Brunswick Corp. is putting its Cabo and Hatteras brands up for sale

[administrator]

I thought I would go ahead and post this....



Brunswick Corporation : Brunswick Announces Plan To Exit Hatteras And CABO Brands




LAKE FOREST, Ill. Jan. 3, 2013 --- Brunswick Corporation (NYSE: BC) announced today that its board of directors has authorized the Company to seek a buyer for its Hatteras and CABO brands of motoryachts and sportfishing convertibles.

"This action reflects our decision to exit the sportfishing convertible category and to concentrate our resources in the yacht segment on our remaining brands, Sea Ray and Meridian Yachts. When completed, this action will also contribute to our goal of a break-even or better Boat Segment in 2013, even if the larger sterndrive/inboard fiberglass markets do not improve," said Brunswick Chairman and Chief Executive Officer Dustan E. McCoy.

"The current plan assumes that the eventual purchaser will retain both the physical plant and the talented workforce of Hatteras/CABO. During the sale process, which we seek to complete in an expeditious manner, Hatteras and CABO will maintain ongoing operations, and we will keep our employees and dealer network informed of our progress."

As a result of this decision, the Company expects to record charges in the range of $70 million to $80 million, a majority of which will be recorded in the fourth quarter of 2012.

Brunswick purchased Hatteras Yachts in 2001 and CABO in 2006. Both are based in New Bern, N.C.

 

[Artzco]

Sad. Stability needed now that Hatteras and Cabo production picking up. Hopefully a strong buyer will come along and maintain current products.

Now I will decide whether to keep my Brunswick stock. Hard to support Sea Ray over Hatteras.

 

[sandspur1966]

Really sad... Brunswick just never understood the high end semi-custom yacht market. They seem to just be interested in buying lines that they can then sell vertically in to from their motor and fixture businesses. A strategy that makes sense when selling unit numbers like sea ray and boston whaler but not when you sell just a few multi million dollar units.

Will be very interesting to see how much of a discount they sell the brand for off of their $80 million purchase price in 2001.

That is making the assumption that they find real buyer. I hope it ends up in a smaller entity that "gets it" but not so small like Post which really was an auction purchase of the fixtures and seems not to be a real turnaround.

Hopefully this ends up being good news for the brand and the new management understands what they own.

 

[Jasper]

This could be VERY good news, as long as the Hatteras and or Cabo buyer realise just what the Hatteras name means. Brunswick is a number cruncher, I know because I had a bit to do with the company in the late 1990's. What we need is a passionate buyer who knows this company is a part of what made the industry.
As long as it is not an Italian buyer, as in Ferretti (look what they did to Bertram) or Chinese, I think it is positive.
Just my 2c.

 

[jim rosenthal]

Who buys the two brands is maybe not as important as what they do with them after the sale. I hope they will leave them physically where they are, and concentrate on building high-quality modern boats in the plants they will acquire with the sale. I think the real question is who has enough money to do this and also understands the high-end boating business. I don't have a high opinion of Brunswick, but perhaps they deserve some credit for keeping the two brands alive through what has been a rather tough several years.

 

[saltshaker]

I think it will be a tough sell period. Not many buyers out there buying these things and I can't imagine there are many buyers for the companies that make them. It's amazing these two brands have survived the last few years given the number of units being sold. Hopefully the right buyer comes along and focuses on what makes the brand great and is able to grow on that. Most other brands that have been sold didn't fair so well.

 

[krush]

Nobody is going to buy Cabo or Hatt...except maybe the Chinese See also: bunch of airplane manufacturers such as Hawker Beechcraft (though the sale failed)

 

[Pascal]

The writing has been on the wall,ok make that the water, for a few years.
Just look at the boats you see everyday on the water and count how many new (under 5 years) you see

Right now at Atlantis, there are 4 large late Viking SF and one recent Bert. No Hatt... MY? Not a single Hatt either. The only newish Hatt MY i ve seen since leaving Mia almost 2 weeks ago has been a 2004 80', northland, docked next to us at Staniel. On the other hand I ve seen many ferrettis, Mutts, Lazzaras, horizons, etc.

How can the company which invented the mid size MY have lost its market to that point.

Marlow recently acquired the bankrupt company which includes Hunter, Silverton and another brand i forgot... Oh yeah, saw quite a few Marlows and Flemmings in the past few days...

 

[Pete]

Local New Bern news paper reports the layoff of 105 employees at Hatteras/Cabo also, 75 full time and 35 temporary. Brings total workforce to 440 from a peak of 1300+, if my memory serves me today.

My take is both the sale and the workforce reduction plans were on the shelf waiting to see how the taxes on the wealthy sorted out. Every potential Hatteras buyer just took a big tax hit personally, and their business likely just got nailed with Obamacare taxes/expenses. Bad times ahead for luxury item sales.

Pete

 

[Boatsb]

Brunswick did little damage to Hatteras. Irwin turned it into carvers big brother. Sadly I don't see a manor economic upturn in the next 4 years but who knows if people will the buy big ticket items after paying higher taxes to feel better.

 

[saltshaker]

They're still buying high dollar custom SF. Vikings sales aren't great but they're still building and selling their big SF at a pretty high price. Curious if high end boat sales were up last month. Manhattan saw a 40% spike in home sales in the last quarter of 2012. 42% increase for homes over $5 million, 44% for those over $10 million and a 47% spike in sales over $20 million just in the last month. Given the average price being just under $1.3 million, most buyers were looking to buy before the new higher tax rates kicked in.

 

[fissioneng]

I don't think the people in that tax bracket will feel it enough to change their minds about buying a boat. They would spend more in fuel in a year than their tax increase!

 

[dastahl]

I bet the tax increase will slow down the yacht sales as all the previous tax hikes have. No different this time. Ferretti did not do well buying Bertram. I bet it will be difficult to sell Hatt/Cabo. My old marina owner at Worton Creek MD bought everything left of Post for pennies.
I think it will be a tough sell.
Kinda sad no one can re-capture the brand we all respect so strongly. May be a private equity firm that knows brands has a boater or two on the board.
Skooch

 

[krush]

The is no upper middle class left that buys a 2-5mil boat...only super rich that buy 10-30+mil boat.

 

[sandspur1966]

While the contraction in the market was undeniable and the impact of current tax changes are not entirely knowable at this point... what is equally undeniable, as Pascal's post illustrates, is that whomever still IS buying, is no longer buying Hatterases.

That, in my opinion, is the legacy of the last two ownership groups. The fact that Marlow is growing and buying shipyards in Miami and Flemming seems to be holding on well I believe is a testament to the fact that traditional design with good craftsmanship is a timeless business model. I just cant help feeling that the duality of trying to blend tradition with chasing the Azimut and Searay markets was what tripped them up.

They invented the FRP motoryacht and have steadily lost share to the point of irrelevancy.

They invented the LRC concept and gave the market away.

They invented the battlewagon and until the current GT series really hadn't put an innovative boat out in decades... since the 65 anyway.

They invented the semi-custom large yacht trade and gave their concept away to the Lazzaras and Hargaves of the world.

And therein lies the rub. Lots of innovative concepts and no continuity in design, management or operations. Not to mention them forgoing vertical revenue streams that other manufacturers rely on in downturns like service and refit work. With the scale of the facility and institutional expertise intrinsically in place, they should, again in my opinion, be the single biggest and best shipyard between Annapolis and Miami and if they had been, other yards like Jarrett Bay may not have grown to the point of building yachts to steal market share when each unit sold could mean the difference between profit and loss. Hinckley is the perfect example of this. They were bought by Private Equity shops and over leveraged during robust sales years and if it were not for the service side of the business, would likely have ended up in a reorganization debacle.

Hopefully a well funded, small group of zealots buy the brand, distill it down to a manageable enterprise and then begin attracting innovators, like Jack Hargrave was, to start releasing products that people of means feel they MUST have.

If some Private Equity guys buy it, leverage it up to the hilt, pay themselves off handsomely and then use a fresh round of bank cash to continue to put out dyslexic concepts that are not either traditional nor innovative I fear for the brand's survival.

Herein endeth my sermon... sorry I'm just passionate about both yachts and American manufacturing and it irks the heck out of me to see all these asian-built boats bobbing around our shores.

 

[Pascal]

I m still at Atlantis, provisioning for a ten day charter to the exumas and 2 Hatts MY came in today... So at least there are 2 late models Hatt in here... A 56 and an 80

Not bad looking boats but they don't stand out with special features. Heck they are the only boats here with teak less swim platforms... They also have the smallest aft decks, very cramped for boats that size especially the 80. After 20 years of offering great aft decks, why did Hatteras forget that this where people spend the most time during the day!!

The Ferretis and Lazzaras that are docked nearby both have huge fold down transoms creating a ton of spaces to hang around near the water... 8 to 10' deep vs 2 to 3' on the new Hatts!

 

[yachtbrokerguy]

Who ever buys the companies will have to change the dealer method of selling boats. Marlow which has been mentioned a lot in this thread sells direct, same as Cheoy Lee, Nordavn, Ocean Alexander, Lazzarra, Ferretti and others.
There might be a Hatteras factory direct sales office in Florida at first with later ones in the North East and California.

 

[sandspur1966]

I think I read somewhere that Marlow, in addition to buying the Merrill yard out of bankruptcy has also bought Mainship and Hunter sailboats.

Will be interesting to see what they do about those lines and how they sell them.

 

[krush]

I see no purpose for hatteras even having dealers. Back when they had smaller boats and produced higher numbers, dealers may have been useful. But the low volume high $$$ boats sold now, a dealer is merely an added middle man that drives up the cost.

 

[Diver Down]

Saw this piece in today's newspaper (Norfolk area). Old news to this group, but still disturbing.

The Associated Press
© January 21, 2013
NEW BERN, N.C.

Another 40 employees at the Hatteras and CABO Yachts plant in New Bern are losing their jobs.

The Sun Journal of New Bern reports that the company owned by Brunswick Corp. of Lake Forest, Ill., reduced its force by 105 workers on Jan. 3 and announced plans to sell the Hatteras and CABO Yachts brands in its Marine Division.

The two layoffs mean about 390 are currently employed at what was once Craven County's largest private employer with about 1,400.