months Ended March 29, March 30, Segment (#039;s in millions) 2014 2013 % Change Marine Engine $ 505.1 $ 521.8 (3)% Boat 282.8 289.7 (2)% Marine eliminations (73.1) (67.6) Total Marine 714.8 743.9 (4
Slide 6: Q1 Adjusted Operating Earnings decreased by $0.8 million
Brunswick Corporation – Earnings Release Q1 Adjusted Operating Earnings decreased by $0.8 million Operating Earnings - Excluding Charges Three Months Ended March 29, March 30, Segment (#039;s in millions) 2014 2013 Change Marine Engine $ 61.7 $ 71.5 $ (9.8) Boat 8.4 7.3 1.1 Total Marine 70.1 78.8 (8.7)
Slide 7: Q1 Adjusted Pretax Earnings increased by $4.9 million, or 6%
Brunswick Corporation – Earnings Release Q1 Adjusted Pretax Earnings increased by $4.9 million, or 6% Adjusted Pretax Earnings Three Months Ended March 29, March 30, Change (#039;s in millions) 2014 2013 Adjusted operating earnings $ 94.7 $ 95.5 $ (0.8) Net interest expense (8.3) (14.0) 5.7 Other incom
Slide 8: Q1 Diluted EPS, as adjusted, decreased by $0.16
Brunswick Corporation – Earnings Release Q1 Diluted EPS, as adjusted, decreased by $0.16 Earnings Per Share Three Months Ended March 29, March 30, 2014 2013 Diluted EPS from continuing operations $ 0.60 $ 0.59 Restructuring, exit and impairment charges 0.00 0.05 Loss on early extinguishment of debt
Slide 9: Marine Engine segment – sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – sales by region Q1 - 2014 Change vs. Region % of Sales* Prior Year United States 64% (5)% Europe 15% (1)% Rest-of-World 21% (6)% Total 100% (3)% • U.S. sales reflect a slight increase in parts and accessories, more than offset by lower
Slide 10: Q1 Outboard and Sterndrive engines
Brunswick Corporation – Earnings Release Q1 Outboard and Sterndrive engines Outboard • Q1 wholesale declines in most major markets; full-year outlook of solid growth • System-wide inventory levels, including backlogs, entered 2014 better aligned with anticipated market demand • Favorable retail dema
Slide 11: 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 European and U.S markets, offset by declines in Rest-of-World • Revenue benefited from new product launches and market share gains Oil & Lubes Trolling Mot
Slide 12: Factors affecting Marine Engine segment’s Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q1 operating earnings Key Factors • Absence of gain on sale of real estate in Q1, 2013 • Lower sales • Investments in growth initiatives Q1 operating margin at 12.2% 12 April 24, 2014
Slide 13: Boat segment – sales by region
Brunswick Corporation – Earnings Release Boat segment – sales by region Q1 - 2014 Change vs. Region % of Sales Prior Year United States 65% (4)% Europe 11% 38% Rest-of-World 24% (11)% Total 100% (2)% • U.S. sales continue to benefit from overall retail growth in outboard boat categories, more than o
Slide 14: Retail sales activity influenced by weather
Brunswick Corporation – Earnings Release Retail sales activity influenced by weather March 2013 vs. Normal March 2014 vs. Normal 14 14 April 24, 2014
Slide 15: U.S. Industry Retail Powerboats - Percentage Change in Units
Brunswick Corporation – Earnings Release U.S. Industry Retail Powerboats - Percentage Change in Units 2013 2014(a) Q1 Q2 Q3 Q4 FY Q1 March Fiberglass - SD/IB -13% -11% -3% -4% -9% -12% -12% Fiberglass - OB +3% +6% +18% +10% +9% +5% +5% Aluminum >16' - OB -5% +8% +17% +6% +8% -2% -1% Total Industry -
Slide 16: 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 were flat compared to prior year; global wholesale unit shipments decreased by 4 percent Pipeline Metrics • Q1, 2014 ended with
Slide 17: Factors affecting Boat segment’s Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q1 operating earnings Key Factors • Cost reduction activities and improved net operating efficiencies • Lower sales • Increased investment spending Q1 operating margin at 3.0% 17 April 24, 2014
Slide 18: Fitness segment - sales by region
Brunswick Corporation – Earnings Release Fitness segment - sales by region Q1 - 2014 Change vs. Region % of Sales Prior Year United States 52% 12% Europe 21% (1)% Rest-of-World 27% (0)% Total 100% 6% • Solid growth in sales reflects gains in the U.S. to health clubs, local and federal governments an
Slide 19: 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 • Higher gross margin - - including favorable warranty expense comparisons, partially offset by absence of favorable insurance settlement • Increased investment in growt
Slide 20: Bowling & Billiards segment sales and operating earnings
Brunswick Corporation – Earnings Release Bowling & Billiards segment sales and operating earnings Q1 - 2014 Change vs. Region % of Sales Prior Year United States 86% (1)% Europe 5% (59)% Rest-of-World 9% 2% Total 100% (8)% • Q1 sales decreased 8 percent • Sales declined in each major business catego
Slide 21: Foreign currency impact
Brunswick Corporation – Earnings Release Foreign currency impact* First quarter 2014: • Slight net unfavorable impact on consolidated sales and a minimal net favorable impact on operating earnings Full year 2014: • Slight net unfavorable impact on consolidated sales and operating earnings * Includes
Slide 22: Tax provision
Brunswick Corporation – Earnings Release Tax provision Note: Effective tax rates for 2014 exclude any potential benefit from extension of U.S. R&D tax credit Q1 (#039;s in millions) 2014 2013 Tax provision - GAAP $ 30.4 $ 21.9 Effective tax rate - GAAP 34.8% 28.5% Tax provision, as adjusted* $ 30.0 $ 1
Slide 23: Cash Flow
Brunswick Corporation – Earnings Release Cash Flow Three Months Ended March 29, March 30, (#039;s in millions) 2014 2013 Net earnings from continuing operations $ 57.0 $ 54.9 Depreciation and amortization 21.9 21.6 Pension expense, net of funding 3.1 4.0 Gains on sale of property, plant and equipment,
Slide 24: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations Three Months Ended March 29, March 30, (#039;s in millions) 2014 2013 Net cash used for operating activities of continuing operations $ (108.2) $ (93.8) Net cash provided by (used for): Capital expenditures (21.9) (21.2) Pr
Slide 25: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Factors affecting cash balances $369 • Seasonal free cash flow - - usage of $130 million $227 • Dividends paid of $9 million $’s in millions 12/31/2013 3/29/2014 25 April 24, 2014
Slide 26: 2014 Outlook – P&L
Brunswick Corporation – Earnings Release 2014 Outlook – P&L • Depreciation and amortization estimate of approximately $95 million to $100 million • Pension expense of approximately $15 million, a decrease of $4 million • Net interest expense of approximately $30 million to $32 million, a decrease of
Slide 27: 2014 Outlook – Cash Flow Assumptions
Brunswick Corporation – Earnings Release 2014 Outlook – Cash Flow Assumptions • Pension cash contributions of approximately $50 million • Current plan anticipates working capital changes to result in a modest usage of cash • Capital expenditure levels continue to approximate 4 percent of sales • Gen
Slide 28: Outlook for Brunswick 2014
Outlook for Brunswick 2014 2014 Financial Targets • Revenue growth at 5 percent to 6 percent • Solid improvement in gross margin levels • Operating expenses, as a percent of sales, to be slightly lower than prior year • Adjusted pretax earnings growth of 24 percent to 30 percent • EPS, as adjusted,
Slide 29: Outlook for Brunswick 2014
Outlook for Brunswick 2014 Q2 - 2014 Outlook • Revenue growth consistent with annual target range • Slight decline in gross margin • Operating expenses reflect low-teens percent growth; represents a significant portion of annual increase • Slight increase in adjusted pretax earnings Full-year result
Slide 30: 2014 Product Launches
2014 Product Launches Marine Segments 30 April 24, 2013
Slide 31: 2014 Product Launches
2014 Product Launches Fitness Segment 31 April 24, 2013
Slide 32: Marine Engine Segment
Marine Engine Segment Continued Revenue and Operating Earnings Growth Summary of Growth Strategy Financial Targets • 2014 to 2016 Targets • Drive consistent, profitable growth • Revenue CAGR in mid-single • Product leadership digit percent range • Be the best partner • Operating margins in the • Enh
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: Life Fitness Segment
Life 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
Slide 35: Bowling & Billiards Segment
Bowling & Billiards Segment Revenue Growth and Strong Operating Margins Summary of Growth Strategy Financial Targets • Retail Bowling Centers: Piloting new • 2014 to 2016 Targets retail bowling concept (Brunswick’s) • Revenue CAGR in low-single to and repositioning of existing traditional mid-single
Slide 36: Brunswick Earnings Conference Call Q1, 2014
Brunswick Earnings Conference Call Q1, 2014 Helping Active People Live Active Lives
Slide 37: Brunswick Earnings Conference Call Q1, 2014
Brunswick Earnings Conference Call Q1, 2014 Helping Active People Live Active Lives