Good morning, and welcome to Brunswick Corporation's 2018 Third Quarter Earnings Conference Call. All participants will be in a listen-only mode until the question-and-answer period. Today's meeting will be recorded. If you have any objections, you may disconnect at this time. I would now like to introduce Ryan Gwillim, Vice President, Investor Relations. Ryan Gwillim, you may begin.

Good morning. Thank you for joining us. On the call this morning are Mark Schwabero, Brunswick's Chairman and & CEO; and Bill Metzger, CFO. Before we begin with our prepared remarks, I would like to remind everyone that during this call, our comments will include certain forward-looking statements about future results. Please keep in mind that our actual results could differ materially from these expectations. For details on the factors to consider, please refer to our recent SEC filings and today's press release. All of these documents are available on our website at brunswick.com. During our presentation, we'll be referring to certain non-GAAP financial information. Reconciliations of GAAP to non-GAAP financial measures are provided in the appendix to this presentation and the reconciliation sections of the consolidated financial statements accompanying today's results. As a reminder, as a result of the June announcement regarding Sea Ray, the results of the entire Sea Ray business are again being reported in continuing operations for GAAP purposes which matches the basis of reporting using comparable 2017 periods. However, as adjusted, non-GAAP results exclude the Sea Ray Sport Yacht and Yacht operations that are being wound down. Therefore, for all periods presented in this release, all figures and outlook statements incorporate these changes unless otherwise noted. For more information, please see the Form 8-K dated July 19, 2018, which includes metrics on a GAAP and an as adjusted basis, reflecting these changes. I would now like to turn the call over to Mark.

Thank you, Ryan, and good morning. Before we start our review of the quarter, as you likely saw in a separate announcement this morning, I have decided to retire as Chairman and CEO of Brunswick at the end of this year. With the separation of Fitness underway and the focus of our future in the marine business, I think now is an ideal time to make this change. As we've discussed before, we have a robust succession planning process and a very rich talent bench. From that talent pool, I'm pleased to announce that replacing me as the CEO will be David Foulkes. David is a bright and talented leader. He and I have worked together for over 10 years and he has been an integral part of both of our success and our strategy development. He will lead the team by not only executing the strategy, but building out our business. Between now and the end of the year, I'll be actively engaged in the business, and working closely with David to ensure a smooth transition. So with that, let's move on to the review of a tremendous third quarter. Our third quarter performance reflects the outstanding execution of our marine strategy, evidenced by the strong financial contributions from each of the propulsion, parts and accessories, and boat businesses. We concluded the primary marine retail selling season, leveraging a steady marine market and robust demand for outboard engines into significant top line growth and margin expansion. Led by increased production of our new outboard engine lineup, continued success of our leading parts and accessories business, which was augmented by the closing of the Power Products acquisition in August, and the improving operating execution across our businesses, we delivered financial results in the quarter that demonstrate the effectiveness of our…

Thanks, Mark. For the third quarter, adjusted net sales increased by 15%. Our combined marine business sales grew 18% with a 4% lift from acquisitions and Fitness sales increased by 5%. Currency had a slight negative impact on third quarter sales growth. For the year, adjusted net sales were up 9%. Sales in the combined marine business were up 11% with acquisitions and currency providing a 2% and1% benefit respectively. Fitness sales were up 3% for the year, which also includes a 1% favorable currency impact. Turning to gross margin percentage on an as adjusted basis. The combined marine business grew 70 basis points over third quarter 2017 levels with year-to-date gross margins relatively consistent with the prior year. Fitness gross margins remain challenged as compared to 2017 and are below year-to-date performance due to the inventory adjustments, which Mark referenced earlier. Our adjusted operating margin was 11.9%, which was slightly higher than Q3 of 2017, marking the first quarter in the last seven that we've reported consolidated operating margin growth. As Mark stated earlier, operating earnings for the combined marine businesses grew 31% and operating margins increased by 160 basis points versus the third quarter of last year. These results evidence the strong volume gains, improved cost position of the new Mercury outboard engines and the immediate benefits from the acquisition of Power Products. On a year-to-date basis, adjusted operating earnings were up 5% over 2017 with marine business adjusted operating earnings up 13%. Turning to our Marine Engine segment, revenues increased by 20%, propulsion sales grew by 24% led by outboard engines as our successful new products, continued customer migration to higher horsepower product, and a healthy market are driving results. We continue to gain market share in almost all horsepower categories and believe our overall domestic retail…

Thanks, Bill. With three quarters completed, 2018 is shaping up to be another year of record earnings led by the robust marine revenue and margin growth with excellent cash flow generation. In our combined marine business, we expect top line performance to continue benefiting from a steady global marine market, increases in average selling price including the benefits from customer migration to higher horsepower engines and boats with increased content. The market share gains resulting from the unprecedented demand and the acceptance of our new outboard products, and our growing parts and accessory business. For the full-year, we anticipate solid improvement in both gross and operating margins in our marine business given ongoing benefit from the new products and acquisition with pricing actions mostly offsetting the impacts related to cost inflation and tariffs. In the Fitness segment, we are now planning for full-year revenues to be consistent with 2017 due in part to the anticipated fourth quarter declines in sales to certain value oriented health clubs and international markets, following a strong first nine months along with the continued weakness in Cybex sales. We are projecting our gross margins to be consistent with our year-to-date performance. We're also increasing and narrowing the guidance range for full-year expectations of our diluted EPS as adjusted to $4.65 to $4.70 with consolidated revenue growth of approximately 9%. Each takes into the account the expected strong top line growth and operating leverage momentum generated by our marine business, the net benefit from the Power Products acquisition, our unchanged estimated impact of tariffs on our remaining 2018 performance, and the Fitness business performance in line with the year-to-date trends. In all, this is projected to be another successful year for Brunswick. Now turning to the discussion on tariffs. Despite additional tariffs being implemented since our…

Thank you. Our first question comes from the line of Michael Swartz with SunTrust. Your line is now open.

Yeah, hey, good morning, everyone. Just wanted to focus on the engine business, and I have a longer term oriented question, as you obviously have started really ramping up production deliveries of these new outboard engines and then with the contribution from the Power Products acquisition, I'm just trying to get a sense of how you look at the longer term margin profile of that business, is this something that can carry margins in the 20% plus range longer term?

Yeah, Michael, this is Bill. I'm not sure we are ready to put a long term target on the business, but when you take a look at what we've done to reset the cost position of the outboard product lineup along with the margin profile of the P&A business that was bolstered by the acquisition of Power Products, I believe there's potential to continue to expand margins into the foreseeable future. There's additional margin opportunity there.

And the second question is just, and I think Mark had touched on this in his remarks, but just with capacity on the engine side, did I hear you say you need to expand capacity? I may have missed that. And if that was correct, are there incremental costs related to that we should be thinking about in 2019?

Well, yes, we will be expanding. Some of that, Michael, will go through the supply base and tooling and other kinds of things like that, but that will all be within the capital plan, and that capital plan is virtually within the guidance that we've given in the past. So I wouldn't expect that you'd see any deterioration to the business.

And I would say, Michael, that as we've added in new machines and new capacity, it generally comes online at a higher efficiency than some of the older capacity that we're replacing. So there's cost reduction opportunities there and we've generally been able to absorb the capacity fairly quickly because the demand has been so strong. So net-net, there's certainly some additional costs that could get added in terms of depreciation and things like that, but there's also cost reduction that follows along with it. And the product that we're building capacity for carries with it a fairly attractive margin profile.

Okay. Great. Thanks. Thanks a lot.

Thank you. Our next question comes from James Hardiman with Wedbush Securities. Your line is now open.

Hey, good morning. So I have a number of questions on the quarter and on the outlook. But I guess first, Mark, I don't know if this is the last time we'll be talking to you on an earnings call or in Miami, but maybe to the extent that you feel comfortable talking about the decision to step down, a timeframe, how long has this been in the works? I'm assuming that certainly when David was promoted back in May that this was something that was on the table. Maybe talk about that. Hopefully this wasn't a decision you made Saturday night watching Ohio State.

No, I was contemplating other things at that point, James. If you go back, I mean, you can start all the way. I mean, one of the first things a CEO does when he comes in the job is to start thinking about succession because it's a very, very critical and important element. And when I started, the stuff coming together really was back in the March-April timeframe when we were announcing the spin because it was getting clearer and clearer with the spin that fundamentally we were going to have a marine company and a – as the sole entity of the portfolio going forward. And so the dialog I had and had with the board was basically we get to a February timeframe of the Miami Boat Show, and typically in 2019, we'd be laying out the next three years. And my view was that we were at a real inflection point, and the person who was going to lead the Marine business going forward for the next couple years should really be someone who's there and involved and really driving that process rather than worrying about some other change happening down the road. And when you look at the third quarter results and you look at the strategy and things we've got in place, and fundamentally, David is a very known entity; we've worked together 10 years. He's been in the corporate office for a year-and-a-half now as CTO interacting with all the rest of the peers and staff. He's been running the Boat business for the last six months and will, you know, through the end of the year. So fundamentally, it can be a very, very orderly transition. I think David is a great guy to take that strategy going forward, and I think it's just a natural place for me to step off and leave the management here in great hands.

Well that's helpful, and it's certainly been a pleasure and hopefully we'll get a chance to see you around. So, couple of questions.

You may have to put up with – James, you may have to put up with me at Miami, but I'll be walking around as a shareholder then, so...

Awesome, awesome. That sounds great. So a couple questions on the business. I guess just real quick on the tariffs, you're assuming retaliatory tariffs are going away. Why is that a good assumption at this point, and how big – what's the number if they don't go away? How should we think about the offset?

Well, let me do the first part, and Bill can do the second; the first part being why we made the assumption. What we've really made the assumption are around EU and Canada and the expectation with the NAFTA replacement and the stuff that – our assumption is that the Canada thing will get worked out as part of that agreement and also the belief that the things between us and the EU will get worked out. The European one is very small because of the fact, you know, most of the product we're selling in Europe boats-wise are boats that are manufactured in Europe. So our belief is those are probably valid assumptions on a go-forward. To the contrary, we haven't made any assumptions of the China tariffs going away.

Got it. Yeah, go ahead.

Embedded in our 2018 guidance, about a third of that is attributable to some of the restocking activity that's being deferred by the dealers in the second half of this year. Our belief is is that some of that is already kind of, I would say, pre-running what would have happened in 2019 if tariffs would remain in place. So, it's a pretty manageable risk going forward if they're not removed, and we also believe that dealers right now are just trying to figure out what the rules are, and if they understand that the tariffs are in place permanently, they'll adjust accordingly and start to restock and sell. But they're very apprehensive to start stocking boats in advance of kind of understanding what the long-term landscape is going to be.

Safe to say the biggest risk more so than tariff dollars and cents is just demand in Canada to that issue?

Well, demand in Canada has actually been very strong. I think demand in Canada...

I guess, dealer demand, I guess it's – yeah, sorry.

The impact of price on retail demand will probably be the biggest factor moving into next year.

Got it. And then Fitness, real quick here. Maybe this inventory cost adjustment, maybe what is that? Why is that happening? How much was that? Maybe walk us through that. And then the big Fitness top line decline that we're assuming for the fourth quarter, you talked about a decline in value customers. I mean, it doesn't seem like there's any new news from Planet. Maybe walk us through some of that.

Yeah, James, I'd say – I'll address the second one first. If you look at fourth quarter demand, Planet is on a full-year basis exceeds 10%. They are over-indexed to the fourth quarter. We are assuming that we start to see some meaningful changes in our share in Planet. We haven't really seen that yet in the third quarter, but based upon order rates, I feel that that's going to occur more in the fourth. And when you've got that kind of your business being adjusted down on a share basis significantly, it creates a headwind. So that's probably the largest single item that we're facing that's creating headwinds for the fourth quarter. And then on the inventory side, James, I would say that it's – at the end of any sort of – in connection with any product transition, you have some opportunities for there to be mismatches between what you still have to sell and what customers are willing to buy on a preceding basis. We're probably left with a little bit too much of some products that we've chosen to take care of through an excess and obsolete reserve. It's kind of a one-time adjustment that we've taken care of in the third quarter.

I'll hop in the queue, but what's the size of that adjustment?

It's a low single-digit number.

Okay. Low-single digit millions?

Millions, yes. Correct.

Got it. Great, thanks guys.

Thank you. Our next question comes from the line of Craig Kennison with Baird. Your line is now open. Craig R. Kennison - Robert W. Baird & Co., Inc.: Yeah, good morning, Mark. Congratulations on a wonderful career and will certainly miss you.

Thanks, Craig. Craig R. Kennison - Robert W. Baird & Co., Inc.: Yeah. James took five or six of my questions, but I'd like to ask maybe about leadership in the future. You've got a really strong team not only at the CEO level of course but at each of your divisions. Should we anticipate stability in leadership as we look at each division?

Yeah. When you look at the Marine segment, which is really the focus around that, John Pfeifer is – Craig, you know well, will continue running the Mercury. We've got Huw running within the boat business. When I look across the staff I've got here and the strength we have got in the business, no reason to believe that and in fact we feel very good about the team that's here in the continuity going forward in the marine space. Craig R. Kennison - Robert W. Baird & Co., Inc.: Thanks. I'll get back in the queue.

Thank you. Our next question comes from the line of Joe Altobello with Raymond James. Your line is now open. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Great, thanks, good morning guys. I also want to congratulate you, Mark, wish you good luck, in the future hopefully you can see a few more Cub games than you have in the last few years, so good luck with that. But wanted to talk about Power Products and I think if I recall correctly, the accretion this year net of interest was sort of in the $0.10 to $0.15 range and I am thinking do we double that next year given on the full year that number – I'm sorry, of that business or do we see additional upside in synergies and could Power Products offset effectively the incremental tariffs that you're calling for next year.

You must be in my head on this stuff, Joe. Yeah, it's fairly close. I'd say that the Power Products – as we sit around and think about 2019 and the tailwinds that are back, not only do we have Power Products, but we also have momentum in the outboard business, which I think we've been able to demonstrate, a, our ability to produce, drop and deliver extremely strong earnings leverage. I'd say that we haven't talked about it, but a part of our ability to outperform in the third quarter was influenced a bit by our pricing power and our ability to offset cost for tariffs and things in the outboard business. So, we feel very strong about our outlook going into 2019 and even though we are facing some tariff headwinds, we've got some things that we've already seen evidence of in the second half of the year which give us confidence moving into 2019. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay, that's very helpful. And if I could ask a second one on the Fitness side, you did mention the "full range of separation outcomes" that you're evaluating. Has there been interest in that segment from a buyer or buyers because I would assume that you've evaluated a sale before announcing the spend.

Well, we started with spend obviously driven by some of the tax-free elements of the transaction. We've had inquiries, and basically around a sale we've queued those really Joe relative to getting the Form 10 out, which we've said will be out there in the first half of November. So there has been interest, but again in the absence of having all the financial stuff together, we've just kind of queued that up. Joseph Nicholas Altobello - Raymond James & Associates, Inc.: Okay. Very helpful, thank you guys.

Thank you. Our next question comes from the line of Eric Wold with B. Riley. Your line is now open.

Thank you, good morning. Just a couple of questions I guess. One on the engine side, with the ramp in production around the new engine and demand outstripping supply until or into next year. Any risk of seeing demand shift either temporarily or medium-term to other suppliers and be sure your relationships are strong enough to push through this. And then any sense of what the kind of adverse impact to growth in that segment has been this year because you could not meet demand and kind of what it could be possibly in the next year.

Well, a couple of different pieces to that Eric. First of all, we've had substantial increases of production we've said in the low double-digit kind of numbers. So, one is, we've had the growth number. Two is the fact that there is a lot of demand that's going on that we haven't been able to address. I would say largely to the OEMs and boat builders and stuff. Eric, we've been meeting some of that, it's queued up a little, but the fringe places really that we haven't addressed yet is really getting more into reman and some of those. So, do I feel very good about upside and continued on a go forward basis? The answer is, yes.

And I'd just point out that our propulsion revenues were up 24% in the quarter, I think we're capitalizing on quite a bit of market opportunity. I think there's probably additional that we can as we bring more capacity online, but we're certainly keeping up and then some relative to what demand is.

Okay. And then just a question on the tariffs, sorry, if I missed this, but the $60 million to $70 million of gross tariff impact for 2019. Does that assume that exemption is granted for the Wave 1, the 40-60 horsepower engines, and then what does that represent, I guess, if it's granted or if it's not granted?

Well, first of all, it doesn't assume it's granted, so it's the gross number assuming it would be continuing. In terms of...

It would be a meaningful part of the $30 million to $35 million net impact, would be covered by the exemption.

Okay. Perfect, thanks guys.

And so we're just waiting to hear the results.

And do you have a timeframe pause (58:31)? I know political wrangling is always tough, but do you have a timeframe of when you think you might hear back?

Timeframe is unknown.

All right. Thanks guys.

Thank you. Our next question comes from the line of David MacGregor with Longbow Research. Your line is now open.

Yes, good morning, everyone, and Mark, congratulations on your retirement. Wish you all the best.

Thanks, David.

You bet. Two things. Can you just talk about kind of the early initiatives on Sea Ray and just what you've done sort of as a plan of departure on the journey there. And then secondly, just talk a little bit about Power Products as a facilitator of OEM wins going forward, and kind of the plan to the extent you feel comfortable discussing that? Thanks.

Yeah. I'll start with – let's just block kind of two pieces to the Sea Ray, part of it is just shutting down, closure, everything around the large boats or yachts. And I would tell you that stuff is moving along pretty much exactly as we planned and the inventory levels that are out in the field are low. So we feel good about all that. On the side of the sport boats and cruisers, we've got launches going on with new product coming in. It's fresh. People will be seeing that stuff down at Lauderdale. We've been getting great support and backing from the dealers wanting to bring some of that product in and get that going. A lot of attention around the efficiency and performance at the facilities and some leadership talent additions we've put up there, but some of that is again back to the dealer side is even dealers wanting to replace some of the volume they're losing, and committing even more to the sport boats or cruisers. So, we really feel good about where that's moving David.

And the Power Products?

Yeah. The Power Products, to the point of I think it opens a lot of doors because pulling it down as we've had a great ability to bring a propulsion system to an engine or to a OEM boat manufacturer. Now we have the ability to bring kind of the electrical backbone and the propulsion system, and the reality is there's more and more technology there. It's becoming more and more difficult for the individual OEMs to deal with all the technology, and I would tell you that being able to walk in and provide an integrated system to them is going to be another differentiator of us versus some of our competitors. So we feel very good about the opportunities that that can present.

Thanks very much.

Thank you. Our next question comes from the line of Seth Woolf with Northcoast Research. Your line is now open.

Hey guys. Thanks for squeezing me in here at the end. Congrats Mark and see you in Miami. So real quick, just had a question on the pipeline inventories. You said it was down slightly, and then when you talked about the retail performance, I think this is the first time that you've broken out what retail did, and then retail ex Lowe. So if you assume that over – since this didn't happen overnight that there's been some benefits on the retail sales the last couple of quarters that you sold off the inventory that was in those locations or...?

No, I'd say, Seth, we faced headwinds relative to Cabela's transition away for Lowe. This has been really going on for about three quarters. I'd say the third quarter a year ago is when the acquisition occurred. So we're starting I think to get to the point where it's probably the most challenging year-over-year because we look forward into model year 2019 with the additional incremental dealers that we've been able to bring on. We should be in much better shape on a comparable basis. And honestly, Seth, I would say some of that played into our pipeline a bit but we've also been restocking and rebuilding dealer network without a lot of volume there, so that's a net offset. And I would attribute the decline in inventories at the end of this year more due to dealer restocking activity in Canada, deferring that into 2019. That's really going to be what's going to drive our pipeline inventories down year-over-year.

Okay. That helps. I guess what I was trying to think through was whether you had some – did the sell off over the last couple of quarters, you were still getting a little bit of benefit as they sold the rest of whatever they had in stock off and then it's out of the inventory, so if ex Lowe, your pipeline was up year-over-year, so...

No. I don't think, again, Seth, I don't think that that's – if you're thinking that that should be driving a decline on a year-over-year hand and a weeks on hand basis, the point I made about rebuilding the Lowe dealer opportunity that's something that we would have been – we would have seen some benefit on the wholesale side but not a lot of sell-through yet in the pipeline. So, I don't think that's a reason to see pipelines decline here at the end of Q3. We are extremely comfortable with where our pipelines are at the end of the model year. We're exactly where we've been for the last four years and very comfortable with pipeline levels exiting the retail season and entering the off-season.

Okay. Thanks, thanks for the clarification, appreciate it.

Yeah.

Thank you. Our next question comes from the line of Greg Badishkanian with Citi. Your line is now open.

Hey, guys, it's actually Fred Wightman on for Greg. A couple of different times you've mentioned pricing is an offset to some of the tariff and cost pressures that you've seen. I'm wondering if you could sort of contextualize the price increases that you guys are pushing through this year versus more of a "normal year"?

The only thing I'd say there Greg is obviously they are up a little bit but I don't think anything is outside of what we're seeing competitors doing as well, but obviously some of the impacts is causing us to adjust our pricing a little. So you can take the numbers of kind of what the tariff stuff amounts to and kind of go backwards into the increase, but it's up a little bit but it's more of just being offsets.

And I'd say the fact that we've got a very fresh product lineup with just a superb new offering that we've just come out with this year. We certainly feel like we're in a position where we can pass along pricing to the extent we need to, right. So our product line is very strong and our brands are very strong.

Okay. Thanks. And then in the past, you've talked about sort of the 12- to 18-month lag for any hurricane-related demand. Could you sort of talk about what you've seen from last year's storms versus what you might have expected?

I don't think we've seen any noticeable recovery impact. In fact, if you look at Florida, Florida is down a little bit and I would expect that still relates to not seeing some of the recovery from last year yet. But there's lots and lots of variables going on, but I wouldn't say we've seen noticeable impact yet. And again, we've always talked 12- to 18-months, and we're kind of at the bottom end of that range right now.

Great. Thank you.

Thank you. Our next question comes from the line of Gerrick Johnson with BMO Capital Markets. Your line is now open.

Great. Thank you. Congratulations, Mark, also to David. I had two questions here, one near-term, one longer-term. In the near- term, how did Boat retail progress through the quarter? Did you see it strengthen or weaken? And then also, from a higher-level, the pushback I often get here is that we're end of cycle or at least not at the beginning of a cycle. So where do you think we are in this current cycle? Why should investors be comfortable with where we are in the cycle? Thank you.

Yeah, so Gerrick, if you look at the micros, I mean, replacement demand is good. The premium value mix stuff is going on, a lot of great new products, and even things going on in category rotation now between, so I would tell you a lot of those things including the dealer sentiments that on a micro level still remain very positive. Even if you go to the macro, in the developed countries, particularly things like U.S., the economies are strong. I would tell you is we either – we look at a lot of the other variables, employment, unemployment, whichever way you want to look at it, consumer confidence, GDPs, tariffs, and geopolitical probably or midterms are some of the negatives. But they're not really cycle related, they're probably a little more point in time. So things that we would assign more to the cycle of those micro and macro we think continue to bode well for kind of a steady growth in the 3% to 5% that we've talked about in the past.

And Gerrick, I'll just comment on the retail progressing throughout the quarter. We really haven't seen any change in trends that make us change our kind of short- or long-term outlook on the Marine market. I will say that we continue to see strength in categories that are important to us, categories that Sea Ray participates in, sport boats and cruisers, pontoons continue to be strong, saltwater continues to be strong. So we're pretty confident here as we've closed out the retail selling season. Again, I think we've got setup for dealers to feel comfortable restocking product. We've got a lot of new product that's been introduced that should put dealers in a position where they're going to restock in advance of the boat show season which starts here late in the fourth quarter and then into the first. So we feel like we're pretty well positioned exiting the third quarter and then entering the off-season.

Okay. Thank you, guys.

Thank you. Our next question comes from the line of Tim Conder with Wells Fargo Securities. Your line is now open.

Thank you. Mark, first of all, let me also offer my congratulations and enjoy the grandkids, most of all the Ohio state, but I cannot wish you an enjoyable Cubs future as a Cardinals fan. On to business here, I would like to – a little clarity on the tariff things. In your presentation, you have outlined $30 million to $35 million net, which first of all, it seems like you're including getting that List 1 exemption to get in part of that, but then below that on the slide you talked about a $20 million to $25 million incremental, so just maybe kind of clarify that?

Yeah, Tim, I'll go back – mentioned on the prior, we are not assuming we're going to get an exemption.

Okay.

So in the event we got an exemption, that would be good news to what we talked about here today. So go ahead with your question.

Okay. Okay. No, that's a part of it. That helps. So on the slide it says $30 million to $35 million net, but then it says $20 million to $25 million incremental. Just maybe parse through that, the difference there on that slide. It's a little bit confusing I think.

All that really – 2018's got the $10 million to $15 million, and so the incremental is over and above the $10 million to $15 million in 2018.

It's been adjusted for the bottom end of the range, Tim, $10 million across the board.

Right.

Okay. Okay. So again – okay. The $20 million to $25 million is the true incremental in 2019 that we're looking at at this point ex any List 4 coming on?

Ex any List 4. It's all based upon things like the 10% going up to 25%. It's the full-year impacts of some of what we've seen in 2018, Tim.

Okay.

Yeah. I mean, if you stack up the positives and negatives, Tim, I think you articulated that the exemption would be a positive, correct? And that's mostly what our Wave 1 exposure is, so that you can kind of size. And I would tell you that that is – that that exemption would take care of most of the $30 million to $35 million net, a substantial part of it represents the part that could be exempted as part of the process.

Okay. Okay.

And obviously we've got some additional risk related to Wave 4, but we've got to characterize that as being manageable. That doesn't materially increase our risk profile.

Okay, okay, okay. Okay. Helpful. Okay. And then on Fitness, it seems like internally, I know you guys have had a lot going on this year from acquisitions, to preparing on Fitness and just a lot of things, refinancing and so forth, but it seems like internally maybe there's been a little bit of a pause, and obviously the delay in the Form 10. Was there a pause and reassessment giving maybe inbound interest in purchasing? And has that been the main little pause here that we've seen, or any other characterizations? Has there been anything fundamentally that's changed that's maybe resulted in the pause on the process of the Fitness separation?

I would tell you, Tim, probably the biggest thing – I wouldn't call it a pause. It's just literally getting through everything around the Power Products, the retail financing, all the things, getting that in the filings and all the stuff done. The Form 10 has kind of moved from the end of the third quarter with all the stuff we had going on to really in November, and I literally wouldn't interpret it as much more than the fact that we just had 10 pounds trying to go through the funnel, and we were – that – I wouldn't interpret it as more than that, Tim.

Okay. Okay. And then lastly, to circle back to a question on the engine capacity, so you added a lot of capacity and basically ramped up here and very quickly filled that. And just to, again, to clarify that you're going to be adding additional capacity here currently for 2019, but that should not have any material incremental operating cost because – is that what is interpreted correctly from a previous question?

Yeah, that would be a fair statement, Tim.

Okay. Okay. Well, congrats again, Mark, and David incoming, and thank you, gentlemen.

Thanks, Tim.

Thank you. This concludes our question-and-answer session. I would now like to turn the call back to Mark for some concluding remarks.

Yeah, just a closing thought. As I said before we went in the Q&A, I'm really excited about the business, the momentum we've got generated. I think the portfolio actions and the product stuff we've got going around the engine business, the Power Products acquisition and reminding you, we all said we'd be at $1.5 billion and do the 350 (1:16:00), all those things have taken place, the portfolio on the Boat side. So, I mean, the past 14 years at Brunswick probably are the most rewarding in my entire 40-plus year career, and I've really been honored to lead and have been inspired by all the people that I've been able to work with around the world, including dealers, distributors, suppliers, et cetera. Brunswick is always going to be part of me, but now it's an opportunity for me to go off and spend some time with my wife of 43 years, my daughters and now four grandchildren. So that's what I'm looking forward to. And there is a great – I'm leaving this in a great hands to a great staff and organization. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.