Slide 1: Earnings Conference Call Q3 2020
Earnings Conference Call Q3 2020
Slide 2: Forward-Looking Statements
Brunswick 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 abou
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: Business Overview
BUSINESS OVERVIEW Dave Foulkes – CEO |4 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 5: Q3 2020 in Review
Brunswick Corporation – Q3 2020 in Review Outstanding performance across the Company Strong financial results: Boat pipeline U.S. marine retail unit Guidance*: inventory at historical demand surge continued • Adjusted1 EPS of $1.80 (up 64%) lows: through the quarter: • 2020 Adjusted EPS of ~$4.75; o
Slide 6: New Boaters are Positioning Brunswick for Future Generations
Brunswick Corporation – Earnings Release New Boaters are Positioning Brunswick for Future Generations BRUNSWICK IS OUTPERFORMING the industry in attracting new boaters YOUNGER MORE FEMALE INCREASING DIVERSITY The average age of the Brunswick boat This summer, the percentage of women Recent activity
Slide 7: Propulsion Segment – Q3 2020 Overview
Brunswick Corporation – Earnings Release Propulsion Segment – Q3 2020 Overview Sales up 32.7%, operating margins of 17.9%, up 320bps • Significant U.S. and international retail market share gains • OEM conversions continue, with Sportsman and Beneteau announcing partnerships with Mercury -- many mor
Slide 8: Parts & Accessories Segment – Q3 2020 Overview
Brunswick Corporation – Earnings Release Parts & Accessories Segment – Q3 2020 Overview Sales up 23.3%, adjusted operating margins of 23.4%, up 100bps 1 • Strong sales growth across all businesses • Increased boat usage and favorable weather, which extended the primary U.S. boating season, generated
Slide 9: Boat Segment – Q3 2020 Overview
Brunswick Corporation – Earnings Release Boat Segment – Q3 2020 Overview Sales up 18.3%, adjusted operating earnings of 9.2%, up 470bps 1 • Robust revenue, earnings, and margin growth - Adjusted operating leverage of ~35% • Pipelines at historical lows - surge in retail demand outpaced increased pro
Slide 10: Q3 Revenue Growth Rates By Region
Brunswick Corporation – Earnings Release Q3 Revenue Growth Rates By Region1 TOTAL BC REGION REVENUE FY International 2019 MIX GROWTH revenues up 24 U.S. 27% 69% percent on a Europe 16% 13% constant Canada 6% 7% currency basis Asia-Pacific 48% 7% Rest-of-World 33% 4% Continued strong Total Intern
Slide 11: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units Q3 2020 industry unit volume for Q1- Q2- Q3- Q3- YTD YTD CATEGORY 20 20 20 19 2020 2019 main powerboat segments was up Outboard Boats (3)% (3)% 39% 2% 8% (4)% 39% vs. Q3 2019 Fiberglass SD/IB (9)%
Slide 12: Financial Overview
FINANCIAL OVERVIEW Ryan Gwillim - CFO | 12 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 13: Overview of Third Quarter 2020
Brunswick Corporation – Earnings Release Overview of Third Quarter 20201 Consolidated results on an as adjusted basis: Diluted EPS of $1.80, Net sales of $1.23B, up Operating margin of up 63.6 percent 26.3 percent 16.5 percent Operating earnings of Operating leverage of Free cash flow of $202.9M 26.
Slide 14: Overview of Year-to-date 2020
Brunswick Corporation – Earnings Release Overview of Year-to-date 20201 Consolidated results on an as adjusted basis: Diluted EPS of $3.76, up Net sales of $3.19B, Operating margin of 7.7 percent down 0.2 percent 13.6 percent Operating earnings of Free cash flow of $433.3M $520M 1See the Appendix to
Slide 15: Propulsion Segment – Q3 Performance
Brunswick Corporation – Earnings Release Propulsion Segment – Q3 Performance PRODUCT CATEGORY SALES ($M) % CHANGE Outboard Engines $410.3 34% Sterndrive Engines $39.3 10% Controls, Rigging and Propellers $76.9 38% Total $526.5 33% OPERATING MARGIN OPERATING EARNINGS • Operating Margin of 17.9 percen
Slide 16: Parts and Accessories Segment – Q3 Performance
Brunswick Corporation – Earnings Release Parts and Accessories Segment – Q3 Performance1 PRODUCT CATEGORY SALES ($M) % CHANGE Engine Parts and Accessories $141.8 20% Distribution $205.0 31% Advanced Systems Group $113.1 16% Total $459.9 23% OPERATING MARGIN OPERATING EARNINGS • Adjusted Margin of 23
Slide 17: Boat Segment – Q3 Performance
Brunswick Corporation – Earnings Release Boat Segment – Q3 Performance1 PRODUCT CATEGORY SALES ($M) % CHANGE Aluminum Freshwater $124.5 18% Recreational Fiberglass $111.0 14% Saltwater Fishing $82.6 24% Business Acceleration $11.2 27% Total $328.12 18%3 OPERATING MARGIN OPERATING EARNINGS • Adjusted
Slide 18: Pipeline Metrics
Brunswick Corporation – Earnings Release Pipeline Metrics Historically low pipelines due to YEAR ENDING WEEKS ON CHANGE VERSUS PRIOR UNITS IN PIPELINE CHANGE VERSUS PRIOR strongest Q3 retail HAND YEAR (WOH) (THOUSANDS) YEAR (UNITS) demand since pre- GFC, while ramping 20 14.4 -15.6 weeks 10.1 (48)
Slide 19: 2020 Assumptions and Guidance
2020 Assumptions and Guidance* 2020 U.S. marine industry retail unit demand up high- single digit percent from 2019 levels Q4 2020 revenue up low-to-mid-teens percent, with adjusted operating leverage in the high-teens FY 2020 operating expenses as a percent of sales flat versus 2019 FY 2020 Adjuste
Slide 20: Liquidity Assessment
Brunswick Corporation – Earnings Release Liquidity Assessment • Liquidity position extremely strong at $1.05 billion Projected Dividends Liquidity Analysis* ($ in Millions) Q3 cash balance of $660 million versus $332 million at year-end 2019 $1,250 Free cash flow of $520 million YTD 2020 versus
Slide 21: 2020 Outlook – P&L and Cash Flow
Brunswick Corporation – Earnings Release 2020 Outlook – P&L and Cash Flow CHANGE FROM 2020 ESTIMATES PRIOR CONFERENCE CALL ESTIMATE Free cash flow Exceeding $600 million Higher Working capital reduction Exceeding $175 million Higher Depreciation and amortization1 ~$115 - $120 million Unchanged Acqui
Slide 22: 2020 Outlook – Capital Strategy Assumptions
Brunswick Corporation – Earnings Release 2020 Outlook – Capital Strategy Assumptions CHANGE FROM PRIOR 2020 CONFERENCE CALL ESTIMATES ESTIMATE Debt retirement ~$160 million Higher Capital expenditures ~$160 - $170 million Unchanged Share repurchases $100 million Higher Quarterly dividends $0.27 per
Slide 23: Outlook
OUTLOOK Dave Foulkes – CEO | 23 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 24: Operating and Strategic Priorities
Brunswick Corporation – Earnings Release Operating and Strategic Priorities BOATS & PARTS & PROPULSION BUSINESS ENTERPRISE ACCESSORIES ACCELERATION • Continue share growth • Optimize traditional and • Successfully launch new • Continue to strengthen in higher-horsepower online distribution models pr
Slide 25: 2021 EPS Target Bridge
Brunswick Corporation – Earnings Release 2021 EPS Target Bridge* $5.75 - $6.25 In a reference scenario in which U.S. marine industry retail unit demand is flat to up low-single digit percent for 2021, we would ~$4.75 anticipate adjusted diluted EPS in the range of $5.75 - $6.25 We anticipate making
Slide 26: Innovation + Inspiration on the Water
INNOVATION + INSPIRATION” ON THE WATER’.
Slide 27: Appendix
Appendix | 27
Slide 28: GAAP to Non-GAAP Reconciliations
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations ($ in millions, except per share data) Q3 2020 QTD Q3 2019 QTD Q3 2020 YTD Q3 2019 YTD Net sales $ 1,233.1 $ 976.6 $ 3,186.4 $ 3,190.8 Sport yacht & yachts — — — 0.7 Net sales, as adjusted $ 1,233.1 $ 976.6 $ 3,186.4 $ 3,191.5
Slide 29: Q3 Net Sales by Segment and Region
Brunswick Corporation - Earnings Release Q3 Net Sales increased by $256.5 million, or 26.3 percent Net Sales Segments ($ in millions) Q3 2020 Q3 2019 % Change Propulsion $ 526.5 $ 396.9 32.7% Parts and Accessories 459.9 373.0 23.3% Boat 328.1 277.4 18.3% Segment eliminations (81.4) (70.7) Total 1,23
Slide 30: YTD Adjusted Net Sales Decreased 0.2 Percent
Brunswick Corporation - Earnings Release YTD Adjusted Net Sales decreased by $5.1 million, or 0.2 percent Net Sales - GAAP Net Sales – As Adjusted1 Segments ($ in Q3 2020 Q3 2019 % Segments ($ in Q3 2020 Q3 2019 % millions) YTD YTD Change millions) YTD YTD Change Propulsion $ 1,370.5 $ 1,310.8 4.6%
Slide 31: Q3 Net Sales Growth Drivers
Brunswick Corporation - Earnings Release Q3 Net Sales Third Quarter 2020 vs. Third Quarter 2019 Sales Growth Drivers Propulsion Parts and Accessories Boat Brunswick Organic (constant currency) 33% 23% 18% 26% Acquisitions - - - - Currency (0)% 0% 0% 0% 2020 Net Sales – GAAP 33% 23% 18% 26% Sales Gro
Slide 32: YTD Net Sales Growth Drivers
Brunswick Corporation - Earnings Release YTD Net Sales YTD 2020 vs. YTD 2019 Sales Growth Drivers Propulsion Parts and Accessories Boat Brunswick Organic (constant currency) 6% 5% (14)% 1% Acquisitions - - (1)% 0% Currency (1)% (0)% (0)% (1)% 2020 Net Sales – GAAP 5% 5% (15)% (0)% Sales Growth by Re
Slide 33: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision Estimated 2020 effective book tax rate, as Q3 adjusted, is 2020 2019 expected to be Effective tax rate - GAAP 22.1% (22.8)% between 21 and Effective tax rate, as adjusted1 22.7% 22.7% 22 percent on tax guidance issued to date Cash tax rate e
Slide 34: Review of Foreign Currency Impact
Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q3 2020: • Minimal impact on sales and earnings LA/Other Outlook for Full-Year 2020: Canada • Unfavorable impact on consolidated sales of less than 1 percent • Unfavorable impact on operating earnings of Asia $10 to $15 mill
Slide 35: Tariff Update
Brunswick Corporation – Earnings Release Tariff Update Change from Our tariff Q2 call assumptions remain 2020 estimates incorporate tariffs paid on 40 to 60 horsepower outboard engines assembled in unchanged No Change our Suzhou, China facility Assumes Waves 1- 3 staying at 25% rate, and no No Cha
Slide 36: Other Factors Affecting GAAP Operating Earnings
Brunswick Corporation – Earnings Release Other Factors Affecting GAAP Operating Earnings $ in millions Q3 2020 2019 Restructuring, exit, and impairment $1.8 $7.4 Purchase accounting amortization 7.5 7.5 Acquisition and IT-related costs 1.0 1.2 Total Operating Earnings Adjustments $10.3 $16.1 | 36 ©2
Slide 37: Free Cash Flow
Brunswick Corporation – Earnings Release Free Cash Flow Nine Months Ended ($ in millions) 2020 2019 Net cash provided by operating activities from continuing operations $ 637.4 $ 254.2 Net cash provided by (used for): Capital expenditures (120.6) (178.4 ) Proceeds from sale of property, plant and eq