Archive for » May 6th, 2015«

House Rejects Tax Break for Pricey Boats


The Texas House Wednesday demonstrated that its support for tax relief has limits when it voted down a measure to cap sales taxes on expensive boats.

In a lopsided 45-91 vote, lawmakers soundly rejected House Bill 619, which would have capped the state sales tax on certain boat purchases at $15,625, the approximate amount levied for a $250,000 boat under the current state sales tax. The exemption would only have applied when the boat was being purchased for use in another state.

The bill’s author, state Rep. Greg Bonnen, R-Friendswood, said it was aimed at helping boat sellers along the Texas coast who are losing business to their counterparts in states that already cap sales taxes on boat purchases, particularly Florida. The bill had the support of several coastal business groups and the city of Corpus Christi.

The Legislative Budget Board estimated that Bonnen’s bill would cost the state $3.5 million in sales tax revenue over the next two years. Bonnen argued his measure would make up for that loss tax revenue by increasing overall activity in the recreational boating industry.

“This is about the men and the women in the small businesses and their employees on the Texas gulf coast and allowing them to be competitive,” Bonnen said.

Several House Democrats decried the measure as a giveaway for rich people, though many Republicans also voted against it.

“A pig is still a pig no matter how you dress it up and this is a big fat pig for wealthy people,” state Rep. Roland Gutierrez, D-San Antonio, said. “The mere notion that we’re doing this to save jobs is a joke.”

State Rep. Sylvester Turner, D-Houston, told fellow House members that if they voted for Bonnen’s bill, they would be obligated to vote on a hypothetical future bill exempting sales taxes on helicopters.

“What about the airplanes? Don’t they provide an economic stimulus?” Turner asked Bonnen. “The major problem that I have with your bill is that it picks winners and losers within our existing tax structure.”

Bonnen said critics were ignoring the recreational marine industry workers who are losing business to other states.

“You can just be jealous of wealthy people who can afford to go to another state and buy the vessel, but for the men and women who work and live in this state, who don’t have the expensive vessels but rather depend on those vessels so they can have a job and they can earn a living and they can support their families, this is important legislation to them,” Bonnen said.


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Industry mourns longtime Michigan dealer

Posted on May 5th, 2015
Written by Reagan Haynes


Mark M. Gaskill

Michigan Boating Industries Association Hall of Fame inductee and owner of Jefferson Beach Yacht Sales Greg Krueger died suddenly of a heart attack on April 25. He was 67.

Krueger, a boating industry icon in the Great Lakes, was very healthy and did not have heart disease. He died suddenly in a rare heart attack case while working on his boat, which he was preparing for launch.

“He was a phenomenal guy and a great leader,” said Norm Schultz, former longtime president of the Lake Erie Marine Trade Association and Trade Only Today blogger. “He was always committed to the industry and served on all kinds of boards. I have nothing but good things to say about him. He was very highly regarded. He was really well known in the Great Lakes. He was a quintessential gentleman.”

Krueger was a strong supporter of the Michigan Boating Industries Association, as well as the association’s Recreational Boating Industries Educational Foundation, MBIA executive director Nicki Polan told Trade Only Today.

“He was a character, full of passion and positive attitude,” Polan said in an email. “He was fun, kind and genuinely cared about people. He actually got up on the table at the board meeting to show his enthusiasm for giving back to education and this was the start of our education foundation.”

Krueger’s family has chosen the boating foundation (RBIEF) that he started for those who would like to make contributions in his name, she said.

Krueger was the MBIA’s longest-serving board member, serving for 25 years, beginning in 1983, Polan said. He served as board chairman in 1994-95.

Jefferson Beach Yacht Sales, a Viking, Sunseeker, Princess and Duffy dealership and yacht broker, has six locations around the Great Lakes. JBYS is the oldest Viking Yachts dealer in the world, the oldest Sunseeker dealer in the United States and among the oldest Princess dealers in the nation, according to Krueger’s obituary.

Krueger started his professional career at the age of 23 at Jefferson Beach Marina, a large, full-service marina and boat dealership in St. Clair Shores on what is known as the Nautical Mile in southeast Michigan.

Prior to kicking off his professional career, he earned a bachelor’s degree in business administration at Wayne State University. He persuaded university officials to create a special recreational boating curriculum for him because he believed that the boating business was too important not to have specific courses for him and many other future business people in Michigan.

He was inducted into the MBIA Hall of Fame in 2011. During the presentation of the award by Eric Foster and Steve Remias, Krueger’s motto was noted — “The course I’ve charted is simple; boating is not just my business, it’s my life.”

He enjoyed his very first boat at age 5 and was operating his own outboard by the age of 6.

He spent much of his youth working in the industry, doing the things many industry veterans have done, such as washing, detailing and running boats, overseeing boatyards, and in his case, even captaining the Harsens Island Ferry.

As a teenager he was in charge of houseboat rentals for Sunset Marina. He later oversaw outboard motor repairs for Krueger’s Boats and Motors, which was owned and operated by his grandparents, along with his father, Peer Krueger.

In addition to sales, Greg pursued boatbuilding. He started building center consoles in 1982 and formed American International, which later sold to Genmar Industries.

“He was a profound man with a vibrant spirit,” Amy L. Krueger Malow, president at Jefferson Beach Yacht Sales, told Trade Only. “He deeply touched many, many people.  He leaves behind a stellar team of passionate big-boat experts who will continue to blaze the Jefferson Beach Yacht Sales torch, delivering quality, integrity and exceptional customer care.”


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Industry mourns longtime Michigan dealer

Posted on May 5th, 2015
Written by Reagan Haynes


Mark M. Gaskill

Michigan Boating Industries Association Hall of Fame inductee and owner of Jefferson Beach Yacht Sales Greg Krueger died suddenly of a heart attack on April 25. He was 67.

Krueger, a boating industry icon in the Great Lakes, was very healthy and did not have heart disease. He died suddenly in a rare heart attack case while working on his boat, which he was preparing for launch.

“He was a phenomenal guy and a great leader,” said Norm Schultz, former longtime president of the Lake Erie Marine Trade Association and Trade Only Today blogger. “He was always committed to the industry and served on all kinds of boards. I have nothing but good things to say about him. He was very highly regarded. He was really well known in the Great Lakes. He was a quintessential gentleman.”

Krueger was a strong supporter of the Michigan Boating Industries Association, as well as the association’s Recreational Boating Industries Educational Foundation, MBIA executive director Nicki Polan told Trade Only Today.

“He was a character, full of passion and positive attitude,” Polan said in an email. “He was fun, kind and genuinely cared about people. He actually got up on the table at the board meeting to show his enthusiasm for giving back to education and this was the start of our education foundation.”

Krueger’s family has chosen the boating foundation (RBIEF) that he started for those who would like to make contributions in his name, she said.

Krueger was the MBIA’s longest-serving board member, serving for 25 years, beginning in 1983, Polan said. He served as board chairman in 1994-95.

Jefferson Beach Yacht Sales, a Viking, Sunseeker, Princess and Duffy dealership and yacht broker, has six locations around the Great Lakes. JBYS is the oldest Viking Yachts dealer in the world, the oldest Sunseeker dealer in the United States and among the oldest Princess dealers in the nation, according to Krueger’s obituary.

Krueger started his professional career at the age of 23 at Jefferson Beach Marina, a large, full-service marina and boat dealership in St. Clair Shores on what is known as the Nautical Mile in southeast Michigan.

Prior to kicking off his professional career, he earned a bachelor’s degree in business administration at Wayne State University. He persuaded university officials to create a special recreational boating curriculum for him because he believed that the boating business was too important not to have specific courses for him and many other future business people in Michigan.

He was inducted into the MBIA Hall of Fame in 2011. During the presentation of the award by Eric Foster and Steve Remias, Krueger’s motto was noted — “The course I’ve charted is simple; boating is not just my business, it’s my life.”

He enjoyed his very first boat at age 5 and was operating his own outboard by the age of 6.

He spent much of his youth working in the industry, doing the things many industry veterans have done, such as washing, detailing and running boats, overseeing boatyards, and in his case, even captaining the Harsens Island Ferry.

As a teenager he was in charge of houseboat rentals for Sunset Marina. He later oversaw outboard motor repairs for Krueger’s Boats and Motors, which was owned and operated by his grandparents, along with his father, Peer Krueger.

In addition to sales, Greg pursued boatbuilding. He started building center consoles in 1982 and formed American International, which later sold to Genmar Industries.

“He was a profound man with a vibrant spirit,” Amy L. Krueger Malow, president at Jefferson Beach Yacht Sales, told Trade Only. “He deeply touched many, many people.  He leaves behind a stellar team of passionate big-boat experts who will continue to blaze the Jefferson Beach Yacht Sales torch, delivering quality, integrity and exceptional customer care.”


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Malibu Boats reports 28.8% sales growth for quarter

Malibu Boats, Inc. (Nasdaq:MBUU) today announced its financial results for the third quarter of fiscal 2015 ended March 31, 2015.

Highlights for the Third Quarter of Fiscal 2015

  • Net sales for the third quarter of fiscal 2015 increased 28.8% to $64.8 million compared to the third quarter of fiscal 2014.
  • Unit volume increased 24.4% to 980 boats, including 80 units from Australia.
  • Net sales per unit for the third quarter of fiscal 2015 increased approximately 3.5% to $66,084 compared to the third quarter of fiscal 2014 and net sales per unit in the U.S. increased approximately 6.7% over the same period in fiscal 2015.
  • Gross profit for the third quarter of fiscal 2015 increased 33.5% to $17.9 million compared to the third quarter of fiscal 2014.
  • Adjusted EBITDA for the third quarter of fiscal 2015 increased 31.9% to $13.3 million from the same period in fiscal 2014.
  • Adjusted fully distributed net income for the third quarter of fiscal 2015 increased 73.5% to $7.7 million, or $0.34 per share, on a fully distributed weighted average share count of 22.7 million shares of Class A Common Stock.

Jack Springer, Chief Executive Officer, stated, “Our third quarter results were strong and both our Malibu and Axis brands performed well. We continue to meet or exceed our internal goals and projections and remain pleased with the trends in the business. Driven by continued demand for our product in the U.S. and Australia, net sales for the quarter increased 28.8% and unit volume increased 24.4%. The third quarter is our boat show season quarter and the strong demand we’ve seen is reflected in the form of customized orders from retail consumers. Our four new or completely remodeled boats, the 22 VLX, Axis A22, Axis T23 and Response LXR continue to show strong first year performance, and orders for the completely remodeled 23 LSV are pacing ahead of last year, with the potential of us setting a new annual shipping record. There is normally a six month lag before new product begins to take root and this occurs simultaneously with the boat shows when everything is on display. Our new Malibu dash and G4 tower have been validated through their reception at the boat shows. We believe the Power Wedge 2 is rapidly becoming a feature that is gaining attention and we expect it to be a strong selling point for Malibu as we go forward. With its rapid planing ability and integration into our surfing system, it lowers fuel costs while providing a level of surf wave control never seen before and ahead of any other commodity on the market.”

Mr. Springer continued, “As we look to the future, it appears we are having a more normal spring weather pattern, although the upper northeast had a late start. As expected, the strength of the U.S. dollar has had some impact on Canadian and international sales, but strong domestic demand has offset this. One area of the world that has benefited from the strengthened U.S. dollar is Australia, where demand for Malibu boats versus the imported competition remains in our favor.”

Comparison of the Third Quarter Ended March 31, 2015 to the Third Quarter Ended March 31, 2014

Net sales for the three months ended March 31, 2015 increased $14.5 million, or 28.8%, to $64.8 million as compared to the three months ended March 31, 2014. Included in net sales for the three months ended March 31, 2015 were net sales of $5.3 million attributable to our Australia segment that we acquired on October 23, 2014. Unit volume for the three months ended March 31, 2015 increased 192 units, or 24.4%, to 980 units as compared to the three months ended March 31, 2014. Of the 192 units added, 80 units were added as a result of our Australia segment and the remainder of the increase was primarily due to a demand-driven increase in our daily production rate over the same period in the prior year. Net sales per unit increased approximately 3.5% to $66,084 per unit for the three months ended March 31, 2015 compared to the three months ended March 31, 2014, primarily driven by higher prices and increased selection of optional features, partially offset by the elimination of parts sales between our segments since the acquisition of our Australian licensee in October 2014. Net sales per unit for our U.S. segment increased approximately 6.7% for the three months ended March 31, 2015 compared to three months ended March 31, 2014, primarily driven by higher prices and increased selection of optional features.

Cost of sales for the three months ended March 31, 2015 increased $10.0 million, or 27.0%, to $46.9 million as compared to the three months ended March 31, 2014. Included in cost of sales was $0.3 million of integration related expenses attributable to the acquisition of our Australian licensee. The increase in cost of sales was primarily due to the 24.4% increase in unit volume and higher material cost per unit, driven primarily by higher material content per unit associated with the addition of new features such as our new Malibu dash for model year 2015 and increased optional feature selections such as the G4 tower in addition to integration related expenses for our Australian acquisition.

Gross profit for the three months ended March 31, 2015 increased $4.5 million, or 33.5%, to $17.9 million compared to the three months ended March 31, 2014. The increase in gross profit resulted primarily from higher volumes. Gross margin for the three months ended March 31, 2015 increased to 27.6% from 26.6% over the same period in the prior fiscal year. The increase in gross margin was primarily driven by lower labor and warranty expenses, offset by $0.3 million of integration related expenses attributable to the acquisition of our Australian licensee. Excluding these integration related expenses, gross margin increased to 28.1%, or 150 basis points, for the three months ended March 31, 2015.

Selling and marketing expense for the three month period ended March 31, 2015 increased approximately $0.2 million, or 9.6%, to $1.7 million compared to the three months ended March 31, 2014, due to increased volumes, as well as incremental selling and marketing related expenses in Australia. General and administrative expenses for the three months ended March 31, 2015 decreased $4.2 million, or 40.5%, to $6.1 million as compared to the three months ended March 31, 2014, largely due to one-time charges incurred in connection with our IPO in February 2014, including a $3.8 million termination fee for our previously existing management agreement and $1.8 million for stock compensation charges associated with the modification of awards granted in 2012, and $0.8 million in management fees attributable to the previously noted management agreement incurred through the date of our IPO on February 5, 2014, which we did not have for the quarter ended March 31, 2015. This decrease was partially offset by increased legal costs of $0.6 million primarily related to our Nautique Boat Company, Inc. litigation settled February 6, 2015, acquisition related expenses of $0.1 million attributable to the acquisition of our Australian licensee, and incremental expenses associated with becoming a public company. These charges were collectively approximately $1.0 million higher and primarily included payroll related expenses associated with additional headcount as well as fees for audit, tax, investor relations, and directors and officers insurance. For the three months ended March 31, 2015, general and administrative expenses for our Australian operations excluding amortization were $0.3 million. Amortization expense for the three months ended March 31, 2015 decreased $0.7 million, or 54.2%, to $0.6 million primarily due to the full amortization of our dealer relationship intangible acquired in 2006, offset by amortization attributable to intangible assets acquired in the acquisition of our Australian licensee in October 2014.

Operating income for the three month period ended March 31, 2015, increased to $9.5 million from $0.3 million for the three month period ended March 31, 2014. Adjusted EBITDA in the third quarter of fiscal 2015 increased 31.9% to $13.3 million and Adjusted EBITDA margin increased to 20.5% from 20.0% in the third quarter of fiscal 2014.



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