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Malibu on spending spree - now buys Pursuit Boats

Discussion in 'General Yachting Discussion' started by PacBlue, Aug 22, 2018.

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  1. PacBlue, Aug 22, 2018
    #1
    PacBlue

    PacBlue Senior Member

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    Malibu Boats first purchases Cobalt Boats for $130M in 2017, then Pursuit Boats in 2018 for $100M. two quality brands considered to be in the top of their class.

    https://www.tradeonlytoday.com/manu...utm_content=morelink&utm_campaign=enewsletter

    Must be good business as the #1 Ski and Wakeboat builder in the country, those guys in Tennessee have certainly outdone their competitors in that production boatbuilding hub of Tennessee.

    Interesting that Tiara has pulled back to its core brand in Michigan and away from the ever expanding OB market, the cash infusion is nice, but what are the long term plans for Tiara Yachts - is their a 3rd generation that is dedicated to the boatbuilding life ready to carry the Tiara flag forward?
  2. YachtForums, Aug 22, 2018
    #2
    YachtForums

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    I'm trying to wrap my calculator around this... a ski boat company buying two major boat brands?
  3. PacBlue, Aug 22, 2018
    #3
    PacBlue

    PacBlue Senior Member

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    Yes, hard to imagine but those are some quality purchases to keep them diversified. From their annual report:


    "We are pleased to report that Malibu has yet again delivered record results noted below for fiscal year 2017. The following highlights of our results
    compared to fiscal year 2016 demonstrate our commitment to you in continuing to deliver shareholder value:

    • Record net sales increased 11.5% to $281.9 million


    • Unit volume increased 6.9% to 3,815 boats, the highest since 2007


    • Net sales per unit increased 4.3% to $73,902


    • Record gross profit increased 12.3% to $75.0 million


    • Record adjusted EBITDA increased 15.5% to $55.7 million; and


    • Record adjusted fully distributed net income per share increased 18.2% to $1.56 per share on a fully distributed weighted average share count of 19.3 million shares of Class A common stock"

    Quite a calculated move to get into Stern Drive and OB markets.
  4. Capt J, Aug 22, 2018
    #4
    Capt J

    Capt J Senior Member

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    Those financials all look good. Maybe they'll buy a motorhome company next :D While Malibu is at the top of their class in wakeboards. How much do they know about saltwater boats and usage.
  5. olderboater, Aug 22, 2018
    #5
    olderboater

    olderboater Senior Member

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    The don't know the other markets but they know how to be successful and respect the management of the other companies. Pursuit is the perfect acquisition and now positions them much like Chaparral is with Robalo. The majority of the Pursuit line is perfect for lakes and rivers, 23-36' family boats. Perfect outboard match to their inboards and Cobalt's I/O's.

    Cobalt has added their first three outboards and their overall business has remained very steady. The decline of Sea Ray sales has protected Cobalt some.

    Malibu's moves in the ski boat and wakeboat world have been incredible to observe over the years. They've gone from nowhere to domination.
  6. Liam, Aug 22, 2018
    #6
    Liam

    Liam Senior Member

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    The surprise in all this is not Malibu buying Pursuit, but more S2 Yachts Tiara selling.
    That surprised me not by little considering the growth outboard center console have have had in the last eight to ten years.
    A growth which does not seem to stop in the USA and is in the last three to four years also expanding in Europe for sub thirty (soon forty) feet boats.
  7. PacBlue, Aug 22, 2018
    #7
    PacBlue

    PacBlue Senior Member

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    Maybe it will present the opportunity for Tiara to enter the OB market without selling against themselves. There is a family dynamic at play as well. plenty of cash to develop a Tiara OB product now.
  8. PacBlue, Aug 22, 2018
    #8
    PacBlue

    PacBlue Senior Member

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    Malibu has always been a well know entity out West, but they beat the odds and overtook markets nationwide and internationally in an West-to-East fashion as opposed to the typical East-to-West boat builder migration of competitors like CorrectCraft and Mastercraft.

    Not sure if Cobalt needed as much protection as you surmise (of course, they are both in the #1 position as they interpret the data to keep their own stockholders in the right frame of mind even though they both use the SSI data):

    From Malibu's 2017 Annual Report:

    upload_2018-8-22_14-35-28.png


    From Chapparal's 2017 Annual Report:

    "According to Statistical Surveys, Inc., the following is a list of the top ten (largest to smallest) sterndrive boat manufacturers in the United States based on unit sales in 2017. According to Statistical Surveys, Inc., the companies set forth below represent approximately 86 percent of all United States retail sterndrive boat registrations with hull lengths of 18 to 33 feet for the 12 month period ended September 30, 2017."

    1. Chaparral

    2. Cobalt*

    3. Sea Ray**

    4. Regal

    5. Bayliner**

    6. Crownline

    7. Four Winns***

    8. Monterey

    9. Tahoe

    10. Glastron ***
  9. Capt J, Aug 22, 2018
    #9
    Capt J

    Capt J Senior Member

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    The other weird thing with Tiara selling Pursuit. Is they've been shipping Tiara's by truck to Pursuit, with Pursuit doing the final finish out...….Installing drives/running gear, launching the boat......installing hardtop mounted items.....etc......Where are they now going to do this?
  10. Liam, Aug 22, 2018
    #10
    Liam

    Liam Senior Member

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    They had a Tiara OB model which was removed from the line. Usually these sales have an agreement where a boat builder cannot enter a similar market to what he sold for a number of years.
    Usually it is about three.

    When Menorquin was sold he had a similar agreement.
    When Cabo was sold also the same.
  11. olderboater, Aug 22, 2018
    #11
    olderboater

    olderboater Senior Member

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    Cobalt is #1 in dollar sales and I think Chaparral might be in units. They used two different criteria for their charts.

    As to Pursuit, 100 million reasons for Tiara to sell.
  12. PacBlue, Aug 22, 2018
    #12
    PacBlue

    PacBlue Senior Member

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    Tiara was not the Boat Builder sold.
  13. PacBlue, Aug 22, 2018
    #13
    PacBlue

    PacBlue Senior Member

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    Cobalt uses the data for the segment from 24' - 29'. Chaparral uses the 18' - 33' segment. It's just data and can be used to flavor whatever conversation they want with their shareholders. I am sure you can create a scenario with SR as #1 in stern drives buy adjusting the length segments and including over 33' product and picking dollar value instead of units sold.
  14. Liam, Aug 22, 2018
    #14
    Liam

    Liam Senior Member

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    Yes I know, but the Tiara OB model the 38 LS (launched in 2017) has been stopped, which implies they have an agreement with the sale that they cannot produce outboard model boats for a number of years.
  15. PacBlue, Aug 22, 2018
    #15
    PacBlue

    PacBlue Senior Member

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    When was the end of production? Was it based on a Pursuit platform?

    I would say the Tiara line is now screaming for an OB model and would be surprised that a non compete would be generic to include all OB models.

    I would venture to say the non compete language would be pretty specific to size, style and models of the existing Pursuit line, there is a world of options outside of those temporary limitations.
  16. Liam, Aug 23, 2018
    #16
    Liam

    Liam Senior Member

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    It is normal industry procedure and no surprise at all.
    When Menorquin owner and founder sold the company they had a clause not to build any boat for three years. When the clause was finished they founded Sasga.
    When Angelo Gobbi sold Gobbi to Azimut he did had a similar clause which did not allow him to own any boat building business for five years. He entered the Absolute share holding in 2009.
  17. PacBlue, Aug 23, 2018
    #17
    PacBlue

    PacBlue Senior Member

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    Was the Tiara Sport 38LS and Tiara Sport 34LS built by Pursuit or Tiara? If built by Pursuit, that could be a possibility, but where is no announcement that I have seen and the Tiara website still shows these two OB products? https://www.tiarayachts.com/
  18. Liam, Aug 23, 2018
    #18
    Liam

    Liam Senior Member

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    They are not showing on my website. Do you have a cached copy.
  19. olderboater, Aug 23, 2018
    #19
    olderboater

    olderboater Senior Member

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    You're both right...lol

    If you go to "Yachts" at the top and then "Tiara", they don't show. If you go to "Models" mid page they don't show. However, they show in the middle under "Announcements" and, if you follow those links, it takes you to Tiarasport.com where they are featured. So, they're just linked to from tiarayachts.com but shown on Tiara Sport.