Slide 1: Brunswick Earnings Conference Call Q1, 2016
Brunswick Earnings Conference Call Q1, 2016 April 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: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 28, 2016 4
Slide 5: Overview of First Quarter 2016
Brunswick Corporation – Earnings Release Overview of First Quarter 2016 • Revenue increased 9 percent -- on a constant currency basis1, sales increased by 10 percent. Strong growth in fiberglass outboard boats and marine parts and accessories; solid growth rates in outboard engines • Gross margin of
Slide 6: Net Sales increased by $84.6 million, or 9%
Brunswick Corporation – Earnings Release Net Sales increased by $84.6 million, or 9% Net Sales Three Months Ended April 2, April 4, % Change Acquisition Segment (#039;s in millions) 2016 2015 GAAP1 Constant Currency Contribution Marine Engine $ 595.5 $ 562.2 6% 9% 3% Boat 336.8 318.0 6% 7% 0% Marine el
Slide 7: Q1 Adjusted Operating Earnings increased by $11.1 million, or 13%
Brunswick Corporation – Earnings Release Q1 Adjusted Operating Earnings increased by $11.1 million, or 13% Operating Earnings - Excluding Charges Three Months Ended April 2, April 4, Segment (#039;s in millions) 2016 2015 Change Marine Engine $ 78.3 $ 74.2 $ 4.1 Boat 16.4 7.7 8.7 Total Marine 94.7 81.9
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 Q4-15 2015 Q1-16 AL – Fish 12% 6% 8% 5% 7% 11% AL - Pontoon 14% 6% 9% 10% 8% 16% FG - Outboard 10% 11% 9% 11% 10% 8% Outboard Boats 12% 7% 9% 9% 9% 11% FG – SD/IB (14-30 ft.) -9% -11% -2%
Slide 9: Revenue By Region – Marine Segments Only
Brunswick Corporation – Earnings Release Revenue By Region – Marine Segments Only Region 2016 vs. 2015 2015 Growth Rates* Mix U.S. +9% 68% Europe +13% 12% Canada -4% 8% Asia Pacific +22% 6% Latin America -6% 4% Africa & Middle East -29% 2% Total 8% 100% Sales* in our combined marine segments experie
Slide 10: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 28, 2016 10
Slide 11: Marine Engine segment – Q1 sales by region
Brunswick Corporation – Earnings Release Marine Engine segment – Q1 sales by region Q1 % - 2016 of % Change Region Sales* GAAP Constant Currency United States 67% 7% 7% Europe 15% 15 % 20 % Rest-of-World 18% 2% 10 % Total 100% 6% 9% Based on Constant Currency • U.S. sales increased in parts and acce
Slide 12: Q1 Outboard and Sterndrive engines
Brunswick Corporation – Earnings Release Q1 Outboard and Sterndrive engines Outboard • Favorable retail demand environment continues in overall U.S. outboard boat and engine categories • Market share gain benefits in targeted saltwater, repower and commercial markets reflecting recently launched pro
Slide 13: Q1 Marine Engine segment’s Parts & Accessories
Brunswick Corporation – Earnings Release Q1 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 14: Factors affecting Marine Engine segment’s Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Marine Engine segment’s Q1 operating earnings Key Factors • Higher sales • Cost reductions including benefits from lower commodity costs and savings related to sourcing initiatives • Favorable product mix from recently launched outboard prod
Slide 15: Boat segment – Q1 sales by region
Brunswick Corporation – Earnings Release Boat segment – Q1 sales by region Q1 - 2016 % Change Region % of Sales GAAP Constant Currency United States 75% 14% 14% Europe 9% (4)% (1)% Rest-of-World 16% (16)% (13)% Total 100% 6% 7% Based on Constant Currency • U.S. sales continue to benefit from recentl
Slide 16: Review of Brunswick Boat segment metrics
Brunswick Corporation – Earnings Release Review of Brunswick Boat segment metrics Wholesale and Retail Metrics • For the first quarter, global retail unit sales increased by 10 percent, compared to prior year. U.S. retail units increased by 14 percent • Global wholesale unit shipments were down 6 pe
Slide 17: Factors affecting Boat segment’s Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Boat segment’s Q1 operating earnings Key Factors • Higher sales • Favorable product mix • Lower commodity costs and savings from sourcing initiatives Q1 operating margin at 4.9% April 28, 2016 17
Slide 18: Fitness segment – Q1 sales by region
Brunswick Corporation – Earnings Release Fitness segment – Q1 sales by region Q1 - 2016 % Change Region % of Sales GAAP Constant Currency United States 56% 22% 22% Europe 18% 14% 18% Rest-of-World 26% 11% 13% Total 100% 18% 19% Based on Constant Currency, Excluding Acquisitions • U.S. sales down sli
Slide 19: Factors affecting Life Fitness segment’s Q1 operating earnings
Brunswick Corporation – Earnings Release Factors affecting Life Fitness segment’s Q1 operating earnings* Key Factors • Cost reductions and savings related to sourcing initiatives • Favorable warranty adjustment • Unfavorable impact of customer and channel mix • Increased investment in growth initiat
Slide 20: Review of foreign currency impact
Brunswick Corporation – Earnings Release Review of foreign currency impact1 40% Q1, 2016: 35% • Unfavorable impact on sales of approximately 1 percent 30% LA/Other • Unfavorable impact on operating earnings of approximately $5 million 25% International Sales % of Total Sales Asia Outlook 2016: Pacif
Slide 21: Tax provision
Brunswick Corporation – Earnings Release Tax provision Q1 2016 2015 Effective tax rate - GAAP 30.9% 33.3% Effective tax rate, as adjusted 31.0% 34.0% Change in effective tax rate between years reflects impact of R&D tax credit and benefits from optimizing international legal entity and cash manageme
Slide 22: Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Cash Flow – Continuing Operations Three Months Ended (#039;s in millions) 2016 2015 Net earnings* $ 63.2 $ 56.6 Depreciation and amortization 25.4 21.9 Pension funding, net of expense (32.2) (58.0) Changes in certain current assets and current liabilities** (153
Slide 23: Free Cash Flow – Continuing Operations
Brunswick Corporation – Earnings Release Free Cash Flow – Continuing Operations Three Months Ended (#039;s in millions) 2016 2015 Net cash used for operating activities* $ (90.2) $ (125.9) Net cash provided by (used for): Capital expenditures (46.2) (33.8) Proceeds from sale of property, plant and equi
Slide 24: Cash and Marketable Securities
Brunswick Corporation – Earnings Release Cash and Marketable Securities Main Factors Affecting Changes in $669 Cash Balances • Free cash flow usage of $133 million • Share repurchases of $40 million (approximately 973,000 shares) $’s in millions $283 • Dividends paid of $14 million • Acquisition exp
Slide 25: 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 26: 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 27: Mark Schwabero and Bill Metzger
Brunswick Corporation – Earnings Release Mark Schwabero – Chairman and Chief Executive Officer Bill Metzger – Chief Financial Officer April 28, 2016 27
Slide 28: 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 29: Outlook for Brunswick Q2 2016
Outlook for Brunswick Q2 2016 Q2 2016 Financial Targets • Revenue growth at the lower end of our full-year guidance • Operating margins decline approximately 50 basis points due to increased investments to support growth April 28, 2016 29
Slide 30: 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 • Increased investments to support growth April 28, 2016 30
Slide 31: 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 April 28, 2016 31
Slide 32: 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 33: Earnings Conference Call Q1, 2016
Brunswick Earnings Conference Call Q1, 2016
Slide 34: Appendix
BRUNSWICK Appendix
Slide 35: Q1 Diluted EPS, as adjusted, increased by $0.12, or 20%
Brunswick Corporation – Earnings Release Q1 Diluted EPS, as adjusted, increased by $0.12, or 20% Earnings Per Share Three Months Ended April 2, April 4, 2016 2015 Diluted EPS from continuing operations $ 0.68 $ 0.59 Restructuring and integration charges 0.03 - Diluted EPS from continuing operations,
Slide 36: Q1 Adjusted Pretax Earnings increased by $10.3 million, or 12%
Brunswick Corporation – Earnings Release Q1 Adjusted Pretax Earnings increased by $10.3 million, or 12% Adjusted Pretax Earnings Three Months Ended April 2, April 4, (#039;s in millions) 2016 2015 Change Adjusted operating earnings $ 99.8 $ 88.7 $ 11.1 Net interest expense (6.4) (6.5) 0.1 Other income