A recent survey of boat dealers by Longbow Research shows those contacted reported aluminum boats, including pontoons, have continued to outperform fiberglass, although this margin is beginning to narrow. Pontoon boats were widely reported as the best-selling model of boat for both the month of March and the first quarter.
"This growth is being driven by increased demand for the relatively low-priced and versatile watercraft, combined with an increasing number of dealers who carry them," the report noted. "[Brunswick's] Harris, Princecraft and Lowe brands benefit most notably from this trend.
"In terms of size, we have seen no change from the post-recession pattern of boats at the high and low end performing better than mid-sized (in the 25-40 foot range), which happens to be a key segment for Brunswick," Hardiman added. "That said, it would appear that this sub-segment appears to be slowly improving and has grown slightly over the past two months after years of decline."
The recent survey of boat dealers reports an average growth of 17 percent of overall boat sales during March which, on top of 6 percent January growth and 21 percent February growth, brings first-quarter weighted average growth to 16 percent.
"While these numbers were clearly aided by unseasonably warm weather and are off of a seasonally small year-over-year base, our contacts are generally more optimistic toward the upcoming season than they have been in a handful of years," James Hardiman said in his report.
Longbow Research analysts track Brunswick Corp. and MarineMax.
The survey was conducted by contacting more than 25 domestic powerboat dealers.
Of Brunswick, Hardiman said he would be surprised to see a "dramatic shift" in the company's 2012 outlook when it issues its quarterly earnings report later this month.
"However, we do believe that the first few months of the year have trended ahead of expectations and that short sellers looking for a repeat of 2011 (a steep drop following 1Q commentary) are likely to be disappointed," he added.
Of MarineMax, he said, current industry levels imply continued losses for the company.
"Until we get better visibility on the timing and magnitude of an industry recovery, we remain neutral on [MarineMax]," Hardiman said.
"Although we estimate that the true earnings power for MarineMax remains a few years away, we believe that if everything goes as planned, there is significant upside potential for the shares," he added. "If MarineMax can make some convincing progress toward its longer-term goals, that expected upside could be realized sooner than expected."
On a geographic basis, contacted dealers reported the strongest growth in the Southern and Midwestern regions, with average unit sales up over 20 percent in both cases. On the East Coast and the Midwest, dealers report that much more favorable weather than last spring has been a strong contributor to growth, although the East still trails the Midwest in terms of year-over-year comparisons. The West coast is the laggard, with contacts reporting more variable results.
Hardiman said he's seeing an increase in Florida, which is by far the biggest boating state in the U.S.
