Slide 1: Brunswick Earnings Conference Call Q3, 2015
Brunswick Earnings Conference Call Q3, 2015 October 29, 2015 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 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: Presenters
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 4 October 29, 2015
Slide 5: Overview of Third Quarter 2015
Brunswick Corporation – Earnings Release Overview of Third Quarter 2015 • Revenue increased 6 percent -- on a constant currency* basis, sales increased by 11 percent. Growth in outboard boats and engines, marine parts and accessories, fiberglass sterndrive/inboard boats and fitness equipment • Gross
Slide 6: Q3 Net Sales increased by $59.8 million, or 6%
Brunswick Corporation – Earnings Release Q3 Net Sales increased by $59.8 million, or 6% Net Sales Three Months Ended October 3, September 27, % Change 1 Segment (#039;s in millions) 2015 2014 GAAP Constant Currency Marine Engine $ 588.2 $ 566.9 4% 8% Boat 271.3 234.6 16 % 19 % Marine eliminations (65.1
Slide 7: Q3 Adjusted Operating Earnings increased by $21.2 million, or 22%
Brunswick Corporation – Earnings Release Q3 Adjusted Operating Earnings increased by $21.2 million, or 22% Operating Earnings - Excluding Charges Three Months Ended October 3, September 27, Segment (#039;s in millions) 2015 2014 Change Marine Engine $ 102.5 $ 93.3 $ 9.2 Boat 6.4 (6.1) 12.5 Total Marine
Slide 8: U.S. Powerboat Industry – Percentage Change in Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Units Q1-15 Q2-15 Q3-15 YTD-15 YTD-14 AL – Fish 12.5% 3.2% 6.5% 6.3% 6.0% AL - Pontoon 13.5% 5.2% 7.1% 6.8% 5.6% FG - Outboard 9.5% 8.5% 7.2% 8.3% 9.7% Outboard Boats 11.6% 5.5% 7.0% 7.1% 7.0% FG – SD/IB (14-30 f
Slide 9: 2014 Revenue By Region – Marine Segments Only
Brunswick Corporation – Earnings Release 2014 Revenue By Region – Marine Segments Only Latin America 5% Africa & Middle East 2% Asia Pacific 7% Canada 9% Europe 12% U.S. 65% U.S. and Europe experiencing solid growth; Rest-of-World markets are down 9 October 29, 2015
Slide 10: Presenters
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 10 October 29, 2015
Slide 11: Marine Engine segment – Q3 sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – Q3 sales by region Q3 - 2015 % Change Region % of Sales* GAAP Constant Currency United States 68% 7% 7% Europe 10% (15)% 0% Rest-of-World 22% 2% 16 % Total 100% 4% 8% Based on Constant Currency • U.S. sales increased in all major produ
Slide 12: Q3 Outboard and Sterndrive engines
Brunswick Corporation – Earnings Release Q3 Outboard and Sterndrive engines Outboard • Favorable retail demand environment continues in overall U.S. outboard boat and engine categories, including recently launched products • Market share gain benefits, including in targeted saltwater, repower and co
Slide 13: Q3 Marine Engine segment's Parts & Accessories
Brunswick Corporation – Earnings Release Q3 Marine Engine segment’s Parts & Accessories Service Parts Boating Accessories Propellers • Growth in most major markets • Revenue benefited from recent acquisitions, new product launches and market share gains Oil & Lubes Trolling Motors Controls/Rigging •
Slide 14: Factors affecting Marine Engine segment's Q3 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q3 operating earnings Key Factors • Higher sales • Favorable product mix benefit from recently launched outboard products and P&A growth • Cost reductions and savings related to sourcing initiatives • Foreign exchange
Slide 15: Boat segment – Q3 sales by region
Brunswick Corporation – Earnings Release Boat segment – Q3 sales by region Q3 - 2015 % Change Region % of Sales GAAP Constant Currency United States 79% 29% 29% Europe 6% 7% 28% Rest-of-World 15% (23)% (17)% Total 100% 16% 19% Based on Constant Currency • U.S. sales continue to benefit from recently
Slide 16: Review of Brunswick Boat segment metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment metrics Wholesale and Retail Metrics • In the third quarter, Brunswick’s global retail unit sales decreased by one percent compared to prior year. U.S. retail units increased by 6 percent; global wholesale unit shipments incre
Slide 17: Factors affecting Boat segment's Q3 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q3 operating earnings Key Factors • Higher sales • Favorable product mix • Savings related to sourcing initiatives and cost reductions Q3 operating margin at 2.4% 17 October 29, 2015
Slide 18: Fitness segment – Q3 sales by region
Brunswick Corporation – Earnings Release Fitness segment – Q3 sales by region Q3 - 2015 % Change Region % of Sales GAAP Constant Currency United States 53% 14% 14% Europe 19% (3)% 9% Rest-of-World 28% (5)% 1% Total 100% 4% 9% Based on Constant Currency • Growth in sales reflects gains in the U.S. at
Slide 19: Factors affecting Life Fitness segment's Q3 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Life Fitness segment’s Q3 operating earnings Key Factors • Higher sales • Cost reductions and savings related to sourcing initiatives • Unfavorable foreign exchange impact Q3 operating margin at 14.0% 19 October 29, 2015
Slide 20: Presenters
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 20 October 29, 2015
Slide 21: Review of foreign currency impact
Brunswick Corporation – Earnings Release Review of foreign currency impact1 40% Third Quarter 2015: 35% • Unfavorable impact on sales of LA/Other approximately $38 million or 30% 4.1 percent and operating earnings of approximately $6 million 25% International Sales Pacific % of Total Sales Asia Outl
Slide 22: Tax provision
Brunswick Corporation – Earnings Release Tax provision Q3 First Nine Months 2015 2014 2015 2014 Effective tax rate - GAAP 35.5% 31.4% 31.9% 33.4% Effective tax rate, as adjusted* 34.9% 33.6% 34.3% 33.9% Effective tax rates for 2014 and 2015, exclude any potential benefit from extension of U.S. R&D t
Slide 23: Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Cash Flow – Continuing Operations Nine Months Ended October 3, September 27, (#039;s in millions) 2015 2014 Net earnings* $ 236.4 $ 197.2 Depreciation and amortization 66.3 58.4 Pension funding, net of expense (63.9) (61.5) Changes in certain current assets and
Slide 24: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations Nine Months Ended October 3, September 27, (#039;s in millions) 2015 2014 Net cash provided by operating activities* $ 240.7 $ 127.4 Net cash provided by (used for): Capital expenditures (98.5) (79.6) Proceeds from sale of
Slide 25: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Main factors affecting changes in $654 YTD cash balances $636 • Free cash flow of $131 million • Share repurchases of $100 million (approximately 1.95 million shares) $’s in millions • Dividends paid of $35 million • Acquisition
Slide 26: 2015 Outlook – P&L
Brunswick Corporation – Earnings Release 2015 Outlook – P&L • Depreciation and amortization estimate of approximately $90 million • Pension expense of approximately $12 million* • Net interest expense of approximately $26 million • Combined equity earnings and other income comparable to 2014 • Effec
Slide 27: 2015 Outlook: Cash Flow Assumptions
Brunswick Corporation – Earnings Release 2015 Outlook: Cash Flow Assumptions • Pension cash contributions of approximately $75 million • Current plan anticipates working capital changes to result in a modest usage of cash of $10 million to $30 million • Capital expenditure levels of approximately 4
Slide 28: Presenters
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer 28 October 29, 2015
Slide 29: Outlook for Brunswick 2015
Outlook for Brunswick 2015 2015 Financial Targets • Revenue growth of approximately 7 percent • Slight improvement in gross margin levels • Operating expenses, as a percent of sales, to be lower than prior year • Solid gains in operating margins • Diluted EPS, as adjusted, of $2.80 to $2.85 • Free c
Slide 30: Marine Engine Segment
Marine Engine Segment Continued Revenue and Operating Earnings Growth 2015 Financial Targets • Revenue growth at the high-end of the mid-single digit percent range • Solid improvement in operating margins • Currency headwinds 30 October 29, 2015 Mercury Marine
Slide 31: Boat Group Segment
Boat Group Segment Gain Market Share and Improve Profitability 2015 Financial Targets • Revenue growth in low double-digit range • Operating margin to be up - approaching 3.0 percent for the full-year • Currency headwinds 31 October 29, 2015 Brunswick Boat Group
Slide 32: Fitness Segment
Fitness Segment Continued Revenue Growth with Strong Margins 2015 Financial Targets • Revenue growth in the mid-single digit range • Slight increase in operating margin • Currency headwinds • Absence of Q1, 2014 favorable warranty adjustments 32 October 29, 2015 Life Fitness
Slide 33: November 10, 2015 Investor Day
Brunswick Corporation – Earnings Release November 10, 2015 Investor Day • New York - NYSE • Financial targets for the period ending 2018 • Contact Bruce.Byots@brunswick.com for more information regarding this event 33 October 29, 2015
Slide 34: Earnings Conference Call Q3, 2015
Brunswick Earnings Conference Call Q3, 2015 Helping Active People Live Active Lives
Slide 35: Appendix
Appendix Helping Active People Live Active Lives
Slide 36: First Nine Months Net Sales increased by $219.5 million, or 8%
Brunswick Corporation – Earnings Release First Nine Months Net Sales increased by $219.5 million, or 8% Net Sales Nine Months Ended October 3, September 27, % Change 1 Segment (#039;s in millions) 2015 2014 GAAP Constant Currency Marine Engine $ 1,839.6 $ 1,724.4 7% 11 % Boat 938.6 841.5 12 % 15 % Mari
Slide 37: First Nine Months Adjusted Operating Earnings increased by $40.8 million, or 13%
Brunswick Corporation – Earnings Release First Nine Months Adjusted Operating Earnings increased by $40.8 million, or 13% Operating Earnings - Excluding Charges Nine Months Ended October 3, September 27, Segment (#039;s in millions) 2015 2014 Change Marine Engine $ 308.5 $ 277.5 $ 31.0 Boat 35.0 22.6 1
Slide 38: Q3 Adjusted Pretax Earnings increased by $22.1 million, or 25%
Brunswick Corporation – Earnings Release Q3 Adjusted Pretax Earnings increased by $22.1 million, or 25% Adjusted Pretax Earnings Three Months Ended October 3, September 27, (#039;s in millions) 2015 2014 Change Adjusted operating earnings $ 115.8 $ 94.6 $ 21.2 Net interest expense (6.3) (6.7) 0.4 Other
Slide 39: First Nine Months Adjusted Pretax Earnings increased by $47.1 million, or 16%
Brunswick Corporation – Earnings Release First Nine Months Adjusted Pretax Earnings increased by $47.1 million, or 16% Adjusted Pretax Earnings Nine Months Ended October 3, September 27, (#039;s in millions) 2015 2014 Change Adjusted operating earnings $ 358.7 $ 317.9 $ 40.8 Net interest expense (19.3)
Slide 40: Q3 Diluted EPS, as adjusted, increased by $0.14, or 22%
Brunswick Corporation – Earnings Release Q3 Diluted EPS, as adjusted, increased by $0.14, or 22% Earnings Per Share Three Months Ended October 3, September 27, 2015 2014 Diluted EPS from continuing operations $ 0.77 $ 0.64 Restructuring, exit and impairment charges - 0.01 Special tax items 0.00 (0.0
Slide 41: First Nine Months Diluted EPS, as adjusted, increased by $0.32, or 15%
Brunswick Corporation – Earnings Release First Nine Months Diluted EPS, as adjusted, increased by $0.32, or 15% Earnings Per Share Nine Months Ended October 3, Septmeber 27, 2015 2014 Diluted EPS from continuing operations $ 2.50 $ 2.07 Restructuring, exit and impairment charges - 0.03 Special tax i
Slide 42: 2014 Consolidated Statements of Operations, as adjusted
Brunswick Corporation – Earnings Release 2014 Consolidated Statements of Operations, as adjusted* 2014 Q1 Q2 Q3 Q4 Net Sales $ 894.9 $ 1,073.1 $ 932.1 $ 938.6 Cost of sales 651.6 768.8 672.9 708.6 Selling, general and administrative expense 133.0 134.9 134.9 153.8 Research and development expense 28
Slide 43: 2014 Consolidated Statements of Operations, GAAP
Brunswick Corporation – Earnings Release 2014 Consolidated Statements of Operations, GAAP 2014 Q1 Q2 Q3 Q4 Net Sales $ 894.9 $ 1,073.1 $ 932.1 $ 938.6 Cost of sales 651.6 768.8 672.9 708.6 Selling, general and administrative expense 133.0 134.9 134.9 153.8 Research and development expense 28.4 28.0