Tommys vs Malibu

[Btown801]

I took a quick look at Tommy’s inventory

leftover 2023's
131 Axis boats
213 Malibu boats

344 boats total.  Estimated average price of those boats $150k x 344 = $51.6 million in leftover inventory.

2024 inventory in stock:
42 Axis boats 
68 Malibu boats

110 boats total.   Estimated price of these boats $150k x110 = $16.5 million in inventory.

 

[Sparky450]

3 hours ago, skurfer said:

I heard 4 Tommy's locations closed yesterday

They closed Madera, Ca recently, within a few months as well. Although I believe it was a small dealer. 

[The Hulk]

58 minutes ago, Btown801 said:

I took a quick look at Tommy’s inventory

leftover 2023's
131 Axis boats
213 Malibu boats

344 boats total.  Estimated average price of those boats $150k x 344 = $51.6 million in leftover inventory.

2024 inventory in stock:
42 Axis boats 
68 Malibu boats

110 boats total.   Estimated price of these boats $150k x110 = $16.5 million in inventory.

 

That's Malibu only + $XM other brands?

Not sure if they are getting a special rate but otherwise their variable is likely in the 8.5%+ range and likely to keep increasing. I'm not seeing how they can survive easily if paying this rate with deteriorating market conditions. Their un official Ebita has been exceeded 2X over just in estimated interest alone..

 

Just spoke to a strong local bank yesterday. Things aren't going good. profit at bank way down having to match CDs and such in the 5+% range and loan out at 8+% to make 3% profit. Nobody is borrowing. deposits in nearly all accounts have been drawn way down via poor business or money that has left the bank for MM and mainly cash available has been used to pay down variable debt. Basically nobody wants to borrow currently.  

 

Edited April 13 by The Hulk

[Bozboat]

8 hours ago, UWSkier said:

Wild allegations if true.  Classic channel-stuffing approach.

Anyone else miss the old Bob Alkema Malibu and small local dealers like SmoothWater Sports yet?

Publicly traded giants and dealer conglomerates suck...

Yes, Peter aka Smoothwaterman helped me out a couple times. I hate that he got exited. 

Edited April 13 by Bozboat

[EchelonMike]

11 hours ago, The Hulk said:

Just spoke to a strong local bank yesterday. Things aren't going good. profit at bank way down having to match CDs and such in the 5+% range and loan out at 8+% to make 3% profit. Nobody is borrowing. deposits in nearly all accounts have been drawn way down via poor business or money that has left the bank for MM and mainly cash available has been used to pay down variable debt. Basically nobody wants to borrow currently.  

Agree, I have a friend that's been in the car biz 30+ years, and I talked to him yesterday.  Asked how business was going.  He said:  "completely dead".  He's a VW dealer finance manager, so it's not like they sell high end stuff either.  

 

[The Hulk]

Stagflation baby..

 

[Raimie]

I think the Great Yard Sale is coming.

There are a couple purchases I was considering, but think I will be holding off for the time being.

[bwski]

1 hour ago, EchelonMike said:

Agree, I have a friend that's been in the car biz 30+ years, and I talked to him yesterday.  Asked how business was going.  He said:  "completely dead".  He's a VW dealer finance manager, so it's not like they sell high end stuff either.  

 

Car biz volume is okay but gross profits are crashing.  It's actually very similar the the pre-covid era.  What makes it difficult is pre-covid floorplan rates were 2-3%, now they are 7-8%.  Inventories must be kept much lower than pre-covid levels and you MUST turn it as fast as possible otherwise you drown in inventory expense.  A dealer has to carry 50-75% of their pre-covid inventory but sell the same volume.  Fortunately for the car industry it there is still marginal pent up demand because volumes during Covid were actually pretty low.  Rates and prices are keeping some buyers away but there is still a lot of ammo available from many manufacturers to keep some business going.  Most brands are not even close to pre-covid incentives yet.  

On the boating side high inventories combined with high costs and no inventory turnover is a disaster.  If total inventory was the same from year to year, interest alone is a few million more in expense.  Add to that a much higher inventory, no sales to generate any income and 8% rates vs 3% and it's pretty easy to see how dealers could get in trouble VERY fast.  This isn't just Tommy's but every dealer.  The difference though with a large dealer in expense is many millions more.  Most dealers don't have millions of dollars in extra cash flow to just burn on interest when there is no revenue.  

[IXFE]

On 4/12/2024 at 7:52 AM, Stevo said:

Skier’s pier strikes again….

 

[SkiWhiz70]

On 4/12/2024 at 8:16 AM, Slayer said:

I think you're right about this.  It's unacceptable regardless, but it is what it is I suppose.  

 

We have 2 other Malibu dealers in the state other than Tommy's.  One is about 2 hours away, the other a little less.  The one that's 2 hours away is higher volume and I nearly purchased from them in 2021 but wasn't able to do so due to territory constraints with the Tommy's agreement with Malibu.  Looks like I need to visit them again and build a relationship, or jump brands.  

Coldwater Lake Marina has always treated our family well too! Just had some massive fiberglass work down last year and they did an amazing job. 

[The Hulk]

2 hours ago, bwski said:

Car biz volume is okay but gross profits are crashing.  It's actually very similar the the pre-covid era.  What makes it difficult is pre-covid floorplan rates were 2-3%, now they are 7-8%.  Inventories must be kept much lower than pre-covid levels and you MUST turn it as fast as possible otherwise you drown in inventory expense.  A dealer has to carry 50-75% of their pre-covid inventory but sell the same volume.  Fortunately for the car industry it there is still marginal pent up demand because volumes during Covid were actually pretty low.  Rates and prices are keeping some buyers away but there is still a lot of ammo available from many manufacturers to keep some business going.  Most brands are not even close to pre-covid incentives yet.  

On the boating side high inventories combined with high costs and no inventory turnover is a disaster.  If total inventory was the same from year to year, interest alone is a few million more in expense.  Add to that a much higher inventory, no sales to generate any income and 8% rates vs 3% and it's pretty easy to see how dealers could get in trouble VERY fast.  This isn't just Tommy's but every dealer.  The difference though with a large dealer in expense is many millions more.  Most dealers don't have millions of dollars in extra cash flow to just burn on interest when there is no revenue.  

Yes word on the streets is there are a few other Tommys out there for other brands that if things don't change quickly will find themselves in the same boat very soon. Not only wake boats but as mentioned this sector has been hit the hardest of all, and generally the cost of this type of boat is the highest.

Banker was telling me the CRAZY amounts of PPP many of these kind of places got and many did multiple rounds with multiple different banks..  he basically said the music has stopped across the board and tech is the only thing still going hot apart from consumer inflation and forthcoming tax hikes

Banks are about to eat it on lots of Boats, vehicles, RVs; when they can't afford to.. 

Hmm maybe the  Do-it Best corp advisor group is pretty close on what's to come soon...

Edited April 13 by The Hulk

[shawndoggy]

1 hour ago, The Hulk said:

Yes word on the streets is there are a few other Tommys out there for other brands that if things don't change quickly will find themselves in the same boat very soon. Not only wake boats but as mentioned this sector has been hit the hardest of all, and generally the cost of this type of boat is the highest.

Banker was telling me the CRAZY amounts of PPP many of these kind of places got and many did multiple rounds with multiple different banks..  he basically said the music has stopped across the board and tech is the only thing still going hot apart from consumer inflation and forthcoming tax hikes

Banks are about to eat it on lots of Boats, vehicles, RVs; when they can't afford to.. 

Hmm maybe the  Do-it Best corp advisor group is pretty close on what's to come soon...

“Forthcoming tax hikes?”

[DAI]

Some corporate tax provisions from the TCJA are going to expire. 

Edited April 13 by DAI

[shawndoggy]

1 hour ago, DAI said:

Some corporate tax provisions from the TCJA are going to expire. 

Before 2025?

[DAI]

30 minutes ago, shawndoggy said:

Before 2025?

No.

MNCs have OECD P2 changes right now to manage/plan, but TCJA will follow right on the heals of that.

[justgary]

2 hours ago, DAI said:

No.

MNCs have OECD P2 changes right now to manage/plan, but TCJA will follow right on the heals of that.

Por favor explíquelo en inglés.

Εξηγήστε το στα αγγλικά.

請用英語解釋一下。

Please explain that in English.

[spikew919]

Where’s the Popcorn? Karma coming for those, dealers and manufacturers who raped the consumer and We the people taking in ppp money.  And it’s not just this industry.  

[Steve B.]

53 minutes ago, justgary said:

Por favor explíquelo en inglés.

Εξηγήστε το στα αγγλικά.

請用英語解釋一下。

Please explain that in English.

I'm not gonna get it even in English!

[IXFE]

On 4/11/2024 at 10:34 PM, skurfer said:

Oh man. There have been rumblings about Tommy's. Selling a boat and not paying it off with your lender is not good..

#bridgecity

[Nick55]

3 hours ago, DAI said:

No.

MNCs have OECD P2 changes right now to manage/plan, but TCJA will follow right on the heals of that.

Multinational Corporations

Tax Cuts and Jobs Act

https://en.m.wikipedia.org/wiki/OECD

 

[DAI]

15 hours ago, justgary said:

Por favor explíquelo en inglés.

Εξηγήστε το στα αγγλικά.

請用英語解釋一下。

Please explain that in English.

Simple way to explain is a large group of countries got together and are trying to set global tax policy.  Any company that has overseas operations are being subject to a new tax regime that eliminate the benefits a low tax country provided them.  It’s basically a couple of mechanisms for a “top off tax”. That country over there did not tax you enough, so I’m going to tax you more here to make sure you pay a minimum level.  P2 is “Pillar 2” of the group of countries called OECD for their tax plan aspects are in play now and more will come.  Less likely to be impactful for the 2 companies being discussed here directly, but more on their suppliers, which will try to offset with component price increases.  But the TCJA expiration will likely bite them.

For the TCJA, big 2 items that are set (and will likely be let to expire) is the level of deductibility of interest expense and depreciation.  I’m sure there is more, but those are the 2 I’m acutely aware of at the moment.  

Edited April 14 by DAI

[granddaddy55]

so was this a ponzi scheme in essence where tommy’s used money that should have gone to floor plan lender and used it to finance expansion?????. 

havent read all four pages of posts but as an accountant it seems like one to me.  first thing i educate my clients on is quit using the governments sales tax, withholding, payroll tax as financing the day to day business and then borrowing from LOC to cover

[The Hulk]

2 hours ago, granddaddy55 said:

so was this a ponzi scheme in essence where tommy’s used money that should have gone to floor plan lender and used it to finance expansion?????. 

havent read all four pages of posts but as an accountant it seems like one to me.  first thing i educate my clients on is quit using the governments sales tax, withholding, payroll tax as financing the day to day business and then borrowing from LOC to cover

Haha Nobody cared when you were getting paid to borrow $.. for the past 4yrs cash was trash. You got paid to borrow...

Now cash is king again! 

Basically companies across the board their margins are getting slaughtered in about all sectors. Price hikes coming, along with reduced consumer demand. Energy /input cost are going to continue to rise.. On shoring efforts and deglobalization are highly inflationary. Bailouts for banks and others on the horizon mean printing more $ for yee but not thee.. governments have NO choice but to increase taxes as the merre thought of reduced spending is worse than a major conflict.. We have no choice but to PRINT/Inflate the debt away. Commodities will continue to rise, wages will continue to stagnate or be reduced from layoffs.. 

Simple term.. stagflation 

For this Tommys thing Malibu I assume was paid by the bank up front, so the risk to Malibu is a fire sale by the bank which puts all other at least surrounding dealerships at risk of being undercut? I'd be curious to see how Tommys would have a case they would need pretty hard evidence of Malibu forcing inventory in them instead of them or threat's of pulling their dealership rights?

Sadly one thing we're all forgetting is the same situation here is what's happening to the banks.. basically I’m guessing a huge amount of this inventory was committed to started coming in as interest rates started to skyrocket. At the same time demand dropped off a cliff and Tommy’s probably thought it might get better come boat show season and it didn't so interest rates chewed through all available margin and they robbed Peter to pay Paul hoping it would turn around.. 

Edited April 14 by The Hulk

[skurfer]

21 hours ago, IXFE said:

#bridgecity

Yep, all over again.

[DFW]

 Tommy's Used Boat Liquidation

DFW replied to Ronnie's topic in General Discussion Area

I’d be curious to know how Tommy’s financed their massive expansion over the past few years. 🤔

 November 2, 2022

 

 70 replies