Hatteras, Cabo out of limbo

Posted on Written by Reagan Haynes

hatteras1

CEO of the two brands says new ownership has satisfied consumer concerns and spurred sales

If Brunswick Corp.’s announcement early this year that it planned to sell its Hatteras and Cabo brands prompted sales to decline, the sale to Philadelphia-based private equity firm Versa Capital Management LLC six months later has had the opposite effect.

“I think that finally getting the news that the company has been sold and that it’s owned by a U.S. private equity company has been a really good thing … in that there were customers on the sidelines waiting to see what the final sale and acquisition would look like,” Hatteras and Cabo president and CEO John Ward said in his first industry interview after the acquisition. Before Aug. 6, Ward says, the companies were “struggling to get customers.”

“They were wondering who will buy the company, where will my boats be built, will they shut it down, will they move it to China? The fact that it’s a U.S.-based private equity firm, it’s no longer publicly held, it’s staying in New Bern, N.C., and it’s keeping the management team that helped with the divestiture” is comforting. “We’re known entities to the industry, to our dealers and, in many instances, to our customers, and that is a very comforting thing,” Ward says.

‘Industry-agnostic’

A Versa representative reinforced to dealers at an August forum at the new Fort Lauderdale-based Hatteras Cabo Yacht Center that Versa bought the company to invest in it, grow it and return it to greatness. The rep also emphasized that the company was keeping its management team, Ward says.

“Our investors are taking a supportive approach,” he says. “They’ve got a lot of great competencies [and resources] that we can draw on when and if we need them. So it’s a contrast with owners that are really hands-on and running the business.”

The investment firm is what Ward calls industry-agnostic. “They’re not wed to any one industry. If you look at their portfolios, this is their only marine holding. Their other portfolios aren’t any one industry. Their specialty is buying troubled businesses and turning them around and making them successful.”

Along with the acquisition, Versa also announced that Ward, a 24-year marine executive, will continue to lead Hatteras and Cabo as president and CEO. The news came as a surprise to some because Ward’s tenure with the Brunswick Boat Group had been long, both at the helm of Boston Whaler and at Mercury Marine.

Ward says he enjoyed his time at Brunswick and is looking forward to new opportunities moving forward.

High expectations

“One thing that won’t change between Brunswick and Versa ownership is the expectation to deliver results,” he says. “Whether a company is public or private, especially as part of a private equity group, you’re going to be charged with delivering results. For Hatteras and Cabo, the results are year-over-year improvement and restoring these iconic brands. That expectation isn’t really any different. How they manage and drive it will be different, but the expectation is the same.”

hatteras2Ward didn’t say why the announcement to put the brands up for sale was made prior to having a buyer, but he did say Brunswick wouldn’t have sold an operating unit that was contributing to its bottom line.

“The other element is, if you look at the Brunswick boat business, Hatteras and Cabo were the only builders that didn’t have a link to [Brunswick-owned] Mercury Marine,” he says. “When you think about vertical integration from a power standpoint, there’s no benefit for Brunswick to keep brands like Hatteras and Cabo. If the focus is going to be building your boat business and making it profitable, and growing it, and you have that vertical integration opportunity on the powertrain side of things, it makes sense.”

Looking ahead

Under new ownership, the Hatteras/Cabo operation will focus on its new Fort Lauderdale-based Hatteras Cabo Yacht Center at the Billfish Marina. Cabo’s former sales vice president, Don Smith, was tapped in September to be general manager of the center.

“The yacht center is and will continue to be an important part of our strategy going forward,” Ward says. “The dealers all understand that and embrace that.”

The company had begun to move away from a traditional dealer-stocking model just prior to Brunswick’s announcement that it planned to sell the brands. The announcement occurred just about the time the new yacht center was up and running. With the exception of “a couple straggler units,” most of the field inventory is gone, Ward says.

“Part of our strategy was creating a venue where customers and prospects could come that is accessible from anywhere in the world and also accessible year-round,” Ward says. “That’s working out very, very well. We’re seeing more and more traffic and activity going on at the yacht center in Fort Lauderdale. We just brought Don Smith back on board as general manager. He’s an industry veteran, and he’s going to manage the sales, the inventory and the facility. We’re really excited to have him back on board.”

Smith had spent more than four years with Cabo before leaving in June 2012 to become vice president of sales at Bertram Yachts. He has worked in sales since 1990 for companies that include Chris-Craft, Galati Yacht Sales and MarineMax.

Global reach

Both Hatteras and Cabo will focus on export opportunities, Ward says. “We’re going to — and Boston Whaler did this masterfully well — develop great products that have broad global appeal.”

Two international buyers have already purchased the new flagship motoryacht, the Hatteras 100 Raised Pilothouse, which wasn’t to be unveiled until the Fort Lauderdale International Boat Show.

“Think about purchasing a $9 million MSRP yacht based on only a picture and specifications,” Ward says. “I think that lends to who we are, that customers have that much faith and confidence about what we can deliver from a product standpoint. There was no boat test, no feature article and no photos other than a raw photograph of the boat going out and doing a sea trial” in August. “The first photo shoot for this boat will be following FLIBS, and then we’ll do a full photo shoot so we can create the appropriate collateral materials for the boat.”

The fact that the two boats have been sold to international buyers is also encouraging, he says. “We know our motoryachts have always been well-suited for American buyers. That’s part of our rich history, heritage and legacy. But to see international customers start to take a liking to our new motoryachts is encouraging.”

The brands’ heritage was part of the appeal to Versa, Ward says. “Hatteras and Cabo are truly two global, iconic brands. I will tell you, in the last year, half our sales for both brands have been to international customers. As I travel and talk to our dealers, both brands are known all over the world. That puts us ahead of a lot of people who have the product, but don’t have the brand. It gives you a leg up.”

This article originally appeared in the November 2013 issue.

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