Slide 1: Earnings Conference Call Q1 2020
Earnings Conference Call Q1 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: Comprehensive, Coordinated, Global Response to COVID-19
Brunswick Corporation – Earnings Release Brunswick’s Comprehensive, Coordinated, Global Response to COVID-19 Employees Business Partners Communities ✓ Prompt, coordinated production ✓ Worked with primary floorplan lenders ✓ Donating PPE to local healthcare shutdowns and restarts to provide additiona
Slide 6: COVID-19 Impacts on our Business - Domestic
Brunswick Corporation – Earnings Release COVID-19 Impacts on our Business - Domestic ✓ Temporarily suspended manufacturing at most of our engine and boat facilities on March 23 ✓ All major US manufacturing facilities are already back online with new temperature screening, distancing, PPE and cleanin
Slide 7: COVID-19 Impacts on our Business – International
Brunswick Corporation – Earnings Release COVID-19 Impacts on our Business – International ✓ All global manufacturing facilities will have resumed production by May 4 aside from one UK facility ✓ P&A distribution hub in Belgium remains open, and our boat production operations in Portugal and contract
Slide 8: Cost Containment Actions
Brunswick Corporation – Earnings Release Cost Containment Actions We are targeting $525M - $550M of operating expenses in 2020, down approximately 15 percent from initial 2020 expectations ✓ Structural costs reductions at each business unit, in addition to full-year effect of $50M reductions in 2019
Slide 9: Capital Strategy Update
Brunswick Corporation – Earnings Release Capital Strategy Update We are actively managing our cash position and are well prepared for any market environment ✓ Approximately $515M of cash on hand at end of Q1, including proceeds from revolver borrowings ✓ Expect to maintain cushion against debt coven
Slide 10: Resilient Q1 Performance vs. Q1 2019
Brunswick Corporation – Earnings Release Resilient Q1 Performance1 vs. Q1 2019 ✓ Revenue down 8 percent – impacted by temporary manufacturing suspensions ✓ First quarter ✓ Adjusted EPS of $0.96, up 2 percent, with benefits from lower shares outstanding and interest expense performance was tracking t
Slide 11: Q1 Revenue Growth Rates By Region
Brunswick Corporation – Earnings Release Q1 Revenue Growth Rates By Region1 Region Total BC 2019 Mix U.S. (11)% 69% ✓ International Europe (3)% 13% revenues down Canada (26)% 7% 2 percent, with Asia-Pacific 35% 7% Propulsion Rest-of-World (7)% 4% benefitting Total (2)% 31% from strong International
Slide 12: U.S. Powerboat Industry – Percentage Change in Retail Units
Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units Category Jan-20 Feb-20 Q1-20 Q1-19 FY-19 Outboard 12% 9% 0% (7)% (3)% Boats ✓ Q1 2020 unit Fiberglass SD/IB Boats 24% (7)% (9)% (5)% (11)% volume for Main main Powerboat 13% 8% (0)% (7)% (4)% powerbo
Slide 13: Financial Overview
FINANCIAL OVERVIEW Bill Metzger - CFO | 13 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 14: Overview of First Quarter 2020
Brunswick Corporation – Earnings Release Overview of First Quarter 20201 Consolidated results on an as adjusted basis vs. Q1 2019: Diluted EPS of $0.96, Net sales down 8.1 Operating margin of 11.7 up 2 percent percent percent, down 10 bps Operating earnings Operating deleverage of decreased 9.6 perc
Slide 15: Propulsion Segment – Q1 Performance
Brunswick Corporation – Earnings Release Propulsion Segment – Q1 Performance Product Category Sales ($M) % Change Outboard Engines $353.8 0% Sterndrive Engines $37.3 (21)% Controls, Rigging and Propellers $57.5 8% Total $448.6 (1)% Operating Margin of 13.7 percent, up Operating Earnings of $61.3M, u
Slide 16: Parts and Accessories Segment – Q1 Performance
Brunswick Corporation – Earnings Release Parts and Accessories Segment – Q1 Performance1 Product Category Sales ($M) % Change Engine Parts and Accessories $77.2 (9)% Distribution $121.3 (2)% Advanced Systems Group $103.1 1% Total $301.6 (4)% Operating Margin Operating Earnings - Adjusted @ 17.8 perc
Slide 17: Boat Segment – Q1 Performance
Brunswick Corporation – Earnings Release Boat Segment – Q1 Performance1 Product Category Sales ($M) % Change Aluminum Freshwater $120.5 (28)% Recreational Fiberglass $101.8 (12)% Saltwater Fishing $59.8 (34)% Business Acceleration $9.4 NM Total $291.5 (22)%2 Operating Margin Operating Earnings - Adj
Slide 18: Pipeline Metrics
Brunswick Corporation – Earnings Release Pipeline Metrics ✓ Pipeline inventory at end of Q1 is down Ending Change Units in Change from Q1 2019, but Year Weeks on Versus Prior Pipeline Versus Prior consistent with Hand Year (WOH) (Thousands) Year (Units) previous years 20 38.8 -1.6 weeks 24.6 (11)% ✓
Slide 19: 2020 Assumptions and Resulting Expectations
2020 Assumptions and Resulting Expectations Formal guidance for 2020 remains withdrawn U.S. retail marine market down high-teens to low- twenties percent from 2019 levels FY revenue comparisons to trend slightly better than the U.S. retail marine market performance Operating deleverage to fall betwe
Slide 20: Cost Structure and Fixed Cost Base
Brunswick Corporation – Earnings Release Cost Structure and Fixed Cost Base Cost Structure – Initial 2020 Plan Fixed Cost Base – Full Year1 $ in millions ~$3.8 billion Highly variable cost structure, along with actions taken to lower fixed costs, are both benefitting our results | 20 1Other SGA excl
Slide 21: Managing Operating Leverage
Brunswick Corporation – Earnings Release Managing Operating Leverage VOLUME IMPACTS OPERATING FACTORS MANAGE FIXED COSTS ✓ Deleverage between 20 and 35 ✓ Absorption (-) ✓ SG&A reductions percent, depending on mix: KEY ELEMENTS ✓ F/X changes (-) ✓ Segment specific within range: ✓ Manage R&D and Cap-E
Slide 22: Liquidity Assessment
Brunswick Corporation – Earnings Release Liquidity Assessment ✓ Liquidity position is strong Dividends Projected Liquidity Analysis* Dividends Dividends ➢ Q1 cash balance of ~$515 million versus $332 million at year-end $ in millions 03/31/20 06/30/20 12/31/20 Share Share Repurchases Total Liquidity
Slide 23: 2020 Outlook – P&L and Cash Flow
Brunswick Corporation – Earnings Release 2020 Outlook – P&L and Cash Flow Change from Prior 2020 Estimates Conference Call Estimate Free cash flow Exceeding $125 million Lower Working capital usage ~$40 - $60 million Slightly Higher Depreciation and amortization1 ~$115 - $125 million Slightly Lower
Slide 24: 2020 Outlook – Capital Strategy Assumptions
Brunswick Corporation – Earnings Release 2020 Outlook – Capital Strategy Assumptions Change from Prior 2020 Estimates Conference Call Estimate Debt retirement ~$35 million Lower Capital expenditures ~$150 - $160 million Lower Share repurchases $34 million Lower Quarterly dividends $0.24 per share Un
Slide 25: 2020 Outlook
2020 OUTLOOK Dave Foulkes – CEO | 25 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 26: Propulsion Segment Operating and Strategic Priorities
Propulsion Segment Operating and Strategic Priorities Continued Further investment market share in and execution of gains in outboard new product engines programs Optimize Sterndrive production and product control costs enhancements | 26 ©2020 Brunswick Co. Confidential and all rights reserved.
Slide 27: Parts & Accessories Segment Operating and Strategic Priorities
Parts & Accessories Segment Operating and Strategic Priorities Continued Efficient operation of successful distribution execution at businesses, Power Products supporting strong aftermarket presence New products and Cost control growth in systems and strategic integration optimization business oppor
Slide 28: Boat Segment Operating and Strategic Priorities
Boat Segment Operating and Strategic Priorities Successful new Structural cost product reductions to introductions enhance profitability across portfolio of each brand Successful Growth and pipeline synergies at management Freedom Boat Club | 28 ©2020 Brunswick Co. Confidential and all rights reserv
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Slide 30: Appendix
Appendix | 30
Slide 31: GAAP to Non-GAAP Reconciliations
Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations | 31 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 32: Q1 Net Sales Decreased by $85.2 million, or 8.1 percent
Brunswick Corporation – Earnings Release Q1 Net Sales Decreased by $85.2 million, or 8.1 percent | 32 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 33: Q1 Net Sales
Brunswick Corporation – Earnings Release Q1 Net Sales | 33 ©2019 Brunswick Co. Confidential and all rights reserved.
Slide 34: Tax Provision
Brunswick Corporation – Earnings Release Tax Provision ✓ Estimated 2020 effective book Q1 tax rate, as 2020 2019 adjusted, is Effective tax rate - GAAP 20.7% 19.8% Effective tax rate, as adjusted (1) 21.3% 21.5% between 21 and 22 percent on tax guidance issued to date ✓ Cash tax rate expected to be
Slide 35: Review of Foreign Currency Impact
Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q1 2020: • Unfavorable impact on sales of approximately 1 LA/Other percent • Unfavorable impact on operating earnings of Canada approximately $7 million Outlook for Full-Year 2020: Asia Pacific • Unfavorable impact on consol
Slide 36: Tariff Update
Brunswick Corporation – Earnings Release Tariff Update Change from ✓ Our tariff Q4 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 37: Other Factors Affecting GAAP Operating Earnings
Brunswick Corporation – Earnings Release Other Factors Affecting GAAP Operating Earnings $ in millions Q1 2020 2019 Restructuring, exit, and impairment $0.4 $3.2 Purchase accounting amortization 7.5 7.2 Acquisition and IT-related Costs 1.4 - Total Operating Earnings Adjustments $9.3 $10.4 | 37 ©2019
Slide 38: Free Cash Flow
Brunswick Corporation – Earnings Release Free Cash Flow Q1 ($ in millions) 2020 2019 Net cash (used for) operating activities from continuing operations $ (92.7) $ (73.2) Net cash provided by (used for): Plus: Capital expenditures (55.9) (86.2) Plus: Proceeds from sale of property, plant and equipme