Analyst optimistic despite slow May boat sales

Wells Fargo analysts are reiterating their belief that the overall retail boat industry will be up between 8 and 9 percent in light of May sales data released by Statistical Surveys.

Senior analyst Timothy Conder and associate analysts Marc Torrente and Karen Wang say that despite some mixed trends, the decrease in sales was likely attributable to tough comparisons with sales last year.

“We believe industry fundamentals remain sound, with clean channel inventories and new [and] used market dynamics lifting new unit sales,” the three say in their analysis.

Sales in key segments aluminum pontoon 16 to 99 feet and aluminum fishing 16 to 24 feet decreased 6.2 percent and 1.5 percent “with very difficult prior year comps,” having risen 17.6 percent and 9 percent last year, Conder said in the analysis.

Outboard fiberglass 11 to 40 feet showed steady momentum, rising 6.2 percent in May and 9.3 percent year to date, Conder said.

Fiberglass inboard and sterndrive also faced difficult comps in larger ranges, but on smaller volumes.

Ski and wake, as well as PWC, “continued to be standout categories under the non-traditional segment,” with ski rising 13 percent and PWC spiking 31.8 percent in May.

Conder expects Brunswick Corp., Malibu Boats and Sea-Doo’s sales to be favorable for shareholders.

He expects Brunswick to continue to regain share during the second and third quarters this year. “We believe management is indifferent to the rotation away from mid-size sterndrive boats to aluminum and fiberglass boats as long as a Mercury engine is attached,” Conder wrote in his analysis. “Mercury is Brunswick’s largest and most profitable business.”

He noted that National Marine Manufacturers Association data shows outboard engine shipments increased 4.3 percent year-over-year for the period ending in May, with retail sales up 8.9 percent for the same period.

Data through March showed Malibu lost share, but in a quarter that only accounts for 13.7 percent of annual volumes. Also, the data “excluded a few key Malibu Boats states,” Conder said.

The company also stands to “earn better economics on sales” in Australia if the licensee buyout announced Monday goes through.

The rise in PWC sales also bodes favorably for Sea-Doo, he said.

“Spark is a potential catalyst in restoring PWC industry growth after a 14-year decline,” he said. “The Spark should also help Sea-Doo’s entry into target developing markets. Evinrude is benefiting from strong outboard boat trends, but has underperformed modestly as engine sales for new boats outpace the repower business, where Evinrude is concentrated. The new E-TEC engines should help regain momentum.”


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