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Old     (phat_in_cincy)      Join Date: May 2003       08-23-2007, 6:30 PM Reply   
Has it been posted already?


A Hot Category

MasterCraft, located in Vonore, TN, is the world’s second largest builder (about 2300 units in 2006) of water ski and wakeboard boats, after west coast builder Malibu (2900 units in ’06). The total US market for these specialized inboard-powered boats is about 10,000 annually, with the rest of the market made up primarily of Correct Craft (1600 units), Moomba (1260 units), Supra (644 units) and Tigé (850 units).

The market for these boats is small, but it has been one of the few growing categories in the sport over the last few years, thanks to the advent of wakeboarding – both with and without a tow rope. It is simply snowboarding on the water, with about the same constituency. Ski/wakeboard boats are also complex and the most creatively-designed boats on the market these days for their size. They are also expensive.

Electricity in the Hallways

Located on the banks of Lake Tellico, south of Knoxville, MasterCraft tests every one of its boats before shipment and has professional ski/wakeboarders on staff to work out the wrinkles on new products and suggest innovations.

Company president and CEO John Dorton says that the plant will stay in Vonore and will likely add employees due to booming international sales and its saltwater line. “The entire management team will stay intact,” Dorton said, and that is likely to be true since one of the stated acquisition requirements of TRP is a solid management team already in place. MasterCraft has that and the halls of the executive offices are electric with excitement – more what one might expect in Silicone Valley than in the sleepy boating industry – as the young execs dart from meeting to meeting, cooking up the next ad campaign, or product feature, or new model.

5,000 Annual units in 5 Years?

Dorton also said he expects business to double for MasterCraft during the next five years and with this deal the company will have the financial backing (thanks to Jefferies and Co.) to meet its goals. Roger Penske said in the press release, "MasterCraft has established an outstanding reputation for performance, quality and product innovation. We are pleased to have joined the MasterCraft team and look forward to supporting the company during the next phase of its growth."

In the M&A business, the seller usually knows more about the company and its prospects than the buyer, and often that is why the company is on the market. But in this case, it looks like the VC owners made a tidy profit and would like to move on given the volatility of the boating market, and the new VC buyers have their eyes wide open and some pretty big plans.

Andrew Janower, managing director of Charlesbank Capital Partners, also commented on the acquisition in the release, saying, “…We have partnered successfully with TRP in the past, and now we look forward to putting our combined strength behind the preeminent MasterCraft brand to help the company capitalize on its many opportunities for growth."


The big question in the marine industry the last seven days has been: “Where will Penske go next? Do you think he will take aim on our niche? How will he change the business?” Interestingly, Malibu, Correct Craft and other ski/wakeboard builders are not quaking in their topsiders. Some managers at these companies feel that while MasterCraft's market share might grow, Penske will also do things that will grow the overall ski/wakeboard market, meaning all six of the companies will sell more boats.

The truth of the matter is that virtually the whole industry could be at Penske’s feet, except for the few independent, family-owned companies who take pride in nurturing their business and handing it down to the next generation. But no matter what happens, that man who rarely appears to smile should have a positive effect on the sport and the quality of the boating industry in general.

Welcome aboard, Roger. What took you so long?

(Message edited by Phat in Cincy on August 23, 2007)
Old     (olskooltige)      Join Date: Mar 2007       08-23-2007, 6:51 PM Reply   
Yes....but not that same article. The press release from Mastercraft came out earlier today.
Old     (curtisco24)      Join Date: Dec 2005       08-24-2007, 5:28 AM Reply   
Uh oh somebody needs some money. My personal opinion is that when MC keeps expanding their qc will continue to dwindle because they are producing too many boats. They are getting away from what made them #1 to begin with, which was a small number of great boats. From what I have seen, they have had more qc issues in the last few years than during the past 20 years.
Old     (hal2814)      Join Date: Feb 2006       08-24-2007, 5:51 AM Reply   
5000 units? If I had to wager on it, I'd bet that they're planning to keep Mastercraft as a high quality brand and then pulling a Supra/Moomba Maxum/Bayliner and spinning off a "lesser" brand name. Maybe they could call it Slavecraft? I just don't see them selling 5000 per year at the price they're currently getting per boat. Either that or they may take an old old page from Correct Craft and produce I/Os so they can generate more appeal in the general boating market.
Old     (jon4pres)      Join Date: May 2004       08-24-2007, 8:09 AM Reply   
I dont think mastercraft can produce 5k units a year unless they are going to start producing a different kind of boat. That is half of the total market.
Old     (lukewtwt)      Join Date: Apr 2003       08-24-2007, 8:29 AM Reply   
Whether or not then can PRODUCE 5k units a year is a completely different question from whether or not they can SELL 5k units a year. As hinted at above, I think a serious price adjustment would be necessary (which I personally would be for), but one would expect a corresponding drop in quality.
Old     (three6ty)      Join Date: Feb 2004       08-24-2007, 8:36 AM Reply   
Luke get a new screen name!!!!!!!!
Old     (flackpack)      Join Date: Feb 2004       08-24-2007, 8:58 AM Reply   
Penske is a huge master of the large and expensive vehicle LEASE. Their financial services are very strong, does anyone see a lease program coming soon for $100k X stars?
Old     (mrt111)      Join Date: Sep 2006       08-24-2007, 9:19 AM Reply   
I have had the opportunity to work around Mr. Penske and he is one of the most meticulous individuals I have ever met. He makes a point to be very involved with everything he owns. I bet that the Quality Control is the best in the industry within 60 days. He wouldn't have it any other way. Master Craft fans should be very confident in the direction he will take the company.
Old     (lukewtwt)      Join Date: Apr 2003       08-24-2007, 10:48 AM Reply   
E Double U, NO!!!!!!!!

J/K just like the weather, if you don't like it, wait a few months and it will change.


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