Analyst expects strong 2Q boat sales

Marine wholesale and retail lending trends are strong with the selling season starting earlier than in the previous two years.
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Marine wholesale and retail lending trends are strong with the selling season starting earlier than in the previous two years.

That’s according to an analyst at Wells Fargo, who recently met with unnamed lenders during a Midwest power-sports tour lender meeting.

The marine market outlook increased to 14 percent dollar growth on an increase of 5 to 6 percent in unit sales, senior analyst Timothy Conder said in a report recapping his tour.

That compares with 9 percent dollar growth on a 5 to 6 percent unit increase at the Miami boat shows.

Conder expects to see strong year-over-year growth in the second quarter, again led by aluminum pontoon and saltwater fishing boats, and with more modest growth from aluminum fishing boats and runabouts. The ski and wake segment should see low double-digit growth with negligible aged inventory, he wrote.

He projected that the boat mix will become “richer across each segment, driven by manufacturer innovation, strong option uptake and larger boat momentum.”

Conder also met with executives at Brunswick Corp., saying management’s tone remains upbeat, with solid U.S. marine demand continuing through April and May.

“Boston Whaler is running at record margins, with Lund margins just below,” Conder wrote. “Sea Ray remains margin-dilutive, but the goal is to reach profitability exiting 2015. Excluding Sea Ray, boat margins are mid-single digits.”

Rising average unit prices are driving boat segment growth in the first half of this year and volumes should drive the second half of the year, he said.

“Management remains indifferent to the consumer shift away from [the] smaller cruiser segment into aluminum [and] fiberglass outboards, given comparable margins with Mercury engines attached,” he said.

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