Slide 1: Earnings Conference Call Q3 2019
Earnings Conference Call Q3 2019
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: Discontinued Operations
Brunswick Corporation – Earnings Release Discontinued Operations On June 27, 2019, Brunswick completed the sale of its Fitness business. Starting with the second quarter of 2019, the historical and future results of this business are now reported as discontinued operations. Therefore, for all period
Slide 5: Business Overview
BUSINESS OVERVIEW Dave Foulkes – CEO |5
Slide 6: Highlights: Overview of Q3 2019
Brunswick Corporation – Earnings Release Highlights Overview of Q3 2019 Top-line consistent Boat pipeline Marine retail FY as adjusted with guidance; inventory higher environment EPS earnings exceeded than Q3 2018 by significantly improved expectations only 2 weeks on versus first half of the 2019
Slide 7: Marine Engine Segment – Q3 Overview
Brunswick Corporation – Earnings Release Marine Engine Segment – Q3 Overview1 Top-line down 4.0%, adjusted operating margin improvement of 60 bps • Solid increases in gross and operating margins • Continued strong demand and market share gains in 175+ horsepower outboard engine categories • Planned
Slide 8: Boat Segment – Q3 Overview
Brunswick Corporation – Earnings Release Boat Segment – Q3 Overview1 Adjusted net sales down 11.6%, adjusted operating margin down by 230 bps • Operating margins influenced mostly by lower volume associated with planned pipeline reductions – segment adjusted operating deleverage of 23% • Boston Whal
Slide 9: YTD Revenue Growth Rates By Region
Brunswick Corporation – Earnings Release YTD Revenue Growth Rates By Region1 Region Engines Boats Total BC 2018 Mix YTD consolidated U.S. (5)% (3)% (4)% 71% revenue grew by Europe 8% (9)% 4% 11% 2 percent; Canada (3)% 0% (1)% 7% on a constant Asia-Pacific 9% 0% 8% 7% currency, ex- Rest-of-World 7% 2
Slide 10: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units Q3 2019 Category Q3-19 1H-19 YTD-19 YTD-18 FY-18 industry unit Outboard Boats 5% (7)% (4)% 6% 5% volume for the Fiberglass main (15)% (10)% (11)% (5)% (4)% SD/IB Boats powerboat Main segments was P
Slide 11: Capital Strategy Update
Brunswick Corporation – Earnings Release Capital Strategy Update We remain on target to fully deploy the Fitness proceeds by the end of 2019 • Completed $161 million of share repurchases in Q3; $231 million through Q3 • Anticipate completing remaining $169 million of share repurchases in Q4 • Comple
Slide 12: Financial Overview
FINANCIAL OVERVIEW Bill Metzger – CFO | 12
Slide 13: Overview of Third Quarter 2019
Brunswick Corporation – Earnings Release Overview of Third Quarter 20191 Consolidated results on an as adjusted basis vs. Q3 2018: Diluted EPS of $1.10, Net sales down 6 Operating margin of 13.9 down 4 percent percent percent, up 40 bps Operating earnings Operating deleverage of decreased 3 percent
Slide 14: Overview of YTD 2019
Brunswick Corporation – Earnings Release Overview of YTD 20191 Consolidated results on an as adjusted basis vs. YTD 2018: Diluted EPS of $3.49, Operating margin of 13.8 Net sales up 2 percent up 4 percent percent, up 90 bps Operating earnings Operating leverage of increased 10 percent 51 percent 1Se
Slide 15: Marine Engine Segment – Q3 Performance
Brunswick Corporation – Earnings Release Marine Engine segment – Q3 Performance1 Product Category Sales ($M) % Change Propulsion $339.2 (14%) Parts & Accessories 431.0 6% Total $770.2 (4%)2 Operating Margin Operating Earnings - Adjusted @ 19.0 percent, up 60 bps - Adjusted of $146.4M, down 1 percent
Slide 16: Boat Segment – Q3 Performance
Brunswick Corporation – Earnings Release Boat segment – Q3 Performance1 % Change in Product Category Sales ($M) Adjusted Net Sales Aluminum Freshwater $105.2 (19%) Recreational Fiberglass 97.0 2% Saltwater Fishing 66.9 (23%) Business Acceleration 8.0 NM Total $277.1 (12%)2 Operating Margin Operating
Slide 17: Boat Segment Pipeline Metrics
Boat Segment pipeline metrics Ending Change Units in Change Year Weeks on Versus Prior Pipeline Versus Prior Hand Year (WOH) (thousands) Year (Units) We expect ending 19 30 +2 weeks 19.5 (0)% 2019 with pipelines meaningfully lower 18 28 +1 week 19.5 2% than 2018 on overall units, and flat to 17 27
Slide 18: Other Factors Affecting GAAP Earnings
Brunswick Corporation – Earnings Release Other factors affecting GAAP earnings1 Q3 ($M) 2019 2018 Restructuring, exit, impairment, and other charges $8.1 $9.4 Purchase accounting amortization 7.5 9.4 Acquisition-related Costs 0.5 10.5 Sport Yacht & Yachts - 11.9 Total Operating Earnings Adjustments
Slide 19: Guidance
Guidance 2019 diluted EPS, as adjusted, of approximately $4.25 (vs. $4.13 in 2018 on a comparable basis), at midpoint of prior guidance range Revenue up slightly versus 2018 Solid improvement in gross and operating margins Operating earnings growth of mid-single digit percent Maintain 2020, as adjus
Slide 20: Tariff Update
Brunswick Corporation – Earnings Release Tariff Update Change from Q2 call 2019 estimates incorporate exclusion granted on 40 to 60 horsepower engines We anticipate an impact to 2019 Assumes Wave 3 staying at 25% rate, does pre-tax earnings not assume any impact for Wave 4 (minimal) of $17 to $22 mi
Slide 21: 2019 Outlook – P&L and Cash Flow
Brunswick Corporation – Earnings Release 2019 Outlook – P&L and Cash Flow Change from Prior 2019 Estimates Conference Call Estimate Free cash flow1 Approximately $260 million Slightly Lower Working capital usage ~$50 - $70 million Higher Depreciation and ~$100 - $110 million No Change amortization2
Slide 22: 2019 Outlook – Capital Strategy Assumptions
Brunswick Corporation – Earnings Release 2019 Outlook – Capital Strategy Assumptions Change from Prior 2019 Estimates Conference Call Estimate Debt retirement ~$150 - $200 million No Change Capital expenditures Approximately $230 million Slightly Lower Share repurchases ~$400 million No Change Quart
Slide 23: 2019 Outlook
2019 OUTLOOK Dave Foulkes – CEO | 23
Slide 24: Marine Engine Segment
Marine Engine Segment Strength in Outboard Engines Together with Power Products Leading to Record Earnings Operating and Strategic Priorities Capitalize on Execute capacity outboard product initiatives to enable lineup growth Power Products Strong new product Systems Integrators pipeline Expansion 2
Slide 25: Boat Segment
Boat Segment Proactive Pipeline Management Along with New Product Introductions Leading into 2020 Operating and Strategic Priorities Invest in new Focus on products and operational technologies excellence Expand Freedom Leverage scale Boat Club and service businesses 2019 Segment Financial Targets N
Slide 26: Slide 26
Slide 27: Appendix
Appendix | 27
Slide 28: GAAP to Non-GAAP Reconciliations
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations | 28 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 29: Q3 Adjusted Net Sales decreased by $58.5 million, or 5.7 percent
Brunswick Corporation – Earnings Release Q3 Adjusted Net Sales decreased by $58.5 million, or 5.7 percent Net Sales - GAAP Net Sales - As Adjusted 1 Segments (in % % millions) Q3 2019 Q3 2018 Change Q3 2019 Q3 2018 Change Marine Engine $ 770.2 $ 802.7 (4.0)% $ 770.2 $ 802.7 4.0% Boat 277.1 322.6 (14
Slide 30: YTD Adjusted Net Sales increased by $75.7 million, or 2.4 percent
Brunswick Corporation – Earnings Release YTD Adjusted Net Sales increased by $75.7 million, or 2.4 percent Net Sales - GAAP Net Sales - As Adjusted 1 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Segments (in millions) YTD YTD % Change YTD YTD % Change Marine Engine $ 2,407.7 $ 2,324.1 3.6% $ 2,407.7 $ 2,324.1 3.
Slide 31: Q3 Adjusted Net Sales
Brunswick Corporation – Earnings Release Q3 Adjusted1 Net Sales . 1Excludes net sales related to Sea Ray Sport Yacht and Yacht operations, see today's Form 8-K for reconciliation to GAAP figures and for information on marine eliminations | 31 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 32: YTD Adjusted Net Sales
Brunswick Corporation – Earnings Release YTD Adjusted1 Net Sales . 1Excludes net sales related to Sea Ray Sport Yacht and Yacht operations, see today's Form 8-K for reconciliation to GAAP figures and for information on marine eliminations | 32 ©2019 Brunswick Co. Confidential and all rights reserved
Slide 33: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision Estimated 2019 Q3 effective book tax 2019 2018 rate, as adjusted, Effective tax rate - GAAP NM 8.2% is approximately Effective tax rate, as adjusted (1) 22.7% 21.6% 22 percent on tax guidance issued to date; cash tax rate expected to be low to m
Slide 34: Review of Foreign Currency Impact
Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q3 2019: • Unfavorable impact on sales of approximately 1 LA/Other percent • Unfavorable impact on operating earnings of Canada approximately $3 million Outlook for Full-Year 2019: Asia Pacific • Unfavorable impact on consol
Slide 35: Free Cash Flow
Brunswick Corporation – Earnings Release Free Cash Flow Nine Months Ended (#039;s in millions) 2019 2018 Net cash provided by operating activities from continuing operations $ 254.2 $ 190.0 Net cash provided by (used for): Plus: Capital expenditures (178.4) (113.3) Plus: Proceeds from sale of property,