Brunswick Corporation 26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045 | |
Telephone 847.735.4700 Facsimile 847.735.4750 |
Release: | IMMEDIATE | |
Contact: | Ryan Gwillim | |
Vice President - Investor Relations | ||
Phone: | 847-735-4926 | |
Contact: | Daniel Kubera | |
Director - Media Relations and Corporate Communications | ||
Phone: | 847-735-4617 | |
Email: | daniel.kubera@brunswick.com |
FY 2018 | ||||||||||
$ millions (except per share data) | GAAP | Increase/(Decrease) | As Adjusted | Increase/(Decrease) | ||||||
Marine Segments Net Sales | $4,120.9 | 8.4 | % | $4,071.5 | 11.5 | % | ||||
Marine Segments Operating Earnings | $441.9 | 6.1 | % | $589.4 | 18.6 | % | ||||
Marine Segments Operating Margin | 10.7 | % | (30) bps | 14.5 | % | 90 bps | ||||
Marine Segments Operating Leverage | 8 | % | 22 | % | ||||||
Consolidated Net Sales | $5,159.2 | 6.7 | % | $5,109.8 | 9.1 | % | ||||
Consolidated Operating Margin | 7.1 | % | (110) bps | 11.2 | % | (0) bps | ||||
Diluted EPS | $2.98 | 84 | % | $4.77 | 19 | % | ||||
bps = basis points |
Q4 2018 | ||||||||||
$ millions (except per share data) | GAAP | Increase/(Decrease) | As Adjusted | Increase/(Decrease) | ||||||
Marine Segments Net Sales | $961.2 | 9.6 | % | $955.8 | 13.9 | % | ||||
Marine Segments Operating Earnings | $91.8 | NM | $124.0 | 47.4 | % | |||||
Marine Segments Operating Margin | 9.6 | % | 540 bps | 13.0 | % | 300 bps | ||||
Marine Segments Operating Leverage | 66 | % | 34 | % | ||||||
Consolidated Net Sales | $1,248.9 | 5.7 | % | $1,243.5 | 8.7 | % | ||||
Consolidated Operating Margin | 5.1 | % | 330 bps | 10.0 | % | 130 bps | ||||
Diluted EPS | $0.47 | NM | $0.98 | 32 | % | |||||
bps = basis points NM = not meaningful |
Year Ended | ||||||||||||||||
Operating Earnings | Diluted Earnings (Loss) Per Share | |||||||||||||||
$ millions (except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||
GAAP | $ | 367.0 | $ | 398.3 | $ | 2.98 | $ | 1.62 | ||||||||
Restructuring, exit, integration and impairment charges | 80.9 | 81.3 | 0.71 | 0.62 | ||||||||||||
Sport Yacht & Yacht operations | 58.4 | 31.9 | 0.51 | 0.22 | ||||||||||||
Purchase accounting amortization | 21.2 | — | 0.18 | — | ||||||||||||
Separation costs | 19.3 | — | 0.19 | — | ||||||||||||
Acquisition-related costs | 13.8 | — | 0.17 | — | ||||||||||||
Other non-recurring charges - Fitness | 11.8 | 13.5 | 0.10 | 0.10 | ||||||||||||
Pension settlement charge | — | — | — | 0.69 | ||||||||||||
Special Tax Items | — | — | (0.05 | ) | 0.76 | |||||||||||
Gain on sale of equity investment | — | — | (0.02 | ) | — | |||||||||||
As Adjusted | $ | 572.4 | $ | 525.0 | $ | 4.77 | $ | 4.01 | ||||||||
Percent Increase | 9 | % | 19 | % | ||||||||||||
GAAP Operating Margin | 7.1 | % | 8.2 | % | (110) bps | |||||||||||
Adjusted Operating Margin | 11.2 | % | 11.2 | % | (0) bps | |||||||||||
bps = basis points |
Quarter Ended | ||||||||||||||||
Operating Earnings | Diluted Earnings (Loss) Per Share | |||||||||||||||
$ millions (except per share data) | Q4 2018 | Q4 2017 | Q4 2018 | Q4 2017 | ||||||||||||
GAAP | $ | 63.9 | $ | 21.6 | $ | 0.47 | $ | (1.32 | ) | |||||||
Restructuring, exit, integration and impairment charges | 24.6 | 53.6 | 0.21 | 0.38 | ||||||||||||
Purchase accounting amortization | 11.8 | — | 0.10 | — | ||||||||||||
Sport Yacht & Yacht operations | 11.0 | 10.7 | 0.08 | 0.08 | ||||||||||||
Other non-recurring charges - Fitness | 6.4 | 13.5 | 0.06 | 0.10 | ||||||||||||
Separation costs | 6.4 | — | 0.06 | — | ||||||||||||
Acquisition-related costs | 0.8 | — | 0.01 | — | ||||||||||||
Gain on sale of equity investment | — | — | (0.02 | ) | — | |||||||||||
Pension settlement charge | — | — | — | 0.70 | ||||||||||||
Special Tax Items | — | — | 0.01 | 0.80 | ||||||||||||
As Adjusted | $ | 124.9 | $ | 99.4 | $ | 0.98 | $ | 0.74 | ||||||||
Percent Increase | 26 | % | 32 | % | ||||||||||||
GAAP Operating Margin | 5.1 | % | 1.8 | % | 330 bps | |||||||||||
Adjusted Operating Margin | 10.0 | % | 8.7 | % | 130 bps | |||||||||||
bps = basis points |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations (in millions, except per share data) (unaudited) | ||||||||||
Three Months Ended | ||||||||||
December 31, 2018 | December 31, 2017 | % Change | ||||||||
Net sales | $ | 1,248.9 | $ | 1,182.1 | 6 | % | ||||
Cost of sales | 932.5 | 905.5 | 3 | % | ||||||
Selling, general and administrative expense | 192.4 | 163.6 | 18 | % | ||||||
Research and development expense | 35.5 | 37.8 | -6 | % | ||||||
Restructuring, exit, integration and impairment charges | 24.6 | 53.6 | -54 | % | ||||||
Operating earnings | 63.9 | 21.6 | NM | |||||||
Equity earnings | 3.7 | 0.9 | NM | |||||||
Pension settlement charge | — | (96.6 | ) | -100 | % | |||||
Other expense, net | (1.0 | ) | (1.4 | ) | -29 | % | ||||
Earnings (loss) before interest and income taxes | 66.6 | (75.5 | ) | NM | ||||||
Interest expense | (18.0 | ) | (6.5 | ) | NM | |||||
Interest income | 0.6 | 0.8 | -25 | % | ||||||
Earnings (loss) before income taxes | 49.2 | (81.2 | ) | NM | ||||||
Income tax provision | 8.0 | 35.7 | -78 | % | ||||||
Net earnings (loss) from continuing operations | 41.2 | (116.9 | ) | NM | ||||||
Net earnings from discontinued operations, net of tax | 2.2 | — | NM | |||||||
Net earnings (loss) | $ | 43.4 | $ | (116.9 | ) | NM | ||||
Earnings per common share: | ||||||||||
Basic | ||||||||||
Earnings (loss) from continuing operations | $ | 0.47 | $ | (1.32 | ) | NM | ||||
Earnings from discontinued operations | 0.03 | — | ||||||||
Net earnings (loss) | $ | 0.50 | $ | (1.32 | ) | NM | ||||
Diluted | ||||||||||
Earnings (loss) from continuing operations | $ | 0.47 | $ | (1.32 | ) | NM | ||||
Earnings from discontinued operations | 0.02 | — | ||||||||
Net earnings (loss) | $ | 0.49 | $ | (1.32 | ) | NM | ||||
Weighted average shares used for computation of: | ||||||||||
Basic earnings per common share | 87.4 | 88.4 | ||||||||
Diluted earnings per common share | 88.0 | 88.4 | ||||||||
Effective tax rate | 16.3 | % | (44.0 | )% | ||||||
NM = not meaningful |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations - Reconciliations to Adjusted Metrics (in millions, except per share data) (unaudited) | ||||||||||
Three Months Ended | ||||||||||
December 31, 2018 | December 31, 2017 | % Change | ||||||||
Reconciliations | ||||||||||
Continuing Operations: | ||||||||||
Net sales | $ | 1,248.9 | $ | 1,182.1 | 6 | % | ||||
Sport Yacht & Yacht operations (1) | (5.4 | ) | (38.3 | ) | ||||||
Adjusted net sales | $ | 1,243.5 | $ | 1,143.8 | 9 | % | ||||
Gross margin | $ | 316.4 | $ | 276.6 | 14 | % | ||||
Sport Yacht & Yacht operations (1) | 4.6 | 5.9 | ||||||||
Purchase accounting amortization (2) | 4.6 | — | ||||||||
Other non-recurring charges - Fitness (4) | 3.8 | 8.4 | ||||||||
Adjusted gross margin | $ | 329.4 | $ | 290.9 | 13 | % | ||||
Operating earnings | $ | 63.9 | $ | 21.6 | NM | |||||
Restructuring, exit, integration and impairment charges | 24.6 | 53.6 | ||||||||
Purchase accounting amortization (2) | 11.8 | — | ||||||||
Sport Yacht & Yacht operations (1) | 11.0 | 10.7 | ||||||||
Separation costs (3) | 6.4 | — | ||||||||
Other non-recurring charges - Fitness (4) | 6.4 | 13.5 | ||||||||
Acquisition-related costs (2) | 0.8 | — | ||||||||
Adjusted operating earnings | $ | 124.9 | $ | 99.4 | 26 | % | ||||
Earnings before income taxes | $ | 49.2 | $ | (81.2 | ) | NM | ||||
Restructuring, exit, integration and impairment charges | 24.6 | 53.6 | ||||||||
Purchase accounting amortization (2) | 11.8 | — | ||||||||
Sport Yacht & Yacht operations (1) | 11.0 | 10.7 | ||||||||
Separation costs (3) | 6.4 | — | ||||||||
Other non-recurring charges - Fitness (4) | 6.4 | 13.5 | ||||||||
Acquisition-related costs (2) | 0.8 | — | ||||||||
Gain on sale of equity investment (5) | (2.3 | ) | — | |||||||
Pension settlement charge | — | 96.6 | ||||||||
Adjusted pretax earnings | $ | 107.9 | $ | 93.2 | 16 | % | ||||
Earnings per common share | $ | 0.47 | $ | (1.32 | ) | NM | ||||
Restructuring, exit, integration and impairment charges | 0.21 | 0.38 | ||||||||
Purchase accounting amortization (2) | 0.10 | — | ||||||||
Sport Yacht & Yacht operations (1) | 0.08 | 0.08 | ||||||||
Separation costs (3) | 0.06 | — | ||||||||
Other non-recurring charges - Fitness (4) | 0.06 | 0.10 | ||||||||
Acquisition-related costs (2) | 0.01 | — | ||||||||
Special tax items | 0.01 | 0.80 | ||||||||
Gain on sale of equity investment (5) | (0.02 | ) | — | |||||||
Pension settlement charge | — | 0.70 | ||||||||
Adjusted diluted earnings per common share | $ | 0.98 | $ | 0.74 | 32 | % | ||||
NM = not meaningful | ||||||||||
(1) In the second quarter of 2018, the Company announced its intention to wind down Sport Yacht & Yacht operations. Sport Yacht & Yacht operations had operating losses of $11.0 million in the fourth quarter of 2018, consisting of $5.4 million of Net sales, $10.0 million of Cost of sales (COS) and $6.4 million of Selling, general and administrative expense (SG&A). In the fourth quarter of 2017, Sport Yacht & Yacht operations had operating losses of $10.7 million, consisting of $38.3 million of Net sales, $44.2 million of COS and $4.8 million of SG&A. | ||||||||||
(2) In the third quarter of 2018, the Company acquired Power Products – Global Marine & Mobile, resulting in acquisition-related costs from transaction costs of $0.8 million within SG&A and $11.8 million of purchase accounting amortization in the fourth quarter of 2018. The purchase accounting amortization reflected $7.2 million within SG&A and $4.6 million within COS. All charges were recorded within the Marine Engine segment. | ||||||||||
(3) In the fourth quarter of 2018, the Company recorded $6.4 million of charges within SG&A related to the planned Fitness business separation. The charges consisted of $4.2 million within Corporate/Other and $2.2 million within the Fitness segment. | ||||||||||
(4) In the fourth quarter of 2018, the Company's Fitness segment recorded $6.4 million of non-recurring charges. The charges consisted of $3.1 million within COS related to the settlement of supplier obligations, $2.8 million within SG&A related to penalties associated with submission of import duty filings in a foreign jurisdiction, $0.7 million within COS for a product field campaign and ($0.2) million within SG&A related to a contract dispute. In the fourth quarter of 2017, the Fitness segment recorded $13.5 million of non-recurring charges related to product field campaigns, comprised of $8.4 million within COS and $5.1 million within SG&A. | ||||||||||
(5) In the fourth quarter of 2018, the Company sold its non-controlling interest in a marine joint venture and recorded a gain of $2.3 million within Equity earnings. |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations (in millions, except per share data) (unaudited) | ||||||||||
Year Ended | ||||||||||
December 31, 2018 | December 31, 2017 | % Change | ||||||||
Net sales | $ | 5,159.2 | $ | 4,835.9 | 7 | % | ||||
Cost of sales | 3,838.2 | 3,573.8 | 7 | % | ||||||
Selling, general and administrative expense | 724.3 | 636.1 | 14 | % | ||||||
Research and development expense | 148.8 | 146.4 | 2 | % | ||||||
Restructuring, exit, integration and impairment charges | 80.9 | 81.3 | 0 | % | ||||||
Operating earnings | 367.0 | 398.3 | -8 | % | ||||||
Equity earnings | 7.7 | 6.1 | 26 | % | ||||||
Pension settlement charge | — | (96.6 | ) | |||||||
Other expense, net | (4.3 | ) | (2.8 | ) | 54 | % | ||||
Earnings before interest and income taxes | 370.4 | 305.0 | 21 | % | ||||||
Interest expense | (46.0 | ) | (26.4 | ) | 74 | % | ||||
Interest income | 2.9 | 2.6 | 12 | % | ||||||
Transaction financing charges | (5.1 | ) | — | |||||||
Earnings before income taxes | 322.2 | 281.2 | 15 | % | ||||||
Income tax provision | 59.1 | 134.8 | -56 | % | ||||||
Net earnings from continuing operations | 263.1 | 146.4 | 80 | % | ||||||
Net earnings from discontinued operations, net of tax | 2.2 | — | NM | |||||||
Net earnings | $ | 265.3 | $ | 146.4 | 81 | % | ||||
Earnings per common share: | ||||||||||
Basic | ||||||||||
Earnings from continuing operations | $ | 3.00 | $ | 1.64 | 83 | % | ||||
Earnings from discontinued operations | 0.03 | — | ||||||||
Net earnings | $ | 3.03 | $ | 1.64 | 85 | % | ||||
Diluted | ||||||||||
Earnings from continuing operations | $ | 2.98 | $ | 1.62 | 84 | % | ||||
Earnings from discontinued operations | 0.03 | — | ||||||||
Net earnings | $ | 3.01 | $ | 1.62 | 86 | % | ||||
Weighted average shares used for computation of: | ||||||||||
Basic earnings per common share | 87.6 | 89.4 | ||||||||
Diluted earnings per common share | 88.2 | 90.1 | ||||||||
Effective tax rate | 18.3 | % | 47.9 | % | ||||||
NM = not meaningful |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations - Reconciliations to Adjusted Metrics (in millions, except per share data) (unaudited) | ||||||||||
Year Ended | ||||||||||
December 31, 2018 | December 31, 2017 | % Change | ||||||||
Reconciliations | ||||||||||
Net sales | $ | 5,159.2 | $ | 4,835.9 | 7 | % | ||||
Sport Yacht & Yacht operations (1) | (49.4 | ) | (151.6 | ) | ||||||
Adjusted net sales | $ | 5,109.8 | $ | 4,684.3 | 9 | % | ||||
Gross margin | $ | 1,321.0 | $ | 1,262.1 | 5 | % | ||||
Sport Yacht & Yacht operations (1) | 39.7 | 12.4 | ||||||||
Purchase accounting amortization (2) | 9.2 | — | ||||||||
Other non-recurring charges - Fitness (3) | 5.4 | 8.4 | ||||||||
Adjusted gross margin | $ | 1,375.3 | $ | 1,282.9 | 7 | % | ||||
Operating earnings | $ | 367.0 | $ | 398.3 | -8 | % | ||||
Restructuring, exit, integration and impairment charges | 80.9 | 81.3 | ||||||||
Sport Yacht & Yacht operations (1) | 58.4 | 31.9 | ||||||||
Purchase accounting amortization (2) | 21.2 | — | ||||||||
Separation costs (4) | 19.3 | — | ||||||||
Acquisition-related costs (2) | 13.8 | — | ||||||||
Other non-recurring charges - Fitness (3) | 11.8 | 13.5 | ||||||||
Adjusted operating earnings | $ | 572.4 | $ | 525.0 | 9 | % | ||||
Earnings before income taxes | $ | 322.2 | $ | 281.2 | 15 | % | ||||
Restructuring, exit, integration and impairment charges | 80.9 | 81.3 | ||||||||
Sport Yacht & Yacht operations (1) | 58.4 | 31.9 | ||||||||
Purchase accounting amortization (2) | 21.2 | — | ||||||||
Separation costs (4) | 19.3 | — | ||||||||
Acquisition-related costs (2) | 18.9 | — | ||||||||
Other non-recurring charges - Fitness (3) | 11.8 | 13.5 | ||||||||
Gain on sale of equity investment (5) | (2.3 | ) | — | |||||||
Pension settlement charges | — | 96.6 | ||||||||
Adjusted pretax earnings | $ | 530.4 | $ | 504.5 | 5 | % | ||||
Earnings per common share | $ | 2.98 | $ | 1.62 | 84 | % | ||||
Restructuring, exit, integration and impairment charges | 0.71 | 0.62 | ||||||||
Sport Yacht & Yacht operations (1) | 0.51 | 0.22 | ||||||||
Separation costs (4) | 0.19 | — | ||||||||
Purchase accounting amortization (2) | 0.18 | — | ||||||||
Acquisition-related costs (2) | 0.17 | — | ||||||||
Other non-recurring charges - Fitness (3) | 0.10 | 0.10 | ||||||||
Special tax items | (0.05 | ) | 0.76 | |||||||
Gain on sale of equity investment (5) | (0.02 | ) | — | |||||||
Pension settlement charge | — | 0.69 | ||||||||
Adjusted diluted earnings per common share | $ | 4.77 | $ | 4.01 | 19 | % | ||||
(1) In the second quarter of 2018, the Company announced its intention to wind down Sport Yacht & Yacht operations. Sport Yacht & Yacht operations had operating losses of $58.4 million for the year ended 2018, consisting of $49.4 million of Net sales, $89.1 million of Cost of sales (COS) and $18.7 million of Selling, general and administrative expense (SG&A). In the year ended 2017, Sport Yacht & Yacht operations had operating losses of $31.9 million, consisting of $151.6 million of Net sales, $164.0 million of COS and $19.5 million of SG&A. | ||||||||||
(2) In the third quarter of 2018, the Company acquired Power Products – Global Marine & Mobile, resulting in acquisition-related costs from transaction costs of $13.8 million within SG&A, $5.1 million of Transaction financing charges and $21.2 million of purchase accounting amortization during the year ended 2018. The purchase accounting amortization reflected $12.0 million within SG&A and $9.2 million within COS. All charges were recorded within the Marine Engine segment. | ||||||||||
(3) In 2018, the Company's Fitness segment recorded $11.8 million of non-recurring charges. The charges consisted of $3.6 million within SG&A related to a contract dispute, $3.1 million within COS related to the settlement of supplier obligations, $2.8 million within SG&A related to penalties associated with submission of import duty filings in a foreign jurisdiction, and $2.3 million within COS for a product field campaign. In 2017, the Fitness segment recorded $13.5 million of non-recurring charges related to product field campaigns, comprised of $8.4 million within COS and $5.1 million within SG&A. | ||||||||||
(4) During the year ended 2018, the Company recorded $19.3 million of charges within SG&A related to the planned Fitness business separation. The charges consisted of $17.1 million within Corporate/Other and $2.2 million within the Fitness segment. | ||||||||||
(5) In the fourth quarter of 2018, the Company sold its non-controlling interest in a marine joint venture and recorded a gain of $2.3 million within Equity earnings. |
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Segment Information - GAAP | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
Net Sales | Operating Earnings (Loss) | Operating Margin | |||||||||||||||||||||||||
Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | ||||||||||||||||||||
Marine Engine | $ | 669.5 | $ | 564.6 | 19 | % | $ | 81.5 | $ | 59.2 | 38 | % | 12.2 | % | 10.5 | % | |||||||||||
Boat | 377.3 | 386.5 | -2 | % | 10.3 | (22.7 | ) | NM | 2.7 | % | -5.9 | % | |||||||||||||||
Marine eliminations | (85.6 | ) | (73.8 | ) | 16 | % | — | — | |||||||||||||||||||
Total Marine | 961.2 | 877.3 | 10 | % | 91.8 | 36.5 | NM | 9.6 | % | 4.2 | % | ||||||||||||||||
Fitness | 287.7 | 304.8 | -6 | % | (2.7 | ) | 7.9 | NM | -0.9 | % | 2.6 | % | |||||||||||||||
Corporate/Other | — | — | (25.2 | ) | (22.8 | ) | 11 | % | |||||||||||||||||||
Total | $ | 1,248.9 | $ | 1,182.1 | 6 | % | $ | 63.9 | $ | 21.6 | NM | 5.1 | % | 1.8 | % | ||||||||||||
Year Ended | |||||||||||||||||||||||||||
Net Sales | Operating Earnings (Loss) | Operating Margin | |||||||||||||||||||||||||
Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | ||||||||||||||||||||
Marine Engine | $ | 2,993.6 | $ | 2,631.8 | 14 | % | $ | 454.4 | $ | 411.3 | 10 | % | 15.2 | % | 15.6 | % | |||||||||||
Boat | 1,471.3 | 1,490.6 | -1 | % | (12.5 | ) | 5.3 | NM | -0.8 | % | 0.4 | % | |||||||||||||||
Marine eliminations | (344.0 | ) | (320.2 | ) | 7 | % | — | — | |||||||||||||||||||
Total Marine | 4,120.9 | 3,802.2 | 8 | % | 441.9 | 416.6 | 6 | % | 10.7 | % | 11.0 | % | |||||||||||||||
Fitness | 1,038.3 | 1,033.7 | 0 | % | 22.4 | 64.1 | -65 | % | 2.2 | % | 6.2 | % | |||||||||||||||
Corporate/Other | — | — | (97.3 | ) | (82.4 | ) | 18 | % | |||||||||||||||||||
Total | $ | 5,159.2 | $ | 4,835.9 | 7 | % | $ | 367.0 | $ | 398.3 | -8 | % | 7.1 | % | 8.2 | % | |||||||||||
NM = not meaningful |
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Segment Information - As Adjusted | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
Net Sales (1) | Operating Earnings (Loss) (2) | Operating Margin | |||||||||||||||||||||||||
Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | ||||||||||||||||||||
Marine Engine | $ | 669.5 | $ | 564.6 | 19 | % | $ | 94.1 | $ | 59.2 | 59 | % | 14.1 | % | 10.5 | % | |||||||||||
Boat | 371.9 | 348.2 | 7 | % | 29.9 | 24.9 | 20 | % | 8.0 | % | 7.2 | % | |||||||||||||||
Marine eliminations | (85.6 | ) | (73.8 | ) | 16 | % | — | — | |||||||||||||||||||
Total Marine | 955.8 | 839.0 | 14 | % | 124.0 | 84.1 | 47 | % | 13.0 | % | 10.0 | % | |||||||||||||||
Fitness | 287.7 | 304.8 | -6 | % | 21.1 | 38.1 | -45 | % | 7.3 | % | 12.5 | % | |||||||||||||||
Corporate/Other | — | — | (20.2 | ) | (22.8 | ) | -11 | % | |||||||||||||||||||
Total | $ | 1,243.5 | $ | 1,143.8 | 9 | % | $ | 124.9 | $ | 99.4 | 26 | % | 10.0 | % | 8.7 | % | |||||||||||
Year Ended | |||||||||||||||||||||||||||
Net Sales (3) | Operating Earnings (Loss) (4) | Operating Margin | |||||||||||||||||||||||||
Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | % Change | Dec 31, 2018 | Dec 31, 2017 | ||||||||||||||||||||
Marine Engine | $ | 2,993.6 | $ | 2,631.8 | 14 | % | $ | 489.4 | $ | 411.3 | 19 | % | 16.3 | % | 15.6 | % | |||||||||||
Boat | 1,421.9 | 1,339.0 | 6 | % | 100.0 | 85.7 | 17 | % | 7.0 | % | 6.4 | % | |||||||||||||||
Marine eliminations | (344.0 | ) | (320.2 | ) | 7 | % | — | — | |||||||||||||||||||
Total Marine | 4,071.5 | 3,650.6 | 12 | % | 589.4 | 497.0 | 19 | % | 14.5 | % | 13.6 | % | |||||||||||||||
Fitness | 1,038.3 | 1,033.7 | 0 | % | 61.7 | 108.0 | -43 | % | 5.9 | % | 10.4 | % | |||||||||||||||
Corporate/Other | — | — | (78.7 | ) | (80.0 | ) | -2 | % | |||||||||||||||||||
Total | $ | 5,109.8 | $ | 4,684.3 | 9 | % | $ | 572.4 | $ | 525.0 | 9 | % | 11.2 | % | 11.2 | % | |||||||||||
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Disaggregated Revenue | |||||||||||||||
Three Months Ended | |||||||||||||||
December 31, 2018 | |||||||||||||||
Marine Engine | Boat (1) | Fitness | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 461.9 | $ | 301.1 | $ | 148.0 | $ | 911.0 | |||||||
Europe | 75.6 | 25.4 | 56.2 | 157.2 | |||||||||||
Asia-Pacific | 67.2 | 12.7 | 48.8 | 128.7 | |||||||||||
Canada | 30.9 | 32.9 | 8.6 | 72.4 | |||||||||||
Rest-of-World | 33.9 | 5.2 | 26.1 | 65.2 | |||||||||||
Marine eliminations | (85.6 | ) | — | — | (85.6 | ) | |||||||||
Total | $ | 583.9 | $ | 377.3 | $ | 287.7 | $ | 1,248.9 | |||||||
Major Product Lines | |||||||||||||||
Propulsion | $ | 351.7 | $ | — | $ | — | $ | 351.7 | |||||||
Parts & Accessories | 317.8 | — | — | 317.8 | |||||||||||
Aluminum Freshwater Boats | — | 157.4 | — | 157.4 | |||||||||||
Recreational Fiberglass Boats | — | 113.4 | — | 113.4 | |||||||||||
Saltwater Fishing Boats | — | 105.6 | — | 105.6 | |||||||||||
Commercial Cardio Fitness Equipment | — | — | 158.2 | 158.2 | |||||||||||
Commercial Strength Fitness Equipment | — | — | 106.2 | 106.2 | |||||||||||
Consumer Fitness Equipment | — | — | 23.3 | 23.3 | |||||||||||
Other | — | 0.9 | — | 0.9 | |||||||||||
Marine eliminations | (85.6 | ) | — | — | (85.6 | ) | |||||||||
Total | $ | 583.9 | $ | 377.3 | $ | 287.7 | $ | 1,248.9 |
Year Ended | |||||||||||||||
December 31, 2018 | |||||||||||||||
Marine Engine | Boat (1) | Fitness | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 2,106.6 | $ | 1,119.9 | $ | 533.9 | $ | 3,760.4 | |||||||
Europe | 373.7 | 132.9 | 201.9 | 708.5 | |||||||||||
Asia-Pacific | 228.8 | 35.7 | 175.0 | 439.5 | |||||||||||
Canada | 150.5 | 157.5 | 30.0 | 338.0 | |||||||||||
Rest-of-World | 134.0 | 25.3 | 97.5 | 256.8 | |||||||||||
Marine eliminations | (344.0 | ) | — | — | (344.0 | ) | |||||||||
Total | $ | 2,649.6 | $ | 1,471.3 | $ | 1,038.3 | $ | 5,159.2 | |||||||
Major Product Lines | |||||||||||||||
Propulsion | $ | 1,551.6 | $ | — | $ | — | $ | 1,551.6 | |||||||
Parts & Accessories | 1,442.0 | — | — | 1,442.0 | |||||||||||
Aluminum Freshwater Boats | — | 619.0 | — | 619.0 | |||||||||||
Recreational Fiberglass Boats | — | 485.9 | — | 485.9 | |||||||||||
Saltwater Fishing Boats | — | 362.1 | — | 362.1 | |||||||||||
Commercial Cardio Fitness Equipment | — | — | 579.4 | 579.4 | |||||||||||
Commercial Strength Fitness Equipment | — | — | 379.4 | 379.4 | |||||||||||
Consumer Fitness Equipment | — | — | 79.5 | 79.5 | |||||||||||
Other | — | 4.3 | — | 4.3 | |||||||||||
Marine eliminations | (344.0 | ) | — | — | (344.0 | ) | |||||||||
Total | $ | 2,649.6 | $ | 1,471.3 | $ | 1,038.3 | $ | 5,159.2 |
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Disaggregated Revenue | |||||||||||||||
Three Months Ended | |||||||||||||||
December 31, 2017 | |||||||||||||||
Marine Engine | Boat (1) | Fitness | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 388.0 | $ | 286.7 | $ | 167.1 | $ | 841.8 | |||||||
Europe | 59.5 | 28.1 | 59.4 | 147.0 | |||||||||||
Asia Pacific | 58.4 | 15.9 | 39.4 | 113.7 | |||||||||||
Canada | 25.8 | 46.3 | 10.5 | 82.6 | |||||||||||
Rest-of-World | 32.9 | 9.5 | 28.4 | 70.8 | |||||||||||
Marine eliminations | (73.8 | ) | — | — | (73.8 | ) | |||||||||
Total | $ | 490.8 | $ | 386.5 | $ | 304.8 | $ | 1,182.1 | |||||||
Major Product Lines | |||||||||||||||
Propulsion | $ | 307.0 | $ | — | $ | — | $ | 307.0 | |||||||
Parts & Accessories | 257.6 | — | — | 257.6 | |||||||||||
Aluminum Freshwater Boats | — | 152.6 | — | 152.6 | |||||||||||
Recreational Fiberglass Boats | — | 138.5 | — | 138.5 | |||||||||||
Saltwater Fishing Boats | — | 91.5 | — | 91.5 | |||||||||||
Commercial Cardio Fitness Equipment | — | — | 181.8 | 181.8 | |||||||||||
Commercial Strength Fitness Equipment | — | — | 98.5 | 98.5 | |||||||||||
Consumer Fitness Equipment | — | — | 24.5 | 24.5 | |||||||||||
Other | — | 3.9 | — | 3.9 | |||||||||||
Marine eliminations | (73.8 | ) | — | — | (73.8 | ) | |||||||||
Total | $ | 490.8 | $ | 386.5 | $ | 304.8 | $ | 1,182.1 |
Year Ended | |||||||||||||||
December 31, 2017 | |||||||||||||||
Marine Engine | Boat (1) | Fitness | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 1,844.5 | $ | 1,118.1 | $ | 555.6 | $ | 3,518.2 | |||||||
Europe | 303.5 | 130.0 | 189.4 | 622.9 | |||||||||||
Asia-Pacific | 218.5 | 35.9 | 156.0 | 410.4 | |||||||||||
Canada | 135.8 | 170.7 | 32.2 | 338.7 | |||||||||||
Rest-of-World | 129.5 | 35.9 | 100.5 | 265.9 | |||||||||||
Marine eliminations | (320.2 | ) | — | — | (320.2 | ) | |||||||||
Total | $ | 2,311.6 | $ | 1,490.6 | $ | 1,033.7 | $ | 4,835.9 | |||||||
Major Product Lines | |||||||||||||||
Propulsion | $ | 1,358.6 | $ | — | $ | — | $ | 1,358.6 | |||||||
Parts & Accessories | 1,273.2 | — | — | 1,273.2 | |||||||||||
Aluminum Freshwater Boats | — | 590.9 | — | 590.9 | |||||||||||
Recreational Fiberglass Boats | — | 565.2 | — | 565.2 | |||||||||||
Saltwater Fishing Boats | — | 326.8 | — | 326.8 | |||||||||||
Commercial Cardio Fitness Equipment | — | — | 608.7 | 608.7 | |||||||||||
Commercial Strength Fitness Equipment | — | — | 341.8 | 341.8 | |||||||||||
Consumer Fitness Equipment | — | — | 83.2 | 83.2 | |||||||||||
Other | — | 7.7 | — | 7.7 | |||||||||||
Marine eliminations | (320.2 | ) | — | — | (320.2 | ) | |||||||||
Total | $ | 2,311.6 | $ | 1,490.6 | $ | 1,033.7 | $ | 4,835.9 |
Brunswick Corporation Comparative Condensed Consolidated Balance Sheets (in millions) (unaudited) | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents, at cost, which approximates fair value | $ | 294.4 | $ | 448.8 | |||
Restricted cash | 9.0 | 9.4 | |||||
Short-term investments in marketable securities | 0.8 | 0.8 | |||||
Total cash and short-term investments in marketable securities | 304.2 | 459.0 | |||||
Accounts and notes receivable, net | 550.7 | 485.3 | |||||
Inventories | |||||||
Finished goods | 614.2 | 521.3 | |||||
Work-in-process | 106.1 | 119.3 | |||||
Raw materials | 223.4 | 187.1 | |||||
Net inventories | 943.7 | 827.7 | |||||
Prepaid expenses and other | 81.6 | 74.7 | |||||
Current assets | 1,880.2 | 1,846.7 | |||||
Net property | 805.3 | 706.0 | |||||
Other assets | |||||||
Goodwill | 767.1 | 425.3 | |||||
Other intangibles, net | 646.4 | 149.1 | |||||
Equity investments | 34.6 | 25.1 | |||||
Deferred income tax asset | 96.1 | 165.6 | |||||
Other long-term assets | 56.0 | 40.4 | |||||
Other assets | 1,600.2 | 805.5 | |||||
Total assets | $ | 4,285.7 | $ | 3,358.2 | |||
Liabilities and shareholders’ equity | |||||||
Current liabilities | |||||||
Short-term debt and current maturities of long-term debt | $ | 41.3 | $ | 5.6 | |||
Accounts payable | 527.8 | 420.5 | |||||
Accrued expenses | 687.4 | 609.0 | |||||
Current liabilities | 1,256.5 | 1,035.1 | |||||
Debt | 1,179.5 | 431.8 | |||||
Other long-term liabilities | 267.1 | 408.4 | |||||
Shareholders’ equity | 1,582.6 | 1,482.9 | |||||
Total liabilities and shareholders’ equity | $ | 4,285.7 | $ | 3,358.2 | |||
Supplemental Information | |||||||
Debt-to-capitalization rate | 43.5 | % | 22.8 | % |
Brunswick Corporation Comparative Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | |||||||
Year Ended | |||||||
December 31, 2018 | December 31, 2017 | ||||||
Cash flows from operating activities | |||||||
Net earnings | $ | 265.3 | $ | 146.4 | |||
Less: net earnings from discontinued operations, net of tax | 2.2 | — | |||||
Net earnings from continuing operations | 263.1 | 146.4 | |||||
Stock compensation expense | 19.2 | 18.3 | |||||
Depreciation and amortization | 149.6 | 110.8 | |||||
Pension (funding), net of expense | (156.1 | ) | 32.2 | ||||
Asset impairment charges | 59.1 | 54.7 | |||||
Deferred income taxes | 25.1 | 104.2 | |||||
Changes in certain current assets and current liabilities | (57.1 | ) | (44.4 | ) | |||
Long-term extended warranty contracts and other deferred revenue | 15.1 | 17.1 | |||||
Fitness business separation costs | 19.3 | — | |||||
Cash paid for Fitness business separation costs | (12.7 | ) | — | ||||
Income taxes | 12.3 | (43.1 | ) | ||||
Other, net | 0.1 | 5.4 | |||||
Net cash provided by operating activities of continuing operations | 337.0 | 401.6 | |||||
Net cash used for operating activities of discontinued operations | — | (1.3 | ) | ||||
Net cash provided by operating activities | 337.0 | 400.3 | |||||
Cash flows from investing activities | |||||||
Capital expenditures | (193.4 | ) | (203.2 | ) | |||
Sales or maturities of marketable securities | — | 35.0 | |||||
Investments | (10.8 | ) | (3.2 | ) | |||
Acquisition of businesses, net of cash acquired | (909.6 | ) | (15.5 | ) | |||
Proceeds from the sale of property, plant and equipment | 6.7 | 8.5 | |||||
Other, net | (0.2 | ) | (0.5 | ) | |||
Net cash used for investing activities | (1,107.3 | ) | (178.9 | ) | |||
Cash flows from financing activities | |||||||
Net proceeds from issuances of short-term debt | 298.9 | — | |||||
Retirement of shot-term debt | (300.0 | ) | — | ||||
Net proceeds from issuances of long-term debt | 794.6 | — | |||||
Payments of long-term debt including current maturities | (12.6 | ) | (4.5 | ) | |||
Common stock repurchases | (75.0 | ) | (130.0 | ) | |||
Cash dividends paid | (67.8 | ) | (60.6 | ) | |||
Proceeds from share-based compensation activity | 1.4 | 6.2 | |||||
Tax withholding associated with shares issued for share-based compensation | (12.5 | ) | (14.8 | ) | |||
Other, net | (6.5 | ) | — | ||||
Net cash provided by (used for) financing activities | 620.5 | (203.7 | ) | ||||
Effect of exchange rate changes | (5.0 | ) | 6.9 | ||||
Net increase (decrease) in Cash and cash equivalents and Restricted cash | (154.8 | ) | 24.6 | ||||
Cash and cash equivalents and Restricted cash at beginning of period | 458.2 | 433.6 | |||||
Cash and cash equivalents and Restricted cash at end of period | 303.4 | 458.2 | |||||
Less: Restricted cash | 9.0 | 9.4 | |||||
Cash and cash equivalents at end of period | $ | 294.4 | $ | 448.8 | |||
Reconciliation | |||||||
Free cash flow | |||||||
Net cash provided by operating activities of continuing operations | $ | 337.0 | $ | 401.6 | |||
Net cash provided by (used for): | |||||||
Plus: Capital expenditures | (193.4 | ) | (203.2 | ) | |||
Plus: Proceeds from the sale of property, plant and equipment | 6.7 | 8.5 | |||||
Plus: Effect of exchange rate changes | (5.0 | ) | 6.9 | ||||
Less: Cash paid for Fitness business separation costs, net of tax | (9.8 | ) | — | ||||
Less: Cash impact of Sport Yacht & Yacht operations, net of tax | (53.7 | ) | (10.9 | ) | |||
Free cash flow | $ | 208.8 | $ | 224.7 |
Brunswick Corporation - Selected Financial Information, As Adjusted Excluding Fitness (in millions, except per share data) (unaudited) | |||||||||||||||||||
Quarter Ended | Year Ended | ||||||||||||||||||
March 31, 2018 | June 30, 2018 | Sep 29, 2018 | Dec 31, 2018 | Dec 31, 2018 | |||||||||||||||
Reconciliations | |||||||||||||||||||
Net sales | $ | 1,211.4 | $ | 1,400.9 | $ | 1,298.0 | $ | 1,248.9 | $ | 5,159.2 | |||||||||
Sport Yacht & Yacht operations (1) | (15.1 | ) | (19.9 | ) | (9.0 | ) | (5.4 | ) | (49.4 | ) | |||||||||
Fitness | (244.4 | ) | (252.2 | ) | (253.9 | ) | (287.8 | ) | (1,038.3 | ) | |||||||||
Adjusted net sales, excluding Fitness | $ | 951.9 | $ | 1,128.8 | $ | 1,035.1 | $ | 955.7 | $ | 4,071.5 | |||||||||
Gross margin | $ | 310.0 | $ | 349.7 | $ | 344.9 | $ | 316.4 | $ | 1,321.0 | |||||||||
Sport Yacht & Yacht operations (1) | 3.6 | 23.2 | 8.3 | 4.6 | 39.7 | ||||||||||||||
Purchase accounting amortization (2) | — | — | 4.6 | 4.6 | 9.2 | ||||||||||||||
Fitness | (66.9 | ) | (68.5 | ) | (66.6 | ) | (72.0 | ) | (274.0 | ) | |||||||||
Adjusted gross margin, excluding Fitness | $ | 246.7 | $ | 304.4 | $ | 291.2 | $ | 253.6 | $ | 1,095.9 | |||||||||
Operating earnings | $ | 105.1 | $ | 106.7 | $ | 91.3 | $ | 63.9 | $ | 367.0 | |||||||||
Restructuring, exit, integration and impairment charges | 2.6 | 34.2 | 9.4 | 8.6 | 54.8 | ||||||||||||||
Sport Yacht & Yacht operations (1) | 8.1 | 27.4 | 11.9 | 11.0 | 58.4 | ||||||||||||||
Purchase accounting amortization (2) | — | — | 9.4 | 11.8 | 21.2 | ||||||||||||||
Acquisition-related costs (2) | — | 2.5 | 10.5 | 0.8 | 13.8 | ||||||||||||||
Fitness operating (earnings) loss | (10.6 | ) | (13.6 | ) | 6.9 | 5.8 | (11.5 | ) | |||||||||||
Adjusted operating earnings, excluding Fitness | $ | 105.2 | $ | 157.2 | $ | 139.4 | $ | 101.9 | $ | 503.7 | |||||||||
Earnings before income taxes | $ | 100.1 | $ | 98.0 | $ | 74.9 | $ | 49.2 | $ | 322.2 | |||||||||
Restructuring, exit, integration and impairment charges | 2.6 | 34.2 | 9.4 | 8.6 | 54.8 | ||||||||||||||
Sport Yacht & Yacht operations (1) | 8.1 | 27.4 | 11.9 | 11.0 | 58.4 | ||||||||||||||
Purchase accounting amortization (2) | — | — | 9.4 | 11.8 | 21.2 | ||||||||||||||
Acquisition-related costs (2) | — | 2.5 | 15.6 | 0.8 | 18.9 | ||||||||||||||
Gain on sale of equity investment (3) | — | — | — | (2.3 | ) | (2.3 | ) | ||||||||||||
Fitness (earnings) loss before income taxes | (11.0 | ) | (13.5 | ) | 7.0 | 6.0 | (11.5 | ) | |||||||||||
Adjusted earnings before income taxes, excluding Fitness | $ | 99.8 | $ | 148.6 | $ | 128.2 | $ | 85.1 | $ | 461.7 | |||||||||
Diluted earnings per common share from continuing operations | $ | 0.82 | $ | 0.90 | $ | 0.80 | $ | 0.47 | $ | 2.98 | |||||||||
Restructuring, exit, integration and impairment charges | 0.02 | 0.31 | 0.07 | 0.07 | 0.47 | ||||||||||||||
Sport Yacht & Yacht operations (1) | 0.07 | 0.24 | 0.11 | 0.08 | 0.51 | ||||||||||||||
Purchase accounting amortization (2) | — | — | 0.08 | 0.10 | 0.19 | ||||||||||||||
Acquisition-related costs (2) | — | 0.02 | 0.14 | 0.01 | 0.17 | ||||||||||||||
Special tax items | 0.08 | (0.01 | ) | (0.12 | ) | (0.00 | ) | (0.06 | ) | ||||||||||
Gain on sale of equity investment (3) | — | — | — | (0.02 | ) | (0.02 | ) | ||||||||||||
Fitness diluted (earnings) loss per common share | (0.10 | ) | (0.13 | ) | 0.06 | 0.06 | (0.11 | ) | |||||||||||
Adjusted diluted earnings per common share from continuing operations, excluding Fitness | $ | 0.89 | $ | 1.33 | $ | 1.14 | $ | 0.77 | $ | 4.13 | |||||||||
(1) In the second quarter of 2018, the Company announced its intention to wind down Sport Yacht & Yacht operations. In order to reflect the results of businesses the Company expects to operate going forward, the results of Sport Yacht & Yacht operations are excluded from adjusted metrics. | |||||||||||||||||||
(2) In the third quarter of 2018, the Company acquired Power Products – Global Marine & Mobile, resulting in acquisition-related costs, purchase accounting amortization and transaction financing charges. For purposes of comparability, these charges are excluded from adjusted metrics. | |||||||||||||||||||
(3) In the fourth quarter of 2018, the Company sold its non-controlling interest in a marine joint venture and recorded a gain of $2.3 million within Equity earnings. As the Company had previously impaired the investment balance in this joint venture, the gain represents a partial recovery of a prior impairment and is excluded from adjusted metrics. |