Brunswick Corporation · NYSE:BC
Brunswick — Q2 2024 Earnings Presentation
34 slides from Brunswick's earnings presentation, Jul 25, 2024
Slide 1: Q2 2024 Earnings Conference Call
Q2 2024 Earnings Conference Call JULY 25, 2024
Slide 2: Forward-Looking Statements
BRUNSW ICK CORPORATION – EARNINGS RELEASE Forward-Looking Statements Certain statements in this presentation are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations, estimates, and projections abo
Slide 3: Use of Non-GAAP Financial Information and Constant Currency Reporting
BRUNSW ICK 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 c
Slide 4: Overview – Business, Dave Foulkes, CEO
BRUNSW ICK CORPORATION – EARNINGS RELEASE 01 Business Overview – Dave Foulkes, CEO ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 4
Slide 5: Second Quarter Resolute Performance in Challenging Environment
BRUNSW ICK CORPORATION – EARNINGS RELEASE Second Quarter $1.4B $1.80 $169M Resolute Net Sales (-15.2% vs. 2023) Adjusted1 EPS (-23.4% vs. 2023) Q2 Free Cash Flow1 (~140% Q2 FCF Conversion) Performance in Challenging Environment Q2 2024 50%+ $170M 18.6k of Q2 Adjusted Operating YTD Share Repurchases
Slide 6: Segments continue to show resiliency and adapt to market dynamics
BRUNSW ICK CORPORATION – EARNINGS RELEASE Segments continue to show resiliency and adapt to market dynamics Propulsion Engine Parts & Navico Group Boat1 Accessories • OEM customers maintaining lower • Q2 2024 Engine P&A sales up 2%, • OEMs continuing to moderate • Retail trends weaker in later part
Slide 7: External, Customer and Consumer Conditions
BRUNSW ICK CORPORATION – EARNINGS RELEASE External, Customer and Consumer Conditions External Landscape Dealer Sentiment OEM Environment Consumer Health • High interest rates placing • Dealers exhibiting caution with • Marine OEMs continue to reduce • Boating participation remains increasing pressur
Slide 8: U.S. Industry Retail and Pipeline Trends
BRUNSW ICK CORPORATION – EARNINGS RELEASE Q2 U.S. Brunswick U.S. Industry Retail 2024 U.S. Industry Retail Boat Pipeline Metrics Change vs. ’23 and Pipeline Trends 25 100 Ending Q2 2024 20 80 Boats Per Dealer Weeks on Hand 15 60 Units in thousands • Brunswick U.S. boat pipeline Q1 Q2 Q1 Q2 ended the
Slide 9: Full-Year EPS Guidance Bridge
BRUNSW ICK CORPORATION – EARNINGS RELEASE Full-Year EPS Guidance Bridge ▪ Full year Adjusted EPS guidance reflects the impact of market/channel dynamics, partially offset by diligent cost containment ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 9
Slide 10: Overview – Financial, Ryan Gwillim, CFO
BRUNSW ICK CORPORATION – EARNINGS RELEASE 02 Financial Overview – Ryan Gwillim, CFO ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 10
Slide 11: Overview of Second Quarter 2024 Adjusted Results
BRUNSW ICK CORPORATION – EARNINGS RELEASE Overview of Second Quarter 2024 Adjusted Results Net Sales ($M) Operating Earnings1 ($M) $1,702 $235 • Brunswick delivered $181 resilient Q2 results despite a $1,444 much softer U.S. retail (15%) (23%) (460) marine market than bps anticipated 2023 2024 2023
Slide 12: Overview of YTD 2024 Adjusted Results
BRUNSW ICK CORPORATION – EARNINGS RELEASE Overview of YTD 2024 Adjusted Results Net Sales ($M) Operating Earnings1 ($M) $3,446 $497 • YTD results reflect steady $2,809 performance in continued (19%) $322 challenging conditions (460) (35%) bps • YTD gross margins remain 2023 2024 2023 2024 resolute,
Slide 13: Propulsion Segment – Q2'24 Performance
BRUNSW ICK CORPORATION – EARNINGS RELEASE Propulsion Segment – Q2’24 Performance 1 YTD market share gains continue despite planned lower wholesale engine shipments vs. Q2 2023 Q2’24 Net Sales Adjusted Operating Margin of % Change vs. Q2’23 $558.0 15.5% (21%) $423.1 Down 80 bps vs. Q2’23 (24%) (GAAP
Slide 14: Engine P&A Segment – Q2'24 Performance
BRUNSW ICK CORPORATION – EARNINGS RELEASE Engine P&A Segment – Q2’24 Performance 1 Brownsburg distribution facility transition complete, resulting in stronger sales, margin and earnings vs. Q2 2023 Q2’24 Net Sales % Change vs. Q2’23 Adjusted Operating Margin of $336.1 2% 22.6% Up 220 bps vs. Q2’23 (
Slide 15: Navico Group Segment – Q2'24 Performance
BRUNSW ICK CORPORATION – EARNINGS RELEASE Navico Group Segment – Q2’24 Performance 1 Sequential sales and earnings stability led by aftermarket businesses, while Marine and RV OEM remain challenged Adjusted Operating Margin of Q2’24 Navico Group Net Sales 7.4% Down 400 bps vs. Q2’23 (GAAP Operating
Slide 16: Boat Segment – Q2'24 Performance
BRUNSW ICK CORPORATION – EARNINGS RELEASE Boat Segment – Q2’24 Performance 1 Steady performance consistent with expectations, with resolute margins despite planned lower wholesale orders Q2’24 Net Sales % Change vs. Q2’23 Adjusted Operating Margin of $434.2 6.2% Down 490 bps vs. Q2’23 (23%) (GAAP Op
Slide 17: 2024 vs. 2010 Comparison
2024 vs. 2010 Comparison Performance vs. Downside Scenario* 2010 2024F ✓ Aftermarket P&A businesses performing as anticipated, but started from lower base (2022-2023 destocking) U.S. Boat Retail Market ~140K ~140K ✓ Accelerated cost containment and larger capital strategy benefits Sales $3.4 Billion
Slide 18: 2024 Guidance
BRUNSW ICK CORPORATION – EARNINGS RELEASE 2024 Guidance1 Operating Revenue EPS Margin $5.2B to $5.00 to 10% to 11% $5.4B $5.50 Previously Previously Previously $6.0 to $6.2B 12.0% to 13.0% $7.00 to $8.00 Free Cash Quarter 3 Quarter 3 Flow Revenue EPS $1.2B to $1.15 to $350M+ $1.3B $1.25 No Change 1E
Slide 19: 2024 Outlook – P&L and Cash Flow Assumptions
BRUNSW ICK CORPORATION – EARNINGS RELEASE 2024 Outlook – P&L and Cash Flow Assumptions Capital Foreign Currency Expenditures Quarterly Dividends Earnings Impact <$175M $0.42 Per Share Flat to down $15M Previously No Change No Change ~$225M Effective Share Repurchases Tax Rate- As Adjusted1 ~22% $200
Slide 20: Wrap-Up, Dave Foulkes, CEO
BRUNSW ICK CORPORATION – EARNINGS RELEASE 03 Wrap-Up Dave Foulkes, CEO ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 20 ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 20
Slide 21: New Products, Synergies, and Innovation Differentiating Our Business
BRUNSW ICK CORPORATION – EARNINGS RELEASE New Products, Synergies, and Innovation Differentiating Our Business ULTRA L2 Avator 75e/110e New Freedom Location in Copenhagen, Denmark Eagle Eye SPX 190 & 190 OB Recon Trolling Motors ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 21
Slide 22: Appendix
BRUNSW ICK CORPORATION – EARNINGS RELEASE Appendix ©2024 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 22
Slide 23: 2024 Outlook Segment Guide
BRUNSW ICK CORPORATION – EARNINGS RELEASE 2024 Outlook Segment Guide1 Propulsion Engine P&A Navico Group Boat Net Sales Guide2 ~$2.1B ~$1.2B ~$0.825B ~$1.6B Previously ~$2.6B No Change Previously ~$0.9B Previously ~$1.8B Operating Margin ~20.0% High Mid ~13.5% Single Digit Percent Single Digit Perce
Slide 24: 2024 Outlook – Capital Strategy and Other Assumptions
BRUNSW ICK CORPORATION – EARNINGS RELEASE 2024 Outlook – Capital Strategy and Other Assumptions Average Diluted Debt Retirement Depreciation Shares Outstanding ~$50M ~$225M ~67.5M No Change No Change Previously ~68M Combined Equity Working Capital Net Interest Expense Earnings and Usage Other Income
Slide 25: Q2 2024 Revenue Mix & Growth Rates
BRUNSW ICK CORPORATION – EARNINGS RELEASE Geographical Revenue Mix Q2 2024 Canada, 6% Revenue Mix & 1 Europe, Growth Rates 15% • Q2’24 global sales Revenue YoY declined 16 percent on a U.S. -19% constant currency basis, U.S., Asia Pacific, excluding acquisitions Europe -7% 67% 6% Asia Pacific -11% C
Slide 26: Net Sales – Q2 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE Net Sales – Q2 2024 Net Sales decreased by $258.4 million, or 15 percent Segments Q2 2024 Q2 2023 % Change Propulsion $558.0 $703.3 (21%) Engine Parts & Accessories 336.1 328.9 2% NET Navico Group 210.1 227.8 (8%) SALES Boat Segment Eliminations 434.2 (94.5)
Slide 27: Net Sales – YTD 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE Net Sales – YTD 2024 Net Sales decreased by $637 million, or 19 percent Segments FY 2024 FY 2023 % Change Propulsion $1,136.2 $1,454.9 (22%) Engine Parts & Accessories 598.5 617.5 (3%) NET Navico Group 421.0 505.1 (17%) SALES Boat Segment Eliminations 859.9
Slide 28: GAAP to Non-GAAP Reconciliations – Q2 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – Q2 2024 Operating Earnings Diluted Earnings per Share (in millions, except per share data) Q2 2024 Q2 2023 Q2 2024 Q2 2023 GAAP $158.3 $194.4 $1.55 $1.91 Restructuring, exit and impairment charges 7.9 13.9 0.09 0.15 Purchas
Slide 29: GAAP to Non-GAAP Reconciliations – YTD 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – YTD 2024 Operating Earnings Diluted Earnings per Share (in millions, except per share data) YTD 2024 YTD 2023 YTD 2024 YTD 2023 GAAP $268.9 $430.5 $2.54 $3.47 Restructuring, exit and impairment charges 21.4 23.4 0.24 0.25 P
Slide 30: GAAP to Non-GAAP Reconciliations – Q2 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – Q2 2024 Operating Expenses (in millions) Q2 2024 Q2 2023 Selling, general and administrative expense $181.8 $215.1 Research and development expense 43.0 48.9 1 Restructuring, exit and impairment charges 1.6 8.5 GAAP operati
Slide 31: GAAP to Non-GAAP Reconciliations – YTD 2024
BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – YTD 2024 Operating Expenses (in millions) YTD 2024 YTD 2023 Selling, general and administrative expense $385.5 $426.4 Research and development expense 88.8 97.6 1 Restructuring, exit and impairment charges 11.5 16.8 GAAP op
Slide 32: Tax Rate
BRUNSW ICK CORPORATION – EARNINGS RELEASE Tax Rate Q2 2024 Q2 2023 Effective Tax Rate - GAAP 20.9% 21.2% Q2 Effective Tax Rate - As Adjusted 1 21.6% 21.6% YTD 2024 YTD 2023 2 YTD Effective Tax Rate - GAAP Effective Tax Rate - As Adjusted 1 21.1% 35.3% 21.6% 22.1% (1) TAX PROVISION, AS ADJUSTED, EXCL
Slide 33: Free Cash Flow
BRUNSW ICK CORPORATION – EARNINGS RELEASE Free Cash Flow (in millions) Q2 2024 Q2 2023 Net cash provided by (used for) operating activities from continuing operations $215.7 $268.9 Net cash (used for) provided by: Q2 Capital expenditures Proceeds from sale of property, plant, equipment (47.1) 3.1 (7
Slide 34: Free Cash Flow Conversion – Q2'24
BRUNSW ICK CORPORATION – EARNINGS RELEASE Free Cash Flow Conversion – Q2’24 (in millions) Q2 2024 Free Cash Flow $169.4 GAAP net earnings from continuing operations 104.8 Restructuring, exit and impairment charges 7.9 Purchase accounting amortization 14.5 Acquisition, integration and IT related cost