Tommys vs Malibu

[Slayer]

1 hour ago, Hemmy said:

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

If memory serves me correctly, they are also a former Malibu dealer.

[85 Barefoot]

4 hours ago, JeffK said:

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. 

Didn’t I read that their annual dealers’ agreement was not renewed?  If not, seems like there was some leverage for strongly encouraging a particular unit commitment?

earnings call Thursday am.  Will be interesting.  

[RyanB]

If Malibu and Tommy’s have officially parted ways, why is Tommy’s still using Malibu and Axis logs on their social media?  The Malibu website still lists them as a delayer in Colorado. 
 

 

[COOP]

37 minutes ago, 85 Barefoot said:

Didn’t I read that their annual dealers’ agreement was not renewed?  If not, seems like there was some leverage for strongly encouraging a particular unit commitment?

earnings call Thursday am.  Will be interesting.  

Kinda what I was thinking.

 

"Hey buy this many boats or we will pull your dealership"

 

They want the dealers to take a certain number of boats to maintain market share. 

[ElleW]

21 hours ago, rennis said:

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. 

People can believe what they want, but the accusations made by Tommy's: (1) date back to 2022, a period clearly covered by Malibu's audited financials; and (2) are about a point (whether there is a legitimate purchaser) that auditors specifically test when certifying public company financials.   I also don't even really understand the allegations Tommy's is making - if they're saying Malibu forced them to buy product they did not need then they are admitting to knowing about and being in on a fraudulent scheme, and if they're saying Malibu shipped product without an end purchaser then they'd have to show Malibu also recognized revenue on those sales for it to be fraud (which I've seen no indication they have).

I am also not going to comment on silicon valley bank except to say that it's a completely different accounting issue and the run on the bank happened very quickly, during a time period not covered by the audit.

[jeffmx]

22 hours ago, rennis said:

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. 

 However related to MBUU, It is interesting to note that KPMG gave a clean audit bill of heath prior to not only the SVB failure as Rennis mentioned above, but also Signature Bank (went down 11 days later),  and First Republic Bank (forced sale to JPMC). 

[bwski]

5 hours ago, cowwboy said:

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.  

Yes, the labor book rates are not always accurate, but dealers still make plenty on the service work.  Lets assume the book hours are 10 and the dealers dealers customer labor rate is $300 the total is $3,000 if the customer paid for the work.  Typically the manufacturers warranty rate is at a discount from the customer rate so lets assume it it $250, they would be at $2500.  They are definately NOT paying the technician even close to $250 per hour, more than likely it is close to $40 per hour.  Assuming the tech gets $40 per hour on at 10 hour Job the dealers margin is $2100.  The tech likely gets paid on the hours that is allowed per the repair estimate, not on how long it actually takes.  If it takes the tech 13 hours, its on the tech, not the dealer.  There is HUGE markup in labor rates!  Overhead for service is relatively low it is pretty much all related to employee count.  Techs and dealers do not like book hours for warranty.  The techs do not like it because it can cost them quite a bit in their hourly pay.  Dealers do not like it because it cuts alot of very easy profit!    

[NWBU]

Without going too much into the sausage making, current financial statement audit procedures just don't give much assurance over these kinds of operational and side arrangement areas where companies can get into trouble. While extra procedures certainly could be included, no client is ever willing to pay for those increased costs, and the regulators don't require it. And no company that's pushing the boundaries would ever voluntarily engage for that extra work, or volunteer such information.

That said, attorneys and juries have a different perspective and assume absolute assurance of perfection for any audit, so that gets wrestled down in court when things go south with any of these big names mentioned above. 

[rennis]

On 4/29/2024 at 11:19 AM, JeffK said:

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. 

per MBUU's 8K filing with the SEC there is a repurchase agreement in place between Malibu and M&T Bank for $5.2M in boats M&T floored w/ Tommy's. 

[MalibuNation]

8 hours ago, Hemmy said:

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

You are correct.  This was on FB late last night.  Good people so it's sad.  It is their storage facility:

 

[roeboat]

8 hours ago, Slayer said:

If memory serves me correctly, they are also a former Malibu dealer.

Yeah, they were until about 2014. I think Malibu pulled their dealership after the recession because they weren't selling enough boats. I believe they did sell a good number of boats before that. Their lead salesman at the time has like 10 years of sales awards from Malibu. You can still see them in the showroom if you go to visit. 

[oldjeep]

1 hour ago, MalibuNation said:

You are correct.  This was on FB late last night.  Good people so it's sad.  It is their storage facility:

 

Genius sales strategy in the current market;)

[MalibuNation]

9 hours ago, oldjeep said:

Genius sales strategy in the current market;)

@oldjeep

The owners of The Edge are good people along with the hard working staff.  Up north with the shorter season dealers are busier than snot this time of yr and now they have to deal with this.  Last but not least what about the boat owners?

[oldjeep]

2 hours ago, MalibuNation said:

@oldjeep

The owners of The Edge are good people along with the hard working staff.  Up north with the shorter season dealers are busier than snot this time of yr and now they have to deal with this.  Last but not least what about the boat owners?

Yeah, I'm sure - and it is sad for anyone involved.  The part of the message they sent out referencing replacement boats was just funny to someone outside the situation.

[wakebrdr94]

23 hours ago, bwski said:

Yes, the labor book rates are not always accurate, but dealers still make plenty on the service work.  Lets assume the book hours are 10 and the dealers dealers customer labor rate is $300 the total is $3,000 if the customer paid for the work.  Typically the manufacturers warranty rate is at a discount from the customer rate so lets assume it it $250, they would be at $2500.  They are definately NOT paying the technician even close to $250 per hour, more than likely it is close to $40 per hour.  Assuming the tech gets $40 per hour on at 10 hour Job the dealers margin is $2100.  The tech likely gets paid on the hours that is allowed per the repair estimate, not on how long it actually takes.  If it takes the tech 13 hours, its on the tech, not the dealer.  There is HUGE markup in labor rates!  Overhead for service is relatively low it is pretty much all related to employee count.  Techs and dealers do not like book hours for warranty.  The techs do not like it because it can cost them quite a bit in their hourly pay.  Dealers do not like it because it cuts alot of very easy profit!    

There is a lot that goes into service that customers do not realize, and how much is actually eaten by dealerships or just a service shop as I’ve been on the service side at several dealerships.  Over head is not cheap as you have the actual building itself, insurance, tools, utilities, labor that pays the techs, the service writers, the parts guy, the porters that move the boats around, and cleaning the boat before delivery back to the the customer.  So while the techs are not the ones collecting $300 an hour in your example, there is a lot that goes into that.

We’ve been in boats where diag time was probably 12-15 good hours between trying different fixes the factory tells us to do, multiple trips to the lake (fuel for trucks, launch fees, labor to send people to the lake). For us that was a three hour job in itslef, an hour to the lake, from the lake, and maybe an hour on the lake trying to duplicate the issue under load.  Then to get paid 2 hours of warranty and .5 of diag.  
 

same on customer pay.  You bring a boat for x, and with all the electronics and relays, etc, is still may take us just as long to find the culprit as it only happens under load.  So imagine bringing your boat in, and the culprit is a $50 relay that finally failed on the 4th trip to the lake and you were given a bill for $4500 based on your labor rates.  Shop ends up charging the final fix with an hour or two of diag. And eating 13 of actual labor because then the customer comes onto the forums claiming he was ripped off and bad mouths the shop.

    Point is, it takes more than one person to service your boat as you suggest and things would be a lot more expensive if customers payed the actual cost on everything.  After all, how many times have you seen complaints from people on this forum or any forum about getting their boat back from the serving place dirty?  Are techs suppose to wash boats too?   
 

Our rates were no where near $300, but if you show me where i can charge that, i would open a shop.  

Edited May 1 by wakebrdr94

[dizzygti]

36 minutes ago, wakebrdr94 said:

After all, how many times have you seen complaints from people on this forum or any forum about getting their boat back from the serving place dirty?  Are techs suppose to wash boats too?   

My boat was filthy, had been rained in, and was dirtier than when I dropped it off on the last pickup.....not a word was said by either them or me.   

[Five Cent Worth]

1 hour ago, wakebrdr94 said:

 Are techs suppose to wash boats too?   

No.  They are supposed to take off their greasy boots before climbing over my seats and floor.

[oldjeep]

22 minutes ago, dizzygti said:

My boat was filthy, had been rained in, and was dirtier than when I dropped it off on the last pickup.....not a word was said by either them or me.   

That is pretty much why the one time I had to bring the boat in for service at dealer I asked them when they wanted it - told them that if they called me it would be there in 20 minutes and I would pick it up 20 minutes after it was done.  Didn't want it sitting out in their gravel service lot for days getting caked in dirt every time someone drove by.

[wakebrdr94]

1 hour ago, oldjeep said:

That is pretty much why the one time I had to bring the boat in for service at dealer I asked them when they wanted it - told them that if they called me it would be there in 20 minutes and I would pick it up 20 minutes after it was done.  Didn't want it sitting out in their gravel service lot for days getting caked in dirt every time someone drove by.

And they appreciate that.  We would ask when they want to pick up the boat, then wash it the day before,  then the customer would call and say next week, then we would end up washing it again before they arrived.  We would wash a boat several times only to have the customer not show, or keep pushing back.  Finally said its one wash.  It will be clean on the date you originally said you were picking it up.  If you don’t show and it’s a month later, sorry if it got rained on or is not clean anymore.  Can’t keep washing the same boat 4-5 times.  
 

way off topic, but there should be thread for the service side of things.  The stories would be epic.

 

 

[Slayer]

36 minutes ago, wakebrdr94 said:

 

way off topic, but there should be thread for the service side of things.  The stories would be epic.

 

 

No doubt!

[bwski]

8 hours ago, wakebrdr94 said:

There is a lot that goes into service that customers do not realize, and how much is actually eaten by dealerships or just a service shop as I’ve been on the service side at several dealerships.  Over head is not cheap as you have the actual building itself, insurance, tools, utilities, labor that pays the techs, the service writers, the parts guy, the porters that move the boats around, and cleaning the boat before delivery back to the the customer.  So while the techs are not the ones collecting $300 an hour in your example, there is a lot that goes into that.

We’ve been in boats where diag time was probably 12-15 good hours between trying different fixes the factory tells us to do, multiple trips to the lake (fuel for trucks, launch fees, labor to send people to the lake). For us that was a three hour job in itslef, an hour to the lake, from the lake, and maybe an hour on the lake trying to duplicate the issue under load.  Then to get paid 2 hours of warranty and .5 of diag.  
 

same on customer pay.  You bring a boat for x, and with all the electronics and relays, etc, is still may take us just as long to find the culprit as it only happens under load.  So imagine bringing your boat in, and the culprit is a $50 relay that finally failed on the 4th trip to the lake and you were given a bill for $4500 based on your labor rates.  Shop ends up charging the final fix with an hour or two of diag. And eating 13 of actual labor because then the customer comes onto the forums claiming he was ripped off and bad mouths the shop.

    Point is, it takes more than one person to service your boat as you suggest and things would be a lot more expensive if customers payed the actual cost on everything.  After all, how many times have you seen complaints from people on this forum or any forum about getting their boat back from the serving place dirty?  Are techs suppose to wash boats too?   
 

Our rates were no where near $300, but if you show me where i can charge that, i would open a shop.  

 

 

Tommy's is $300 per labor hour!  I looked at my service RO before I typed it!  Sounds like you needed a labor rate increase 😁.   I'm not saying they shouldn't be that high because there is more that goes into moving the boats.  But I don't expect them to wash my boat either.  As other said I just expect them to keep their greasy hands and shoes off the interior.  Eating diag can be prevented with proper service estimates that are signed off by customers.  If my techs takes too long to diagnose the issue, that is on the tech not me.  

Edited May 2 by bwski

[jjackkrash]

On 4/28/2024 at 7:28 AM, jjackkrash said:

I have not closely followed what's happening on the ground but if we are talking huge numbers of boats and Tommy's is out of trust, then I'd be surprised if the bank doesn't have say over the sales or that a receiver has not been appointed to control the sale of the collateral with court supervision.  And if there are creditors owed money in addition to the bank then the person or entity controlling the collateral sale could/would most likely have some duty to reasonably maximize value to protect all creditors.  I am sure it is a complicated mess.  

https://www.crainsgrandrapids.com/news/retail/embroiled-in-three-lawsuits-tommys-boats-lands-in-receivership/

[oldjeep]

5 hours ago, jjackkrash said:

https://www.crainsgrandrapids.com/news/retail/embroiled-in-three-lawsuits-tommys-boats-lands-in-receivership/

Seems to be behind a paywall, but I guess the title says it all.

[Michigan boarder]

15 hours ago, wakebrdr94 said:

way off topic, but there should be thread for the service side of things.  The stories would be epic.

 

 

You should start one, seriously.  I don't take my boat in but there are so many people that do, it would help to have that perspective.  Just the washing example alone is an interesting one, I never would have thought of that.

[TallRedRider]

I am not sure it is related, but I got an email this morning that Tommy's in Las Vegas will be closed temporarily, but hope to be open in a few days.  No explanation otherwise.  

As an avid boat owner, but otherwise being an outsider to the workings of dealerships, I see them complain all the time from every brand about warranty work.  The consistency makes me think there is something to it, even though I don't understand how the service department doesn't turn a profit at the price they charge.