Brunswick Investor Presentation

A conversation among Whalers
jimh
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Brunswick Investor Presentation

Postby jimh » Wed Nov 11, 2015 1:23 pm

Yesterday Brunswick gave Wall Street a three-hour presentation to show their businesses to investors. The presentation was webcast. I don't think a replay is available right now, but a comprehensive PDF of 150 slides that were shown can be downloaded from:

http://phx.corporate-ir.net/External.Fi ... 02MDIzNTA=

The supporting material contains a lot of interesting information. In browsing through it, I found this rather startling announcement from the segment of the presentation given by Huw Bower, President of Boston Whaler. A slide said:

55% of 2015 Sales are derived from products released since 2013

(Source: page 97 of supporting materials)

If anyone ever wondered if Boston Whaler was thinking about returning to making c.1980 hulls, this should explain why that won't happen. More than half of their sales in 2015 were boats that did not exist before 2013. That is a lot of sales of new model boats. New boat buyers apparently want to buy new models, not old models. The boats that are new since 2013 are also listed, along with their date of introduction:

--350 Outrage Q1 2013
--Dauntless Models Q2 2013
--345 Conquest Q4 2013
--420 Outrage Q3 2014
--320 Vantage Q1 2015
--330 Outrage Q4 2015

Other than the DAUNTLESS models, these are all very large hulls, 33-feet to 42-feet in length. That is where the sales dollars are coming for Boston Whaler.

I also thought it was impressive that the President of Boston Whaler would be brought to Wall Street to make this pitch. It denotes the importance of Boston Whaler as a brand and as part of Brunswick's business strategy for success. No other individual boat brand executives were presenters yesterday.

During the MERCURY presentation, emphasis was put on increasing sales in the marine re-power market. Mercury described their present share of the re-power market as "mid-20-percent range." They said their "Sales efforts [would be] focused on re-power." And they plan re-power financing and sales incentive programs.

I recommend downloading the investor presentation and reading through it. I am sure there are more nuggets of information that will be interesting. If you see something in the slides, let's hear from you.

Check the Brunswick Investor Relations website to find the webcast replay, when it becomes available.

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Re: Brunswick Investor Presentation

Postby Mambo Minnow » Wed Nov 11, 2015 5:58 pm

Brunswick needs to build on the hugely successful FourStroke 150 HP model if they want to gain market share on the repower market. They took another step with the 75-115 HP models, but 175-225 HP is a large market for 20 foot plus models in need of a repower. This includes the Whalers in the early 2000's they temporarily powered out of the factory with Optimax until the Verado models became available and they went exclusively four stroke power.

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Re: Brunswick Investor Presentation

Postby JRP » Wed Nov 11, 2015 7:36 pm

As far as Mercury's efforts to gain more of the re-power market...

I would like to see Mercury produce a more potent version of their 2.1L in-line 4-cylinder 4-stroke engine. The current top version of this engine (115 CT) weighs only 384 lbs in the 25" shaft. If Mercury could bump the rating of this engine up to a solid 130-135 HP without adding significant weight, it would be a top choice for repowering many older boats in the 17-20 foot range, such as the Boston Whaler Outrage 18, 19 and 20 models.

Many owners of boats in the 17-20 foot size range are in need of more economical re-power options for their older 150 HP engines. The 2.1L Mercury Fourstroke 115 CT engine is a very good value. But it is just a bit short on power for owners coming from 150 HP 2-stroke engines. With another 20 HP, it would be almost the ideal choice given how lightweight and affordable it is.

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Re: Brunswick Investor Presentation

Postby jimh » Wed Nov 11, 2015 7:46 pm

Brunswick needs to build on the hugely successful FourStroke 150 HP model ...


It is great you have some ideas for Brunswick to improve their corporate profits, but I am more interested in what Brunswick has to say in their presentation. Was there anything in there about this engine? I am sure if they had plans that would have a big effect on their share of the re-power market they would have mentioned it to investors.

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Re: Brunswick Investor Presentation

Postby jimh » Wed Nov 11, 2015 7:49 pm

I would like to see Mercury produce a more potent version of their 2.1L in-line 4-cylinder 4-stroke engine.


You should contact them and let them know. Did they mention anything about this engine in the presentation? I suspect that if there were any plans for immediate introduction of products that would help Mercury Marine gain market share in the re-power market they'd be mentioned in the presentation to investors.

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Re: Brunswick Investor Presentation

Postby jimh » Sun Dec 20, 2015 10:46 am

A replay of the Brunswick Investor Day presentation is now available. This replay allows you to hear the remarks of the presenters and see the supporting slides. (Follow the hyperlinked text "Click here for webcast" on the upper left.)

The presentation about Mercury engines begins about 51-minutes into the recording. (The easiest way to cue-up this segment is to use the pop-up menu to select the desired presenter, i.e., John Pfeifer for Mercury Marine. You can also use the left-arrow and right-arrow scrolling controls on the slide presentation window of the right of the screen. Scroll ahead to slide 46 for Mercury Marine.)

John Pfeifer, head of Mercury Marine, begins by quoting Leonardo da Vinci:
Simplicity is the ultimate sophistication; Leonardo da Vinci said that, and that is the mantra by which we [Mercury Marine] operate today.


I have to think any engineer, designer, or manufacturer would be pleased to link themselves or their firm to Leonardo da Vinci, so invoking da Vinci right off the the start was a good way to begin his presentation. However, if that quote is indeed the mantra of Mercury Marine, it has escaped my notice until now. It also seems to have escaped Google's search engine notice, too. I couldn't find any reference to that phrase and "mantra" or "Mercury Marine."

I have listened to all of Mr. Pheifer's remarks, about 35 minutes in total, and I did not hear any information about a new outboard engine for the re-power market. As others comment (above), there seems to be some expectation that the now four-year-old c.2102 150-HP base engine will evolve to higher power. The actual path taken by Mercury has been the opposite. In c.2014 Mercury introduced new models of 75-HP to 115-HP four-stroke-cycle engines, following the general style of the 150-HP. Instead of a new engine with more horsepower, Mercury brought three new engines of less horsepower to the market. Mr. Pfeifer does say the new 75-HP to 115-HP engine have "gotten four-stroke technology down to two-stroke weight."

I also listened to the presentation by Huw Bower of Boston Whaler. The most interesting comments Mr. Bower made were in regard to Boston Whaler sales and profits. He said, "Boston Whaler has never been bigger, never been more profitable." In addition, he later remarked that Boston Whaler was "delivering profitability at record levels."

Boston Whaler has been doing very well in the new market segment for large offshore fiberglass outboard boats. The new 420 OUTRAGE (which I believe has a base price of about $800,000) has about a one-year backlog of orders, even thought an increasing amount of production facilities have been allocated to making that model. It is not too hard to see how the profit in manufacturing and selling one 42-foot boat for $800,000 or more could exceed the profits from selling many hundreds of 13-foot boats.

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Re: Brunswick Investor Presentation

Postby Mambo Minnow » Sun Dec 20, 2015 6:39 pm

Driving south to the holidays yesterday from Washington to Florida, I saw several northbound tractor trailers with factory fresh shrink wrapped Boston Whalers greater than 30 feet being delivered. This seems to match up with the report.

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Re: Brunswick Investor Presentation

Postby Hoosier » Mon Dec 21, 2015 8:02 am

It is interesting to note how Brunswick classifies Whaler in their family of boat brands: Saltwater Fishing. They do not classify Whaler as a General Recreation boat.

[Compare at: https://www.brunswick.com/brands/marine-boats/print.php]
1978 Outrage V20 with 2004 Suzuki DF-115. 1992 23 Walkaround with two 2010 Yamaha F-150s.

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Re: Brunswick Investor Presentation

Postby jimh » Mon Dec 21, 2015 9:28 am

Brunswick has always categorized their Boston Whaler brand as a saltwater boat. Brunswick has a loose organizational structure of their boat brands in a "saltwater boat group," and Brunswick has always put their Boston Whaler brand in that group and as the leading brand in that group.

In the Brunswick Investor Presentation, during the Huw Bower presentation on "saltwater outboard boats" in "the boat group" segment, Mr Bower talked about two other Brunswick boat brands which most of us here in North America are not familiar with: UTTERN and RAYGLASS. These boats are made overseas, in Europe and New Zealand. With the strong dollar, we may see these boats coming to North America.

Mr. Bower noted that "we have the strongest, most iconic, most valuable marine brand in the world in Boston Whaler."

He also said that Boston Whaler plans to expand its product portfolio in the market segment of outboard boats larger than 30-feet. See Slide 104.

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Re: Brunswick Investor Presentation

Postby Dutchman » Mon Dec 21, 2015 10:51 am

It is no surprise that the bigger size Whalers count for the largest sales volume in numbers. A 32-footer costs ten times more than a 17-footer. A boat selling for $450,000 to $500,000 shows a lot more margin that a $45,000 to $50,000 boat.
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Re: Brunswick Investor Presentation

Postby jimh » Mon Dec 21, 2015 12:55 pm

Dutchman wrote:It is no surprise ...


You are correct. There is no surprise in the notion that a boat that costs $800,000 might have a greater amount of profit than a boat that sells for $40,000. This is completely understandable and it not particularly notable. What is notable and is a surprise is the amazing volume of Boston Whaler hulls being sold at those prices.

To build and sell a boat that costs $800,000 and to have a one-year backlog of orders is not in itself impressive, either. I suspect there are many boats that sell for $800,000 which might have a backlog of one year before you could get deliver. Try ordering a new Hinkley picnic boat. Many builders making boats in these price ranges have a backlog.

What is significant in my opinion is for a company that made its name and built its reputation for 50-years by making 13-foot to 25-foot rather spartan outboard boats, can now find extremely strong demand for outboard-powered 35-foot and larger boats that cost over $500,000, have three or four outboard engines, and have large amounts of sophisticated accommodations and gear built into them. This is the remarkable aspect of Boston Whaler's new expansion and increase in sales.

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Re: Brunswick Investor Presentation

Postby Jefecinco » Mon Dec 21, 2015 4:10 pm

I assume when they refer to 55% of sales they are talking about boat units. But I find it astonishing that large boats are outselling smaller boats. Is it possible that they mean 55% of sales income is from the large boat segment?
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Re: Brunswick Investor Presentation

Postby Dutchman » Mon Dec 21, 2015 4:28 pm

Butch that is what I think too, by dollars, not units.
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Re: Brunswick Investor Presentation

Postby jimh » Mon Dec 21, 2015 7:07 pm

I am sure when speaking with investors that any reference to "sales" is in the dimension of dollars, not hulls.

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Re: Brunswick Investor Presentation

Postby Hoosier » Mon Dec 21, 2015 10:15 pm

I think we're all missing that Whaler has not abandoned the smaller boat market. I just went on the Whaler website to make sure I kinda knew what I was talking about and they have boat families in the "smaller boat" end of the market: Super Sport, Montauk, Outrage,and Vantage. Actually there are a lot of boats in the below 30 foot category, they're just not in the below-$30,000 category.
1978 Outrage V20 with 2004 Suzuki DF-115. 1992 23 Walkaround with two 2010 Yamaha F-150s.

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Re: Brunswick Investor Presentation

Postby jimh » Tue Dec 22, 2015 1:49 am

To put some perspective on the Boston Whaler 420 OUTRAGE at $800,000, consider that in 2002 when Boston Whaler introduced the replacement for the classic Montauk 17-footer, their 170 MONTAUK had an MSRP base price of $17,655, and that price included the 90-HP engine and the trailer.

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Re: Brunswick Investor Presentation

Postby Jefecinco » Tue Dec 22, 2015 9:58 am

If oil prices continue at current levels or lower the rate of boat price increases may slow down. I remember when very high oil prices were blamed steeply rising boat prices.

In 1999 I bought a new Dauntless 16 with a high quality aluminum trailer and a 115 HP Evinrude FICHT engine for slightly over $16,000. In 2010 I bought a new 2009 190 Montauk with the optional fishing package, bow rail delete option, 135 HP Mercury Verado engine and standard Karavan galvanized steel trailer with disc brakes for $32,000. I believe I first sold the Dauntless for approximately $14,000.
Butch