Brunswick to NOT Sell SEA RAY

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jimh
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Brunswick to NOT Sell SEA RAY

Postby jimh » Tue Jun 26, 2018 10:09 pm

Brunswick has changed course. A few months ago they announced they would sell off the SEA RAY boat brand, its factories, and assets. A few days ago they announced a complete change in course: they will NOT sell SEA RAY. Here is their press release:

--begin press release---

News Release

Brunswick Corporation : Brunswick to retain and reinvent Sea Ray business

Sea Ray sale process ended;
Company will restructure Sea Ray to focus on growth opportunities in sport boat and cruiser;
Discontinue Sea Ray sport yacht and yacht models and wind down production in 2018

METTAWA, Ill. June 25, 2018 - Brunswick Corporation (NYSE: BC) today announced it:

  • Has ended the sale process for its Sea Ray business, including the Meridian brand.
  • Will retain and revitalize Sea Ray and leverage its premium brand to capitalize on growth opportunities in its sport boat and cruiser product categories.
  • Will discontinue Sea Ray sport yacht and yacht models, resulting in the wind down of yacht production in the third quarter of 2018.
"Over the last several months, we have engaged in a thorough sale process for the Sea Ray business, which we believed would generate the highest value for our shareholders," Brunswick Chairman and Chief Executive Officer Mark Schwabero explained. "Although there was interest in the business, the offers we received did not reflect an appropriate value for this premium brand, and did not meet our expectations. The lower value was largely due to the persistently weak financial performance of the yacht product category, which complicated and obscured the value of the remainder of Sea Ray.

"As the sale process neared conclusion, we started to evaluate other strategic options beyond our original plan to sell the Sea Ray business in its entirety," Schwabero continued. "Based on that re-assessment, we have concluded that our best opportunity to maximize value is to retain the Sea Ray brand and refocus the business on the sport boat and cruiser product portfolio. As part of the transformation of Sea Ray, we will discontinue sport yacht and yacht models and begin an orderly wind down of yacht production.

"These combined actions will create a revitalized Sea Ray that will benefit from continuing synergy with our broader marine portfolio -- and with targeted ongoing investment - we believe will offer increasingly attractive profitability and cash flow returns. We believe that this is the best solution to generate value for our dealers and shareholders now and in the future," Schwabero said.

"Sea Ray remains one of the most aspirational and premium recreational boat brands, and our sport boats and cruisers set the industry standard," said David Foulkes, president - Marine Consumer Solutions. "We will focus our resources on advancing our position in these segments, with an emphasis on the growing and evolving 24 - 40-foot categories. Moving forward, Sea Ray will continue to offer new products, features and services that leverage our technology and innovation initiatives aimed at enhancing the quality of the consumer boating experience."

Sea Ray will begin to wind down sport yacht and yacht production in the third quarter at its Sykes Creek and Palm Coast, Fla., facilities, involving the elimination of as many as 825 positions. Palm Coast is targeted for closure as soon as practical in 2018, while a portion of Sykes Creek will continue to operate for the foreseeable future to support customer service and warranty obligations, along with other operational requirements.

"We will maintain the capability to provide outstanding service and support to our dealers and installed base of all Sea Ray customers, consistent with the Sea Ray brand promise and history," Schwabero said. "We appreciate the dedication and commitment our employees and the communities that support our operations and will help them through this transition."

The expected impact on 2018 performance and long-term planning targets will be addressed as part of the Company's conference call today as well as the second quarter earnings call.

Going forward, Brunswick will report results of Sea Ray on a GAAP basis in continuing operations, rather than the previous classification as discontinued operations in recent financial reports. Sea Ray Sport Yacht and Yacht financial results will be excluded from the Company's as adjusted, non-GAAP results of continued operations to offer a clearer comparison to go-forward operations. In addition, the Company's as adjusted financial information will include the results of the Sea Ray Sport Boat and Cruiser business.

Conference call scheduled today

The Company will hold a conference call today about the Sea Ray announcement at 10 a.m. CDT June 25, 2018, hosted by Mark Schwabero, chairman and chief executive officer, William Metzger, senior vice president and chief financial officer, and Ryan Gwillim, vice president - investor relations.

Security analysts and investors wishing to participate via telephone should call 888-771-4371 (passcode: Brunswick). Callers outside of North America should call 847- 585-4405 (passcode: Brunswick) to be connected. These numbers can be accessed 15 minutes before the call begins, as well as during the call.

To listen via the Internet, go to ir.brunswick.com. Please go to the website at least 15 minutes before the call to register, download and install any needed audio software.

A replay of the conference call will be available through midnight EDT July 2, 2018, by calling 888-843-7419 or international dial 630-652-3042 (passcode: 4718 7022#). The replay also will be available at http://www.brunswick.com.

jimh
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Re: Brunswick to NOT Sell SEA RAY

Postby jimh » Wed Jun 27, 2018 8:26 am

Some further details of Brunswick's plans for Sea Ray:

The Florida plants and facilities will all be closed. The Palm Coast plant is expected to shut down first. The engineering facility at Merritt Island will close. The Sykes Creek plant will also eventually close, but for the immediate future will remain to handle customer service for Sea Ray yacht owners.

Sea Ray engineering which was located on Merritt Island, will be moving to Edgewater, home of Boston Whaler.

"In connection with the orderly wind down of activity in Sykes Creek and Palm Coast, the Merritt Island Sea Ray engineering facility will be consolidated with Boston Whaler engineering to form an industry-leading Brunswick Fiberglass Boat Technology Center, based in Edgewater," according to Daniel Kubera, a press spokesman for Brunswick.

This should re-unite former head of Boston Whaler engineering, Ron Berman, with his old boat brand. He left Whaler to become head of Sea Ray engineering about ten years ago.

The Sea Ray Tellico plant in Vonore, Tennessee will remain in operation. It was recently expanded and employs about 600 people.

frontier
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Re: Brunswick to NOT Sell SEA RAY

Postby frontier » Wed Jun 27, 2018 7:53 pm

Rearranging the deck chairs on the Titanic?

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Phil T
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Re: Brunswick to NOT Sell SEA RAY

Postby Phil T » Wed Jun 27, 2018 8:01 pm

With the introduction of high horsepower, the interest in large inboard boats has dried up.

I may have read of the idea of redesigning the hulls to accept the installation of outboards on the mid sized models rather than inboards.
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Jefecinco
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Re: Brunswick to NOT Sell SEA RAY

Postby Jefecinco » Thu Jun 28, 2018 8:24 am

The cruiser and sport boat lines have been largely powered with Mercruiser Stern Drives. That should make it relatively simple and inexpensive to redesign the hulls for larger high output outboard engines. Doing so will provide some extra below deck space and reduce production costs.

The problem with such conversions is the much higher cost per horsepower for outboard engines. Some savings could be realized by lower production costs. Value could be added by judicious use of the additional below deck space.

Adding cost to the SeaRay line would seem unwise at this time. It would be helpful if converting to outboard power would add enough value to offset any added cost, at least in the minds of buyers.
Butch

jimh
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Re: Brunswick to NOT Sell SEA RAY

Postby jimh » Thu Jun 28, 2018 9:52 am

In 2014 Brunswick developed their own V6 4.5-liter engine blocks for use in their Mercruiser sterndrive systems. Previously they were relying on automotive engine blocks which they converted or "marinized." I would expect that if use of sterndrive propulsion continues in some Sea Ray boat models, the Mercruiser engines will likely have blocks developed and manufactured by Brunswick. Because the sterndrive engines are now likely to be all-Mercury engines, just as their outboard engines are for the most part, the sterndrive engines should provide similar profit potential for bundling with Brunswick boat brands like Sea Ray.

Jefecinco
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Re: Brunswick to NOT Sell SEA RAY

Postby Jefecinco » Sat Jun 30, 2018 10:10 am

The concept of Mercruiser designing and manufacturing engines in-house to replace the marinized automotive engines currently used for inboard and sterndrive power is very interesting. I would be surprised if they don't outsource the early production engines. I believe Porsche did most of the design work on the Verado engine family.

Companies with a significant involvement in light weight, compact, high horsepower engine design and production would seem to be the go-to people for design and prototype production of a new Mercruiser engine line not associated with General Motors.

A new family could bring some very exciting products to boating although the expense would be quite high. If the new engines could be marketed to boat builders not owned by Brunswick that would help offset the development costs.

General Motors would probably be unaffected by the loss of the Mercruiser marine engine business, although the loss could lead to the cancellation of all GM marine engine production. Sales to Volvo and any other stern drive manufacturers are probably not worth the effort. If so, that too could generate added Mercruiser sales.
Butch