The chief executive of Malibu Boats shared his thoughts about yesterday’s acquisition of Pursuit Boats and the company’s strategies going forward. Malibu CEO Jack Springer said the $100 million purchase of Pursuit was “very important” to Malibu. “It establishes a leadership position for Malibu in one of the fastest-growing segments in the marine industry,” Springer told TradeOnlyToday.com. “It also makes us a key player in the outboard segment. Between Pursuit and Cobalt, its makes Malibu Boats a large purchaser of outboard engines.”
Springer said Pursuit offers the new parent multiple opportunities for growth, both in distribution and production. The saltwater brand now has about 40 dealers, mostly concentrated in Southeastern and Northeastern states. “We see opportunities not only in other saltwater markets, but also freshwater markets where that kind of boat is becoming much more prevalent,” said Springer. “We also see opportunities with Cobalt. When you put two premium outboard brands like Pursuit and Cobalt together, which both have different uses, that could be extremely compelling for dealers.”
Pursuit’s facility in Ft. Pierce, Fla., is about 200,000 square feet on a 30-acre campus. Its production capacity has limited sales this year, says Springer, since demand has outpaced sales. “Right now, we’re building at capacity,” he says. “Our plan is to get permitting in place and expand the facility. We’re looking at a time frame of 12 to 18 months. Our goal is to continue to gain share as we expand.”
Pursuit’s net sales in 2017 were about $124 million, with EBITDA margins in the mid-teens. The brand saw 18 percent growth in retail unit sales in year-over-year period through July. Springer expects the saltwater/outboard market to continue to grow.
Springer said the company is currently evaluating whether to grow Pursuit’s product line in length or even types of boats. “We’re looking at opportunities from a product standpoint,” he says. “We’re looking at different sub-categories in the center console segment. Would bay boats make sense? That’s a question we’ll look at going forward.”
Malibu will continue to look at other potential acquisitions, particularly of premium brands.
“We’ll be in the market,” he says. “We’ve had a highly successful integration with Cobalt in the last year and expect the same with Pursuit.” In 2010, says Springer, the company began to build a team designed around accommodating growth. “We created a strong group inside Malibu that would help us accommodate potential acquisitions when they come online. It’s worked well.”
The pontoon segment could be the next target. “That’s the logical one that we’re not in today,” says Springer. “We’ve seen a little slowing, but it remains a real strong market. We’ll continue to watch it for the next six months.” Springer says that recent acquisitions by other companies have muddied the market for now. “You have a few players who have, in my opinion, vastly overpaid for the acquisitions,” he says.
Malibu has no plans to create its own brands, as it did with Axis during the height of the downturn. “We already have the Cobalt brand, which is probably the most prominent boat brand in the world today,” he says. “If you tried to start a new brand in that segment, you would lose a lot of luster. You just don’t have the same dynamics as you do in towboats, with different levels and price points. With Pursuit, in the long term there could be a scale that makes sense.”
Springer said that the company culture inside Malibu has not changed since the company went public and later acquired Cobalt. “We’ve been very careful to retain our culture and present the same face to the public and our dealers,” he says. “We keep our duties as a public company confined to the executive level so it doesn’t spill into the rest of the company. These days, I do the blocking and tackling of strategic planning and have other responsibilities, so I’m not as involved in lower-level functions as I used to be. I’m still involved in product development. That won’t change.”
Beyond entering another category, acquiring Pursuit gives Malibu expertise in building larger boats. “They’re a very strong engineering company, which gives us an asset we didn’t necessarily have,” says Springer. “We plan to transfer those skills across our companies. This acquisition was valuable in many ways.”