2020 Raymond James Conference - David Foulkes - cloudfront.net
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2020 Raymond James Conference
David Foulkes
AUT HENTIC
1 OUT OF
EVERY
2
BOATS IS POWERED
3 OF THE
TOP
4
MOST RECOGNIZABLE
LEADERSHIP BY MERCURY U.S. BOAT BRANDS
THE WORLD’S LEADING
RECREATIONAL BOAT BRANDS
210+
BOAT CLUB
225
PATENTS IN THE
MARINE PROPULSION LOCATIONS LAST TWO YEARS
MARINE PARTS & ACCESSORIES
BOAT CLUB OPERATOR
THE INDUSTRY’S LEADING
INNOVATION CAPABILITIES
SERVICES PORTFOLIO
|2
Dimensioning the U.S. Boating Eco-System
How Brunswick Will Continue to Win
Growing service, Leading fishing
connectivity and
alternative
140 MILLION boat and engine
brands; expanding
participation
people go boating annually;
50% are under 40 years old 50 MILLION
fisherman and anglers
relationships
businesses
Leading parts, 10 MILLION
registered recreational boats
Leading engine, boat,
technology and
accessories,
accessories brands
distribution & service
businesses
200 THOUSAND
new boats sold annually
|3
©2020 Brunswick Co. Confidential and all rights reserved.
Major Strategic Actions
New North-Star
& Narrative
Strategic M&A
New Operating Model
& Talent
Technology & ESG Strategies
|4
20k 210+ 2.4k FREEDOM
B O AT C L U B
MEMBERSHIPS CLUBS BOATS
Delivers hassle-free
recreational boating
experience
• RECIPROCITY PROGRAM
• EXPERIENCE FOCUS
• SIMPLE MODEL
• FOCUS ON SAFETY
• DIVERSE COMMUNITY
|5
New Operating Model Unlocks Potential of Industry-Leading Brands
New Reporting Segments Highlight Attractive P&A Businesses
MERCURY AD V A N C E D BUSINESS
B O AT S
M AR I N E SYSTEMS AC C E L E R A T I O N
OWNED
PROPULSION ENGINE P&A DISTRIBUTION
AL U M I N U M B O AT
GROUP
MINORITY
INVESTMENT
VENTURE GROUP
Plus 4 additional minority investments
$1.7B
PROPULSION
$1.4B $1.3B
PARTS & ACCESSORIES BOATS
|6
©2020 Brunswick Co. Confidential and all rights reserved.
Strong Growth in Aftermarket Business Enhances
Stability
Aftermarket Parts & Engines
16% Boats
30% Aftermarket
Parts & Engines
2006 2019 32%
Boats REVENUE REVENUE Strong aftermarket
56% ~$5.1B ~$4.4B business enables
OEM Parts & Engines
28% improved earnings
stability in various
OEM Parts & Engines market conditions
Boats
38% and benefits our
13% capital strategy
execution
Boats
2006 Aftermarket Parts & Engines 2019
41% EARNINGS 39% EARNINGS
~$330M ~$610M
Aftermarket
Parts & Engines
49%
OEM Parts & Engines
OEM Parts & Engines
20% 38%
|7 1. P&A distribution included in Aftermarket Parts and Engines
2. Revenue figures not adjusted for Marine eliminations
©2020 Brunswick Co. Confidential and all rights reserved. 3. Earnings figures exclude corporate expenses, and 2006 figures exclude all non-marine earnings
Generating Momentum
for 2020+
New
Products, Added Execution
Right-Sized
Technologies Manufacturing & Capital
Organization
& Digital Capacity Strategy
Initiatives
Major Strategic Actions
New North-Star New Operating Technology &
Strategic M&A
& Narrative Model & Talent ESG Strategies
|8
We Will Grow in Both Our Traditional Markets and New Markets
PROPULSION P&A BOATS SERVICES
$5B $6B $9B $20B
Global Market Global Market US Market US Market
Margin & Synergistic Growth
Strategic
Share & Share &
Focus
Margin Margin Premium Share Opportunities
Accretive
Operating
14%+ 20%+ 10%+
Margins
~30% ~25% ~14% ~1%
Share
BC
|9 Note: Propulsion and P&A market sizes are internal estimates; Brunswick Share
Boat and Services market size from NMMA
©2020 Brunswick Co. Confidential and all rights reserved.Our ‘Major Priorities on a Page’
Extend Grow Maximize Expand
PROPULSION LEADERSHIP PARTS & ACCESSORIES BOAT PROFITABILITY BOATING PARTICIPATION
2022 Target
45%+ 2022 Target
$400M+ 2022 Target
~11% 2022 Target 325
share of US outboard in incremental revenue EBIT margin Freedom Locations
engine units with M&A
Enhance the Lead in Lead in Create
BOATING EXPERIENCE PRODUCT INNOVATION DIGITAL TRANSFORMATION ONE BRUNSWICK
2022 Target
70+ 2022 Target ACKNOWLEDGED 2022 Target
90%+ 2022 Target FULLY
INTEGRATED
LEADER Apps in the Cloud;
net promoter score in ACES and innovative marine culture and
lead in e-commerce
marine technology organization
& digital marketing
| 102022 Plan Targets
2020 2022
Guidance Targets
Revenue Dollars $4.4 - $4.5 billion $4.9 - $5.2 billion
Operating Earnings $580 - $600 million $680 - $780 million
Operating Margin 13.3% - 13.5% 14.0% - 15.0%
EPS $5.10 - $5.40 $6.25 - $7.25
FCF Excess of $325 million $425 - $475 million
| 11
©2020 Brunswick Co. Confidential and all rights reserved.Capital Strategy Summary
RETAIN STRONG RETURN CAPITAL TO
INVEST IN GROWTH
FINANCIAL POSITION SHAREHOLDERS
• New product / R&D • Retain investment grade credit • Increase dividend payout ratio
rating (target range of 20 – 25%)
KEY PRIORITIES
• Grow P&A / Aftermarket
businesses • Retire/refinance term loan • Continue share repurchases
obligations -- no near-term (~$100M per year)
• Bolt-on acquisition and
other business acceleration maturities
initiatives • Maintain healthy balance sheet
• Outboard engine capacity • Leverage strong balance sheet
• Maintain strong ROIC for incremental strategic M&A
We continue to execute a balanced capital strategy that prioritizes growth
investments, financial stability and shareholder returns
| 12
©2020 Brunswick Co. Confidential and all rights reserved.Investor Targets – Implied Total CAPABILITIES
Unmatched in Marine
Shareholder Return
VALUATION
4 - 6% 15 - 20% OPPORTUNITY
Focused portfolio and strong operating
performance drives increased value
11 - 14% BALANCED
$800 million PORTFOLIO
Term Loans
Robust growing aftermarket channels
drive improved earnings stability
PRODUCT
LEADERSHIP
Continued strong pipeline of new,
transformative products
Core EBIT Growth Capital Strategy Shareholder
Benefits Returns CAPITAL
(Based on Targets) STRATEGY
Execute capital strategy and deploy
strong free cash flow
We are confident that we can
execute our 2020-2022 plan and
| 13 deliver strong shareholder returnsYou can also read
