Brunswick Corporation · NYSE:BC

Brunswick — Q2 2023 Earnings Presentation

36 slides from Brunswick's earnings presentation, Jul 27, 2023

  1. Slide 1: Q2 2023 Earnings Conference Call

    Q2 2023 Earnings Conference Call JULY 27, 2023

  2. 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

  3. 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

  4. Slide 4: Business Overview – Dave Foulkes, CEO

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 01 Business Overview – Dave Foulkes, CEO

  5. Slide 5: Brunswick Delivers Solid Q2 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE $1.7B $2.35 +140bps Brunswick Net Sales Adjusted1 EPS U.S. YTD Mercury Delivers (-7.3% vs Q2’22) (-16.7% vs. Q2’22) Market Share vs. 2022 Solid Q2 2023 $132M 18.9k $193M YTD Share Repurchases Q2 Global Q2 Free Cash Flow1 Pipeline Units (5,670 units lower tha

  6. Slide 6: IT Security Incident

    BRUNSW ICK CORPORATION – EARNINGS RELEASE IT Security Incident On June 13, 2023, we experienced an IT security incident that impacted some of our systems and global facilities Net Sales Segment Impact Incident Impact Summary (in negative millions) • Propulsion and Engine Parts and Accessories experi

  7. Slide 7: Q2 2023 Segment Performance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Q2 2023 Segment Performance Propulsion Engine Parts & Navico Group Boat1 Accessories • YTD outboard retail market share gains • U.S. Engine P&A Products sales near • New products such as Lowrance • Fifth straight quarter of double-digit of +140 bps vs. 2022

  8. Slide 8: External Background: Macro-Economy, Dealer Sentiment, Consumer Health

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Place External headline Background Macro-Economy Dealer Sentiment Consumer Health here • Solid disinflation trend but additional Fed rate hikes likely • Higher interest rates a significant factor as dealers • Boat participation remains at healthy levels and

  9. Slide 9: Q2 2023 Revenue Mix & Growth Rates

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Europe Canada -15% -8% Mix: 13% Mix: 7% Q2 2023 Revenue Mix & Growth Rates 1 U.S. • Q2’23 sales fell 7 percent on a Asia- -5% constant currency basis, Pacific Mix: 70% excluding acquisitions -10% Mix: 6% • YTD U.S. sales flat to prior year Rest-of- World -7%

  10. Slide 10: U.S. Industry Retail – Percentage Change in Retail Units

    BRUNSW ICK CORPORATION – EARNINGS RELEASE U.S. Industry Retail – Percentage Change in Retail Units • Q2’23 SSI main powerboat industry performance MAIN POWERBOAT SEGMENT OUTBOARD ENGINES improved over Q1’23 2% • YTD SSI main powerboat industry -11% vs. prior year -2% -6% -6% • Brunswick retail outpe

  11. Slide 11: U.S. Boat Pipeline Ending Q2 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE U.S. Boat Pipeline Ending Q2 2023 U.S. Pipeline and WOH U.S. Boats in Inventory per Dealer Q2’23 vs. Q2’19 16 35 14 30 60% Units in thousands 12 Weeks on hand 25 50% 10 40% 20 8 15 30% 6 10 20% 4 10% 2 5 0% 0 0 2019 2020 2021 2022 2023 Below Equal Above Prem

  12. Slide 12: New Products, Synergies, and Innovation Differentiating Our Business

    BRUNSW ICK CORPORATION – EARNINGS RELEASE New Products, Synergies, and Innovation Differentiating Our Business 500R V8 Avator 20e and 35e Major Software Releases 400th Location ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 12

  13. Slide 13: Financial Overview – Ryan Gwillim, CFO

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 02 Financial Overview – Ryan Gwillim, CFO ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 13

  14. Slide 14: Overview of Second Quarter 2023 Adjusted Results

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Overview of Second Quarter 2023 Adjusted Results Net Sales ($M) Operating Margin1 % $1,836 15.5% 16.4% $1,702 13.8% (7%) (260) • Solid Q2 results, but bps below expectations due $1,164 to IT security incident 2019 2022 2023 2019 2022 2023 • Strong Sales and

  15. Slide 15: Overview of YTD 2023 Adjusted Results

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Overview of YTD 2023 Adjusted Results Net Sales ($M) Operating Margin1 % $3,531 $3,446 16.1% 13.8% 14.4% (2%) (170) $2,214 bps • Consistent first-half results despite uncertain 2019 2022 2023 2019 2022 2023 macro-economic conditions Diluted EPS1 Free Cash Fl

  16. Slide 16: Propulsion Segment – Q2'23 Performance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 1 Propulsion Segment – Q2’23 Performance Continued market share gains and steady sales in high-horsepower outboards and controls and rigging provide second-half momentum Q2’23 Net Sales Adjusted Operating Margin of % Change vs. Q2’22 $703.3 (4%) 16.3% $552.6

  17. Slide 17: Engine P&A Segment – Q2'23 Performance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Engine P&A Segment – Q2’23 Performance 1 Steady performance by U.S. Products business offset by headwinds in international markets and third-party Distribution Q2’23 Net Sales Adjusted Operating Margin of % Change vs. Q2’22 $328.9 20.4% (13%) Down 220 bps vs

  18. Slide 18: Navico Group Segment – Q2'23 Performance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Navico Group Segment – Q2’23 Performance 1 Strong performance of new products and accelerated progress with major integration and restructuring actions support second-half stability Adjusted Operating Margin of Q2’23 Navico Group Net Sales 11.4% Down 300 bps

  19. Slide 19: Boat Segment – Q2'23 Performance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Boat Segment – Q2’23 Performance 1 Fifth straight quarter of double-digit adjusted operating margins Q2’23 Net Sales % Change vs. Q2’22 Adjusted Operating Margin of 11.1% $560.8 (1%) Up 30 bps vs. Q2’22 (GAAP Operating Margin of 9.5% down 90 bps vs. Q2’22) $

  20. Slide 20: 2023 Guidance

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 2023 Guidance1 Full Year Operating Operating Expenses Full Year Revenue Margin as % of Sales EPS Flat to Up $6.7 to $6.8B ~14.5% ~$9.50 Slightly Previously $6.8 to $7.2B Previously ~15% No Change Previously $9.50 to $11.00 Free Cash Quarter 3 Quarter 3 Flow

  21. Slide 21: Full-Year EPS Guidance Bridge

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Full-Year EPS $10.25 (.35) Guidance Bridge (.65) .25 ~$9.50  Full year EPS guidance reflects impact of IT security incident, and market/channel dynamics, partially offset by diligent cost containment ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED

  22. Slide 22: 2023 Outlook – Other Assumptions

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 2023 Outlook – Other Assumptions Average Diluted Share Repurchases Shares Outstanding $250M+ ~70.5M Previously $200M+ Previously ~71M Foreign Currency Quarterly Dividends Earnings Headwind $0.40 Per ~$30M Share Previously ~$35-$40 No Change ©2023 BRUNSW ICK

  23. Slide 23: Wrap-Up Dave Foulkes, CEO

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 03 Wrap-Up Dave Foulkes, CEO ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 23

  24. Slide 24: Record Awards

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Record 11 Awards Exceptional XX Recognition XX Record number of awards for people, business, culture and products ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 24

  25. Slide 25: Thank You + Q&A

    THANK YOU + Q&A JOIN US FOR OUR NEW YORK CITY INVESTOR DAY SEPTEMBER 18, 2023 New York Stock Exchange Chelsea Pier Contact Pam Eriksen for details pamela.eriksen@brunswick.com

  26. Slide 26: Appendix

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Appendix ©2023 BRUNSW ICK CO. CONFIDENTIAL AND ALL RIGHTS RESERVED. 26

  27. Slide 27: 2023 Outlook Segment Guide

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 2023 Outlook Segment Guide1 Propulsion Engine P&A Navico Group Boat Up Down Down Down Mid Single Mid Single Mid Single Net Sales Digit Percent Digit Percent Digit Percent Mid Single Digit Percent Growth Previously Up Mid to Previously flat to down Previously

  28. Slide 28: 2023 Outlook – P&L and Cash Flow Assumptions

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 2023 Outlook – P&L and Cash Flow Assumptions Working Capital Depreciation & Usage Amortization1 ~$100M ~$200M No Change Previously ~$190M Effective Book Acquisition Tax Rate- As Adjusted2 Amortization ~23% ~$55M No Change No Change 1EXCLUDES PURCHASE ACCOUNT

  29. Slide 29: 2023 Outlook – Capital Strategy and Other Assumptions

    BRUNSW ICK CORPORATION – EARNINGS RELEASE 2023 Outlook – Capital Strategy and Other Assumptions Capital Debt Retirement Expenditures ~$350M ~$80M No Change No Change Net Interest Combined Equity Earnings Expense and Other Income Slightly Higher ~$100M vs 2022 No Change No Change ©2023 BRUNSW ICK CO.

  30. Slide 30: Net Sales – Q2 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Net Sales – Q2 2023 Net Sales decreased by $133.3 million, or 7 percent Segments Q2 2023 Q2 2022 % Change Propulsion $703.3 $734.2 (4%) NET Engine Parts & Accessories 328.9 379.5 (13%) SALES Navico Group Boat 227.8 560.8 286.1 568.4 (20%) (1%) (in millions)

  31. Slide 31: Net Sales – YTD 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Net Sales – YTD 2023 Net Sales decreased by $85.4 million, or 2 percent Segments YTD 2023 YTD 2022 % Change Propulsion $1,454.9 $1,440.1 1% NET Engine Parts & Accessories 617.5 709.8 (13%) SALES Navico Group Boat 505.1 1,136.0 597.7 1,061.2 (16%) 7% (in mill

  32. Slide 32: GAAP to Non-GAAP Reconciliations – Q2 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – Q2 2023 Operating Earnings Diluted Earnings per Share (in millions, except per share data) Q2 2023 Q2 2022 Q2 2019 Q2 2023 Q2 2022 Q2 2019 GAAP $194.4 $279.0 $162.7 $1.91 $2.61 $1.28 Restructuring, exit and impairment charg

  33. Slide 33: GAAP to Non-GAAP Reconciliations – YTD 2023

    BRUNSW ICK CORPORATION – EARNINGS RELEASE GAAP to Non-GAAP Reconciliations – YTD 2023 Operating Earnings Diluted Earnings per Share (in millions, except per share data) YTD 2023 YTD 2022 YTD 2019 YTD 2023 YTD 2022 YTD 2019 GAAP $430.5 $518.5 $276.8 $3.47 $4.86 $2.15 Restructuring, exit and impairmen

  34. Slide 34: Net Sales Growth Drivers

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Net Sales Growth Drivers % Change - GAAP Currency Impact Acquisitions Impact Q2 2023 Propulsion (4%) - - Engine Parts & Accessories (13%) (1%) - VS. Q2 Navico Group (20%) - - 2022 Boat (1%) - 1% Brunswick (7%) - - % Change - GAAP Currency Impact Acquisitions

  35. Slide 35: Tax Rate

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Tax Rate Q2 2023 Effective Tax Rate at ~22% Q2 2023 Q2 2022 Quarter 2 Effective Tax Rate - GAAP 21.2% 21.9% 1 Effective Tax Rate - As Adjusted 21.6% 22.2% YTD 2023 YTD 2022 Year to Date Effective Tax Rate - GAAP 2 35.3% 21.5% 1 Effective Tax Rate - As Adjust

  36. Slide 36: Free Cash Flow

    BRUNSW ICK CORPORATION – EARNINGS RELEASE Free Cash Flow (in millions) Q2 2023 Q2 2022 Q2 2019 Net cash provided by operating activities from continuing $268.9 $290.3 $220.6 operations Net cash (used for) provided by: Capital expenditures (79.9) (95.6) (49.0) Proceeds from sale of property, plant, e

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