MarineMax, Brunswick provide Sea Ray update

MarineMax will be heavily involved in the transition process involving Brunswick’s pending sale of Sea Ray.

The company remains optimistic about the sale of the iconic boat brand, said MarineMax Chairman of the Board and Chief Executive Officer William McGill, Jr., during Wednesday’s first quarter earnings call and questions session with industry analysts.

“We do believe that this represents a long-term win-win situation for not only Brunswick and Sea Ray, but MarineMax and other dealers as well as Sea Ray owners,” McGill said, adding it’s his view the future owner of the brand will build and improve upon Sea Ray, the product, and its legacy.

The sale process is moving along the track Brunswick has anticipated, said Daniel Kubera, media relations and corporate communications director.

“We have been pleased with level of interest in Sea Ray, as we have had good inbound interest from a number of potential buyers, and are working through the process with our investment bankers,” Kubera said. “We anticipate the sale process should be completed sometime in the first half of 2018.”

As for the current dealer agreement with MarineMax, Kubera reaffirmed the long and successful multi-brand relationship that includes Sea Ray.

“We would expect this relationship to continue throughout and after the Sea Ray sale process,” Kubera said, adding Brunswick does not discuss specifics of any dealer contracts.

According to McGill, an important consideration for MarineMax is a new owner that’s passionate about the brand.

“All options are on the table as far as we are concerned,” McGill said. “We will have a big say in who the buyer is [because of the] percentage of business that we are doing and the dealer agreement we have with Brunswick. We are optimistic it will be a great thing, and we see it [the sale] as a very positive move.”

During Wednesday’s first quarter earnings call, McGill provided additional comment about MarineMax’s record-setting results, which included the most profitable December quarter in the company’s history.

“This is the fourth consecutive year that MarineMax has produced a profitable fourth quarter,” McGill said. “Each month in the quarter was productive, with a healthy mix of everything that we sell.”

According to McGill, industry data shows more market stability, but the recent choppiness in large boats lead to some elevation in inventory levels. He added MarineMax is encouraged by manufactures’ continued innovation, utilization of new technology, and enhanced product design. The early portion of the boat show season is promising.

“We had a great Atlanta show, a great Cleveland show, a great Minneapolis show, and a great Kansas City show,” he said. “Those markets are still very active.”

Outboard-powered models contributed to MarineMax’s strong results at a greater rate in terms of units, and that trend is expected to continue. Pontoon, wake, and ski boats are gaining market share.

MarineMax’s higher margin businesses – finance and insurance, services and marinas – also expanded in the quarter, reported Brett McGill, president and chief operating officer.

“We are seeing some great new models from Sea Ray coming off the line, and we are encouraged,” he said. “We hope that whatever direction they go, they will build enough boats for us, because there’s a big demand for a lot of their top product.”

Brett McGill also addressed the potential of mergers and acquisitions during the earnings call.

“We want to keep a strong balance sheet,” he said. “Most of our earnings growth will come from brand and segment expansion that we started in 2008.” MarineMax will seek smart acquisitions of marinas and properties,” McGill added. “They have to be at the right return; there are some people out there chasing marinas right now and paying pretty hefty prices for them.”

William McGill, Jr., provided additional insight on possible dealer acquisitions.

“There’s still a pretty good pipeline of dealers that want to join our family,” he said. “We’ll take our time, and make sure the cultures are right. If it makes sense for a to company join us, we’ll move forward on it. We’ll continue to find the right people. At the end of the day, it’s all about the people as opposed to the market.”