Brunswick Corporation · NYSE:BC

Brunswick — Q2 2020 Earnings Presentation

37 slides from Brunswick's earnings presentation, Aug 2, 2020

  1. Slide 1: Earnings Conference Call Q2 2020

    Earnings Conference Call Q2 2020

  2. 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

  3. 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

  4. Slide 4: Business Overview

    BUSINESS OVERVIEW Dave Foulkes – CEO |4 ©2020 Brunswick Co. Confidential and all rights reserved.

  5. Slide 5: Q2 2020 in Review

    Brunswick Corporation – Q2 2020 in Review Outperformed Expectations Solid performance Boat pipeline U.S. marine retail • Meaningful despite COVID-19 inventory at historical demand surged in May outboard engine impact: lows: and June: share gains at Mercury • Adjusted EPS of 1 • ~23 WOH at end • Anti

  6. Slide 6: COVID-19 Impacts on our Business

    Brunswick Corporation – Earnings Release COVID-19 Impacts on our Business • Temporarily suspended manufacturing at most of our engine and boat facilities on March 23, restarted operations beginning April 13 • Strong focus on evolving health and safety protocols, including temperature screening, dist

  7. Slide 7: Propulsion Segment – Q2 2020 Overview

    Brunswick Corporation – Earnings Release Propulsion Segment – Q2 2020 Overview Significant market share gains, especially in high-horsepower outboard engines; strong earnings and margin performance in June • Revenue, earnings, and margins impacted by COVID-19 manufacturing shutdowns in April • Avail

  8. Slide 8: Parts & Accessories Segment – Q2 2020 Overview

    Brunswick Corporation – Earnings Release Parts & Accessories Segment – Q2 2020 Overview Strong top-line growth in distribution business; robust revenue and earnings growth in June • P&A distribution business remained open throughout pandemic, supplying products to our dealer and distribution network

  9. Slide 9: Boat Segment – Q2 2020 Overview

    Brunswick Corporation – Earnings Release Boat Segment – Q2 2020 Overview Positive operating earnings despite temporary shutdowns; June adjusted operating margins in double-digits • Revenue, earnings, and margins impacted by COVID-19 manufacturing shutdowns in April • Adjusted operating de-leverage o

  10. Slide 10: Q2 Revenue Growth Rates By Region

    Brunswick Corporation – Earnings Release Q2 Revenue Growth Rates By Region1 REGION TOTAL BC 2019 MIX  International U.S. (19)% 69% revenues down 3 Europe (6)% 13% percent on a Canada (32)% 7% constant- Asia-Pacific 56% 7% currency basis Rest-of-World (21)% 4% Total International (3)% 31%  Continue

  11. Slide 11: U.S. Powerboat Industry – Percentage Change in Retail Units

    Brunswick Corporation – Earnings Release U.S. Powerboat Industry – Percentage Change in Retail Units  Q2 2020 industry unit volume for main Q1- APR- MAY- JUN- Q2- Q2- powerboat segments CATEGORY 20 20 20 20 20 19 was down 8% vs. Q2 2019; first half was Outboard Boats (4)% (38)% (3)% 20% (8)% (6)% d

  12. Slide 12: Financial Overview

    FINANCIAL OVERVIEW Ryan Gwillim - CFO | 12 ©2020 Brunswick Co. Confidential and all rights reserved.

  13. Slide 13: Overview of Second Quarter 2020

    Brunswick Corporation – Earnings Release Overview of Second Quarter 20201 Consolidated results on an as adjusted basis: Diluted EPS of $0.99, Net sales of $987.8M, Operating margin of down 32 percent down 15.2 percent 11.9 percent Operating earnings of Operating de-leverage $117.9M of 35 percent 1Se

  14. Slide 14: Overview of First Half 2020

    Brunswick Corporation – Earnings Release Overview of First Half 20201 Consolidated results on an as adjusted basis: Diluted EPS of $1.96, Net sales of $1.95B, Operating margin of down 18 percent down 11.8 percent 11.8 percent Operating earnings of Operating de-leverage $230.4M of 28 percent 1See the

  15. Slide 15: Propulsion Segment – Q2 Performance

    Brunswick Corporation – Earnings Release Propulsion Segment – Q2 Performance PRODUCT CATEGORY SALES ($M) % CHANGE Outboard Engines $314.3 (11)% Sterndrive Engines $27.9 (44)% Controls, Rigging and Propellers $53.2 (8)% Total $395.4 (14)% OPERATING MARGIN OPERATING EARNINGS • Operating Margin of 12.1

  16. Slide 16: Parts and Accessories Segment – Q2 Performance

    Brunswick Corporation – Earnings Release Parts and Accessories Segment – Q2 Performance1 PRODUCT CATEGORY SALES ($M) % CHANGE Engine Parts and Accessories $109.0 (5)% Distribution $190.7 9% Advanced Systems Group $86.8 (28)% Total $386.5 (6)% OPERATING MARGIN OPERATING EARNINGS • Adjusted Margin of

  17. Slide 17: Boat Segment – Q2 Performance

    Brunswick Corporation – Earnings Release Boat Segment – Q2 Performance1 PRODUCT CATEGORY SALES ($M) % CHANGE Aluminum Freshwater $94.2 (41)% Recreational Fiberglass $89.6 (26)% Saltwater Fishing $59.0 (29)% Business Acceleration $8.3 NM Total $249.92 (32)%3 OPERATING MARGIN OPERATING EARNINGS • Adju

  18. Slide 18: Pipeline Metrics

    Brunswick Corporation – Earnings Release Pipeline Metrics  Historically low pipelines due to ENDING CHANGE UNITS IN CHANGE surging retail YEAR WEEKS ON VERSUS PRIOR PIPELINE VERSUS PRIOR demand and HAND YEAR (WOH) (THOUSANDS) YEAR (UNITS) ramping up production after 20 22.8 -12.2 weeks 15.0 (34)% t

  19. Slide 19: 2020 Assumptions and Resulting Expectations

    2020 Assumptions and Resulting Expectations Formal guidance for 2020 remains withdrawn U.S. marine industry retail unit demand up low-single digit percent from 2019 levels Second-half 2020 revenue and operating earnings expected to exceed second-half 2019 levels Second-half operating leverage of bet

  20. Slide 20: Managing Operating Leverage

    Brunswick Corporation – Earnings Release Managing Operating Leverage FIRST-HALF 2020 SECOND-HALF 2020 • Adjusted operating de-leverage of ~28%1 • Leverage of high-teens to low-twenties percent o Propulsion and P&A higher o Boats lower • All segments benefit from increased sales, along with cost redu

  21. Slide 21: Liquidity Assessment

    Brunswick Corporation – Earnings Release Liquidity Assessment • Liquidity position extremely strong o Q2 cash balance of $553 million versus $332 million atDividends year- Dividends end Share Share Repurchases o Free cash flow of $124 million in 1H 2020 vs. $14 million in 1H Repurchase 2019 o Borrow

  22. Slide 22: 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 $325 million Higher Working capital usage ~$0 - $10 million Lower Depreciation and amortization1 ~$115 - $120 million Slightly Lower Acquisitio

  23. Slide 23: 2020 Outlook – Capital Strategy Assumptions

    Brunswick Corporation – Earnings Release 2020 Outlook – Capital Strategy Assumptions CHANGE FROM PRIOR 2020 CONFERENCE CALL ESTIMATES ESTIMATE Debt retirement ~$100 million Higher Capital expenditures ~$160 - $170 million Slightly Higher Share repurchases $34 million Unchanged Quarterly dividends $0

  24. Slide 24: 2020 Outlook

    2020 OUTLOOK Dave Foulkes – CEO | 24 ©2020 Brunswick Co. Confidential and all rights reserved.

  25. Slide 25: Operating and Strategic Priorities

    Brunswick Corporation – Earnings Release Operating and Strategic Priorities BOATS & PARTS & PROPULSION BUSINESS ENTERPRISE ACCESSORIES ACCELERATION • Continued share growth • Optimization of traditional • Successful new product • Further investments in in high-horsepower and online distribution laun

  26. Slide 26: Innovation + Inspiration on the Water

    INNOVATION + INSPIRATION” ON THE WATER’.

  27. Slide 27: Appendix

    Appendix | 27

  28. Slide 28: GAAP to Non-GAAP Reconciliations

    Brunswick Corporation – Earnings Release GAAP to Non-GAAP Reconciliations (in millions, except per share data) Q2 2020 QTD Q2 2019 QTD Q2 2020 YTD Q2 2019 YTD Net sales $ 987.8 $ 1,163.5 $ 1,953.3 $ 2,214.2 Sport yacht & yachts — 0.7 — 0.7 Net sales, as adjusted $ 987.8 $ 1,164.2 $ 1,953.3 $ 2,214.9

  29. Slide 29: Q2 Adjusted Net Sales Decreased 15.2 Percent

    Brunswick Corporation - Earnings Release Q2 As Adjusted Net Sales decreased by $176.4million, or 15.2 percent Net Sales - GAAP Net Sales - As Adjusted1 % % Segments (in millions) Q2 2020 Q2 2019 Change Segments (in millions) Q2 2020 Q2 2019 Change Propulsion $ 395.4 $ 461.5 (14.3)% Propulsion $ 395.

  30. Slide 30: YTD Adjusted Net Sales Decreased 11.8 Percent

    Brunswick Corporation - Earnings Release YTD Adjusted Net Sales decreased by $261.6 million, or 11.8 percent Net Sales - GAAP Net Sales - As Adjusted1 Q2 2020 Q2 2019 % Q2 2020 Q2 2019 % Segments (in millions) YTD YTD Change Segments (in millions) YTD YTD Change Propulsion $ 884.0 $ 913.9 (7.6)% Pro

  31. Slide 31: Q2 Net Sales

    Brunswick Corporation - Earnings Release Q2 Net Sales Second Quarter 2020 vs. Second Quarter 2019 Sales Growth Drivers Propulsion Parts and Accessories Boat Brunswick Organic (12)% (5)% (32)% (14)% Acquisitions - - 1% 0% Currency (2)% (1)% (1)% (1)% 2020 Net Sales – GAAP (14)% (6)% (32)% (15)% Sales

  32. Slide 32: YTD Net Sales

    Brunswick Corporation - Earnings Release YTD Net Sales YTD 2020 vs. YTD 2019 Sales Growth Drivers Propulsion Parts and Accessories Boat Brunswick Organic (6)% (4)% (28)% (11)% Acquisitions - - 1% 0% Currency (2)% (1)% (0)% (1)% 2020 Net Sales – GAAP (8)% (5)% (27)% (12)% Sales Growth by Region Propu

  33. Slide 33: Tax Provision

    Brunswick Corporation – Earnings Release Tax Provision  Estimated 2020 effective book Q2 tax rate, as 2020 2019 adjusted, is Effective tax rate - GAAP 19.8% 22.0% between 21 and Effective tax rate, as adjusted1 19.5% 21.3% 22 percent on tax guidance issued to date  Cash tax rate expected to be low

  34. Slide 34: Review of Foreign Currency Impact

    Brunswick Corporation – Earnings Release Review of Foreign Currency Impact1 Q2 2020: • Unfavorable impact on sales of approximately 1 LA/Other percent • Unfavorable impact on operating earnings of Canada approximately $6 million Outlook for Full-Year 2020: Asia Pacific • Unfavorable impact on consol

  35. Slide 35: Tariff Update

    Brunswick Corporation – Earnings Release Tariff Update Change from  Our tariff Q1 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

  36. Slide 36: Other Factors Affecting GAAP Operating Earnings

    Brunswick Corporation – Earnings Release Other Factors Affecting GAAP Operating Earnings $ in millions Q2 2020 2019 Restructuring, exit, and impairment $2.1 $5.4 Purchase accounting amortization 7.6 7.3 Acquisition and IT-related costs 1.2 1.8 Sport yacht & yachts - 2.9 Total Operating Earnings Adju

  37. Slide 37: Free Cash Flow

    Brunswick Corporation – Earnings Release Free Cash Flow Six Months Ended ($ in millions) 2020 2019 Net cash provided by operating activities from continuing operations $ 215.7 $ 147.4 Net cash provided by (used for): Capital expenditures (90.7) (135.2) Proceeds from sale of property, plant and equip

Brunswick — Q2 2020 Earnings Presentation on 6ix