Tommys vs Malibu

[BlindSquirrel]

25 minutes ago, MikeR397 said:

what other industry routinely sells at 20-30% off? Is this to make people think they are getting a “deal?”

Lots of them. Furniture, clothing, anything sold on tv to name a few. Whatever it takes for people to feel like they are getting a great deal they can’t pass up. Here in town, Nebraska furniture mart changed the verbiage from MSRP to SRP so they can have full control of the “great deals” they give. 

Edited April 28 by BlindSquirrel

[The Hulk]

Isn't Khols the best at this! Haha

[Bozboat]

4 hours ago, DAI said:

I wouldn’t consider <0.1% of total outstanding loans to be significant, or ~3.5% of what they have on their B/S for loan losses.  But I’m not in the banking industry, so I could be wrong.  Either way, I would not expect the Tommy’s situation to cause the bank to go look for a bail out from Uncle Sam (which was initially suggested as a potential).

I didn’t mention “bailout”, my thought is that bankers work toward quarterly reports and annual numbers much like everyone else. If the boat depression is significant statistically they will be more active than if it wasn’t significant. Look at the call report Executive Summary 5 quarter trends.
Or, if you want to take a deep dive, pull up the 2023 UBPR (uniform banking performance report) for M&T. 
 

Link to FDIC reports

 

Edited April 28 by Bozboat

[DAI]

5 hours ago, Bozboat said:

I didn’t mention “bailout”, my thought is that bankers work toward quarterly reports and annual numbers much like everyone else. If the boat depression is significant statistically they will be more active than if it wasn’t significant. Look at the call report Executive Summary 5 quarter trends.
Or, if you want to take a deep dive, pull up the 2023 UBPR (uniform banking performance report) for M&T. 
 

Link to FDIC reports

 

Sorry, was referencing Hulks comment to a bailout. 

[The Hulk]

I said they’re fine… and “IF” they need bailout then your tax dollars will cover it. Frankly Their larger issue will possibly be with amount of CRE and not this silly boat ordeal.

 

Edited April 29 by The Hulk

[BLSousa]

On 4/24/2024 at 2:31 PM, DAI said:

I wonder if their storage business is in a separate business entity.

I assume so. They hold each of their California dealerships under different entities, i.e Tommy’s California Fresno, LLC; Tommy’s Stockton, LLC; etc. 

[BLSousa]

I really feel for the employees of Tommy’s dealerships! They didn’t roll the dice on the chances of riches but are still left caught up in this mess of uncertainty as if they did. There are a lot of real, hard working, loyal people who are sitting at home this evening, not knowing what to do to feed themselves or their families in the near future. 

Uncertainty is the hardest thing to face. I pray for their comfort and peace during this time of uncertainty. 

 

[bcoppess23]

23 hours ago, PNWoke said:

Is there any chance the US gov bails out M&T then takes all the Bu’s and sends them to Zelensky’s war effort? A fleet of militarized Bu’s would probably be money well spent compared to the rest of the war effort so far 🤣.

I identify as a tank

 

[JeffK]

18 hours ago, MikeR397 said:

This industry msrp pricing is just plain stupid. 30% off msrp deals as standard, why? Just reduce sticker by 20% and give another 0-5% off like a luxury car dealer does in general, 8% if it’s old stock. 

Because everyone nowadays has to feel like they are absolutely taking advantage of someone. The idea of a win-win situation is all but dead. It just sounds so much better when someone can tell their buddy it was worth $200, but I got them down to $140K. This process is heavily driven by consumer and industry behaviors over the years.

[COOP]

20 hours ago, MikeR397 said:

This industry msrp pricing is just plain stupid. 30% off msrp deals as standard, why? Just reduce sticker by 20% and give another 0-5% off like a luxury car dealer does in general, 8% if it’s old stock. 
 

what other industry routinely sells at 20-30% off? Is this to make people think they are getting a “deal?”

It gives the product a perceived value. Even though that value may not be true. 

Small cheap watch brands do this (think Invicta and others), clothing (actually clothing is WAY high) and jewelry, people that dont know (new to the market) think they are getting a great deal. But in reality they basically bought at what is really closer to the actual value (the real value, which is still high). So did they really get a deal? Its all a shell game. 

I cant imagine Malibu would buy the boats back. And even if they did, they wouldnt sell them at any type of discount. We bought demo boats from them, some with over 500hrs, but got no deal. And some didnt even have warranty on them. Malibu is only worried about their stock.

Market share aside, the current dealers will get hurt by this. 

But Im curious about Tommy allegations. They must have some damning evidence to spend money on the lawyers to do this. If true, its securities fraud. People go to jail for that. Is this the reason the CFO bailed? Is this why Jack left? Could Jack go to jail? If true someone will pay fines as well. Its crazy.

 

 

 

 

Edited April 29 by COOP

[ElleW]

I’m a lawyer that practices in this area (I don’t represent either company and this isn’t legal advice).  My read on this is that it is serious trouble for Tommy’s, and a headache for Malibu but not an existential threat.   

If the threats Tommy is making against Malibu are true, that would be securities fraud— but I doubt they are, because Malibu’s auditors will have checked for exactly this possibility earlier this year and gotten certifications from Tommy’s this isn’t happening.   The fact that Malibu is still filing annual financial reports, verified by their auditors, tells me the allegations are likely false.  

That said, if I had a boat at Tommy’s,  I would pull it.  Immediately.  Mid service if I had to, because if the company goes bankrupt the boats are likely going to get frozen there for at least the summer. You may be okay, but it’s a very real risk.

[JeffK]

2 hours ago, ElleW said:

That said, if I had a boat at Tommy’s,  I would pull it.  Immediately.

I agree with this. I'd also caution everyone to think long and hard about buying a boat at fire sale prices. It is going to hurt your local dealers and Malibu, which in turn hurts you too. I'd like to suggest in advance to the Admin's that we lock and trash all of the future threads bashing dealers and Malibu for lack of service and warranty support if you bought one this way. You knew what you were getting into. It has been said lots on here. This mess is just going to hurt everyone. 

3 hours ago, COOP said:

I cant imagine Malibu would buy the boats back.

Coop - Many of the floor plan agreements have buy-back clauses in them just for this reason. So I do know that Malibu does in some cases buy them back. With this being more of a local bank situation, who knows if this one had that in there. 

At the end of the day, floor planning is pretty simple. Dealer orders the boat--> Floor plan is locked in for slot and approved-->boat is built-->floor plan company pays for the boat--> boat leaves the factory and is delivered-->Dealer pays interest on the boat until sold--> Buyer pays dealership-->Dealership pays floor plan provider-->Buyer has clear title

Many floor plan companies send reps to check on inventory on the regular. This bank should have been keeping a closer eye on the lots and a dealer never should have been holding back or spending money that was paid on a customer boat and intended to pay the floor plan off.

[dizzygti]

19 minutes ago, JeffK said:

I agree with this. I'd also caution everyone to think long and hard about buying a boat at fire sale prices. It is going to hurt your local dealers and Malibu, which in turn hurts you too. I'd like to suggest in advance to the Admin's that we lock and trash all of the future threads bashing dealers and Malibu for lack of service and warranty support if you bought one this way. You knew what you were getting into. It has been said lots on here. This mess is just going to hurt everyone. 

Do Malibu dealers lose money on warranty work?   I don't understand this mentality that a dealership is going to deny warranty work because a boat wasn't bought there.   I get not prioritizing shop work that wasn't purchased there over existing/local customers, but can they just deny warranty work even though Malibu would authorize it?    What if you move after buying the boat to a different dealer's territory?   You're out of luck?   Why is purchasing considered a requirement to getting warranty work done at the same dealer?  I genuinely don't understand this line of thinking.   Sure, they don't want you buying from a different dealer to undercut them and then they are expected them to bend over backwards for you on the service side, but if they make money on warranty work, why do they care where you bought the boat?  

[JeffK]

5 minutes ago, dizzygti said:

Do Malibu dealers lose money on warranty work?   

I mentioned something about this earlier in the thread. They can....   

And I'm not saying that anyone would refuse the work, but they will definitely prioritize their customers first. And if I'm a dealer, I'd be making sure every ounce of warranty work was preapproved by Malibu before I turned the first bolt. That could take some time. This industry is not like the car industry at all. 

These are not everyday necessity items. These are luxury and high performance items. We just have to be sensitive of the implications of something like what is going on. Having been on both sides of this, I completely feel for the dealers that are going to bear the burden of the outcomes here. Many of those dealers have worked lots of hard, honest hours for many years to get to where they are. Again, this just isn't good for anyone.

[oldjeep]

I'm thinking, maybe stop buying if the quality is so low that warranty work is even a consideration.

[Slayer]

27 minutes ago, oldjeep said:

I'm thinking, maybe stop buying if the quality is so low that warranty work is even a consideration.

This is an issue not exclusive to Malibu.  I know people with Tige, MC, and Nautique, all of whom have had warranty issues.  My MC buddy has had his hull split 3 times for 2 failed ballast tanks and a failed fuel tank, all under warranty.

[rennis]

4 hours ago, ElleW said:

If the threats Tommy is making against Malibu are true, that would be securities fraud— but I doubt they are, because Malibu’s auditors will have checked for exactly this possibility earlier this year and gotten certifications from Tommy’s this isn’t happening.   The fact that Malibu is still filing annual financial reports, verified by their auditors, tells me the allegations are likely false.  

Malibu's most recently issued independent audit is for June 30, 2023, with a report date of 8/29/23. I suspect KPMG's audit procedures aren't protecting MBUU much in this scenario unless they performed interim audit procedures for the 6/30/24 audit on Tommy's as a major customer.  Even if they were I doubt it has any bearing on this situation.  With the departure of MBUUs CFO and Springer earlier this year I don't think we can infer much about the business dealings between MBUU and Tommy's in the last several months from the past audit.

Also don't forget KPMG issued a clean audit opinion last year for Silicon Valley Bank.  Roughly negative 3 hours before the bank was seized by the FDIC. 

[dizzygti]

1 hour ago, JeffK said:

I mentioned something about this earlier in the thread. They can....   

And I'm not saying that anyone would refuse the work, but they will definitely prioritize their customers first. And if I'm a dealer, I'd be making sure every ounce of warranty work was preapproved by Malibu before I turned the first bolt. That could take some time. This industry is not like the car industry at all. 

These are not everyday necessity items. These are luxury and high performance items. 

Yes, they are luxury items, it doesn't mean you just throw money at them and accept whatever the dealers/Malibu is forcing on you.   I still don't understand losing money on a warranty repair.   

1 hour ago, oldjeep said:

I'm thinking, maybe stop buying if the quality is so low that warranty work is even a consideration.

That will be the outcome if they don't stand behind the product.   As a dealer would you want to sell a product that will have issues and that you'll lose money on fixing?   I'll ask again like in my original post: why is warranty work tied to the purchase in any way?    

[NWBU]

4 hours ago, rennis said:

I suspect KPMG's audit procedures aren't protecting MBUU much in this scenario unless they performed interim audit procedures for the 6/30/24 audit on Tommy's as a major customer.  Even if they were I doubt it has any bearing on this situation.

Yeah, the FS audit would provide no assurance for this situation. Even if it was audited by an actual Big 3 firm.

[The Hulk]

8 hours ago, JeffK said:

I agree with this. I'd also caution everyone to think long and hard about buying a boat at fire sale prices. It is going to hurt your local dealers and Malibu, which in turn hurts you too. I'd like to suggest in advance to the Admin's that we lock and trash all of the future threads bashing dealers and Malibu for lack of service and warranty support if you bought one this way. You knew what you were getting into. It has been said lots on here. This mess is just going to hurt everyone. 

Coop - Many of the floor plan agreements have buy-back clauses in them just for this reason. So I do know that Malibu does in some cases buy them back. With this being more of a local bank situation, who knows if this one had that in there. 

At the end of the day, floor planning is pretty simple. Dealer orders the boat--> Floor plan is locked in for slot and approved-->boat is built-->floor plan company pays for the boat--> boat leaves the factory and is delivered-->Dealer pays interest on the boat until sold--> Buyer pays dealership-->Dealership pays floor plan provider-->Buyer has clear title

Many floor plan companies send reps to check on inventory on the regular. This bank should have been keeping a closer eye on the lots and a dealer never should have been holding back or spending money that was paid on a customer boat and intended to pay the floor plan off.

I believe there are laws such as the Magnuson Moss Warranty Act to protect consumers from this.. 

Still doesn't stop a angry dealership from taking their sweet repair time during our long 12wk northern season to get you fixed up..

I could be wrong but I just can't pull myself to believe that Malibu forced Tommy's to take so much inventory? Someone at Tommy's had to sign off and more than one person was involved. It took someone to reach out to M&T to get a 3X+ increase on their line.. I'm MOST shocked it got approved after everyone especially bankers knew COVID boom was already dwindling fast.. 

I can believe Malibu was great at pitching to their dealerships to take more boats and providing more incentives to get them to do so but it's still the dealerships choice. I can believe dealerships buying into the sales pitch that things are still awesome when they weren't.. I can believe dealerships all had hopes of rates dropping like the fed said.. I CAN'T believe how M&T approved a 3X increase when the market was already tanking!

Well...unless you made commission for signing off on it.. 😂

[JeffK]

9 hours ago, The Hulk said:

I could be wrong but I just can't pull myself to believe that Malibu forced Tommy's to take so much inventory?

I agree with this. I think you can push them and ask them, but at the end of the day, if you don't place the orders or sign off on the boats, they can't be delivered. 

[cowwboy]

16 hours ago, dizzygti said:

Yes, they are luxury items, it doesn't mean you just throw money at them and accept whatever the dealers/Malibu is forcing on you.   I still don't understand losing money on a warranty repair.   

Just from talking with my local marine tech and auto tech friends. 
A lot of the warranty labor book hours are not representative of the hours it actually takes to do the repair.
The car industry does this also.
Do a quick google / youtube search and you will see lots of techs expressing their frustration with unrealistic labor book rates on warranty work.
Let alone the factory deciding to not approve the repair. I know Ford had huge issues with it on the 6.0 and 6.4 powerstroke. 

 

So yes, it is likely they loose money on warranty work. Especially when the manufacturer can decide what the book hr is for a repair and there is no independent auditors.  

[23LSVOwner]

22 hours ago, COOP said:

But Im curious about Tommy allegations. They must have some damning evidence to spend money on the lawyers to do this. If true, its securities fraud. People go to jail for that. Is this the reason the CFO bailed? Is this why Jack left? Could Jack go to jail? If true someone will pay fines as well. Its crazy.

 

 

 

 

Looks to me like Tommy's just trying to throw a turd out there to muddy the waters.

[The Hulk]

Edge marine in portage Mi I heard had a fire . Not sure how many boats or what brands or extent of damage yet.. could be a help to M&T/Tommy’s. With some incoming insurance $

[Hemmy]

1 hour ago, The Hulk said:

Edge marine in portage Mi I heard had a fire . Not sure how many boats or what brands or extent of damage yet.. could be a help to M&T/Tommy’s. With some incoming insurance $

@MalibuNation might have some insight on that.  They are a small MB and Viaggio pontoon boat dealer.