Boat Dealership and Repair in the USscripts.cac.psu.edu/users/j/r/jrr5517/44122c.pdfThis industry...

WWW.IBISWORLD.COM Boat Dealership and Repair in the US July 2016 1

IBISWorld Industry Report 44122cBoat Dealership and Repair in the USJuly 2016 Madeline Hurley

All aboard: Higher disposable incomes will keep industry demand afloat

2 About this Industry2 Industry Definition

2 Main Activities

2 Similar Industries

2 Additional Resources

3 Industry at a Glance

4 Industry Performance4 Executive Summary

4 Key External Drivers

6 Current Performance

8 Industry Outlook

10 Industry Life Cycle

12 Products & Markets12 Supply Chains

12 Products & Services

13 Demand Determinants

14 Major Markets

15 International Trade

16 Business Locations

18 Competitive Landscape18 Market Share Concentration

18 Key Success Factors

18 Cost Structure Benchmarks

20 Basis of Competition

21 Barriers to Entry

21 Industry Globalization

22 Major Companies22 MarineMax Inc.

24 Operating Conditions24 Capital Intensity

25 Technology & Systems

25 Revenue Volatility

25 Regulation & Policy

26 Industry Assistance

27 Key Statistics27 Industry Data

27 Annual Change

27 Key Ratios

28 Industry Financial Ratios

29 Jargon & Glossary

www.ibisworld.com | 1-800-330-3772 | [email protected]

This report was provided toPennsylvania State University (212675314)by IBISWorld on 01 March 2017 in accordance with their license agreement with IBISWorld


This industry sells new and used recreational boats like canoes, sailboats and motorboats (except personal watercraft), boat parts and accessories.

This industry also provides repair and maintenance services; boat repairers may be employed by a boat dealer or operate as an independent shop.

The primary activities of this industry are

Retailing new boats

Retailing used boats

Retailing boat parts and accessories

Providing boat repair and maintenance services

33661a Ship Building in the USThis industry comprises establishments that operate shipyards.

33661b Boat Building in the USThis industry manufactures boats, which are defined as watercraft suitable or intended for personal use, but not built in shipyards.

44122a Motorcycle Dealership and Repair in the USThis industry sells or repairs motorcycles, all-terrain vehicles (ATVs) and personal watercraft. It also provides repair services and retails replacement parts and accessories.

44122b Bicycle Dealership and Repair in the USThis industry sells new bicycles (e.g. mountain bicycles, road bicycles and hybrid bicycles), bicycle parts and accessories.

Industry Definition

Main Activities

Similar Industries

Additional Resources

About this Industry

For additional information on this industry

www.rita.dot.gov Bureau of Transportation Statistics

www.mraa.com Marine Retailers Association of the Americas

www.nmma.org National Marine Manufacturers Association

The major products and services in this industry are

New boats

Parts and repair services

Used boats

Provided to: Pennsylvania State University (212675314) | 01 March 2017


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Revenue vs. employment growth

Products and services segmentation (2016)

56.5%New boats

29.7%Parts and repair services

13.8%Used boats


Key Statistics Snapshot

Industry at a GlanceBoat Dealership and Repair in 2016

Industry Structure Life Cycle Stage Mature

Revenue Volatility Low

Capital Intensity Low

Industry Assistance Low

Concentration Level Low

Regulation Level Medium

Technology Change Low

Barriers to Entry Medium

Industry Globalization Low

Competition Level High

Revenue

$19.8bnProfit

$1.2bnWages

$2.4bnBusinesses

112,464

Annual Growth 16-21

1.9%Annual Growth 11-16

4.5%

Key External DriversPer capita disposable incomeTime spent on leisure and sportsConsumer Confidence IndexAverage age of vehicle fleetWorld price of crude oil

Market ShareMarineMax Inc. 4.2%

p. 22

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FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 27




Key External Drivers Per capita disposable incomeRecreational boats are considered discretionary and luxury purchases; therefore, a rise in household disposable income increases the propensity for consumers to purchase industry goods, thus boosting demand. Per capita disposable income is expected to increase in 2016, representing a potential opportunity for the industry.

Time spent on leisure and sportsFluctuations in consumer leisure time availability have a direct impact on demand for recreational boats. A rise in leisure time may lead to an increase in the number of individuals that are willing to spend time boating and, in turn, purchase industry goods. Time spent on leisure and sports is expected to decrease slightly in 2016, representing a potential threat for the industry.

Executive Summary

Over the five years to 2016, revenue for the Boat Dealership and Repair industry is anticipated to trend higher. Prior to the five-year period, consumers opted to delay discretionary purchases, such as new boats, as unemployment levels were high and disposable income weak. Difficulty in obtaining credit further strained already weak consumer demand for new boats. However, as disposable income and consumer confidence reversed course, industry revenue has rebounded considerably. Although

industry revenue is not expected to reach prerecessionary levels by 2016, industry revenue is expected to increase at a robust annualized rate of 4.5% over the five years to 2016. In 2016 alone, industry revenue is expected to increase 2.4% to reach $19.8 billion.

Despite these positive conditions, the industry experiences potential hurdles that will likely hinder robust growth going forward. Due to aggressive competition from other leisure activities, boating participation has remained

slightly below prerecessionary levels. Although the number of boat registrations has steadily declined since 2011, expenditure on boats has actually increased during the period. The strengthening economy has allowed consumers to spend more on leisure activities, thereby boosting industry revenue. As consumers increased their spending on boats and boat repair services, profit margins also improved over the period. IBISWorld estimates profit margins will increase from 4.9% of revenue in 2011 to 5.9% in 2016. This increase is partially due to the increase in revenue generated from repair service operators, who generally earn higher profit margins than those engaged in just the sale of boats.

Industry profit is expected to remain stagnant in the five years to 2021. As operators within the highly fragmented industry compete for contracts with manufacturers and for a share of the money-conscious consumer market, many companies will be forced to keep prices low to stay afloat. However, rising disposable income and consumer confidence will keep demand for industry goods steady. As a result, IBISWorld forecasts that revenue will increase at an annualized rate of 1.9% to reach $21.7 billion in the five years to 2021.

Industry PerformanceExecutive Summary | Key External Drivers | Current Performance Industry Outlook | Life Cycle Stage

Rising disposable income and consumer confidence will keep demand for industry goods steady



Industry Performance

Key External Driverscontinued

Consumer Confidence IndexThe Consumer Confidence Index measures the level of consumer optimism toward economic conditions, such as unemployment, economic growth and inflation. When consumer perceptions of the economy are high and positive, households tend to freely spend on luxury items, such as recreational boats. The Consumer Confidence Index is expected to increase in 2016.

Average age of vehicle fleetAn increase in the average age of boats can lead to a subsequent increase in

demand for repair and maintenance services; older boats generally require greater maintenance and repair expenditure. The average age of vehicle fleets is expected to increase during 2016.

World price of crude oilBoats with motors require gasoline to operate. As a result, a rise in the price of gasoline can increase the cost of using a boat, subsequently leading to a decline in boat usage. The world price of crude oil is expected to decrease over 2016.

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The Boat Dealership and Repair industry has reversed its course during the past five years, after being bogged down by the adverse effects of the economic recession. Boats are considered relatively expensive discretionary purchases. Therefore, demand fell in line with plummeting consumer sentiment and weaker disposable incomes. However, these factors reversed during the economic recovery, bolstered by pent-up demand for new and used boats. To this end, IBISWorld expects industry revenue to increase at an average annual rate of 4.5% to $19.8 billion over the past five years, with anticipated growth of 2.4% in 2016. Even with this robust growth, revenue is not expected to exceed prerecessionary levels.

Consumer sentiment, disposable income and the ability to obtain loans are major factors affecting demand for new boats. New and used boats are, in many cases, considered luxury purchases. As per capita disposable income and the

availability of credit increased over the past five years, consumers have been more willing to purchase boats and water sports equipment. Additionally, as the number of households earning more than $100,000 increased over the period, more consumers have been able to not only purchase boats, but spend more on them.

Current Performance

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Although the US Department of Homeland Security reports that the number of boat registrations has actually declined between 2011 and 2014, the amount of time and resources spent on boating activities has increased. The NMMA reports that although registrations for boats has declined, in 2014 (latest data available), spending on boats increased an estimated 5.0%. The increased expenditure has boosted industry revenue and profit for industry operators. Additionally, sales of boats not requiring registrations, such as kayaks, rafts and canoes have been

increasing rapidly over the past five years, further boosting industry revenue.

In terms of boat usage, according to data from the NMMA, adult participation in recreational boating has increased considerably from 75.0 million people in 2010 to 87.3 million in 2014. The increase in boat usage has spurred demand for boat repair services over the five-year period. As people use their boats more, they are more likely to require routine maintenance and repair services for their vessels. As a result, repair services’ share of industry revenue has increased from 30.8% to 31.6% over the past five years.

Boat use and leisure time availability




Demand for repair and maintenance

According to the Marine Industries Association of Florida, boat maintenance can cost boat owners between $100.00 and $400.00 or more per year, depending on the size and specs of the vessel. Maintenance services include oil changes, motor repair, parts replacement and painting. Preowned boats require more maintenance and the age of boats affects demand for repair and maintenance services. Although disposable income fell during the recession, this segment supported industry revenue. Consumers opted to repair existing boats rather than purchasing new models. Additionally, this segment is expected to lift industry revenue higher as the average age of vehicle fleets rose sharply as consumers delayed boat purchases during the

downturn. As a result, consumers are likely to need repair and maintenance services on existing boats.

Falling oil prices have also benefited repair service operators. Because fuel is a major expense for boat owners, higher oil prices deters excessive use of boats. When oil prices decline, boat owners are more willing to utilize their boat, leaving it more subjected to regular wear and tear. Boat repair operators benefit from this increased use, as consumers require more frequent fixes and maintained. As a result, demand from boat repair services has increased over the past five years.

Industry landscape As industry revenue grows, the industry is expected to experience an influx of new entrants. To this end, IBISWorld estimates the number of dealerships and boat repair service providers will increase at an annual average rate of 4.7% to 112,464 businesses over the five years to 2016. Moreover, in the midst of historically low interest rates, many large industry operators are expected to acquire other operators. For example, MarineMax, the industry’s largest player, has placed a focus on acquisitions. Employment in the industry is also expected to trend higher, bolstered by rising overall demand. Industry operators require employees for sales and customer service positions. Therefore, the number of employees is expected to increase at an annualized rate of 3.9% to 146,006 workers over the five-year period.

According to the National Marine Manufacturers Association (NMMA), the average price of a new boat is about $14,000, but can range from a few

thousand dollars to several million dollars. Industry major player MarineMax quotes retail prices for various boats, with one particular brand ranging from $21,000 to $2.5 million. The company’s average selling price of a new boat in fiscal 2016 was $171,000, up considerably from years prior. Despite high price-based competition in the industry, larger operators are able to pass along costs to consumers in the form of higher prices. Moreover, larger operators are able to benefit from economies of scale, in which they distribute their fixed costs among several facilities, resulting in higher profit.

For the industry as a whole, profit margins are anticipated to increase over the five years to 2016. However, high levels of competition have resulted in price-cutting to remain competitive, slightly constraining profit margins over this period. Larger operators, particularly those that have purchasing power over upstream suppliers, are anticipated to

The amount of time and resources spent on boating activities has increased




Demand strengthens As a discretionary, and often, luxury purchase, the industry is highly dependent on disposable income levels, unemployment and consumer sentiment. Over the next five years, consumer sentiment and disposable income are expected to rise, while unemployment levels fall. Industry revenue is expected to grow 2.8% in 2017, as more consumers make luxury purchases that were deferred during the previous period.

Most boats are purchased for recreational purposes. As a result, leisure time availability is a key factor that affects industry demand. IBISWorld forecasts that leisure time will increase only slightly over the next five years, due

to falling unemployment. Even so, participation in sports is expected to increase more rapidly over the next five years, boosting demand for industry products. The most popular sporting activities include exercise walking, using exercise equipment and swimming, but fishing ranks seventh in terms of most popular sporting activities, which involves the use of boats.

Industry Outlook

Revenue for the Boat Dealership and Repair industry, which includes boat dealers and service repairers, is expected to rise over the five years to 2021, responding to disposable income growth and greater participation in sporting activities. However, the industry is

expected to continue experiencing competition from other recreational activities, keeping revenue growth more subdued than the previous period. IBISWorld projects that industry revenue will grow at an average annual rate of 1.9% to $21.7 billion over the five years to 2021.

Industry landscapecontinued

find the most success in this highly competitive industry. Nevertheless, profit is anticipated to benefit as downstream

conditions improve, particularly in regards to consumer disposable income and unemployment.

Demand for parts and repair services will continue to increase as the number of boats rises

Demand for boating accessories is expected to increase over the five years to 2021, as boat owners continue to upgrade to the latest technology. The latest products and accessories, such as navigational and communication equipment, will continue to drive demand for accessories. Over the past five years, there was a greater focus on e-commerce by industry operators, particularly within the boating accessories segment. Internet sales of

accessories are expected to continue to increase over the next five years. For example, industry operator West Marine states that it uses its e-commerce website to test markets for new products in a cost-effective manner. Industry operators are expected to increasingly focus on the use of this sales channel.

Demand for parts and repair services will continue to increase as boat usage and the number of boats rises. Demand for this segment also depends on factors

Demand for accessories and repair services to increase




Profit and participation

The industry consists of two distinct segments: new and used boat dealers and independent repair shops. Nonemployers account for over 95.0% of companies in the independent repair shop segment and 46.6% of companies within the boat retailing segment, according to US Census data. These types of companies account for a smaller portion of industry revenue; however, they are expected to contribute more to the industry over the next five years.

As the industry continues to prosper and profit margins rise, more businesses, especially nonemploying operators, are expected to enter the industry. As a result, the number of companies is expected to grow at an average annual rate of 3.9% to 136,452 operators over the next five years.

Moreover, the number of industry employees is also expected to increase, as new operators require personnel for sales and customer service positions. IBISWorld expects employment to rise at an annualized rate of 2.4% to 164,714 employees over the five-year period. Despite an influx of new competitors, industry profit margins are anticipated to remain stable, bolstered by improvements in disposable income stimulating downstream demand.

such as the age of the boat because older boats often require more maintenance and repair services. Boat dealers employ a large portion of boat repairers. For example, industry operator MarineMax provides repair and maintenance services. Repair services may be performed under warranty or out of warranty, but some

boat manufacturers only allow for repairs performed under warranty at authorized dealerships. Boat warranties, which vary between different companies and brands, cover products such as hulls, decks and engines. Warranties on hulls generally range from five years to the product’s entire lifetime.

Demand for accessories and repair services to increase continued

Despite an influx of new competitors, industry profit margins are anticipated to remain stable



Industry PerformanceIndustry value added will grow at a faster pace than the overall economy over the 10 years to 2021

Demand has suffered from competition from other leisure activities

Changes in technology have been limited

Life Cycle Stage

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DeclineShrinking economicimportance

Quality GrowthHigh growth in economic importance; weaker companies close down; developed technology and markets

MaturityCompany consolidation;level of economic importance stable

Quantity GrowthMany new companies; minor growth in economic importance; substantial technology change

Key Features of a Mature Industry

Revenue grows at same pace as economyCompany numbers stabilize; M&A stageEstablished technology & processesTotal market acceptance of product & brandRationalization of low margin products & brands

Ship Building

Aircraft, Marine & Railroad Transportation Equipment Wholesaling

Boat Building

Motorcycle Dealership and Repair

Bicycle Dealership and Repair

Boat Dealership and Repair




Industry Life Cycle IBISWorld estimates that the Boat Dealership and Repair industry is in the mature stage of its life cycle. Industry value added, or the industry’s overall contribution to the economy, is expected to increase at an annualized rate of 3.7% over the 10 years to 2021. GDP is expected to increase at a rate of 2.1% over the same period. Although the industry is anticipated to grow at a much faster pace than the overall economy during the 10-year period, this is not indicative of a growing industry due to IVA starting at a relatively low base.

Changes in technology have been low, indicating mature characteristics; technology within the industry is mostly limited to computer technology, point of sales equipment and inventory management. The industry suffered during the economic downturn as a result of lower disposable income levels, falling consumer sentiment and tighter access to credit, however, these trends reversed course in 2011. Going forward, growth is not expected to be as robust due to high price-based competition, as well as competition from other more affordable leisure activities.

This industry is Mature



Products & Services

New and used boats sold in this industry include powerboats, rowboats and sailboats. Personal watercrafts, small motorized vehicles designed for one to three riders, are not included in this industry, but included in the Motorcycle Dealerships and Repair industry (IBISWorld report 44122a).

New and used boatsThe industry includes a broad range of boat types, including outboard or inboard motorboats, sailboats, canoes and kayaks. In 2016, new boats generate the majority of industry revenue, accounting for an estimated 56.5%. Demand for this segment has increased over the past five

years, bolstered by rising disposable income levels and falling unemployment, leaving consumers with more room for discretionary purchases. Demand for new boats and accessories increased in 2011 for the first time since 2006, primarily driven by demand for pontoons, a lake-dwelling vessel with a power motor, and typically, a retractable awning.

Motorboats make up the largest product within the new boat segment, accounting for an estimated 38.5% of all new boat sales. These types of boats are propelled by an engine that is located inside the hull of the boat, and include cruisers, which are larger boats that have facilities for sleeping and cooking, and ski

Products & MarketsSupply Chain | Products & Services | Demand Determinants Major Markets | International Trade | Business Locations

KEY BUYING INDUSTRIES

9901 Consumers in the US Households represent the major market for this industry.

KEY SELLING INDUSTRIES

33661b Boat Building in the US Boat dealers purchase goods from boat manufacturers.

42386 Aircraft, Marine & Railroad Transportation Equipment Wholesaling in the US Boat dealers purchase inventory from boat wholesalers.

Supply Chain

Products and services segmentation (2016)

Total $19.8bn

56.5%New boats

29.7%Parts and repair services

13.8%Used boats




Products & Markets

Demand Determinants

Changes in disposable income levels, consumer sentiment and unemployment affect demand for new and used boats. An increase in income levels or consumer sentiment can lead to a subsequent increase in demand for boats. Likewise, a fall in unemployment can lead to higher boat sales. Price is another major determinant of demand. An increase in the price of boats can result in consumers choosing to defer purchases. Linked to this, financing deals offered by retailers also affects demand.

The price of gasoline and fuels affects industry demand, especially for boat repair services. An increase in the price of gasoline can lead to lower boat usage, as it is often very costly to run a boat. When boat owners decrease their usage, it is less likely for their boat to experience normal wear and tear. Therefore, when boat owners decrease their usage because of high gas prices, it is less likely that they will require boat repair services.

Growth in participation in outdoor activities leads to greater demand for

industry products. Weather patterns also affect demand for boats. For example, drought conditions or low or excessive rainfall levels may close boating locations or render boating dangerous or inconvenient, thereby curtailing customer demand for boating products. In addition, unseasonably cool weather and prolonged winter conditions may lead to a shorter selling season in certain locations. Hurricanes and other storms could result in operation disruptions or damage to boat inventories and facilities. This factor may drive up demand for industry repair services.

Demand for industry products is seasonal. Generally, boat sales will be strongest during warmer months, with sales in the second and third quarters being the highest. In the first and fourth quarter, sales for recreational boats are generally down; however, the growing number of public boat and recreation shows in January has stimulated first quarter sales.

Products & Servicescontinued

boats. Water skiers sometimes prefer boats with an inboard motor since they can produce less wake (i.e. the water that trails behind a boat).

Demand for used boats fell over the past five years and is expected to generate 19.6% of industry revenue in 2016. As economic conditions improved and consumers released pent-up demand for boats, they were more inclined to purchase new boats due to interest rates being at historically low levels. Additionally, there is more external competition for used boats. According to the Recreational Boating and Fishing Foundation, 38.1% of used boats are purchased from a friend or acquaintance.

Parts and repair servicesBoat repairers provide an array of parts and repair services, including steering alignment, light replacement and more substantial mechanical repairs. In 2016, this segment will generate about 29.7% of revenue. Parts and services have been an important source of revenue as consumers opt to keep their boats for longer periods, choosing repairs over purchases.

Other products offered by industry operators include boating accessories such as boat cleaning supplies, paint, maintenance supplies, recreational equipment, and a variety of other miscellaneous merchandise.



Products & Markets

Major Markets

While intermediate markets, including other retailers and wholesalers, account for a small portion of the industry’s revenue, households are responsible for the largest share of recreational boat revenue. It is expected the household market will continue to favor bigger, more expensive boats as economic conditions, such as disposable income levels and consumer confidence, continue to improve. Within the household market, the sales of mid-sized boats rebounded significantly since the downturn. Because these boats are targeted at middle-class families, their sales were negatively affected by high credit card, mortgage and consumer debt. However, the household segment has benefited from looser access to credit and financing options, such as leases, that reduce the burden on consumers. This has led to other areas of growth, such as in personal watercraft. Additionally, increased participation in recreational water sports like kayaking and wakeboarding over the past five years has further boosted household’s share of revenue. This segment is estimated to account for about 88.1% of industry revenue in 2016.

Households earning between $50,000 and $100,000Households earning between $50,000 and $100,000 are the largest industry market, expected to generate 45.9% of revenue in 2016. Consumers in this segment often purchase industry products for recreational activities such as fishing, kayaking, wakeboarding and tubing. Because of this, the majority of boats purchased by this segment are small to medium-sized. This segment’s share of revenue has increased over the past five years due to increases in consumer confidence and per capita disposable income.

Households earning over $100,000In 2016, households earning over $100,000 per year are expected to generate 28.8% of industry revenue. According to the Recreational Boating and Fishing Foundation, about 9.4% of these households own a boat. While many households in this segment own small to midsized boats, this segment also purchases larger and more expensive vessels. Because this segment has a high level of disposable income, they are willing to spend more on discretionary

Major market segmentation (2016)

Total $19.8bn

28.8%Households earning over $100,000

3.1%Wholesalers for resale

25.4%Households earning $75,000 to $99,999

2.9%Other retailers

for resale

20.5%Households earning $50,000 to $74,999

15.6%Households earning below $50,000

3.7%Other




Products & Markets

International Trade The industry’s service-based nature limits the opportunity for international trade. As a result, the industry records no import or export revenue. While trade

does not apply to the industry, boat dealers do display some degree of globalization through the ownership of foreign holdings.

Major Marketscontinued

purchases. Over the past five years, this segment’s share of revenue has remained relatively stagnant.

Households earning less than $50,000Households earning under $50,000 per year are the smallest segment of consumers for the Boat Dealership and Repair industry. Similar to households earning between $50,000 and $100,000, this segment primarily purchases small to midsized boats for recreational

purchases. In fact, about 5.1% households in this category own a boat or kayak. Even so, because this segment has lower purchasing power, it is expected to generate a smaller share of revenue than higher earning segments. Over the past five years, this segment’s share of revenue has slightly decreased, as many of these individuals put off larger discretionary purchases. In 2016, households earning under $50,000 are expected to account for 15.6% of industry revenue.



Products & Markets

Business Locations 2016

MO2.5

West

West

West

Rocky Mountains Plains

Southwest

Southeast

New England

VT0.4

MA2.5

RI1.0

NJ2.6

DE0.5

NH1.0

CT1.4

MD2.7

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AZ0.8

CA5.6

NV0.3

OR1.2

WA3.9

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NE0.4

MN3.3

IA1.1

OH2.1 VA

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FL17.2

KS0.3

CO0.5

UT0.5

ID0.7

TX4.8

OK1.1

NC3.2

AK0.7

WY0.1

TN2.2

KY1.2

GA1.8

IL2.2

ME1.5

ND0.3

WI3.4 MI

4.5 PA2.0

WV0.3

SD0.4

NM0.1

AR0.8

MS0.8

AL1.5

SC2.4

LA2.3

HI0.3

IN1.9

NY5.3 5

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Mid- Atlantic

Establishments (%)

Less than 3% 3% to less than 10% 10% to less than 20% 20% or more

Great Lakes



Products & Markets

Business Locations The industry is generally spread according to the distribution of the US population, income levels and the presence of waterways. Industry dealers also are located close to suppliers, including boat manufacturers and wholesalers. Industry activity is concentrated in two of the most populous regions of the United States: the Southeast, Great Lakes and West regions. The Southeast, which accounts for an estimated 35.6% of establishments, has the largest share of the US population. According to the latest available US Census data, an estimated 25.6% of Americans live in the Southeast region. Generally, the greater the number of residents in a region, the stronger the demand for industry services. About 17.2% of the region’s establishments are located in Florida, primarily because of the state’s high population levels and large areas of bays, lakes and waterways. According to the Marine Industries Association of Florida, the state’s marine industry, including marinas, boatyards, builders and marine services, employs 246,000 people and is valued at over $20.3 billion.

The Great Lakes region, which has about 14.2% of industry establishments, is home to lakes, such as Lake Erie, Lake Huron, Lake Michigan, Lake Ontario and Lake Superior. Lake Erie is the warmest of the Great Lakes, and is often used for recreational activities; therefore, high water sport participation levels in this region lead

to high demand for dealerships to fulfill. According to the Great Lake Information Network, the region has over 94,000 square miles of water, making it an attractive location for dealerships to operate.

The West accounts for 12.0% of establishments. Within the region, California is a major boating area, accounting for an estimated 5.6% of industry establishments. Boating areas include the coast and the California Delta, which comprise 1,000 miles of waterways and has over 100 marinas and waterside resorts. In addition, California has a higher-than-average median household income; recreational boats are generally considered a luxury purchase.

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Cost Structure Benchmarks

ProfitProfit is expected to account for 5.9% of total industry revenue for the Boat Dealership and Repair industry in 2016. Even in light of high price-based competition, profit has grown over the past five years from recessionary lows. Because the industry is highly fragmented, profit margins often vary between operators. Operators who focus more on boat repair generally earn higher profit margins than operators who specialize in exclusively the sale of boats and parts. However, dealers of specialized or luxury boats and niche services earn higher margins than those with more general product and service offering.

PurchasesAs a retail industry, boat dealers spend the bulk of their revenue purchasing their products. In 2016, purchases are expected to account for about 63.6% of revenue. Purchase’s share of industry revenue depends on a dealer’s target market. For example, purchases typically account for a larger percentage of revenue for boat dealers that primarily sell large boats. These large boats are not only expensive to purchase, but also costly to maintain and display.

While small boats made of lumber and fiberglass are typically less expensive than large steel boats, the rising price of lumber over the past five years has made these boats more costly for operators.

Key Success Factors Ability to clearly specify requirements to suppliersBoat dealers need to obtain dealer agreements with boat manufacturers that can maximize margins.

Maintenance of excellent customer relationsMaintaining strong customer relationships will likely result in repeat sales.

Must have licenseBoat dealers need a license to operate in most states.

Ability to control stock on handSince boat inventories are typically very expensive, the ability to control inventory levels is one of the most important success factors for industry participants.

Market Share Concentration

The Boat Dealership and Repair industry has a low level of market share concentration, with the top three players accounting for less than 10.0% of industry revenue. The industry is highly fragmented, characterized by an overwhelmingly large number of small players. According to US Census Bureau data and IBISWorld estimates, about 79.2% of boat dealerships have fewer than ten employees, while only 5.7% employ more than 20 workers. Industry fragmentation is even higher for boat repairers that are not associated with

dealerships; in 2016, over 95.0% of such operators are estimated to be nonemployers (i.e. owner-operators who do not have any hired employees).

Despite the industry’s fragmented state, market share concentration has been on the rise over the past five years, especially for boat dealers. Larger players have been acquiring smaller dealerships to expand their national presence and increase their market share. For example, the industry’s largest player MarineMax acquired Florida-based Treasure Island Marina in 2011.

Competitive LandscapeMarket Share Concentration | Key Success Factors | Cost Structure Benchmarks Basis of Competition | Barriers to Entry | Industry Globalization

Level Concentration in this industry is Low

IBISWorld identifies 250 Key Success Factors for a business. The most important for this industry are:



Competitive Landscape

Cost Structure Benchmarkscontinued

Although industry operators typically pass along these costs to consumers in the form of higher prices, high price competition has made this increasingly difficult to do. Price-based competition is high for the Boat Dealership and Repair industry, which restricts industry operator’s ability to raise prices.

Operators engaged primarily in boat repair have slightly lower purchase costs than those focused on retailing boats. Purchases for these individuals include repair equipment, spare parts and power tools. Businesses who specialize in the repair of luxury or niche boats typically have higher purchase costs than those with general repair services. However, these specialized repair services are generally less price competitive than general service providers.

WagesBoat dealerships require salespeople, technicians and office workers to operate. In 2016, wages are expected to account for 12.2% of revenue. Labor costs have been volatile over the past five years, reflecting depressed sales volume and layoffs. Although wages are expected to rise at an annualized rate of 4.1% the five-year period, this is primarily due to wages starting at a low recessionary base. Similar to automotive dealers, industry operators are increasingly utilizing technology to lower overall expenses, including labor costs.

Wages vary between different types of operators. Operators who repair boats typically require technical skills and demand higher wages than non-technical employees. Additionally, operators primarily engaged in selling boats often

Sector vs. Industry Costs

n Profi tn Wagesn Purchasesn Depreciationn Marketingn Rent & Utilitiesn Other

Average Costs of all Industries in sector (2016)

Industry Costs (2016)

0

20

40

60

Perc

enta

ge o

f rev

enue

80

100


3.3 5.9

12.43.6 1.31.0

63.6

12.2

10.34.5 1.81.1

69.7

9.2




Basis of Competition InternalCompetition in the industry is high. Dealers principally compete on price, but also compete through warranty, credit offerings and sales experience. Quality of customer service in the parts and repair business is a significant point of competition within a franchise’s dealer network; poor customer service can drive customers to other dealerships within the franchise to get their boat serviced without violating manufacturer warranties. Customer service quality will become a more important basis of competition as parts and repair services grow as a revenue source. Dealerships that offer a full range of services, from sales to repairs, have a competitive advantage over sales-only dealers. Boat dealers also compete on brand offering as customer preferences for a particular brand shift year to year.

Within the industry, dealer groups are continuously growing market share over independent dealerships. Dealer groups are able to operate on lower margins due to cost-savings from marketing expenses, improved credit terms and inventory management.

ExternalBoat dealers face external competition from a number of recreational businesses seeking to attract consumers’ leisure time and discretionary spending dollars. Additionally, used boat dealers face stiff competition from individual boat owners who sell their vehicles themselves. Individual owners are able to offer lower prices than dealerships. According to the Recreational Boating and Fishing Foundation, about 38.1% of pre-owned boats are purchased through a friend or acquaintance, with only 15.5% purchased through an actual dealership.

Cost Structure Benchmarkscontinued

pay their employees commission on sales. While commissions drive revenue, they increase wage costs and lower profit margins.

Financing inventoryFloor plan interest expense represents the interest that boat dealers pay on vehicles purchased for sale. A faster sales pace results in lower floor plan interest expense, as the vehicle spends less time on the dealer’s lot. As a result of historically low interest rates over the five-year period, this segment’s share of revenue has been reduced. Low interest rates stimulates demand for recreational vehicles, such as boats, which reduces the amount of time boats sit on dealer’s lot.

OtherBoat dealers have fairly stable budgets to cover rent, utilities and other costs, such as advertising. Most boat dealers focus their advertising spending on traditional mediums like radio and newspaper ads; internet advertising and lead generation has not gained traction with this industry as easily. Rent and utilities are nearly fixed costs for this industry, rarely veering from a combined 3.6% of revenue. Depreciation costs are typically low within the industry, accounting for an estimated 1.0% of revenue in 2016. Depreciable assets include point-of-sale systems, inventory tracking systems and boat repair equipment.

Level & Trend Competition in this industry is High and the trend is Steady




Industry Globalization

The Boat Dealership and Repair industry has a low level of globalization. Major industry operators are based in the United States,

although some have international operations. For example, West Marine has stores in the United States, Puerto Rico, Canada and Turkey.

Barriers to Entry Barriers to entry in the industry are moderate and include substantial capital requirements. Dealers must purchase boats from manufacturers, which typically require financing because of their high costs. During the recession, access to credit became tight, and some dealers were unable to purchase industry products for resale. Costs to acquire or lease land and buildings also may be significant.

Acquiring a dealer agreement is another barrier for potential entrants. These agreements can specify expected sales targets and performance measures, and thus be nullified if not achieved. Other barriers include acquiring permits, which are required at the state

government level. Nonetheless, the low level of market share concentration indicates there is room for new entrants, especially those with a product or geographic niche.

Barriers to Entry checklist

Competition HighConcentration LowLife Cycle Stage MatureCapital Intensity LowTechnology Change LowRegulation & Policy MediumIndustry Assistance Low


Level & Trend Barriers to Entry in this industry are Medium and Steady

Level & Trend Globalization in this industry is Low and the trend is Steady



Player Performance Established in 1998 as a merger of five previously independent boat dealers, MarineMax Inc. is currently the largest recreational boat dealer in the United States. Through its 53 retail locations in 17 states, the company sells new and used boats, engines, trailers, parts and accessories. It also provides various boat related services, including repair and maintenance, financing and boat insurance. The company’s main products include Sea Ray, Boston Whaler, Cabo, Hatteras and Meridian recreational boats and yachts, which are manufactured by Brunswick Corporation, the world’s largest manufacturer of marine products and marine engines. The company has its headquarters in Clearwater, FL, and employs roughly 1,300 people.

Operating in a highly fragmented industry, MarineMax attempts to differentiate itself from other boat dealerships by focusing its sale on

premium products. To this end, its average selling price in fiscal 2016 was $171,000, compared with $43,000 as the industry average. Other strategies employed by the company include gaining customer loyalty through customer service, offering additional higher profit margin products and services and expanding its internet retail operations.

Financial performanceOver the five years to fiscal 2017, industry-specific revenue is expected to increase at an annualized rate of 11.8% to $839.7 million. Although industry-relevant revenue is expected to rise over the five-year period, this is largely attributable to revenue starting at a low recessionary base. As disposable income dove during the downturn, the company suffered; however, as conditions improved, consumers released pent-up

Major CompaniesMarineMax Inc. | Other Companies

95.8%Other

MarineMax Inc. 4.2% SOURCE: WWW.IBISWORLD.COM

Major players(Market share)

MarineMax Inc. (US industry-specifi c segment) fi nancial performance*

Year**Revenue

($ million) (% change)Operating Income

($ million) (% change)

2011-12 480.9 N/C -11.5 N/C

2012-13 524.5 9.1 1.1 N/C

2013-14 584.5 11.4 15.0 1,263.6

2014-15 624.7 6.9 11.3 -24.7

2015-16 751.4 20.3 48.3 327.4

2016-17* 839.7 11.8 132.0 173.3

*Estimates; **Year-end September SOURCE: ANNUAL REPORT AND IBISWORLD

MarineMax Inc. Market share: 4.2%



Major Companies

Other Companies The industry is highly fragmented and is characterized by a large number of smaller-sized companies. IBISWorld estimates that nonemploying operators account for over 95.0% of all operators within the independent repair shop segment (i.e. repairers that are not associated with a boat dealer). Boat dealers are affected by dealer agreements with manufacturers. Therefore, boat manufacturers have a strong influence over boat dealers. MarineMax states that its dealer agreements include restrictions on locations and approval right over management changes. Companies also need to meet customer satisfaction goals and market share goals.

West Marine Estimated market share: 2.7%Incorporated in 1993, California-based West Marine identifies as one of the largest global boat retailers. The company has almost 300 stores in 38 states, Puerto Rico and Canada and five franchised stores in Turkey. West Marine sells a range of boat-related products, such as apparel, anchor and docking equipment and navigation products. West Marine also retails boats and motors (inflatable boats, dinghies, kayaks, canoes, oars,

paddles and outboard motors). It operates through three segments: stores, port supply and direct-to-consumer. In recent years, the company has expanded its ecommerce offering, and aims to generate 15.0% of its retail sales over the internet in the coming years. In 2016, West Marine is expected to generate $542.7 million in industry-relevant revenue.

Bass Pro Shops Estimated market share: 2.2%Founded in 1971 in Springfield MO, Bass Pro Shops is one of the top retailers of outdoor gear. The company offers a wide variety of products for activities such as fishing, hunting, camping, golfing and boating. The company has over 90 locations across the United States and Canada. Relevant to the industry, the company’s boating segment offers a variety of boats, kayaks, safety gear, navigational devises, marine electronics and water sports gear. The company has experienced consistent revenue growth over the past five years and has opened over a dozen new locations over the period. In 2016, the company’s industry relevant revenue is expected to reach $441.3 million.

Player Performancecontinued

demand for discretionary purchases, such as boats. The company has also boosted sales by expanding its store count, particularly in the Southeast region of the United States.

Operating income is also anticipated to increase over the five years to fiscal 2017.

The company generated additional revenue by discounting prices and engaging in aggressive price strategies. Moreover, MarineMax benefited from shifting its product mix from boat sales to brokerage services, finance and insurance products, which yield higher profit margins.



Capital Intensity Boat dealerships require salespeople, technicians and office workers to operate. In 2016, wages are expected to account for 12.2% of industry revenue, down slightly from 12.4% in 2011. Although total wages are expected to rise over the five years to 2016, this is largely attributable to wages starting the period at a low recessionary base. Going forward, industry operators are expected to utilize technology to reduce operating costs, including labor expenses. This will likely hinder wage growth over the five years to 2021.

Industry depreciation costs are low. By classifying vehicles as short-term assets, boat dealers tend to avoid significant depreciation expenses. Service equipment and the physical dealership

are the industry’s primary long-term assets. The industry spends about $0.08 on capital for every dollar spent on labor.

Operating ConditionsCapital Intensity | Technology & Systems | Revenue VolatilityRegulation & Policy | Industry Assistance

Tools of the Trade: Growth Strategies for Success


Labo

r Int

ensi

veCapital Intensive

Change in Share of the Economy

New Age Economy

Recreation, Personal Services, Health and Education. Firms benefi t from personal wealth so stable macroeconomic conditions are imperative. Brand awareness and niche labor skills are key to product differentiation.

Traditional Service Economy

Wholesale and Retail. Reliant on labor rather than capital to sell goods. Functions cannot be outsourced therefore fi rms must use new technology or improve staff training to increase revenue growth.

Old Economy

Agriculture and Manufacturing. Traded goods can be produced using cheap labor abroad. To expand fi rms must merge or acquire others to exploit economies of scale, or specialize in niche, high-value products.

Investment Economy

Information, Communications, Mining, Finance and Real Estate. To increase revenue fi rms need superior debt management, a stable macroeconomic environment and a sound investment plan.

Ship Building

Aircraft, Marine & Railroad Transportation Equipment Wholesaling

Boat Building

Motorcycle Dealership and Repair

Bicycle Dealership and Repair


Capital intensity

0.5

0.0

0.1

0.2

0.3

0.4

SOURCE: WWW.IBISWORLD.COMDotted line shows a high level of capital intensity

Capital units per labor unit


Retail TradeEconomy

Level The level of capital intensity is Low



Operating Conditions

Regulation & Policy Dealers must comply with state and federal regulations that cover licensing, franchising and liability. For example, dealers must renew franchise and state licensing agreements annually. Franchise agreements protect a dealer’s exclusive right to sell a specific brand within a specified radius. These regulations are in addition to workplace and employment practice laws applicable to most businesses.

Boat dealerships also are subject to regulations imposed by the Environmental Protection Agency (EPA). For example, dealerships that store more than 10,000 pounds of gasoline or diesel fuel and/or reportable quantities of other chemicals must submit an emergency and hazardous chemical inventory form to their local emergency planning commission, state emergency response

Revenue Volatility The Boat Dealership and Repair industry experiences low revenue volatility. Since boats usually represent a discretionary purchase, demand generally fluctuates in line with changes in consumer sentiment and disposable

income levels. Over the past five years, as the economy strengthened, industry operators experienced steady demand. Over the next five years, revenue volatility is expected to remain similarly low.

Technology & Systems The industry experiences a low level of technological change. The use of technology in dealerships is generally limited to the use of the internet for advertising and information distribution; computerized management information systems for processing of sales and expenditure information; and computerized part and accessory inventory management systems. Internet

sales are generally limited to low-cost parts and accessories, hard-to-get items and products located in geographically remote regions. Consumers tend to feel uncomfortable making large purchases over the internet and most dealers offer limited functionality on their websites. Since industry products are often high priced, consumers prefer to travel to dealerships to compare and test boats.

Level The level of Technology Change is Low


Volatility vs Growth

Reve

nue

vola

tility

* (%

)

1000

100

10

1

0.1

Five-year annualized revenue growth (%)–30 –10 10 30 50 70

Hazardous

Stagnant

Rollercoaster

Blue Chip

* Axis is in logarithmic scale

A higher level of revenue volatility implies greater industry risk. Volatility can negatively affect long-term strategic decisions, such as the time frame for capital investment.

When a fi rm makes poor investment decisions it may face underutilized capacity if demand suddenly falls, or capacity constraints if it rises quickly.


Level The level of Volatility is Low

Level & Trend The level of Regulation is Medium and the trend is Increasing



Operating Conditions

Industry Assistance Tariffs are applicable to some recreational boats. For example, inflatable boats incur a general tariff rate of 2.4% and sailboats, with or without an auxiliary motor, incur a tariff of 1.5%. However, some boats, such as canoes, tugs and pusher craft, are exempt from general tariffs.

Dealer agreements between dealers and major boating manufacturers are a key industry feature. These franchise agreements, which are normally valid

for a set period of time, allow a dealer the right to exclusively sell boats within a defined primary geographic area. The industry further benefits from industry trade groups. For example, the Marine Retailers Association of the Americas is the official North American industry trade organization, representing marine retailers across North America. The organization provides educational, advocacy and business development support.

Regulation & Policycontinued

commission and local fire department. Dealerships are also subject to a variety of federal, state and local environmental laws and regulations relating to the discharge, treatment, storage, disposal, investigation and remediation of certain materials, substances and wastes. In 2006, the EPA diesel rule was implemented requiring diesel engines to meet stringent new emission standards, primarily necessitating electronic controls.

Effective January 1, 2010, industry operators must adhere to EPA emission

regulations requiring certain gasoline sterndrive and inboard engines to be equipped with a catalyst exhaust monitoring and treatment system. Environmental regulatory bodies may impose higher emissions standards in the future for marine engines. Complying with these standards increases the cost to manufacture engines and therefore raises the price to the customer. This reduces consumer demand for boats and potentially lowering operating margins.

Level & Trend The level of Industry Assistance is Low and the trend is Steady



Key StatisticsRevenue

($m)

Industry Value Added

($m)Establish-

ments Enterprises Employment Exports ImportsWages ($m)

Domestic Demand


(hours per day per capita)2007 23,620.8 3,641.7 71,860 70,821 115,810 -- -- 2,519.0 N/A 5.12008 20,828.7 2,980.6 74,677 73,613 116,919 -- -- 2,277.8 N/A 5.22009 16,355.0 2,633.3 78,560 77,575 112,611 -- -- 1,988.6 N/A 5.32010 15,664.7 2,673.4 84,269 83,481 114,851 -- -- 1,928.4 N/A 5.22011 15,871.6 2,938.1 90,169 89,386 120,797 -- -- 1,968.2 N/A 5.22012 16,633.3 3,135.0 92,695 91,945 126,522 -- -- 2,129.1 N/A 5.42013 17,849.4 3,141.0 97,450 96,692 130,309 -- -- 2,129.9 N/A 5.32014 18,801.8 3,503.8 103,142 102,261 137,050 -- -- 2,252.1 N/A 5.32015 19,319.6 3,625.9 108,316 107,447 141,478 -- -- 2,328.9 N/A 5.32016 19,780.8 3,764.4 113,329 112,464 146,006 -- -- 2,405.2 N/A 5.32017 20,331.1 3,872.8 118,243 117,491 150,378 -- -- 2,482.9 N/A 5.22018 20,844.9 4,010.2 122,995 122,355 154,845 -- -- 2,560.7 N/A 5.22019 21,210.3 4,084.7 127,711 127,243 158,403 -- -- 2,621.3 N/A 5.32020 21,513.1 4,164.5 132,077 131,712 161,848 -- -- 2,678.1 N/A 5.32021 21,743.0 4,237.9 136,672 136,452 164,714 -- -- 2,724.6 N/A 5.3Sector Rank 35/64 37/64 5/64 5/64 31/64 N/A N/A 38/64 N/A N/AEconomy Rank 451/1556 601/1556 100/1556 95/1556 285/1556 N/A N/A 568/1556 N/A N/A

IVA/Revenue (%)

Imports/ Demand

(%)

Exports/Revenue

(%)

Revenue per Employee

($’000)Wages/Revenue

(%)Employees

per Est.Average Wage

($)

Share of the Economy

(%)2007 15.42 N/A N/A 203.96 10.66 1.61 21,751.14 0.022008 14.31 N/A N/A 178.15 10.94 1.57 19,481.86 0.022009 16.10 N/A N/A 145.23 12.16 1.43 17,659.02 0.022010 17.07 N/A N/A 136.39 12.31 1.36 16,790.45 0.022011 18.51 N/A N/A 131.39 12.40 1.34 16,293.45 0.022012 18.85 N/A N/A 131.47 12.80 1.36 16,827.90 0.022013 17.60 N/A N/A 136.98 11.93 1.34 16,345.00 0.022014 18.64 N/A N/A 137.19 11.98 1.33 16,432.69 0.022015 18.77 N/A N/A 136.56 12.05 1.31 16,461.22 0.022016 19.03 N/A N/A 135.48 12.16 1.29 16,473.30 0.022017 19.05 N/A N/A 135.20 12.21 1.27 16,511.06 0.022018 19.24 N/A N/A 134.62 12.28 1.26 16,537.18 0.022019 19.26 N/A N/A 133.90 12.36 1.24 16,548.30 0.022020 19.36 N/A N/A 132.92 12.45 1.23 16,547.01 0.022021 19.49 N/A N/A 132.00 12.53 1.21 16,541.40 0.02Sector Rank 23/64 N/A N/A 48/64 33/64 63/64 48/64 37/64Economy Rank 1241/1556 N/A N/A 1149/1556 1095/1556 1503/1556 1431/1556 601/1556

Figures are in inflation-adjusted 2016 dollars. Rank refers to 2016 data.

Revenue (%)

Industry Value Added

(%)

Establish-ments

(%)Enterprises

(%)Employment

(%)Exports

(%)Imports

(%)Wages

(%)

Domestic Demand

(%)


(%)2008 -11.8 -18.2 3.9 3.9 1.0 N/A N/A -9.6 N/A 1.42009 -21.5 -11.7 5.2 5.4 -3.7 N/A N/A -12.7 N/A 1.42010 -4.2 1.5 7.3 7.6 2.0 N/A N/A -3.0 N/A -1.32011 1.3 9.9 7.0 7.1 5.2 N/A N/A 2.1 N/A 0.62012 4.8 6.7 2.8 2.9 4.7 N/A N/A 8.2 N/A 3.12013 7.3 0.2 5.1 5.2 3.0 N/A N/A 0.0 N/A -2.02014 5.3 11.6 5.8 5.8 5.2 N/A N/A 5.7 N/A 0.82015 2.8 3.5 5.0 5.1 3.2 N/A N/A 3.4 N/A -0.82016 2.4 3.8 4.6 4.7 3.2 N/A N/A 3.3 N/A -0.22017 2.8 2.9 4.3 4.5 3.0 N/A N/A 3.2 N/A -0.42018 2.5 3.5 4.0 4.1 3.0 N/A N/A 3.1 N/A 0.22019 1.8 1.9 3.8 4.0 2.3 N/A N/A 2.4 N/A 0.42020 1.4 2.0 3.4 3.5 2.2 N/A N/A 2.2 N/A 0.42021 1.1 1.8 3.5 3.6 1.8 N/A N/A 1.7 N/A -0.2Sector Rank 21/64 13/64 3/64 4/64 10/64 N/A N/A 14/64 N/A N/AEconomy Rank 686/1556 487/1556 199/1556 188/1556 359/1556 N/A N/A 441/1556 N/A N/A

Annual Change

Key Ratios

Industry Data




Apr 2015 - Mar 2016 by company revenueApr 2012 - Apr 2013 - Apr 2014 - Apr 2015 - Small Medium LargeMar 2013 Mar 2014 Mar 2015 Mar 2016 (<$10m) ($10-50m) (>$50m)

Liquidity Ratios

Current Ratio 1.3 1.3 1.3 1.3 1.3 1.4 1.2Quick Ratio 0.2 0.2 0.2 0.2 0.2 0.3 0.3Sales / Receivables (Trade Receivables Turnover) 64.3 65.3 66.8 74.5 128.6 74.8 26.5

Days’ Receivables 5.7 5.6 5.5 4.9 2.8 4.9 13.8Cost of Sales / Inventory (Inventory Turnover) 3.4 3.4 3.5 3.3 2.5 3.5 5.1

Days’ Inventory 107.4 107.4 104.3 110.6 146.0 104.3 71.6Cost of Sales / Payables (Payables Turnover) 42.0 41.7 39.1 40.9 53.5 37.9 37.3

Days’ Payables 8.7 8.8 9.3 8.9 6.8 9.6 9.8Sales / Working Capital 13.3 13.6 13.5 12.9 11.1 12.6 20.5

Coverage Ratios

Earnings Before Interest & Taxes (EBIT) / Interest 3.2 3.4 4.1 3.6 2.3 4.9 4.9

Net Profit + Dep., Depletion, Amort. / Current Maturities LT Debt 1.9 1.7 2.3 2.1 1.4 2.8 1.5

Leverage Ratios

Fixed Assets / Net Worth 0.4 0.4 0.4 0.4 0.4 0.3 0.6Debt / Net Worth 3.2 3.0 3.3 3.0 3.4 2.6 3.6Tangible Net Worth 21.3 22.3 22.7 22.7 17.2 28.6 23.8

Operating Ratios

Profit before Taxes / Net Worth, % 21.5 22.2 24.9 22.5 18.1 23.8 26.5Profit before Taxes / Total Assets, % 4.9 5.1 6.0 5.2 3.3 6.6 6.7Sales / Net Fixed Assets 37.5 36.7 37.9 34.4 40.4 33.4 24.2Sales / Total Assets (Asset Turnover) 2.3 2.4 2.4 2.3 2.2 2.4 2.8

Cash Flow & Debt Service Ratios (% of sales)

Cash from Trading 21.8 20.9 22.2 20.6 22.5 19.6 15.0Cash after Operations 1.8 1.8 2.3 2.0 1.6 2.1 2.8Net Cash after Operations 2.9 2.8 3.0 2.9 2.8 2.9 2.9Cash after Debt Amortization -0.3 -0.4 -0.1 -0.1 0.3 -0.3 -0.7Debt Service P&I Coverage 1.0 1.2 1.6 1.3 1.2 1.6 0.6Interest Coverage (Operating Cash) 1.5 2.4 2.8 2.6 1.8 3.7 0.8

Assets, %

Cash & Equivalents 9.7 9.0 10.0 9.6 9.9 9.8 7.9Trade Receivables (net) 7.3 7.3 6.9 6.6 4.4 7.2 12.7Inventory 57.4 57.3 57.0 57.2 61.6 55.9 46.2All Other Current Assets 1.6 1.8 1.6 2.4 2.6 2.1 2.2Total Current Assets 76.0 75.4 75.4 75.9 78.6 75.0 68.9Fixed Assets (net) 14.5 15.3 15.0 15.3 14.7 14.3 20.2Intangibles (net) 4.7 4.4 4.5 4.6 3.3 5.9 4.9All Other Non-Current Assets 4.8 4.9 5.1 4.3 3.4 4.8 6.0Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0Total Assets ($m) 8,824.1 9,512.2 9,623.4 8,891.4 813.5 2,669.9 5,408.0

Liabilities, %

Notes Payable-Short Term 30.7 31.3 31.1 32.0 33.2 30.6 32.4Current Maturities L/T/D 3.8 3.0 3.1 3.3 3.5 3.2 3.4Trade Payables 9.0 9.9 10.0 8.8 8.9 9.0 7.9Income Taxes Payable 0.1 0.1 0.1 0.1 n/a 0.1 0.1All Other Current Liabilities 10.7 10.9 11.0 10.3 12.4 8.0 10.0Total Current Liabilities 54.3 55.2 55.3 54.5 58.0 50.9 53.8Long Term Debt 13.5 12.8 11.6 12.6 13.0 11.5 14.4Deferred Taxes 0.2 0.2 0.2 0.2 n/a 0.1 0.7All Other Non-Current Liabilities 6.0 5.0 5.7 5.4 8.4 3.1 2.4Net Worth 26.0 26.7 27.2 27.3 20.5 34.5 28.7Total Liabilities & Net Worth ($m) 8,824.1 9,512.2 9,623.4 8,891.4 813.5 2,669.9 5,408.0

Maximum Number of Statements Used 754 724 707 665 305 273 87

Industry Financial Ratios

Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects.Note: For a full description of the ratios refer to the Key Statistics chapter online.



Jargon & Glossary

BARRIERS TO ENTRY High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

EMPLOYMENT The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.

ENTERPRISE A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.

ESTABLISHMENT The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.

EXPORTS Total value of industry goods and services sold by US companies to customers abroad.

IMPORTS Total value of industry goods and services brought in from foreign countries to be sold in the United States.

INDUSTRY CONCENTRATION An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.

INDUSTRY REVENUE The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.

INDUSTRY VALUE ADDED (IVA) The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.

INTERNATIONAL TRADE The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.

LIFE CYCLE All industries go through periods of growth, maturity and decline. IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.

NONEMPLOYING ESTABLISHMENT Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.

PROFIT IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.

VOLATILITY The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.

WAGES The gross total wages and salaries of all employees in the industry. The cost of benefits is also included in this figure.

Industry Jargon

IBISWorld Glossary

INBOARD MOTOR A motor that is located inside the hull of a boat.

OUTBOARD MOTOR A motor that is attached to the outside of a boat.

WAKE The v-shaped water that trails behind a boat, created by the boat’s forward motion.


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