Big North American boat makers floating in profits

US-based wake and ski boat maker Malibu has just released its financial results for the last quarter, and it’s as though someone loaded a shotgun shell with the word “record” and fired it at close range into Malibu’s balance sheet.

Over the second quarter to December last year, and despite the global pandemic, supply line interruptions and more, Malibu produced a record 2073 boats – including at its Australian factory at Albury, NSW – over three months, a 19.0 per cent increase.

That record number of boats across brands including Malibu, Axis, Cobalt, Pursuit and Maverick translated to record revenue from sales, which for the quarter added $US263.9 million ($A369 million) to Malibu’s bank account, a 34.9 per cent increase.

Gross profit – the money Malibu makes from every boat sold before it pays taxes and loan repayments – amounted to $US63.6 million, a 28.4 per cent rise, which translated to $US48.1 million after all the bills were settled.

If you own some of Malibu’s 21.7million shares – and if you have superannuation, there’s a chance you’ll own some by proxy – once the dividend is paid you’ll be $US1.50 a share richer for the experience, itself a lump of 23.0 per cent.

A single share in Malibu will cost you around $A100 to buy.

Over at Brunswick Corp, the owner of brands including Boston Whaler and Sea Ray, Mercury and MerCruiser, Lowrance and CZone, it was another long list of record-making wins.

Its fourth-quarter result showed net sales had risen by 23.2 per cent to $US1.43 billion, earning $US121 million after the costs of building everything it makes were taken out of the equation.

Leading the charge for it was a big growth in its Mercury engine business. It grew 12 per cent for the three-month period to December, with most of the heat coming from high-horsepower customers who bought way more 200hp-plus outboard engines than Brunswick had anticipated.

Brunswick admitted it had achieved its result despite having struggled with “continued supply chain disruption, cost inflation, and labour constraints at our suppliers and some of our own facilities during the quarter”.

Its annual dividend to shareholders is likely to be around $US1.34 a share. Brunswick’s stock is currently worth around $A130 a share.

Meanwhile, MasterCraft Boat Holdings, the parent company of makes including ski and wake boat brands MasterCraft and NauticStar, high-end sub-brand Aviara and pontoon boat specialist Crest, notched up its most profitable second quarter ever.

Sales hit $US159.5 million, up 34.4 per cent while income was $US15.4 million, up 23.2 per cent, largely because it sold 20 per cent more boats over the three-month period at full-blown retail prices – no discounts for anyone.

The only dampener on the results was the fallout from the COVID-19 pandemic, which hit MasterCraft’s suppliers providing the bits it needed to build its boats.

MasterCraft shares are currently around $A40 each. Unfortunately, the boat-maker does not pay any dividends, so you’ll have to rely on its share price climbing in value via the company's share buyback program.

Telwater is Australia’s largest boat builder, responsible for around three in every five new boats sold in Australia each year. Last year, Canadian power sports specialist BRP paid $A27.2 million to pick up the last 20 per cent of Telwater – the maker of Stacer, Savage, Quintrex and Yellowfin Plate boats – it didn’t own.

BRP is listed on the Toronto stock exchange, and its most recent third-quarter results don’t show as rosy a result as its US rivals. That’s mainly due to the coronavirus sparking a severe shortage of the parts it needed to build its products, which include Sea-Doo jet skis, Ski-Doo snowmobiles, side-by-side all-terrain vehicles, and three-wheeled and quad bikes, not to mention the odd alloy pontoon boat or tinnie.

Telwater’s owner earned $CAN1.59 billion ($A1.75 billion) in its third quarter, although this was a 5.2 per cent slump compared with the same three-month period to December in the previous financial year. You need to weigh that up against earnings in the year to date, though, which bump to $CAN5.3 billion, up 28.1 per cent.

Also keep in mind that BRP is still paying for shelving its Evinrude outboard engine business in spectacular fashion.

BRP lumps Telwater’s numbers in with its North America-based Alumacraft alloy boat and Manitou pontoon boat business, so it’s difficult to gauge just how much Australia contributes to the business’s bottom line. But overall BRP says its marine division alone should be worth around $CAN420 million this financial year, an up to 23 per cent rise on last year’s result.

BRP’s shares are worth around $A110 each if you can grab any. The dividend is likely to be around the $CAN0.50 mark, a far cry from the rewards handed out by the US boat brands.

A caveat, though: Boat-making is a fickle business. Just as their fortunes can go up, big hits such as the 2008-09 global credit crunch can throw boat makers straight on the rocks. Navigate these waters carefully.