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Disclaimer
The analyses and conclusions of Queens Capital contained herein are based on publicly
available information.The analyses provided may include certain statements, estimates and
projections prepared with respect to, among other things, the historical and anticipated
operating performance of the companies, access to capital markets and the values of assets
and liabilities. Such statements, estimates, and projections reflect various assumptions by
Queens Capital concerning anticipated results that are inherently subject to significant
economic, competitive, and other uncertainties and contingencies and have been included
solely for illustrative purposes. Actual results may vary materially from the estimates and
projected results contained herein.
Queens Capital assumes no responsibility or liability for any error, inaccuracy, or omission
contained that may be made of such information by the viewer.No information herein may
be replicated without prior consent by the Executive Board of Queens Capital.
EXECUTIVE SUMMARY
Company
Overview
Macro/Micro
Factors
SUMMARY
Investmen
t
Thesis
Company Overview
Macro/Micro
Analysis
Valuation
Catalysts/
Risks
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
COMPANY OVERVIEW
Business Overview
Operation Segmentation
Worldwide
designer,
manufacturer
and marketer of
recreation
products,
including
marine engines,
boats, fitness
equipment and
bowling and
billiards
equipment.
DUSTAN E. MCROY
MARK D. SCHWABERO
WILLIAM L. METZGER
President, COO
SUMMARY
Past Experiences
Mercury Mine President
President of Bosch
Braking Systes
VP at Medium Duty
Products
Company Overview
Past Experiences
VP and Treasurer of
Brunswick since start in
1987
Macro/Micro
Analysis
17%
50%
25%
Boat
Fitness
Bowling and
Billiard
Management
Team
Sept 2014: the Company
sold its Retail Bowling
business to Bowlmor
AMF
Past Experiences
Witco Corporation VP
Director at FreeportMcMoRan Copper & Gold
Inc. and LouisianaPacific Corporation
Marine
Engine
8%
Investment Thesis
PX_LAST2
Catalysts/Risks
Valuation
SPX
APPENDIX
MACROECONOMIC ANALYSIS
Income and Participation Increase
Online Movement
Over the past five years, growth in the sports participation rate
has increased by 1% and continues to grow steadily.
SUMMARY
Source: IBIS World,
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
MICROECONOMIC ANALYSIS
Marine Engines
Boat
Analysis
Company Overview
SUMMARY
Investment Thesis
and Billiard
In the five years to 2019, per capita Per Capita Disposable Income
disposable income is forecast to rise
at a rate of 2.2% per year
Resulting in increased
disposable income for leisure
activities
An expanding population
within this age group creates
a bigger potential market for
pool and billiard halls
Catalysts/Risks
Valuation
APPENDIX
INVESTMENT THESIS
Argument I: New Cost Structure
Limited availability of high quality 34 year old boats -> focus on newer
boats
Exports to:
47%
Total:
$1.5bn
3%
4%
9%
37%
Revenue
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Exports To:
Canada
Australia
Mexico
Japan
Other
Valuation
APPENDIX
CATALYSTS
Winter Appreciation/Boat Show
Feedback
Analyzing past cyclicality, winter has
typically done well. With Brunswick
extensive product launches
combined with strong industry
fundamentals, shares of BC will see
appreciation.
Described Boats
Mar
1Q
End
Sea Ray 59
Mar
1Q
End
Boston Whaler
42
Mar 1Q
End
Company Overview
Macro/Micro
Analysis
Source: Equity Research Reports, Google Images (Pictures), Calculated Risk Blog
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
RISKS
Micro-Level
Macro-Level
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
VALUATION
SUMMARY
Brunswick is moving towards better margins: EBITDA growth with minimal revenue change
Trading at relative discount to 5 out of 6 metrics highlighted (EV / Rev, EV / EBITDA, P/E) to both median and mean of peer group
P/BV is also trading at discount indicating lower risk than peer group in scenario of liquidation
Around average for margins and slightly below for dividend yield in trailing twelve months
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
VALUATION
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
VALUATION
$46.00
$59.00
$160.04
$89.31
$57.08
$403.82
$60.58
$70.81
$55.74
$137.00
$58.32
$122.84
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
RECOMMENDATION
48.64
13.1%
1.1%
14.2%
Target Price
$55.00
Soft Stop-Loss:
Hard Stop-Loss:
Sell
SUMMARY
Hold
Buy
Company Overview
Price
$45.00
$40.00
Target Price
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
APPENDIX
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
APPENDIX
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
APPENDIX
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
APPENDIX
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
APPENDIX
Geographic Ownership
Institutional Ownership
Holder Name
5%1%
Position
Change
Position
9.44%
UNITED STAT
7,322,270
-77,195
357,107,108
7.88%
UNITED STAT
7,175,070
-139,926
349,928,164
7.72%
UNITED STAT
5,638,625
-342,483
274,995,741
6.07%
UNITED STAT
BOSTON PARTNERS
4,246,761
551,442
207,114,534
4.57%
UNITED STAT
3,207,069
139,610
156,408,755
3.45%
UNITED STAT
3,196,134
310,953
155,875,455
3.44%
UNITED STAT
3,110,169
-64,454
151,682,942
3.35%
UNITED STAT
INVESCO LTD
2,653,210
9,295
129,397,052
2.85%
UNITED STAT
FRANKLIN RESOURCES
2,022,695
-50,129
98,646,835
2.18%
UNITED STAT
Ownership (Institutional)
1,975,709
-68,145
96,355,328
2.13%
UNITED STAT
1,972,768
-20,789
96,211,895
2.12%
UNITED STAT
1,801,445
705,258
87,856,473
1.94%
UNITED STAT
1,775,012
1,571,866
86,567,335
1.91%
CHARTWELL INVESTMENT
1,657,209
-33,405
80,822,083
1.78%
UNITED STAT
1,461,843
-177,413
71,294,083
1.57%
UNITED STAT
1,239,107
-748,856
60,431,248
1.33%
UNITED STAT
SCHRODER INVESTMENT
1,191,100
56,800
58,089,947
1.28%
1,152,595
16,593
56,212,058
1.24%
UNITED STAT
1,081,145
434,722
52,727,442
1.16%
UNITED STAT
12%
83%
92%
94%
Ownership (Insider)
United States
Britain
C anada
Unknown Country
N orway
Switzerland
Indiv idual
Japan
Others
Others
SUMMARY
92.20%
Britain
2.45%
Canada
2.40%
Unknown Country
1.32%
Norway
0.76%
Switzerland
0.39%
Japan
0.18%
Others
0.30%
Company Overview
1.32%
Others
2.41%
Macro/Micro
Analysis
Country
427,738,894
2% 1% 2%
8,770,533
% of
Ownership
-787,618
2% 2% 1% 1% 0% 0% 0%
FMR LLC
Market Value
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX
CANADA
BRITAIN
APPENDIX
Position
Position
Change
508,884
90,838
75,339
75,124
% of
Market Value Ownership
1,525
1,787
206
71,787
24,818,273
4,430,169
3,674,283
3,663,797
0.55%
0.10%
0.08%
0.08%
3,501,052
0.08%
P/E FY1
SUMMARY
P/E FY2
Company Overview
EV/EBITDA FY1
P/E FY3
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
EV/EBITDA FY2
Valuation
EV/EBITDA FY3
APPENDIX
APPENDIX
Recommendati
on
Target
Analyst
GERRICK L JOHNSON
CRAIG R KENNISON
MICHAEL A SWARTZ
ROMMEL DIONISIO
JOSEPH SPAK
SCOTT W HAMANN
JOSEPH D HOVORKA
JIMMY BAKER
TIMOTHY A CONDER
JAMES L HARDIMAN
CRAIG STERLING
outperform
outperform
buy
buy
sector perform
buy
strong buy
buy
outperform
buy
hold
53.00
54.00
55.00
57.00
46.00
55.00
51.00
59.00
50.00
Date
Date
10-Nov-14 10/31/2014
10-Nov-14 9/30/2014
8/29/2014
4-Nov-14 7/31/2014
29-Oct-14 6/30/2014
24-Oct-14 5/30/2014
24-Oct-14
4/30/2014
24-Oct-14
3/31/2014
24-Oct-14
24-Oct-14 2/28/2014
24-Oct-14 1/31/2014
6-Aug-14 12/31/2013
11/29/2013
(2013)
Buy
Hold
Sell
83%
83%
83%
83%
75%
75%
75%
75%
75%
67%
67%
67%
17%
17%
17%
17%
25%
25%
25%
25%
25%
33%
25%
25%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
8%
8%
6%2%
8%
8%
13%
Sales (M)
63%
United States
2458
499
322
293
226
90
Europe
Canada
Pacific Rim
Latin America
Africa & Middle East
SUMMARY
Company Overview
Macro/Micro
Analysis
Investment Thesis
Catalysts/Risks
Valuation
APPENDIX