Slide 1: Brunswick Earnings Conference Call Q4, 2015
Brunswick Earnings Conference Call Q4, 2015 January 28, 2016
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: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer January 28, 2016 4
Slide 5: Overview of 2015
Brunswick Corporation – Earnings Release Overview of 2015 • Revenue increased 7 percent -- on a constant currency basis1, sales increased by 11 percent. Strong growth in fiberglass sterndrive/inboard and outboard boats, outboard engines and marine parts and accessories; solid growth rates in fitness
Slide 6: Net Sales increased by $267.0 million, or 7%
Brunswick Corporation – Earnings Release Net Sales increased by $267.0 million, or 7% Net Sales Twelve Months Ended December 31, December 31, % Change 1 Segment (#039;s in millions) 2015 2014 GAAP Constant Currency Marine Engine $ 2,314.3 $ 2,189.4 6% 10 % Boat 1,274.6 1,135.8 12 % 16 % Marine eliminat
Slide 7: Adjusted Operating Earnings increased by $65.8 million, or 18%
Brunswick Corporation – Earnings Release Adjusted Operating Earnings increased by $65.8 million, or 18% Operating Earnings - Excluding Charges Twelve Months Ended December 31, December 31, Segment (#039;s in millions) 2015 2014 Change Marine Engine $ 350.4 $ 309.1 $ 41.3 Boat 45.3 18.7 26.6 Total Marin
Slide 8: Diluted EPS, as adjusted, increased by $0.51, or 21%
Brunswick Corporation – Earnings Release Diluted EPS, as adjusted, increased by $0.51, or 21% Earnings Per Share Twelve Months Ended December 31, December 31, 2015 2014 Diluted EPS from continuing operations $ 2.41 $ 2.05 Pension - settlement charges 0.54 0.19 Restructuring, exit and impairment char
Slide 9: Q4 Net Sales increased by $47.5 million, or 5%
Brunswick Corporation – Earnings Release Q4 Net Sales increased by $47.5 million, or 5% Net Sales Three Months Ended December 31, December 31, % Change 1 Segment (#039;s in millions) 2015 2014 GAAP Constant Currency Marine Engine $ 474.7 $ 465.0 2% 5% Boat 336.0 294.3 14 % 18 % Marine eliminations (62.
Slide 10: Q4 Adjusted Operating Earnings increased by $25.0 million, or 59%
Brunswick Corporation – Earnings Release Q4 Adjusted Operating Earnings increased by $25.0 million, or 59% Operating Earnings - Excluding Charges Three Months Ended December 31, December 31, Segment (#039;s in millions) 2015 2014 Change Marine Engine $ 41.9 $ 31.6 $ 10.3 Boat 10.3 (3.9) 14.2 Total Mari
Slide 11: Q4 Diluted EPS, as adjusted, increased by $0.19, or 58%
Brunswick Corporation – Earnings Release Q4 Diluted EPS, as adjusted, increased by $0.19, or 58% Earnings Per Share Three Months Ended December 31, December 31, 2015 2014 Diluted EPS from continuing operations $ (0.10) $ (0.03) Pension - settlement charge 0.55 0.19 Restructuring, exit and impairment
Slide 12: 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 Q4-15 2015 AL – Fish 12.5% 3.2% 8.0% 8.6% 7.5% AL - Pontoon 13.5% 5.2% 7.9% 5.2% 7.6% FG - Outboard 9.5% 8.5% 7.8% 8.4% 9.1% Outboard Boats 11.6% 5.5% 7.9% 8.3% 8.1% FG – SD/IB (14-30 ft.)
Slide 13: Revenue By Region – Marine Segments Only
Brunswick Corporation – Earnings Release Revenue By Region – Marine Segments Only Region 2015 vs. 2014 2015 Growth Rates* Mix U.S. +15% 67% Europe +13% 12% Canada +1% 8% Asia Pacific +15% 7% Latin America -2% 4% Africa & Middle East -2% 2% Total 12% 100% Sales* of our combined marine segments experi
Slide 14: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer January 28, 2016 14
Slide 15: Marine Engine segment – Q4 sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – Q4 sales by region Q4 - 2015 % Change Region % of Sales* GAAP Constant Currency United States 63% 4% 4% Europe 12% (6)% 6% Rest-of-World 25% (5)% 8% Total 100% 1% 5% Based on Constant Currency • U.S. sales increased in outboard engine
Slide 16: Q4 Outboard and Sterndrive engines
Brunswick Corporation – Earnings Release Q4 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 17: Q4 Marine Engine segment's Parts & Accessories
Brunswick Corporation – Earnings Release Q4 Marine Engine segment’s Parts & Accessories Service Parts Boating Accessories Propellers • Revenue benefited from recent acquisitions, new product launches and market share gains • Lower fuel costs a positive factor Oil & Lubes Trolling Motors Controls/Rig
Slide 18: Factors affecting Marine Engine segment's Q4 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q4 operating earnings Key Factors • Higher sales • Cost reductions, including benefits from plant efficencies, lower commodity costs and savings related to sourcing initiatives • Favorable product mix benefit from rec
Slide 19: Boat segment – Q4 sales by region
Brunswick Corporation – Earnings Release Boat segment – Q4 sales by region Q4 - 2015 % Change Region % of Sales GAAP Constant Currency United States 73% 25% 25% Europe 6% 0% 15% Rest-of-World 21% (9)% 1% Total 100% 14% 18% Based on Constant Currency • U.S. sales continue to benefit from recently int
Slide 20: Review of Brunswick Boat segment metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment metrics Wholesale and Retail Metrics • For the full-year, global retail unit sales increased by 4 percent, compared to prior year. U.S. retail units increased by 9 percent; global wholesale unit shipments were up 2 percent. U.
Slide 21: Factors affecting Boat segment's Q4 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q4 operating earnings Key Factors • Higher sales • Favorable product mix • Lower commodity costs and savings related to sourcing initiatives and cost reductions Q4 operating margin at 3.1%; On a GAAP basis at 0.8% FY-15 operat
Slide 22: Fitness segment – Q4 sales by region
Brunswick Corporation – Earnings Release Fitness segment – Q4 sales by region Q4 - 2015 % Change Region % of Sales GAAP Constant Currency United States 57% 8% 8% Europe 19% (17)% (10)% Rest-of-World 24% 3% 8% Total 100% 1% 4% Based on Constant Currency • Growth in sales reflects gains in the U.S. at
Slide 23: Factors affecting Life Fitness segment's Q4 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Life Fitness segment’s Q4 operating earnings Key Factors • Higher sales • Cost reductions and savings related to sourcing initiatives • Transaction costs associated with Cybex acquisition • Unfavorable impact of customer and channel mix Q4 o
Slide 24: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer January 28, 2016 24
Slide 25: International Sales: Review of foreign currency impact
Brunswick Corporation – Earnings Release Review of foreign currency impact1 40% FY, 2015: 35% • Unfavorable impact on sales of approximately 4 percent 30% LA/Other • Unfavorable impact on operating earnings of approximately $28 million 25% International Sales % of Total Sales Asia Outlook 2016: Paci
Slide 26: Other factors affecting GAAP pre-tax earnings
Brunswick Corporation – Earnings Release Other factors affecting GAAP pre-tax earnings $ in millions 2015 2014 Pension settlement charge $ 82.3 $ 27.9 Impairment charge - equity method investment - 20.2 Impairment and restructuring charges 12.4 4.2 Early debt extinguishment charges - 0.1 In 2016, we
Slide 27: Tax provision
Brunswick Corporation – Earnings Release Tax provision Q4 Full-year 2015 2014 2015 2014 Effective tax rate - GAAP 71.7% 71.3% 27.9% 32.3% Effective tax rate, as adjusted* 23.1% 22.3% 32.6% 32.5% Estimated 2016: Effective Book Tax Rate, as adjusted, is approximately 31 to 32 percent; Cash Tax Rate to
Slide 28: Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Cash Flow – Continuing Operations (#039;s in millions) 2015 2014 Net earnings* $ 227.4 $ 194.9 Depreciation and amortization 88.9 81.2 Pension funding, net of expense 20.4 (31.1) Changes in certain current assets and current liabilities** (63.7) (66.7) Income ta
Slide 29: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations (#039;s in millions) 2015 2014 Net cash provided by operating activities* $ 338.3 $ 246.9 Net cash provided by (used for): Capital expenditures (132.5) (124.8) Proceeds from sale of property, plant and equipment 2.4 5.8 Eff
Slide 30: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Main factors affecting changes in cash balances $669 $636 • Free cash flow of $193 million • Share repurchases of $120 million (approximately 2.34 million shares) $’s in millions • Dividends paid of $48 million • Acquisition exp
Slide 31: 2016 Outlook – P&L
Brunswick Corporation – Earnings Release 2016 Outlook – P&L • Depreciation and amortization estimate of approximately $110 million • Pension expense of approximately $15 million • Net interest expense of approximately $26 million • Combined equity earnings and other income comparable to 2015 • Effec
Slide 32: 2016 Outlook: Cash Flow Assumptions
Brunswick Corporation – Earnings Release 2016 Outlook: Cash Flow Assumptions • Current plan anticipates working capital changes to result in a usage of cash of $60 million to $80 million • Capital expenditure levels of approximately 4 to 4.5 percent of sales • Pension cash contributions of approxima
Slide 33: Presenters: McCoy, Schwabero, Metzger
Brunswick Corporation – Earnings Release Dusty McCoy – Chairman and Chief Executive Officer Mark Schwabero – President and Chief Operating Officer Bill Metzger – Chief Financial Officer January 28, 2016 33
Slide 34: Outlook for Brunswick 2016
Outlook for Brunswick 2016 2016 Financial Targets • Revenue growth of approximately 9 percent to 11 percent • Slight improvement in gross margin levels • Operating expenses, as a percent of sales, to be slightly lower than prior year • Slight gains in operating margins • Diluted EPS, as adjusted, of
Slide 35: Marine Engine Segment: Strong Revenue and Strong Margins
Marine Engine Segment Strong Revenue and Strong Margins 2016 Financial Targets • Revenue growth in the mid-to high-single digit percent range • Solid improvement in operating margin January 28, 2016 35
Slide 36: Boat Group Segment: Strong Revenue Growth with Improved Profitability
Boat Group Segment Strong Revenue Growth with Improved Profitability 2016 Financial Targets • Revenue growth in the mid-single to high-single digit percent range • Improvement in operating margin of approximately 100 to 120 basis points January 28, 2016 36
Slide 37: Fitness Segment: Strong Revenue Growth with Strong Margins
Fitness Segment Strong Revenue Growth with Strong Margins 2016 Financial Targets • Revenue growth in the mid-to-high-twenty percent range, including Cybex acquisition • Plan reflects operating margins, as adjusted, to be lower due to the impact of the Cybex acquisition, including purchase accounting
Slide 38: Brunswick Earnings Conference Call Q4, 2015
Brunswick Earnings Conference Call Q4, 2015
Slide 39: Appendix
BRUNSWICK
Slide 40: Q4 Adjusted Pretax Earnings increased by $22.5 million, or 56%
Brunswick Corporation – Earnings Release Q4 Adjusted Pretax Earnings increased by $22.5 million, or 56% Adjusted Pretax Earnings Three Months Ended December 31, December 31, (#039;s in millions) 2015 2014 Change Adjusted operating earnings $ 67.7 $ 42.7 $ 25.0 Net interest expense (6.3) (6.6) 0.3 Other
Slide 41: Full-year Adjusted Pretax Earnings increased by $69.6 million, or 20%
Brunswick Corporation – Earnings Release Full-year Adjusted Pretax Earnings increased by $69.6 million, or 20% Adjusted Pretax Earnings Twelve Months Ended December 31, December 31, (#039;s in millions) 2015 2014 Change Adjusted operating earnings $ 426.4 $ 360.6 $ 65.8 Net interest expense (25.6) (28.