Grand Banks short comings

The past issues were that sales were horrible and they were losing money, not quality issues.

The changes have created pretty much a new company. Palm Beach is the company Mark Richards owned and with the increased manufacturing capacity of Grand Banks, they are selling very well.

Grand Banks has been stripped down. Of what you know as Grand Banks there are only two Aleutian models and two Heritage models now offered and few if any of those being sold. Eastbay is down to one model as Palm Beach covers the market it was for.

Grand Banks also is introducing a new 60' Grand Banks. It really has a lot of features and similarities to Palm Beach but for the Grand Banks customer, or what they think is the Grand Banks customer. It will be lighter and faster than Grand Banks was and more modern in design. Apparently several have been presold.

Now, the rest of the story of their miraculous turnaround.

Well, the quarter ending March 31 they lost money as they did for the nine months ended March 31. Sales have been down significantly from the same period a year ago. They blame the most recent loss on the two years spent developing the new model and all that work, but seems to me that two years wouldn't be reflected in one quarter. Then they blame it on a swap, where they exchanged a 67% complete boat for a 14% complete one. Shouldn't impact profit that much although it's my understanding they are now accounting for sales revenues based on percent complete rather than waiting to record at time of sale. They also blame fees from boat shows and sales and marketing.

Regardless, they say they took orders for 3 new boats during the quarter. That's one per month which is horrible. But then they say their net order book is over S$41 million (about US$30 million). Then why aren't they building and shipping them? Their shipments in the last nine months are only S$39 million. I question their order book and how many of those will ever truly be shipped as the orders stand. In boats of the sizes and types they build, you should never have such a backlog.

I want to believe they're headed somewhere good, but their latest results don't reassure me. The previous quarter they said they took orders for six boats, due to FLIBS. They also reported six boats the quarter before. They don't ever report any cancelled orders. But just dropping from 6 per quarter to 3 isn't good and shipments down from a year ago isn't good.

As to the new boat, that's a boat line of one model. If it took them two years for that, how long to build a real line?

The rhetoric sounds good and makes me hopeful. However, the financials don't reflect it at all. We'll see at the end of the next quarter.

Your theory is not bad Olderboater, but if you start viewing balance sheets of most boat builders you nearly end up with the same answer as you did to all of them when they are in rough seas.

I think the Palm Beach investment was a wrong one, and I cannot understand why they did it since they where in that market with the Eastbay line.

You also describe as Eastbay as a non Grand Banks but before doing so you have to understand the following points
1. It was a big success since they launched the down East lobster boat design and at a time (2000-2005) it was a big chunk of there sales (about 40%)
2. Eastbay was a big impact in the industry and its success apart propelling other brands as Hinckley also made the lobster boat become a hit in the Med, with other Italian builders jumping in the style
3. Downeast boat are also a traditional inspired fishing type craft as is the bread and butter trawler inspired Grand Banks today called Heritage line

Eastbay is built by Grand Banks but not traditional Grand Banks. It sold well, but now they've virtually killed the line. Yes, it was a significant percentage of their total sales.

I know many boat builders that make money, some year after year. Grand Banks doesn't. Rough seas implies a short term run. Grand Banks has been struggling for years. It was only a short time ago they were in trouble with the Singapore exchange and subject to delisting if they couldn't show a profit. So, they had one year of profit and asked to have their status revised.

Downeast boats are big. Palm Beach sells them. Eastbay is down to one model. You bring in the founder of Palm Beach and Palm Beach is always going to be given preferential treatment. Both lines were not needed. So, bye bye Eastbay.

I think the investment in Palm Beach was unwise but Grand Banks was desperate and felt that was the answer. I give Mark credit for perhaps saving the company but he devalued the Grand Banks and Eastbay brands completely. Grand Banks, as a company, needed sales and profit. Palm Beach had both. However, now, as a combined company the total sales are down and the profits are gone again.

Here's where they are today.

Eastbay nearly dead, one boat. Looks very much like a Palm Beach.

Heritage and Aleutian. De-emphasized and not selling. 2 models of each. They'll build if someone comes to them and orders but promotion missing and definitely neither is a complete line.

The new 60'. One boat to represent the "New Grand Banks". Different than anything they've ever built before. Construction very much Palm Beach like in terms of materials, weight, and performance. They're attempting to totally change Grand Banks into a new modern era boat. But they only have one model and only one boat.

Palm Beach. A fairly complete line being sold in place of Eastbay and the line keeping the company alive at this time.

Selling one boat a month, they won't survive. Selling two Palm Beach or Eastbay they won't. Not as a production boat builder of semi-custom boats. I'm not sure they know what they are. Their customer-direct sales model sure hasn't had the results they would have hoped.

I've followed Grand Banks very closely for the last few years for many reasons. They've made a couple of bold moves now. It meant no Grand Banks as they were, whether that's good or bad. However, those moves have not proven yet to be successful. I don't know if they ever will be.