Slide 1: Brunswick Earnings Conference Call Q1, 2017
Brunswick Earnings Conference Call Q1, 2017 April 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: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 27, 2017 4
Slide 5: Overview of First Quarter 2017
Brunswick Corporation – Earnings Release Overview of First Quarter 2017 • Revenue increased 8.4 percent with acquisitions contributing approximately 2.5 percent of growth • Strong growth rates in all three primary boat categories as well as in our marine parts and accessories, Fitness and outboard e
Slide 6: U.S. Powerboat Industry – Percentage Change in Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Units Q1-16 Q2-16 Q3 - 16 Q4 - 16 2016 Q1-17 AL – Fish 12% 1% -1% 4% 4% 2% AL - Pontoon 25% 10% 4% -1% 9% 3% FG - Outboard 13% 6% 3% 0% 6% 7% Outboard Boats 15% 6% 2% 1% 6% 4% FG – SD/IB (14-30 ft.) 8% -2% -11% -
Slide 7: Revenue By Region – Marine Segments
Brunswick Corporation – Earnings Release Revenue By Region – Marine Segments Region 2017 vs. 2016 2016 Growth Rates* Mix** U.S. +8% 71% Europe +12% 11% Canada -1% 7% Asia Pacific +6% 7% Latin America +5% 3% Africa & Middle East -5% 1% Total +7% 100% Global revenue in our combined marine segments exp
Slide 8: Revenue By Region – Fitness Segment
Brunswick Corporation – Earnings Release Revenue By Region – Fitness Segment Region 2017 vs. 2016 2016 Growth Rates* Mix** U.S. -2% 56% Europe 0% 18% Asia Pacific +20% 13% Latin America +4% 5% Africa & Middle East +10% 4% Canada -33% 4% Total +1% 100% Global revenue in our Fitness segment increased
Slide 9: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 27, 2017 9
Slide 10: Q1 Net Sales increased by $90.0 million, or 8%
Brunswick Corporation – Earnings Release Q1 Net Sales increased by $90.0 million, or 8% Net Sales Three Months Ended April 1, April 2, % Change Acquisition 1 Segment (#039;s in millions) 2017 2016 GAAP Contribution Marine Engine $ 631.8 $ 595.5 6% 1% Boat 382.7 336.8 14 % 1% Marine eliminations (89.8)
Slide 11: Q1 Adjusted Operating Earnings increased by $4.4 million, or 4%
Brunswick Corporation – Earnings Release Q1 Adjusted Operating Earnings increased by $4.4 million, or 4% Operating Earnings - Excluding Charges Three Months Ended April 1, April 2, Segment (#039;s in millions) 2017 2016 Change Marine Engine $ 88.5 $ 78.3 $ 10.2 Boat 13.6 16.4 (2.8) Total Marine 102.1 9
Slide 12: Marine Engine segment – Q1 sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – Q1 sales by region Q1 - 2017 % Change Region % of Sales* GAAP* Constant Currency* United States 69% 5% 5% Europe 14% 5% 9% Rest-of-World 17% 12 % 8% Total 100% 6% 6% Based on Constant Currency • U.S. sales increased in outboard engines
Slide 13: Q1 Outboard and Sterndrive Engines
Brunswick Corporation – Earnings Release Q1 Outboard and Sterndrive Engines Outboard • Strong growth in Q1 sales particularly in higher horsepower categories • Favorable retail demand • Benefits from market share gains in targeted saltwater, repower and commercial markets reflecting recently launche
Slide 14: Q1 Marine Engine segment's Parts & Accessories
Brunswick Corporation – Earnings Release Q1 Marine Engine segment’s Parts & Accessories Boating Accessories Service Parts Propellers • Revenue benefited from market share gains, a recent acquisition and new product launches Oil & Lubes Trolling Motors Controls/Rigging April 27, 2017 14
Slide 15: Factors affecting Marine Engine segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q1 operating earnings Key Factors • Higher sales • Favorable product mix • Cost efficiencies • Unfavorable foreign exchange impacts • Increases in growth-related investments Q1 operating margin at 14.0%, an increase o
Slide 16: Boat segment – Q1 sales by region
Brunswick Corporation – Earnings Release Boat segment – Q1 sales by region Q1 - 2017 % Change Region % of Sales GAAP Constant Currency United States 76% 15% 15% Europe 9% 10% 12% Rest-of-World 15% 9% 7% Total 100% 14% 14% Based on Constant Currency • In addition to favorable retail demand, U.S. sale
Slide 17: Review of Brunswick Boat segment sales metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment sales metrics U.S Global Q1 16 Q1 17 Q1 16 Q1 17 Retail (units) 14% 9% 10% 11% Wholesale (units) (1)% 14% (6)% 13% Net Sales (dollars)* 14% 15% 7% 14% Wholesale unit growth rate anticipated to be in balance with retail unit gr
Slide 18: Review of Brunswick Boat segment global pipeline metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment global pipeline metrics Ending Change % Change in % Change in Pipeline Levels Weeks Versus Wholesale Retail Units on Hand Prior Year Units FY 14 35 +1 week 1% 2% FY 15 35 Flat 2% 4% FY 16 35 Flat 2% 3% Q1 16 38 -2 weeks (6)% 1
Slide 19: Factors affecting Boat segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q1 operating earnings* Key Factors • Fiberglass outboard boat performance • Unfavorable cost absorption and reserve adjustments in large fiberglass sterndrive / inboard boats • Net unfavorable changes in sales mix and higher c
Slide 20: Fitness segment – Q1 sales by region
Brunswick Corporation – Earnings Release Fitness segment – Q1 sales by region % Change Q1 - 2017 Constant Ex. Region % of Sales GAAP Currency Acquisition* United States 54% 6% 6% (2)% Europe 18% 4% 10% 0% Rest-of-World 28% 16% 14% 7% Total 100% 8% 9% 1% • Sales in the U.S. (excluding acquisitions) r
Slide 21: Factors affecting Fitness segment's Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Fitness segment’s Q1 operating earnings* Key Factors • Contribution from ICG acquisition • Benefit of Cybex acquisition synergies • Net unfavorable impact of change in sales mix • Impact of planned costs associated with capacity expansions,
Slide 22: International Sales – Review of foreign currency impact
Brunswick Corporation – Earnings Release Review of foreign currency impact1 40% Q1 2017: 35% • Minimal unfavorable impact on sales • Unfavorable impact on operating 30% LA/Other earnings of approximately $2 million % of total sales 25% International Sales Canada Outlook 2017: • Slight unfavorable im
Slide 23: Other factors affecting GAAP pre-tax earnings
Brunswick Corporation – Earnings Release Other factors affecting GAAP pre-tax earnings Q1 $ in millions 2017 2016 Restructuring, exit and integration charges $ 15.2 $ 3.8 In 2017, we are planning to incur $26 to $28 million of restructuring, exit and integration costs. These costs have not been incl
Slide 24: Tax provision
Brunswick Corporation – Earnings Release Tax provision Q1 2017 2016 Effective tax rate - GAAP 25.3% 30.9% Effective tax rate, as adjusted* 24.9% 31.0% Effective tax rate, ex. share-based comp. tax benefits** 30.1% 31.0% Change in first quarter effective tax rate, as adjusted, between years includes
Slide 25: Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Cash Flow – Continuing Operations Three Months Ended (#039;s in millions) 2017 2016 Net earnings* $ 64.9 $ 64.8 Depreciation and amortization 27.2 25.4 Pension (funding), net of expense (33.6) (32.2) Changes in certain current assets and current liabilities (162
Slide 26: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations Three Months Ended (#039;s in millions) 2017 2016 Net cash used for operating activities* $ (86.3) $ (82.8) Net cash provided by (used for): Capital expenditures (60.8) (46.2) 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 ~$120 million No change amortization Pension expense ~$10 million No change Net interest expense ~$26 million No change Combined equity Slightly higher than No change earnings
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 ~$75 million No change contributions Cash taxes Lo
Slide 29: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 27, 2017 29
Slide 30: Outlook for Brunswick 2017
Outlook for Brunswick 2017 2017 Financial Targets • Revenue growth of 6 percent to 8 percent • Improvement in gross margin levels • Operating expenses, as a percent of sales, to be slightly lower than prior year • Gains in operating margins • Operating leverage of high-teen percentage • Diluted EPS,
Slide 31: Marine Engine Segment Solid Revenue and Strong Margins
Marine Engine Segment Solid Revenue and Strong Margins 2017 Financial Targets • Revenue growth in the mid-single digits • Solid improvement in operating margin April 27, 2017 31
Slide 32: Boat Group Segment Strong Revenue Growth with Improved Profitability
Boat Group Segment Strong Revenue Growth with Improved Profitability 2017 Financial Targets • Revenue growth in the high-single-digits • Improvement in operating margin of approximately 60 - 80 basis points April 27, 2017 32
Slide 33: Fitness Segment Strong Revenue Growth with Strong Margins
Fitness Segment Strong Revenue Growth with Strong Margins 2017 Financial Targets • Revenue growth in the high-single digits • Improved operating margins April 27, 2017 33
Slide 34: Earnings Conference Call Q1, 2017
Brunswick Earnings Conference Call Q1, 2017
Slide 35: Appendix
BRUNSWICK Appendix
Slide 36: Q1 Adjusted Pretax Earnings increased by $6.9 million, or 7%
Brunswick Corporation – Earnings Release Q1 Adjusted Pretax Earnings increased by $6.9 million, or 7% Adjusted Pretax Earnings Three Months Ended April 1, April 2, (#039;s in millions) 2017 2016 Change Adjusted operating earnings $ 104.2 $ 99.8 $ 4.4 Net interest expense (6.1) (6.4) 0.3 Other income 4.
Slide 37: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Main Factors Affecting Changes in Cash Balances $469 • Free cash outflow of $137 million • Share repurchases of $20 million $285 (approximately 0.3 million shares) $’s in millions • Dividends paid of $15 million 12/31/2016 4/1/2
Slide 38: Q1 Diluted EPS, as adjusted, increased by $0.13, or 18%
Brunswick Corporation – Earnings Release Q1 Diluted EPS, as adjusted, increased by $0.13, or 18% Earnings Per Share Three Months Ended April 1, April 2, 2017 2016 Diluted EPS from continuing operations $ 0.71 $ 0.68 Restructuring, exit and integration charges 0.14 0.03 Special tax items (0.01) 0.00