Skip to main content

Brunswick confident of its boat sales strategy

The zombie apocalypse for boats? That was the analogy used by Joseph Yurman, an analyst with 1221 Partners LLC, who asked Brunswick Corp. officials during a conference call to discuss first-quarter earnings whether the resurrection of boat brands that continue to fail during the prolonged downturn would eventually shift the business model of Brunswick’s Boat Group.

CEO Dustan McCoy reiterated his position that despite competition for a larger piece of a shrinking pie among roughly the same number of builders, Brunswick’s strategy that relies heavily on the sterndrive cruiser market will not shift.

Yurman said his question stemmed from a speech he heard McCoy give last month. McCoy juxtaposed the engine business with what Yurman called “the dirty and ugly world” of the boat business.

“The thing that really kind of stuck out for me is that the number of brands kind of going into the downturn is the number of brands coming out. So the barriers to continue to operate are pretty low. You described them as zombies stalking the Earth,” Yurman said. “What I'm asking is, do you foresee the composition of the operating income of the boat business ever moving away from the lion’s share coming from these larger boats?”

Currently, the aluminum boat segment is making more money, in part because the company is reducing the pipeline of sterndrive and inboard brands. The aluminum segment has already restructured itself after a decline concurrent with Hurricane Katrina and has recovered better than fiberglass segments, McCoy said.

“So that’s a true change in the structure of our boat business, and a long-term change in the profit-producing activity of our boat business,” McCoy said.

Brunswick would continue to be profitable at wholesale-equals-retail, McCoy said.

“But right now, we've been very open in that we're reducing pipelines. We're wholesaling fairly significantly under retail, and that is all designed to position this business for future success,” McCoy said. “So the industry dynamics are never going to change, in my view. They're always going to be difficult, but our guys in the boat business are making all of the adjustments they need in order to compete in the new world.”

The fiberglass cruiser segment will always remain more profitable on a percentage basis, McCoy said.

“But we've done a complete review, restructuring, repositioning of our boat business, and we feel pretty confident that we're going to do well almost in any market conditions over time,” McCoy said.

McCoy alluded to having “a lot coming in our larger fiberglass business.”

“I don’t really want to get into timing because I don’t want to give away any competitive information,” he told analysts.

Click here to listen to a webcast of the conference call.

— Reagan Haynes

Related

1_DEALER.OUTLOOK

Alleged Tournament Cheats Face Possible Legal Action

Approximately 8 pounds of lead was found stuffed inside fish entered into the contest by two men from Pennsylvania and an Ohio.

1_BOATHOUSE

The Boat House Group Announces Merger

The transaction will add two Wisconsin dealerships and several sales, storage and service locations to the group’s portfolio of properties.

1_GLBBS

GLBBS Breaks Ground on Tech Center

The Michigan-based marine trades school will commence construction of a 10,000-square-foot training facility in the second quarter of 2023.

1_AVIKUS

Avikus Debuts Autonomous Navigation

The company will demonstrate ‘Neuboat’, an autonomous phase-2 navigation solution for recreational boats at this year’s FLIBS.

1_IAN_ROUNDUP

Scope of Ian’s Devastation Emerges

Southwest Florida’s marine industry businesses are ensuring the welfare of their people well before the cleanup even begins.

1_MERCURY.MARINE

Mercury Marine Receives Environmental Award

The company was recognized in the large business sustainability category by Wisconsin Manufacturers and Commerce.