Brunswick Corporation 26125 N. Riverwoods Blvd., Suite 500, Mettawa, IL 60045 | |
Telephone 847.735.4700 |
Release: | IMMEDIATE | |
Contact: | Brent Dahl | |
Vice President | ||
Phone: | 847-735-4039 | |
Contact: | Lee Gordon | |
Director - Global Public Relations & Communications | ||
Phone: | 847-735-4003 | |
Email: | lee.gordon@brunswick.com |
Q2 2020 | ||||||||||||
$ millions (except per share data) | GAAP | (Decr) vs. Q2 2019 | As Adjusted | (Decr) vs. Q2 2019 | ||||||||
Net Sales | $ | 987.8 | (15.1) | % | $ | 987.8 | (15.2 | )% | ||||
Operating Earnings | $ | 107.0 | (34.2) | % | $ | 117.9 | (34.5 | )% | ||||
Operating Margin | 10.8 | % | (320) bps | 11.9 | % | (360) bps | ||||||
Diluted EPS | $ | 0.89 | $ | 0.99 | ||||||||
bps = basis points |
Operating Earnings | Diluted Earnings (Loss) Per Share | |||||||||||||||
$ millions (except per share data) | Q2 2020 | Q2 2019 | Q2 2020 | Q2 2019 | ||||||||||||
GAAP | $ | 107.0 | $ | 162.7 | $ | 0.89 | $ | 1.28 | ||||||||
Restructuring, exit, and impairment | 2.1 | 5.4 | 0.02 | 0.05 | ||||||||||||
Purchase accounting amortization | 7.6 | 7.3 | 0.07 | 0.06 | ||||||||||||
Acquisition and IT related costs | 1.2 | 1.8 | 0.01 | 0.01 | ||||||||||||
Sport Yacht & Yachts | — | 2.9 | — | 0.03 | ||||||||||||
Pension settlement benefit | — | — | (0.01 | ) | — | |||||||||||
Special tax items | — | — | 0.01 | 0.02 | ||||||||||||
As Adjusted | $ | 117.9 | $ | 180.1 | $ | 0.99 | $ | 1.45 | ||||||||
Percent decrease | (34.5 | )% | (31.7 | )% | ||||||||||||
GAAP Operating Margin | 10.8 | % | 14.0 | % | (320) bps | |||||||||||
Adjusted Operating Margin | 11.9 | % | 15.5 | % | (360) bps | |||||||||||
bps = basis points |
$ millions | Q2 2020 | Q2 2019 | (Decr) | |||
Net Sales | $395.4 | $461.5 | (14.3 | )% | ||
Operating Earnings | $47.7 | $71.0 | (32.8 | )% |
$ millions | Q2 2020 | Q2 2019 | (Decr) | |||||
Net Sales | $386.5 | $410.0 | (5.7 | )% | ||||
Operating Earnings GAAP | $80.1 | $88.2 | (9.2 | )% | ||||
Restructuring, exit, and impairment charges | — | 0.6 | NM | |||||
Purchase accounting amortization | 7.2 | 7.2 | — | % | ||||
Operating Earnings, as adjusted | $87.3 | $96.0 | (9.1 | )% | ||||
NM = not meaningful |
$ millions | Q2 2020 | Q2 2019 | Incr (Decr) | |||||
Net Sales | $249.9 | $366.6 | (31.8 | )% | ||||
Operating Earnings GAAP | $2.0 | $25.8 | (92.2 | )% | ||||
Restructuring, exit, and impairment charges | 0.3 | 2.6 | (88.5 | )% | ||||
Acquisition related costs | 0.6 | 1.3 | (53.8 | )% | ||||
Purchase accounting amortization | 0.4 | 0.1 | NM | |||||
Sport Yacht & Yachts | — | 2.9 | NM | |||||
Operating Earnings, as adjusted | $3.3 | $32.7 | (89.9 | )% | ||||
NM = not meaningful |
1. | We anticipate that U.S. marine industry retail unit demand will be up low-single digit percent for the year, with stronger demand in the U.S. than in international regions. We assume that wholesale comparisons will be significantly better than retail in the back-half of the year due mostly to the pipeline reduction actions executed in the second-half of 2019, and the current low pipeline inventory levels due to the strong retail demand and production suspensions in the second quarter. |
2. | We expect operating expenses of between $560 and $575 million for the year, which represents an approximate 10 percent decrease from our initial 2020 plan. While slightly higher than our estimate after the first quarter, this increase represents costs necessary to drive growth in the improved market, while |
3. | We are not making any major changes to our capital strategy for the year. However, we do plan to repay an additional $60 million of long-term debt in the second-half of the year, bringing our full-year debt reduction to $100 million. In addition, yesterday we repaid $100 million of borrowings under our revolving credit facility, and plan to repay the remaining $85 million during the third quarter. |
A. | Second-half 2020 revenue and operating earnings exceeding second-half 2019, as our parts & accessories business should remain steady and our propulsion and boat businesses will ramp-up production to meet demand and refill pipelines. |
B. | Second-half 2020 operating leverage to fall between high-teens and low-twenties percent. |
C. | Full-year free cash flow generation in excess of $325 million, which was our original pre-COVID-19 target for 2020. |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations (in millions, except per share data) (unaudited) | ||||||||||
Three Months Ended | ||||||||||
June 27, 2020 | June 29, 2019 | % Change | ||||||||
Net sales | $ | 987.8 | $ | 1,163.5 | -15 | % | ||||
Cost of sales | 731.8 | 835.5 | -12 | % | ||||||
Selling, general and administrative expense | 119.2 | 126.4 | -6 | % | ||||||
Research and development expense | 27.7 | 33.5 | -17 | % | ||||||
Restructuring, exit and impairment charges | 2.1 | 5.4 | -61 | % | ||||||
Operating earnings | 107.0 | 162.7 | -34 | % | ||||||
Equity earnings | 1.1 | 1.6 | -31 | % | ||||||
Other expense, net | (0.9 | ) | (0.1 | ) | NM | |||||
Earnings before interest and income taxes | 107.2 | 164.2 | -35 | % | ||||||
Interest expense | (18.7 | ) | (20.8 | ) | -10 | % | ||||
Interest income | 0.3 | 0.4 | -25 | % | ||||||
Earnings before income taxes | 88.8 | 143.8 | -38 | % | ||||||
Income tax provision | 17.6 | 31.7 | -44 | % | ||||||
Net earnings from continuing operations | $ | 71.2 | $ | 112.1 | -36 | % | ||||
Discontinued operations: | ||||||||||
(Loss) earnings from discontinued operations, net of tax | (0.5 | ) | $ | 6.9 | NM | |||||
Loss on disposal of discontinued operations, net of tax | — | (41.5 | ) | NM | ||||||
Net loss from discontinued operations, net of tax | (0.5 | ) | (34.6 | ) | NM | |||||
Net earnings | $ | 70.7 | $ | 77.5 | -9 | % | ||||
Earnings (loss) per common share: | ||||||||||
Basic | ||||||||||
Earnings from continuing operations | $ | 0.89 | $ | 1.29 | -31 | % | ||||
Loss from discontinued operations | (0.00 | ) | (0.40 | ) | NM | |||||
Net earnings | $ | 0.89 | $ | 0.89 | 0 | % | ||||
Diluted | ||||||||||
Earnings from continuing operations | $ | 0.89 | $ | 1.28 | -30 | % | ||||
Loss from discontinued operations | (0.00 | ) | (0.39 | ) | NM | |||||
Net earnings | $ | 0.89 | $ | 0.89 | 0 | % | ||||
Weighted average shares used for computation of: | ||||||||||
Basic earnings per common share | 79.6 | 86.9 | ||||||||
Diluted earnings per common share | 79.8 | 87.3 | ||||||||
Effective tax rate | 19.8 | % | 22.0 | % | ||||||
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 | ||||||||||
June 27, 2020 | June 29, 2019 | % Change | ||||||||
Reconciliations | ||||||||||
Net sales | $ | 987.8 | $ | 1,163.5 | -15 | % | ||||
Sport yacht & yachts (1) | — | 0.7 | ||||||||
Adjusted net sales | $ | 987.8 | $ | 1,164.2 | -15 | % | ||||
Gross margin | $ | 256.0 | $ | 328.0 | -22 | % | ||||
Sport yacht & yachts (1) | — | 2.5 | ||||||||
Adjusted gross margin | $ | 256.0 | $ | 330.5 | -23 | % | ||||
Operating earnings | $ | 107.0 | $ | 162.7 | -34 | % | ||||
Restructuring, exit, and impairment charges | 2.1 | 5.4 | ||||||||
Purchase accounting amortization (2) | 7.6 | 7.3 | ||||||||
Acquisition and IT-related costs (2) | 1.2 | 1.8 | ||||||||
Sport yacht & yachts (1) | — | 2.9 | ||||||||
Adjusted operating earnings | $ | 117.9 | $ | 180.1 | -35 | % | ||||
Earnings before income taxes | $ | 88.8 | $ | 143.8 | -38 | % | ||||
Restructuring, exit, and impairment charges | 2.1 | 5.4 | ||||||||
Purchase accounting amortization (2) | 7.6 | 7.3 | ||||||||
Acquisition and IT-related costs (2) | 1.2 | 1.8 | ||||||||
Sport yacht & yachts (1) | — | 2.9 | ||||||||
Pension settlement benefit (3) | (1.3 | ) | — | |||||||
Adjusted pretax earnings | $ | 98.4 | $ | 161.2 | -39 | % | ||||
Diluted earnings per common share from continuing operations | $ | 0.89 | $ | 1.28 | -30 | % | ||||
Restructuring, exit, and impairment charges | 0.02 | 0.05 | ||||||||
Purchase accounting amortization (2) | 0.07 | 0.06 | ||||||||
Acquisition and IT-related costs (2) | 0.01 | 0.01 | ||||||||
Special tax items | 0.01 | 0.02 | ||||||||
Sport yacht & yachts (1) | — | 0.03 | ||||||||
Pension settlement benefit (3) | (0.01 | ) | — | |||||||
Adjusted diluted earnings per common share from continuing operations | $ | 0.99 | $ | 1.45 | -32 | % | ||||
(1) In the second quarter of 2018, the Company announced its intention to wind down Sport yacht & yachts operations. In the three months ended June 29, 2019, the Company recorded charges of $2.9 million related to Sport yacht & yachts, consisting of ($0.7) million of Net sales, $1.8 million of Cost of sales (COS) and $0.4 million of Selling, general and administrative (SG&A). | ||||||||||
(2) In both the three months ended June 27, 2020 and June 29, 2019, the Company recorded $7.2 million of purchase accounting amortization in SG&A within its Parts and Accessories segment. In the three months ended June 27, 2020, the Company also recorded $0.6 million of acquisition-related costs and $0.4 million of purchase accounting amortization in SG&A within its Boat segment; and $0.6 million of IT transformation charges in SG&A within Corporate/Other resulting from the Fitness separation. For the three months ended June 29, 2019, the Company recorded $1.3 million of acquisition-related costs and $0.1 million of purchase accounting amortization in SG&A within its Boat segment; and $0.5 million of IT transformation charges in SG&A within Corporate/Other resulting from the Fitness separation. | ||||||||||
(3) The Company recorded a $1.3 million pension settlement benefit in the second quarter of 2020 in connection with the exit of its defined benefit plans. | ||||||||||
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations (in millions, except per share data) (unaudited) | ||||||||||
Six Months Ended | ||||||||||
June 27, 2020 | June 29, 2019 | % Change | ||||||||
Net sales | $ | 1,953.3 | $ | 2,214.2 | -12 | % | ||||
Cost of sales | 1,453.5 | 1,606.7 | -10 | % | ||||||
Selling, general and administrative expense | 230.5 | 259.9 | -11 | % | ||||||
Research and development expense | 56.6 | 62.2 | -9 | % | ||||||
Restructuring, exit and impairment charges | 2.5 | 8.6 | -71 | % | ||||||
Operating earnings | 210.2 | 276.8 | -24 | % | ||||||
Equity earnings | 2.9 | 3.5 | -17 | % | ||||||
Other expense, net | (0.2 | ) | (1.7 | ) | -88 | % | ||||
Earnings before interest and income taxes | 212.9 | 278.6 | -24 | % | ||||||
Interest expense | (35.6 | ) | (40.6 | ) | -12 | % | ||||
Interest income | 0.6 | 0.8 | -25 | % | ||||||
Earnings before income taxes | 177.9 | 238.8 | -26 | % | ||||||
Income tax provision | 36.0 | 50.5 | -29 | % | ||||||
Net earnings from continuing operations | $ | 141.9 | $ | 188.3 | -25 | % | ||||
Discontinued operations: | ||||||||||
Loss from discontinued operations, net of tax | $ | (1.1 | ) | $ | (105.6 | ) | NM | |||
Loss on disposal of discontinued operations, net of tax | (1.1 | ) | (41.5 | ) | NM | |||||
Loss from discontinued operations, net of tax | (2.2 | ) | (147.1 | ) | NM | |||||
Net earnings | $ | 139.7 | $ | 41.2 | NM | |||||
Earnings (loss) per common share: | ||||||||||
Basic | ||||||||||
Earnings from continuing operations | $ | 1.78 | $ | 2.16 | -18 | % | ||||
Loss from discontinued operations | (0.03 | ) | (1.69 | ) | NM | |||||
Net earnings | $ | 1.75 | $ | 0.47 | NM | |||||
Diluted | ||||||||||
Earnings from continuing operations | $ | 1.77 | $ | 2.15 | -18 | % | ||||
Loss from discontinued operations | (0.02 | ) | (1.68 | ) | NM | |||||
Net earnings | $ | 1.75 | $ | 0.47 | NM | |||||
Weighted average shares used for computation of: | ||||||||||
Basic earnings per common share | 79.8 | 87.2 | ||||||||
Diluted earnings per common share | 80.0 | 87.7 | ||||||||
Effective tax rate | 20.2 | % | 21.1 | % | ||||||
NM = not meaningful |
Brunswick Corporation Comparative Condensed Consolidated Statements of Operations - Reconciliations to Adjusted Metrics (in millions, except per share data) (unaudited) | ||||||||||
Six Months Ended | ||||||||||
June 27, 2020 | June 29, 2019 | % Change | ||||||||
Reconciliations | ||||||||||
Net sales | $ | 1,953.3 | $ | 2,214.2 | -12 | % | ||||
Sport yacht & yachts (1) | — | 0.7 | ||||||||
Adjusted net sales | $ | 1,953.3 | $ | 2,214.9 | -12 | % | ||||
Gross margin | $ | 499.8 | $ | 607.5 | -18 | % | ||||
Sport yacht & yachts (1) | — | 2.5 | ||||||||
Adjusted gross margin | $ | 499.8 | $ | 610.0 | -18 | % | ||||
Operating earnings | $ | 210.2 | $ | 276.8 | -24 | % | ||||
Restructuring, exit, and impairment charges | 2.5 | 8.6 | ||||||||
Purchase accounting amortization (2) | 15.1 | 14.5 | ||||||||
Acquisition and IT-related costs (2) | 2.6 | 1.8 | ||||||||
Sport yacht & yachts (1) | — | 2.9 | ||||||||
Adjusted operating earnings | $ | 230.4 | $ | 304.6 | -24 | % | ||||
Earnings before income taxes | $ | 177.9 | $ | 238.8 | -26 | % | ||||
Restructuring, exit, and impairment charges | 2.5 | 8.6 | ||||||||
Purchase accounting amortization (2) | 15.1 | 14.5 | ||||||||
Acquisition and IT-related costs (2) | 2.6 | 1.8 | ||||||||
Sport yacht & yachts (1) | — | 2.9 | ||||||||
Pension settlement benefit (3) | (1.3 | ) | — | |||||||
Adjusted pretax earnings | $ | 196.8 | $ | 266.6 | -26 | % | ||||
Diluted earnings per common share | $ | 1.77 | $ | 2.15 | -18 | % | ||||
Restructuring, exit, and impairment charges | 0.02 | 0.07 | ||||||||
Purchase accounting amortization (2) | 0.15 | 0.13 | ||||||||
Acquisition and IT-related costs (2) | 0.03 | 0.01 | ||||||||
Sport yacht & yachts (1) | — | 0.03 | ||||||||
Special tax items | (0.00 | ) | (0.00 | ) | ||||||
Pension settlement benefit (3) | (0.01 | ) | — | |||||||
Adjusted diluted earnings per common share | $ | 1.96 | $ | 2.39 | -18 | % | ||||
(1) In the second quarter of 2018, the Company announced its intention to wind down Sport yacht & yachts operations. In the six months ended June 29, 2019, the Company recorded charges of $2.9 million related to Sport yacht & yachts, consisting of $(0.7) million of Net sales, $1.8 million of Cost of sales (COS) and $0.4 million of Selling, general and administrative (SG&A). | ||||||||||
(2) In both the six months ended June 27, 2020 and June 29, 2019, the Company recorded $14.4 million of purchase accounting amortization in SG&A within its Parts and Accessories segment. In the six months ended June 27, 2020, the Company also recorded $1.3 million of acquisition-related costs and $0.7 million of purchase accounting amortization in SG&A within its Boat segment; and $1.3 million of IT transformation charges in SG&A within Corporate/Other resulting from the Fitness separation. For the six months ended June 29, 2019, the Company recorded $1.3 million of acquisition-related costs and $0.1 million of purchase accounting amortization in SG&A within its Boat segment; and $0.5 million of IT transformation charges in SG&A within Corporate/Other resulting from the Fitness separation. | ||||||||||
(3) The Company recorded a $1.3 million pension settlement benefit in the second quarter of 2020 in connection with the exit of its defined benefit plans. | ||||||||||
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Segment Information - GAAP | |||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||
Net Sales | Operating Earnings (Loss) | Operating Margin | |||||||||||||||||||||||||
June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | ||||||||||||||||||||
Propulsion | $ | 395.4 | $ | 461.5 | -14.3 | % | $ | 47.7 | $ | 71.0 | -33 | % | 12.1 | % | 15.4 | % | |||||||||||
Parts & Accessories | 386.5 | 410.0 | -5.7 | % | 80.1 | 88.2 | -9 | % | 20.7 | % | 21.5 | % | |||||||||||||||
Boat | 249.9 | 366.6 | -31.8 | % | 2.0 | 25.8 | -92 | % | 0.8 | % | 7.0 | % | |||||||||||||||
Corporate/Other | — | — | (22.8 | ) | (22.3 | ) | 2 | % | |||||||||||||||||||
Segment Eliminations | (44.0 | ) | (74.6 | ) | -41.0 | % | — | — | |||||||||||||||||||
Total | $ | 987.8 | $ | 1,163.5 | -15.1 | % | $ | 107.0 | $ | 162.7 | -34 | % | 10.8 | % | 14.0 | % |
Six Months Ended | |||||||||||||||||||||||||||
Net Sales | Operating Earnings (Loss) | Operating Margin | |||||||||||||||||||||||||
June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | ||||||||||||||||||||
Propulsion | $ | 844.0 | $ | 913.9 | -7.6 | % | $ | 109.0 | $ | 130.9 | -17 | % | 12.9 | % | 14.3 | % | |||||||||||
Parts & Accessories | 688.1 | 723.6 | -4.9 | % | 126.3 | 136.0 | -7 | % | 18.4 | % | 18.8 | % | |||||||||||||||
Boat | 541.4 | 739.9 | -26.8 | % | 7.1 | 52.8 | -87 | % | 1.3 | % | 7.1 | % | |||||||||||||||
Corporate/Other | — | — | (32.2 | ) | (42.9 | ) | -54 | % | |||||||||||||||||||
Segment Eliminations | (120.2 | ) | (163.2 | ) | -26.3 | % | — | — | |||||||||||||||||||
Total | $ | 1,953.3 | $ | 2,214.2 | -11.8 | % | $ | 210.2 | $ | 276.8 | -24 | % | 10.8 | % | 12.5 | % |
Three Months Ended | |||||||||||||||||||||||||||||
Net Sales (1) | Operating Earnings (Loss) (2) | Operating Margin | |||||||||||||||||||||||||||
June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | ||||||||||||||||||||||
Propulsion | $ | 395.4 | $ | 461.5 | -14.3 | % | $ | 47.7 | $ | 71.0 | -32.8 | % | 12.1 | % | 15.4 | % | |||||||||||||
Parts & Accessories | 386.5 | 410.0 | -5.7 | % | 87.3 | 96.0 | -9.1 | % | 22.6 | % | 23.4 | % | |||||||||||||||||
Boat | 249.9 | 367.3 | -32.0 | % | — | 3.3 | — | 32.7 | -89.9 | % | 1.3 | % | 8.9 | % | |||||||||||||||
Corporate/Other | — | — | (20.4 | ) | — | (19.6 | ) | 4.1 | % | ||||||||||||||||||||
Segment Eliminations | (44.0 | ) | (74.6 | ) | -41.0 | % | — | — | |||||||||||||||||||||
Total | $ | 987.8 | $ | 1,164.2 | -15.2 | % | $ | 117.9 | $ | 180.1 | -34.5 | % | 11.9 | % | 15.5 | % |
Six Months Ended | |||||||||||||||||||||||||||||
Net Sales(1) | Operating Earnings (Loss) (2) | Operating Margin | |||||||||||||||||||||||||||
June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | % Change | June 27, 2020 | June 29, 2019 | ||||||||||||||||||||||
Propulsion | $ | 844.0 | $ | 913.9 | -7.6 | % | $ | 109.0 | $ | 130.9 | -16.7 | % | 12.9 | % | 14.3 | % | |||||||||||||
Parts & Accessories | 688.1 | 723.6 | -4.9 | % | 141.0 | 151.0 | -6.6 | % | 20.5 | % | 20.9 | % | |||||||||||||||||
Boat | 541.4 | 740.6 | -26.9 | % | — | 9.4 | — | 61.7 | -84.8 | % | 1.7 | % | 8.3 | % | |||||||||||||||
Corporate/Other | — | — | (29.0 | ) | — | (39.0 | ) | -25.6 | % | ||||||||||||||||||||
Segment Eliminations | (120.2 | ) | (163.2 | ) | -26.3 | % | — | — | |||||||||||||||||||||
Total | $ | 1,953.3 | $ | 2,214.9 | -11.8 | % | $ | 230.4 | $ | 304.6 | -24.4 | % | 11.8 | % | 13.8 | % |
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Disaggregated Revenue | |||||||||||||||
Three Months Ended | |||||||||||||||
June 27, 2020 | |||||||||||||||
Propulsion | Parts & Accessories | Boat | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 224.9 | $ | 293.8 | $ | 183.2 | $ | 701.9 | |||||||
Europe | 69.8 | 41.9 | 35.3 | 147.0 | |||||||||||
Asia-Pacific | 66.5 | 24.6 | 3.2 | 94.3 | |||||||||||
Canada | 13.4 | 19.5 | 23.7 | 56.6 | |||||||||||
Rest-of-World | 20.8 | 6.7 | 4.5 | 32.0 | |||||||||||
Segment Eliminations | (39.8 | ) | (4.2 | ) | — | (44.0 | ) | ||||||||
Total | $ | 355.6 | $ | 382.3 | $ | 249.9 | $ | 987.8 | |||||||
Major Product Lines | |||||||||||||||
Outboard Engines | $ | 314.3 | $ | — | $ | — | $ | 314.3 | |||||||
Controls, Rigging, and Propellers | 53.2 | — | — | 53.2 | |||||||||||
Sterndrive Engines | 27.9 | — | — | 27.9 | |||||||||||
Distribution Parts and Accessories | — | 190.7 | — | 190.7 | |||||||||||
Advanced Systems Group | — | 86.8 | — | 86.8 | |||||||||||
Engine Parts and Accessories | — | 109.0 | — | 109.0 | |||||||||||
Aluminum Freshwater Boats | — | — | 94.2 | 94.2 | |||||||||||
Recreational Fiberglass Boats | — | — | 89.6 | 89.6 | |||||||||||
Saltwater Fishing Boats | — | — | 59.0 | 59.0 | |||||||||||
Business Acceleration | — | — | 8.3 | 8.3 | |||||||||||
Boat Eliminations/Other | — | — | (1.2 | ) | (1.2 | ) | |||||||||
Segment Eliminations | (39.8 | ) | (4.2 | ) | — | (44.0 | ) | ||||||||
Total | $ | 355.6 | $ | 382.3 | $ | 249.9 | $ | 987.8 |
Three Months Ended | |||||||||||||||
June 29, 2019 | |||||||||||||||
Propulsion | Parts & Accessories | Boat (1) | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 309.9 | $ | 300.8 | $ | 271.2 | $ | 881.9 | |||||||
Europe | 75.1 | 50.6 | 34.6 | 160.3 | |||||||||||
Asia-Pacific | 33.5 | 23.9 | 6.4 | 63.8 | |||||||||||
Canada | 16.2 | 23.3 | 47.4 | 86.9 | |||||||||||
Rest-of-World | 26.8 | 11.4 | 7.0 | 45.2 | |||||||||||
Segment Eliminations | (67.9 | ) | (6.7 | ) | — | (74.6 | ) | ||||||||
Total | $ | 393.6 | $ | 403.3 | $ | 366.6 | $ | 1,163.5 | |||||||
Major Product Lines | |||||||||||||||
Outboard Engines | $ | 353.9 | $ | — | $ | — | $ | 353.9 | |||||||
Controls, Rigging, and Propellers | 57.8 | — | — | 57.8 | |||||||||||
Sterndrive Engines | 49.8 | — | — | 49.8 | |||||||||||
Distribution Parts and Accessories | — | 174.6 | — | 174.6 | |||||||||||
Advanced Systems Group | — | 120.8 | — | 120.8 | |||||||||||
Engine Parts and Accessories | — | 114.6 | — | 114.6 | |||||||||||
Aluminum Freshwater Boats | — | — | 160.8 | 160.8 | |||||||||||
Recreational Fiberglass Boats | — | — | 119.5 | 119.5 | |||||||||||
Saltwater Fishing Boats | — | — | 82.6 | 82.6 | |||||||||||
Business Acceleration | — | — | 4.3 | 4.3 | |||||||||||
Boat Eliminations/Other | — | — | (0.6 | ) | (0.6 | ) | |||||||||
Segment Eliminations | (67.9 | ) | (6.7 | ) | — | (74.6 | ) | ||||||||
Total | $ | 393.6 | $ | 403.3 | $ | 366.6 | $ | 1,163.5 |
Brunswick Corporation Selected Financial Information (in millions) (unaudited) Disaggregated Revenue | |||||||||||||||
Six Months Ended | |||||||||||||||
June 27, 2020 | |||||||||||||||
Propulsion | Parts & Accessories | Boat | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 515.8 | $ | 504.7 | $ | 398.7 | $ | 1,419.2 | |||||||
Europe | 139.4 | 84.7 | 70.4 | 294.5 | |||||||||||
Asia-Pacific | 115.8 | 49.3 | 8.8 | 173.9 | |||||||||||
Canada | 27.5 | 33.2 | 55.5 | 116.2 | |||||||||||
Rest-of-World | 45.5 | 16.2 | 8.0 | 69.7 | |||||||||||
Segment Eliminations | (108.9 | ) | (11.3 | ) | — | (120.2 | ) | ||||||||
Total | $ | 735.1 | $ | 676.8 | $ | 541.4 | $ | 1,953.3 | |||||||
Major Product Lines | |||||||||||||||
Outboard Engines | $ | 668.1 | $ | — | $ | — | $ | 668.1 | |||||||
Controls, Rigging, and Propellers | 110.7 | — | — | 110.7 | |||||||||||
Sterndrive Engines | 65.2 | — | — | 65.2 | |||||||||||
Distribution Parts and Accessories | — | 312.0 | — | 312.0 | |||||||||||
Advanced Systems Group | — | 189.9 | — | 189.9 | |||||||||||
Engine Parts and Accessories | — | 186.2 | — | 186.2 | |||||||||||
Aluminum Freshwater Boats | — | — | 214.7 | 214.7 | |||||||||||
Recreational Fiberglass Boats | — | — | 191.4 | 191.4 | |||||||||||
Saltwater Fishing Boats | — | — | 118.8 | 118.8 | |||||||||||
Business Acceleration | — | — | 18.3 | 18.3 | |||||||||||
Boat Eliminations/Other | — | — | (1.8 | ) | (1.8 | ) | |||||||||
Segment Eliminations | (108.9 | ) | (11.3 | ) | — | (120.2 | ) | ||||||||
Total | $ | 735.1 | $ | 676.8 | $ | 541.4 | $ | 1,953.3 |
Six Months Ended | |||||||||||||||
June 29, 2019 | |||||||||||||||
Propulsion | Parts & Accessories | Boat (1) | Total | ||||||||||||
Geographic Markets | |||||||||||||||
United States | $ | 619.7 | $ | 515.2 | $ | 545.1 | $ | 1,680.0 | |||||||
Europe | 148.2 | 96.7 | 71.3 | 316.2 | |||||||||||
Asia-Pacific | 64.9 | 48.6 | 11.8 | 125.3 | |||||||||||
Canada | 31.1 | 39.7 | 97.4 | 168.2 | |||||||||||
Rest-of-World | 50.0 | 23.4 | 14.3 | 87.7 | |||||||||||
Segment Eliminations | (146.9 | ) | (16.3 | ) | — | (163.2 | ) | ||||||||
Total | $ | 767.0 | $ | 707.3 | $ | 739.9 | $ | 2,214.2 | |||||||
Major Product Lines | |||||||||||||||
Outboard Engines | $ | 706.2 | $ | — | $ | — | $ | 706.2 | |||||||
Controls, Rigging, and Propellers | 111.0 | — | — | 111.0 | |||||||||||
Sterndrive Engines | 96.7 | — | — | 96.7 | |||||||||||
Distribution Parts and Accessories | — | 298.8 | — | 298.8 | |||||||||||
Advanced Systems Group | — | 224.8 | — | 224.8 | |||||||||||
Engine Parts and Accessories | — | 200.0 | — | 200.0 | |||||||||||
Aluminum Freshwater Boats | — | — | 327.0 | 327.0 | |||||||||||
Recreational Fiberglass Boats | — | — | 234.5 | 234.5 | |||||||||||
Saltwater Fishing Boats | — | — | 172.8 | 172.8 | |||||||||||
Business Acceleration | — | — | 6.7 | 6.7 | |||||||||||
Boat Eliminations/Other | — | — | (1.1 | ) | (1.1 | ) | |||||||||
Segment Eliminations | (146.9 | ) | (16.3 | ) | — | (163.2 | ) | ||||||||
Total | $ | 767.0 | $ | 707.3 | $ | 739.9 | $ | 2,214.2 |
Brunswick Corporation Comparative Condensed Consolidated Balance Sheets (in millions) (unaudited) | |||||||||||
June 27, 2020 | December 31, 2019 | June 29, 2019 | |||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents, at cost, which approximates fair value | $ | 541.5 | $ | 320.3 | $ | 656.1 | |||||
Restricted cash | 11.6 | 11.6 | 11.6 | ||||||||
Short-term investments in marketable securities | 0.8 | 0.8 | 0.8 | ||||||||
Total cash and short-term investments in marketable securities | 553.9 | 332.7 | 668.5 | ||||||||
Accounts and notes receivable, net | 452.6 | 331.8 | 484.5 | ||||||||
Inventories | |||||||||||
Finished goods | 411.5 | 554.3 | 528.8 | ||||||||
Work-in-process | 99.3 | 101.3 | 98.2 | ||||||||
Raw materials | 166.1 | 168.9 | 174.8 | ||||||||
Net inventories | 676.9 | 824.5 | 801.8 | ||||||||
Prepaid expenses and other | 30.7 | 36.8 | 56.6 | ||||||||
Current assets | 1,714.1 | 1,525.8 | 2,011.4 | ||||||||
Net property | 815.4 | 796.4 | 747.0 | ||||||||
Other assets | |||||||||||
Goodwill | 415.4 | 415.0 | 410.7 | ||||||||
Other intangibles, net | 567.1 | 583.5 | 599.4 | ||||||||
Deferred income tax asset | 102.9 | 118.7 | 144.2 | ||||||||
Operating lease assets | 81.9 | 83.2 | 80.4 | ||||||||
Equity investments | 29.4 | 29.5 | 32.7 | ||||||||
Other long-term assets | 12.9 | 12.3 | 15.0 | ||||||||
Other assets | 1,209.6 | 1,242.2 | 1,282.4 | ||||||||
Total assets | $ | 3,739.1 | $ | 3,564.4 | $ | 4,040.8 | |||||
Liabilities and shareholders’ equity | |||||||||||
Current liabilities | |||||||||||
Short-term debt and current maturities of long-term debt | $ | 225.3 | $ | 41.3 | $ | 40.3 | |||||
Accounts payable | 328.3 | 393.5 | 412.9 | ||||||||
Accrued expenses | 501.0 | 509.6 | 562.5 | ||||||||
Current liabilities | 1,054.6 | 944.4 | 1,015.7 | ||||||||
Debt | 1,060.4 | 1,068.0 | 1,240.1 | ||||||||
Other long-term liabilities | 259.7 | 251.1 | 247.7 | ||||||||
Shareholders’ equity | 1,364.4 | 1,300.9 | 1,537.3 | ||||||||
Total liabilities and shareholders’ equity | $ | 3,739.1 | $ | 3,564.4 | $ | 4,040.8 | |||||
Supplemental Information | |||||||||||
Debt-to-capitalization rate | 48.5 | % | 46.0 | % | 45.4 | % |
Brunswick Corporation Comparative Condensed Consolidated Statements of Cash Flows (in millions) (unaudited) | |||||||
Six Months Ended | |||||||
June 27, 2020 | June 29, 2019 | ||||||
Cash flows from operating activities | |||||||
Net earnings | $ | 139.7 | $ | 41.2 | |||
Less: net loss from discontinued operations, net of tax | (2.2 | ) | (147.1 | ) | |||
Net earnings from continuing operations, net of tax | 141.9 | 188.3 | |||||
Stock compensation expense | 8.8 | 7.0 | |||||
Depreciation and amortization | 72.2 | 66.4 | |||||
Pension expense, net of (funding) | (2.5 | ) | 1.2 | ||||
Asset impairment charges | — | 2.9 | |||||
Deferred income taxes | 15.6 | 29.3 | |||||
Changes in certain current assets and current liabilities | (38.6 | ) | (154.0 | ) | |||
Long-term extended warranty contracts and other deferred revenue | 6.1 | 6.1 | |||||
Income taxes | 7.0 | 6.4 | |||||
Other, net | 5.2 | (6.2 | ) | ||||
Net cash provided by operating activities of continuing operations | 215.7 | 147.4 | |||||
Net cash provided by (used for) operating activities of discontinued operations | 0.9 | (8.1 | ) | ||||
Net cash provided by operating activities | 216.6 | 139.3 | |||||
Cash flows from investing activities | |||||||
Capital expenditures | (90.7 | ) | (135.2 | ) | |||
Investments | (1.1 | ) | (0.2 | ) | |||
Acquisition of businesses, net of cash acquired | — | (64.4 | ) | ||||
Proceeds from the sale of property, plant and equipment | 1.6 | — | |||||
Net cash used for investing activities of continuing operations | (90.2 | ) | (199.8 | ) | |||
Net cash provided by investing activities of discontinued operations | — | 481.9 | |||||
Net cash (used for) provided by investing activities | (90.2 | ) | 282.1 | ||||
Cash flows from financing activities | |||||||
Proceeds from issuances of short-term debt | 610.0 | 655.0 | |||||
Payments of short-term debt | (425.0 | ) | (655.0 | ) | |||
Net proceeds from issuances of long-term debt | — | 223.1 | |||||
Payments of long-term debt including current maturities | (9.4 | ) | (168.1 | ) | |||
Common stock repurchases | (34.1 | ) | (69.8 | ) | |||
Cash dividends paid | (38.2 | ) | (36.4 | ) | |||
Proceeds from share-based compensation activity | 0.6 | 0.9 | |||||
Tax withholding associated with shares issued for share-based compensation | (6.7 | ) | (8.0 | ) | |||
Other, net | — | (0.2 | ) | ||||
Net cash provided by (used for) financing activities | 97.2 | (58.5 | ) | ||||
Effect of exchange rate changes | (2.4 | ) | 1.4 | ||||
Net increase in Cash and cash equivalents and Restricted cash | 221.2 | 364.3 | |||||
Cash and cash equivalents and Restricted cash at beginning of period | 331.9 | 303.4 | |||||
Cash and cash equivalents and Restricted cash at end of period | 553.1 | 667.7 | |||||
Less: Restricted cash | 11.6 | 11.6 | |||||
Cash and cash equivalents at end of period | $ | 541.5 | $ | 656.1 | |||
Reconciliation | |||||||
Free cash flow | |||||||
Net cash provided by operating activities | $ | 215.7 | $ | 147.4 | |||
Net cash provided by (used for): | |||||||
Capital expenditures | (90.7 | ) | (135.2 | ) | |||
Proceeds from the sale of property, plant and equipment | 1.6 | — | |||||
Effect of exchange rate changes | (2.4 | ) | 1.4 | ||||
Free cash flow | $ | 124.2 | $ | 13.6 |