BRUNSWICK ENDS SEA RAY SALE PROCESS – DISCONTINUES YACHT MODELS
June 26, 2018
In an investor relations call June 25th, 2018, Brunswick Corporation announced that the Sea Ray boat brand sale process has been ended and that the company will restructure Sea Ray to focus on growth opportunities in the sport boat and cruiser lines while discontinuing the Sea Ray sport yacht and yacht models (including the Meridian brand) starting in third quarter 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 was addressed as part of the Company’s conference call and in fact the decision today is not expected to result in EPS guidance changes or capital strategy.
Additionally, Schwabero mentioned that the company will continue to look at suitable boat company acquisitions with an emphasis on outboard sales and the related future P&A sales.
The existing and probably substantial used boat market seemed to be significant for Sea Ray and it was noted that their new outboard models like the SLX line have no comparable used market competition making these models more attractive to consumers.
Boating Industry Canada News Week found it interesting that the new Canadian and EU tariffs were not mentioned in either the Brunswick call or in the following Q&A session.
For those who are interested, 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 www.brunswick.com.
