Brunswick Reports Fourth Quarter and Full-Year Results

Brunswick Corporation (NYSE: BC) today reported results for the fourth quarter and full-year of 2021:

"We delivered record sales and earnings in 2021 and, more importantly, set a foundation for growth across all our businesses in 2022 and for years to come," said Brunswick Chief Executive Officer David Foulkes. "Our outstanding operational performance in a challenging environment continues to prove the strength and durability of our portfolio and earnings profile, with robust capital generation enabling accelerated investments in our core businesses, including propulsion, parts and accessories and Freedom Boat Club, as well as critical ACES, digital and other technology programs, while also delivering strong shareholder returns.

Our propulsion business delivered yet another quarter of strong top-line and earnings growth, with increased production efficiency and more favorable customer mix leading to higher sales and margins than anticipated. Mercury gained 160 basis points of U.S. retail market share in 2021, with more than 500 basis points of share gains in each horsepower category over 200hp. We anticipate our previously announced significant additional investment in capacity for higher horsepower outboards will enable increased production for international, commercial, repower, and new OEM customers, with full effect in the fourth quarter of 2022.

Our parts and accessories businesses leveraged favorable late-season weather conditions in many areas, which drove continued robust aftermarket demand and contributed to top-line and adjusted earnings growth in the quarter. In addition, our Advanced Systems Group enjoyed the first full quarter with Navico, RELiON Battery, and SemahTronix in its portfolio, with each contributing to the strong results and Navico outpacing expectations. Finally, Mercury announced the critical centralization and expansion of its P&A distribution footprint, which we believe will extend its already robust market position.

Our boat business delivered strong top-line growth and earnings stability despite continued supply chain disruption, cost inflation, and labor constraints at our suppliers and some of our own facilities during the quarter. Pipeline inventories remain at historically low levels with just over 15 weeks on hand at the end of the year, as elevated levels of retail-sold product and continued strong demand constrain our ability to build field inventory. Finally, Freedom Boat Club had one of its busiest quarters on record, continuing its acquisition activity and membership growth while attracting a younger and increasingly diverse customer base. Over the past twelve months, Freedom added 75 new locations and over 10,000 new memberships network-wide, and now operates a fleet of more than 4,000 boats, with an increasing percentage of Brunswick boats and engines," Foulkes
concluded.

2021 Fourth Quarter Results
For the fourth quarter of 2021, Brunswick reported consolidated net sales of $1,431.0 million, up from $1,161.1 million in the fourth quarter of 2020. Diluted EPS for the quarter was $1.31 on a GAAP basis and $1.44 on an as adjusted basis. Sales and earnings in each segment benefited from increased volume due to continued strong global demand for marine products, market share gains, and higher pricing, with earnings also impacted by increased input costs and higher spending on growth initiatives. Additionally, versus the fourth quarter of 2020:

Propulsion segment reported a 12 percent increase in sales due to continued strong global demand for all product categories, with higher operating earnings also resulting from favorable customer mix and favorable absorption throughout its manufacturing footprint. Parts and Accessories segment reported a 40 percent increase in sales, or a 4 percent increase excluding the impact of acquisitions, with sales and earnings growth primarily benefiting from favorable late-season weather conditions in many areas driving continued robust aftermarket demand. Operating margins declined as anticipated due to the impact of recent acquisitions. Boat segment reported a 14 percent increase in sales due to increased deliveries to dealers to meet continued strong retail customer demand. Freedom Boat Club, which is part of our Business Acceleration division, contributed approximately 3 percent of sales to the segment in the quarter. Increased sales volume and lower retail discount levels versus prior year were also offset by higher costs due to manufacturing inefficiencies, and unfavorable changes in sales mix, resulting in slightly lower segment operating earnings.

Review of Cash Flow and Balance Sheet
Cash and marketable securities totaled $367.5 million at the end of 2021, down $219.5 million from year-end 2020 levels. Net cash provided by operating activities during the year of $586.2 million includes net earnings net of non-cash items, partially offset by the impact of higher working capital needs, including increased inventory levels to ensure manufacturing continuity necessary to meet demand and rebuild pipeline inventories.

Investing and financing activities resulted in net cash used of $732.1 million during 2021, including $1,138.6 million of acquisitions, $267.1 million of capital expenditures, $128.4 million of payments of long-term debt, $120.1 million of share repurchases, and $98.9 million of dividend payments, net of $994.4 million of proceeds from the issuance of long-term debt used to finance the acquisition of Navico, and $55.9 million of net proceeds from the sale of marketable securities.

2022 Outlook
"We believe that 2022 will be another outstanding year for Brunswick. Although we continue navigating certain headwinds, including the effects of COVID-19 and elevated supply chain, labor, and freight costs, we remain extremely focused on executing our Next Wave strategy and we are confident that we will continue to lead the marine industry in growth and innovation," said Foulkes.

"We expect elevated production levels over time will be required to satisfy retail demand and rebuild boat and engine pipelines, and together with significant upcoming new product offerings, increased boat and engine production capacity, and exceptionally strong boating participation, we anticipate wholesale growth in all our product categories throughout 2022 and well beyond. Assuming no major pandemic-related business continuity issues and given the clarity on our ability to drive growth in the upcoming year, we are providing the following guidance for 2022:
1. U.S. marine industry retail unit growth remains supply constrained, up low-single digit percent versus 2021;
2. Net sales between $6.7 billion and $7.0 billion, with strong growth in each segment;
3. Adjusted operating margin growth between 20 and 60 basis points with operating margin expansion in each segment;
4. Operating expenses as a percent of sales to increase 50 to 80 basis points, with elevated spending on ACES and other growth initiatives;
5. Free cash flow in excess of $350 million, which is materially impacted by planned capital spending of more than $375 million;
6. Adjusted diluted EPS in the range of $9.60 - $10.25, with EPS growth anticipated in each quarter; and
7. First quarter 2022 revenue growth of approximately 15% versus the first quarter of 2021, with low-to-mid single digit EPS growth.

Finally, I want to offer heartfelt thanks to our global employee population for their dedication, effort, and sacrifices during what is still a challenging time for many families and communities. Through their efforts, we remain very confident in our ability to successfully execute our strategic plan while also ensuring that we prioritize the health and welfare of our employees. At our upcoming virtual investor day, I look forward to reflecting on the many exciting new products we will launch at the upcoming Miami Boat show in February, which will demonstrate the power of our technology, and our business and acquisition synergies. We will also be sharing an overall update on Brunswick's Next Wave strategy, including our exciting, longer term growth projections and our vision to deliver annual revenues of $10 billion by 2025," Foulkes concluded.

Use of Non-GAAP Financial Information
A reconciliation of GAAP to non-GAAP financial measures used in this release is provided in the reconciliation sections of the consolidated financial statements accompanying this release. In order to better align Brunswick's reported results with the internal metrics used by Brunswick's management to evaluate business performance as well as to provide better comparisons to prior periods and peer data, non-GAAP measures used in this release exclude the impact of purchase accounting amortization related to acquisitions, among other adjustments.

Brunswick does not provide forward-looking guidance for certain financial measures on a GAAP basis because it is unable to predict certain items contained in the GAAP measures without unreasonable efforts. These items may include restructuring, exit, and impairment costs, special tax items, acquisition-related costs, and certain other unusual adjustments.
Conference Call Scheduled Brunswick will host a conference call today at 10 a.m. CST, hosted by David M. Foulkes, chief executive officer, Ryan M. Gwillim, executive vice president and chief financial officer, and Brent G. Dahl, vice president of investor relations. The call will be broadcast over the Internet at www.brunswick.com/investors. To listen to the call, go to the website at least 15 minutes before the call to register, download, and install any needed audio software. See Brunswick’s website for slides used to supplement conference call remarks at www.brunswick.com/investors. Security analysts and investors wishing to participate via telephone should call 877-900-9524 (nopassword needed). Callers outside of North America should call 412-902-0029 (no password needed) to be connected. These numbers can be accessed 15 minutes before the call begins, as well as during the call. A replay of the conference call will be available through 1 p.m. CST Thursday February 3, 2022, by calling 877-660-6853 or 201-612-7415 (Access ID: 13726021). The replay will also be available at www.brunswick.com/investors.

Forward-Looking Statements
Certain statements in this news release 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 about Brunswick’s business and by their nature address matters that are, to different degrees, uncertain. Words such as “may,” “could,” “should,” “expect,” "anticipate," "project," "position," “intend,” “target,” “plan,” “seek,” “estimate,” “believe,” “predict,” “outlook,” and similar expressions are intended to identify forward-looking statements. Forwardlooking statements are not guarantees of future performance and involve certain risks and uncertainties that may cause actual results to differ materially from expectations as of the date of this news release. These risks include, but are not limited to: the effect of adverse general economic conditions, including the amount of disposable income consumers have available for discretionary spending; changes in currency exchange rates; fiscal policy concerns; adverse economic, credit, and capital market conditions; higher energy and fuel costs; competitive pricing pressures; the coronavirus (COVID-19) pandemic and the emergence of variant strains; managing our
manufacturing footprint; adverse weather conditions, climate change events and other catastrophic event risks; international business risks; our ability to develop new and innovative products and services at a competitive price; our ability to meet demand in a rapidly changing environment; loss of key customers; actual or anticipated increases in costs, disruptions of supply, or defects in raw materials, parts, or components we purchase from third parties, including as a result of pressures due to the pandemic; supplier manufacturing constraints, increased demand for shipping carriers, and transportation disruptions; absorbing fixed costs in production; joint ventures that do not operate solely for our benefit; our ability to successfully implement our strategic plan and growth initiatives; our ability to integrate acquisitions, including Navico, and the risk for associated disruption to our business; the risk that unexpected costs will be incurred in connection with the Navico transaction or the possibility that the expected synergies and value creation from thetransaction will not be realized or will not be realized within the expected time period; attracting and retaining skilled labor, implementing succession plans for key leadership, and executing organizational and leadership changes; our ability to identify, complete, and integrate targeted acquisitions; the risk that strategic divestitures will not provide business benefits; maintaining effective distribution; adequate financing access for dealers and customers; requirements for us to repurchase inventory; inventory reductions by dealers, retailers, or independent boat builders; risks related to the Freedom Boat Club franchise business model; outages, breaches, or other cybersecurity events regarding our technology systems, which could affect manufacturing and business operations and could result in lost or stolen information and associated remediation costs; our ability to protect our brands and intellectual property; changes to U.S. trade policy and tariffs; any impairment to the value of goodwill and other assets; product liability, warranty, and other claims risks; legal and regulatory compliance, including increased costs, fines, and reputational risks; changes in income tax legislation or enforcement; managing our share repurchases; and risks associated with certain divisive shareholder activist actions.

Additional risk factors are included in the Company’s Annual Report on Form 10-K for 2020 and in subsequent Quarterly Reports on Form 10-Q. Forward-looking statements speak only as of the date on which they are made, and Brunswick does not undertake any obligation to update them to reflect events or circumstances after the date of this news release or for changes by wire services or Internet service providers.