Brunswick analyst meeting
 

NEW YORK, Sept. 16 /PRNewswire-FirstCall/ -- Brunswick Corporation (NYSE:
BC) said that Chairman and Chief Executive Officer George W. Buckley and
presidents of the company's operating units will be meeting with analysts and
investors in New York City today.

Subjects to be covered by the other speakers at today's meeting include:
-- Dusty McCoy, president - Brunswick Boat Group, on efforts to enhance
its distribution through closer ties with its marine dealer network,
-- Pat Mackey, president - Mercury Marine Group, on the technology
transition from two-stroke to four-stroke outboards and Mercury's
Project "X" four-stroke product,
-- T.J. Chung, president - Brunswick New Technologies, on how the
integration of marine electronics will make boating simpler, safer
and more enjoyable,
-- Peter Hamilton, president - Brunswick Bowling & Billiards, on the
success of the Brunswick Zone retail bowling strategy and recent
acquisitions in the billiards division, and
-- Kevin Grodzki, president - Life Fitness Division, on how innovation
and a keen focus on the consumer is driving growth in fitness
equipment.

Report by First Boston re Brunswick analyst meeting follows. Bottom line: They are growing, both in sales and in profits. They are on a buying spree, which the analyst calls "highly ambitious." The definitely seem to do better than the performance boat industry ...

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Presentations at well-attended analyst meeting emphasized leveraging Brunswick’s “competitive platforms” to raise entry barriers, bolster sustainable differential advantage and deliver less cyclical financial results characterized by higher highs and higher lows.

Strategic vision in core marine segment emphasizes “covering the waterfront,” or creating a comprehensive product and service capability to enhance the value proposition to both distributors and end consumers.

Management’s strategy is highly consistent with both its competitive advantage set/leadership positioning and dynamics shaping the boating category (material limiting factors including perceived cost and hassle issue, etc.).
The strategy’s inherent near-vertical orientation and broad horizontal coverage, however, has required heavy investment (17 acq’s/JVs already completed from 2001-03) and appears highly ambitious.

General financial discussion suggested 5-9% top-line growth and 8-10% operating margins over three-year horizon, implying EPS of ~$3.00 in 2006.

Feedback on Project X (new four-stroke) was impressive, and highlights the company’s emphasis on innovation through differentiated technology.

Cost emphasis transitioning from restructuring to optimization. Multiple initiatives (supply chain, ops efficiency, fin’l discipline, etc.) expected to largely offset cost pressures (move to four-strokes, heavier investment, inflation, etc.).

Favorable company-specific change supports current valuation, but limited visibility on trajectory of cyclical recovery and impact of heavier investment owing to largescale strategic transformation should limit NT upside.