MBUU by the numbers

[The Hulk]

I would guess/ imagine they used more local banks in California to finance those CA dealerships acquisitions? Possible local banks near the other locations? Maybe even more loans other than M&T possibly?

Just doesn't make sense how the staggering loan increase got approved....banks have disclosure rules on companies! Well they typically do....

[Nick55]

There are banks that specialize in high risk lending, especially in the Silicon Valley area. That likely explains the >13% interest. And quite honestly, if they were financed in 21-22, even early 23, it’s possible that everyone thought it was still gangbusters…. Though I really have concerns about underwriters that didn’t see the writing on the wall regarding economic slowdown. 

[Brandonloos21]

28 minutes ago, The Hulk said:

I would guess/ imagine they used more local banks in California to finance those CA dealerships acquisitions? Possible local banks near the other locations? Maybe even more loans other than M&T possibly?

Just doesn't make sense how the staggering loan increase got approved....banks have disclosure rules on companies! Well they typically do....

Silicon Valley Bank? 

[The Hulk]

On a serious note Malibu made $ on these boats once. What's better than once? TWICE! Well kinda but IMO they don't have a choice

Malibu should work out a deal with M&T to buy back these boats at MAJOR discount and Quickly, then sell back again protecting the market pricing. I don't see how Malibu can let these get dumped without killing other dealers leading to prices and margins getting cut further when financing expenses and margin across the board are getting slim for all parties..

Depending on how long this last these boats could be caught up in limbo for a long time sitting outside as well getting weathered, water, mold etc as I'm sure Tommys is probably not allocating labor anymore to keep up on LOT duties now since they kinda don't own them anymore. you know like leaving covers half off or not on and just assuming drain plugs are out while other cavities fill and mold.

On another note it's NOT going to be easy in this market to just go and pick up a bunch of dealers that want to take on expensive boats that don’t already have a lot full of other brand expensive boats.. 

Maybe go the Tesla route...

 

[IXFE]

On 4/16/2024 at 9:08 PM, 85 Barefoot said:

Touché.  Floor plans are unique as to their terms obviously. Not just a simple line of credit collateralized by individual units. 

That said some googling tonight doesn’t seem 5% is that off base?  Is it?  Of course,  big difference between googling and signature lines.  Enlighten us on a reasonable rate charged for a unit sold in a reasonable time 

I don’t know much about how floor plans are priced. But I do know this… 

the current fed funds rate is 5.33% while SOFR is 5.31%. Those are the banks’ overnight “wholesale” rates.

Commercial lending is typically quoted at SORR + X%.  So a 5% rate on a loan of any kind would mean the bank is literally giving $ away.

That’s why I said… if you know of such a bank, please DM me their contact info. 

Even your 7.5% number is not realistic given experiences I have with large commercial lending (which I won’t elaborate on). 

Trust me, these guys are paying double digits, and that’s not all that uncommon, especially considering their credit rating (which I’m sure wasn’t super attractive even before this melt down). 

The 13.5% quoted above is perhaps higher than I would have guessed, but also not surprising. 

[The Hulk]

Excellent commercial credit has been hovering 8.3-8.8% for a while and set to raise.

I was told buy an RV they have been double digits for a while on their lot. Not sure about boats.

banks are scrounging as hard as possible for 3% margin for a while and nobody is borrowing if they can help it.

Oddly I have never had so many marine dealers in our sector call and ask for a few more days to pay bills so they could get AR in and not have to borrow or borrow more on their line for only a few days or a week.

smoker craft employee said they are basically dead. Their winter shut down /break went longer than expect.  They anticipated demand coming back a bit come late winter early spring but it’s not there and things are essentially dead and now layoff’s. 
 

Also look no further than Elkhart IN if you want to know how RV and boating is going… …it ain’t good… layoffs everywhere!
 

If pontoon sector is getting hit harder now that means wake boats are getting destroyed.

And maaaan if I see one more idiotic report about sales $ amount YOY comparison instead of YOY units to compare demand to past years!! 
 

“our cost doubled and we doubled our prices but at least our top line is on par with the past! We’re doing great!” 

[IXFE]

4 hours ago, The Hulk said:

Excellent commercial credit has been hovering 8.3-8.8% for a while and set to raise.

Correct, and why would anybody believe Tommy’s has/had “excellent” credit?

[85 Barefoot]

5 minutes ago, IXFE said:

Correct, and why would anybody believe Tommy’s has/had “excellent” credit?

Well, if the reporting is to be believed, and the floor plan was $20M previous to more recent events, and were moving 1/3 of Malibu’s units, lets assume a few hundred Million $, I’d say that their credit would be pretty appealing?  But what do I know.  

[IXFE]

29 minutes ago, 85 Barefoot said:

Well, if the reporting is to be believed, and the floor plan was $20M previous to more recent events, and were moving 1/3 of Malibu’s units, lets assume a few hundred Million $, I’d say that their credit would be pretty appealing?  But what do I know.  

For sure I don’t know specifics on Tommy’s situation. How could any of us… private company and whatnot. But I do have quite a bit of experience both raising large amounts of commercial debt and managing debt on corporate balance sheets, servicing that debt, refinancing / re-pricing that debt, credit ratings, interest rates, etc. I have loads of respect for you, 85 (always have, I think you know that) so take this as simply me sharing some of my experience and principles I’ve learned (and am now applying here, a close but not exactly identical set of circumstances)… 

In my experience, commercial credit isn’t driven by volume or wow factor. It’s driven by RISK. That is all the banks really care about. “Am I going to get my money back?” is what they care about, not an impressive or inflated growth rate.

People make this mistake all the time when they do a large commercial debt raise… “I’m gonna show these guys how awesome my growth rate is and how much market share I have.”  They fail to understand their audience; lenders are not equity investors. Growth is not what banks care about. They would rather see SLOW, steady top-line growth and LARGE free cash flow that is BANKABLE and not susceptible to the way the winds blow. “Hockey stick” top line growth actually scares them. 

I simply don’t believe Tommy’s has steady, consistent cash flow (like 20% - 30% demonstrated over years). I also think the bank knows this industry can and does flip on a dime; they have long memories. And think about the pitch… “Uh, we need to increase our credit line because Malibu wants us to sit on more inventory.” It takes the bank about 30 seconds to do the math and assess the risk of that increased inventory turning stale. 

I also believe that if they just recently raised their credit limit, it wasn’t likely done for free (it never is cuz the leverage ratio changes and not in a good way). All that is factored into the bank’s risk model. And as Tommy’s asks for more it’s a simple calculation… what is the implied debt to earnings/fcf ratio? What is the risk profile of the industry? The higher those variables go … well, so goes the juice! 

100% speculation on my part, but I think it’s founded on sound lending experience/principles. For all I know you own a bank that floors ATV or something and I’m way out of my depth. lol. 

Edited April 19 by IXFE

[85 Barefoot]

56 minutes ago, IXFE said:

For sure I don’t know specifics on Tommy’s situation. How could any of us… private company and whatnot. But I do have quite a bit of experience both raising large amounts of commercial debt and managing debt on corporate balance sheets, servicing that debt, refinancing / re-pricing that debt, credit ratings, interest rates, etc. I have loads of respect for you, 85 (always have, I think you know that) so take this as simply me sharing some of my experience and principles I’ve learned (and am now applying here, a close but not exactly identical set of circumstances)… 

In my experience, commercial credit isn’t driven by volume or wow factor. It’s driven by RISK. That is all the banks really care about. “Am I going to get my money back?” is what they care about, not an impressive or inflated growth rate.

People make this mistake all the time when they do a large commercial debt raise… “I’m gonna show these guys how awesome my growth rate is and how much market share I have.”  They fail to understand their audience; lenders are not equity investors. Growth is not what banks care about. They would rather see SLOW, steady top-line growth and LARGE free cash flow that is BANKABLE and not susceptible to the way the winds blow. “Hockey stick” top line growth actually scares them. 

I simply don’t believe Tommy’s has steady, consistent cash flow (like 20% - 30% demonstrated over years). I also think the bank knows this industry can and does flip on a dime; they have long memories. And think about the pitch… “Uh, we need to increase our credit line because Malibu wants us to sit on more inventory.” It takes the bank about 30 seconds to do the math and assess the risk of that increased inventory turning stale. 

I also believe that if they just recently raised their credit limit, it wasn’t likely done for free (it never is cuz the leverage ratio changes and not in a good way). All that is factored into the bank’s risk model. And as Tommy’s asks for more it’s a simple calculation… what is the implied debt to earnings/fcf ratio? What is the risk profile of the industry? The higher those variables go … well, so goes the juice! 

100% speculation on my part, but I think it’s founded on sound lending experience/principles. For all I know you own a bank that floors ATV or something and I’m way out of my depth. lol. 

I understand (and agree) completely.  I was just pointing out a collateralized $20M floor plan to a 17 store dealership chain didn’t seem unreasonably risky.  When that goes well over 9 figures, I agree a lot starts changing.  

EDIT:  And thx for the compliment!  Same here.

Edited April 19 by 85 Barefoot

[MJHSupra]

On 4/16/2024 at 9:33 PM, DAI said:

 

I believe it hit $18.73 on 4/3/2020 (I believe that’s a close number and not intraday; but I don’t use that app that often so not 100% sure)

 

I agree, it looks somewhat like this . . . . really LOW.   Bad day if you owned corp stock.

*********************************

Date - Apr 03, 2020

Open - 19.76

High - 20.46

Low - 18.02

Close - 18.73

*Adj Close- 18.73

**Volume - 490,000

*********************************

Date - Apr 06, 2020

Open - 18.84

High - 20.87

Low - 18.81

Close - 20.26

*Adj Close- 20.26

**Volume - 512,800

 

 

[NorCalSurfer]

On 4/17/2024 at 3:51 PM, The Hulk said:

I would guess/ imagine they used more local banks in California to finance those CA dealerships acquisitions? Possible local banks near the other locations? Maybe even more loans other than M&T possibly?

Just doesn't make sense how the staggering loan increase got approved....banks have disclosure rules on companies! Well they typically do....

From a real estate standpoint, Tommy’s is leasing the Rancho Cordova and Stockton buildings from the previous owner, Larson (Marine). 
 

I have a feeling Mr Larson will be owning these two dealerships again for pennies on the dollar. 

[smuurph84]

I’m not a market guy , but is this a big enough problem that people would potentially short Malibu stock?  Just putting myself and small business in a similar situation. Losing that much revenue and then to be sued . If Tommy’s wins what could that potentially do to bu ??  
 

Full transparency This might be a laughable post . Again I’m clueless on markets stocks and publicly traded companies . 

[85 Barefoot]

https://stockhouse.com/news/press-releases/2024/05/02/malibu-boats-inc-announces-third-quarter-fiscal-2024-results

@IXFE and @The Hulk   This looks bad.  Whoa

[MJHSupra]

Revenue missed, but EPS beat estimates this quarter.  Stock is down a little on the open today. 

Predicted Q4 and Year-End Q4 for revenue to be down 40%.

Overall the company reported uncertain economic conditions (interest rates) will remain and focus will be on dealer inventory.  Much will depend on how summer sales decreases inventory and that effects production numbers and factory staffing.

Sounded like 2025 will be flat sales.

[Five Cent Worth]

1 hour ago, 85 Barefoot said:

https://stockhouse.com/news/press-releases/2024/05/02/malibu-boats-inc-announces-third-quarter-fiscal-2024-results

@IXFE and @The Hulk   This looks bad.  Whoa

https://investors.mastercraft.com/static-files/24cae00b-634c-45fc-ae5c-4621e7d08cc1

Bad for everyone....  (this is Q2, not Q3)

Remember, the street values how you do vs your peers....

[CaptainMorgan]

6 minutes ago, Five Cent Worth said:

https://investors.mastercraft.com/static-files/24cae00b-634c-45fc-ae5c-4621e7d08cc1

Bad for everyone....  (this is Q2, not Q3)

Remember, the street values how you do vs your peers....

wow.  I think its telling when MC Q2 describe "Better-than-Expected Financial Results" to include "Net sales down 37.5%" and "Diluted Adjusted Net Income down 69.2%"

I used to joke that Flat is the new Up, but now Flat would be a miracle

[rennis]

and not a peep about the lawsuit w/ Tommy's.  that's probably predictable but also funny to me.  I didn't listen to the call but hoping someone asked about it.  

[85 Barefoot]

46 minutes ago, rennis said:

and not a peep about the lawsuit w/ Tommy's.  that's probably predictable but also funny to me.  I didn't listen to the call but hoping someone asked about it.  

There was a mention, but no comment other than working successfully to bring alternatives online.  Paraphrasing.  

[The Hulk]

I'd say current lift sales are as a market whole are below 2018-2019 levels and continuing to fall... Budget mfgs doing significantly better than higher end mfgs on unit sold qty. Most mfgs are complaining they have more employee head counts with less $sales amounts and less unit qtys sold. Basically it takes more people to do the same and less

Vast Majority of lift sales are tritooon bunk setups if that means anything.. 

[Sparky450]

12 hours ago, The Hulk said:

Basically it takes more people to do the same and less

Welcome to post Covid America!!!

Nobody wants to do there job
I see this across all industries.