THOMAS DAMMRICH PRESIDENT, NMMA VIRGINIA MARINE TRADE ASSOCIATION NOVEMBER 10, 2015

THOMAS DAMMRICHPRESIDENT, NMMA

VIRGINIA MARINE TRADE ASSOCIATION

NOVEMBER 10, 2015

2

EVERY SATURDAY & SUNDAY!

3

BEST OF ALL TIMES

STATE OF THE U.S. RECREATIONAL BOATING INDUSTRY

5

WHAT CONCERNS YOU ABOUT OUR INDUSTRY TODAY?

6

BOAT REGISTRATIONS

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

2000000

4000000

6000000

8000000

10000000

12000000

Source: USCG

7

2014 REGISTRATIONS BY BOAT TYPE(MILLIONS)

Outboard Boats; 7.3

Inboard Boats; 1.2Sterndrive

Boats; 1.4

PWCs; 1.0

Sailboats; 0.3

Other; 0.7

Source: USCG

8Source: USCG

Under 26'95%

26' and larger5%

2014 POWERBOAT REGISTRATIONS BY SIZE

9Source: USCG

40' and larger1%

2014 Powerboat Registrations

1%

10

FISHING LICENSE HOLDERS

‘90‘91‘92‘93‘94‘95‘96‘97‘98‘99‘00‘01‘02‘03‘04‘05‘06‘07‘08‘09‘10‘11‘12‘13‘14‘150

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000 28,463,499.0

Source: U.S. Fish and Wildlife Service

11

FISHING LICENSE SALES

• Fishing is adding and losing participants at a high rate. – Nearly half, 46% do not renew their

licenses regularly– Average angler renews their license 3 out

10 years– 70% of boats used for fishing

12

DAYS OF USE OF BOAT

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

41

32

39

29

34

28 30

26

30 31

Source: Foresight Research

13

<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+0%

2%

4%

6%

8%

10%

12%

14%

16%

Boat Owner Age Distribution - 1997

Age Range

Per

cen

tag

e o

f A

ll B

uye

rs

AGING DEMOGRAPHICSThe primary factor influencing the future growth of boating is that our most loyal, core market is aging

Average Age 47

Mostly Males

Source: Info-Link

14

AGING DEMOGRAPHICSEvery year the average age of a boat owner has increased by half a year

<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+0%

2%

4%

6%

8%

10%

12%

14%

16%

Boat Owner Age Distribution - 2013

Age Range

Per

cen

tag

e o

f A

ll B

uye

rs

Average Age 55

Mostly Males

Source: Info-Link

15

AGING DEMOGRAPHICSWe must start to better understand how to motivate younger consumers to buy boats

<25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75+0%

2%

4%

6%

8%

10%

12%

14%

16%

Boat Owner Age Distribution - 1997 vs 2013

1997 Owners

2013 Owners

2013 Adult Pop

Age Range

Per

cen

tag

e o

f A

ll B

uye

rs

Source: Info-Link

16

THE PROBLEM WITH MILLENIALSRISING STUDENT DEBT

Source: NY Fed Consumer Credit Panel/Equifax

17

BOAT OWNERSHIP IN 2014

82.9%

5.4%

5.3%

3.4% 3.0%

Boat Owners

11.8%5.1%

63.8%

14.5%

4.8%

U.S. Population

African-American Asian Caucasian

Hispanic Other

Source: Foresight Research, U.S. Census Bureau

18

HISPANIC BOAT OWNERSHIP IN 2014

5.30%

94.70%

Boat Owners

Hispanic

Non-Hispanic

14.5%

85.5%

U.S. Population

Source: Foresight Research, U.S. Census Bureau

19

PERCENT OF UNITED STATES POPULATION BY AGE GROUP AND ETHNICITY, 2050

Hobby Center for the Study of Texas at Rice University

20

21

STAGNANT MIDDLE CLASS

Source: EPI

22

GOVERNMENT REGULATIONS GROWING

• Acquatic Invasive Species Regulation Growing• Ethanol—Pressure to Increase % in Gasoline• Access to the Water—National Parks (Biscayne,

Everglades)• Access on the Water—Red Snapper, MSA• EOL Boat Recycling or Dismantling• Tax Reform Threats?• Sport Fish and Boating Trust Fund Funding

23

WHAT’S HAPPENING?

24

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$27.7

$32.0 $34.2

$30.2

$33.8 $35.6

$37.6 $35.7

$32.3

$29.6 $29.1 $30.5

$32.6 $33.3 $35.4

US

D (

Bill

ion

s)

$36B

U.S. RETAIL SPENDING ON BOATING

Source: NMMA

25

2014 BOATING EXPENDITURESIN BILLIONS OF DOLLARS

New Boat

Sales, $8.4

Pre-owned Boat

Sales, $8.7

New Outboard Engine Sales; $2.5 New Boat Trailer Sales, $0.3

After-market

Ac-ces-sory

Sales; $5.6

Other, $9.8

Source: NMMA

26

BOATING PARTICIPATION

0%

5%

10%

15%

20%

25%

30%

35%

40%

0

10

20

30

40

50

60

70

80

90

10036.5% 35.8%

26.0%

35.7%

Millions of Boaters Participation Rate

Pa

rtic

ipa

tio

n R

ate

*

Mil

lio

ns

of

Bo

ate

rs*

Source: Foresight Research, U.S. Census Bureau*Adults 18 years of age and older

27

• 3 billion boating exposure hours• More than 300 million boating trips in 2012

Source: USCG

BOATING IS PERVASIVE

28Source: NMMA, Foresight Research, U.S. Census Bureau

AN AMERICAN INDUSTRY• 95% of boats sold in the U.S. are built

in the U.S.• 97% of U.S. boat manufacturers and

dealers are small businesses• 72% of boat owners have a less than

$100K HHI

29Source: RMRC

ECONOMIC VALUE OF BOATING

• 34,833 boating industry businesses

• Employing 472,594 people in the U.S. in boating-related manufacturing, services and sales

30

VIRGINIA ECONOMIC VALUE OF BOATING

• Virginia• $2.9 billion total

economic impact

• 15,547 jobs

• 756 businesses

• 237,551 recreational boats registered

31

TRADITIONAL POWERBOAT RETAIL UNIT SALES

1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2—

100,000

200,000

300,000

400,000

500,000

600,000

UN

ITS

1980s Recession Asian Financial Crisis

Desert StormIraq War

Great Recession

911

Source: NMMA, SSI

32

2014 UNIT SALES GROWTH SINCE RECESSION

source: SSI

73%68%

46%

38%35%

23% 22%19% 18%

16% 16%11%

0%

33

BOUNCEBACK

Pontoon

Aluminum Outboard 26'+

Aluminum Outboard <26'

Fiberglass Outboard <26'

PWC

Jet Boat

Ski Boat

Fiberglass Outboard 26'+

Sterndrive Cruisers

Bass Boat

Deck Boat

Inboard 26'+

Inboard <26'

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2014 Retail Unit Sales as Percentage of Pre-recession Unit Sales

source: SSI

34

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD

-2%-4%

-21%

-26%

4%

12%

21%

13%

6% 7%

YO

Y C

ha

ng

e

source: SSI

PONTOON BOAT RETAIL SALES

35

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15

-13%

-34%

-20% -20%

5%

14%

11%13%

12 Months Ending March

YO

Y C

ha

ng

eSALTWATER FISHING BOAT RETAIL SALES

source: SSI

36

2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD

-8%

-20%

-22%

-4%

3%

11%

5%

7% 7%

YO

Y C

ha

ng

e

source: SSI

OUTBOARD BOAT RETAIL SALES

37

2007 2008 2009 2010 2011 2012 2013 2014 2015YTD

-8%

-26% -27%

-23%

-3%

13%11%

16%

11%

YO

Y C

ha

ng

eSKIBOAT RETAIL SALES

source: SSI

38

STERNDRIVE BOAT RETAIL SALES

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD

-6%

-11%

-36%

-31%-30%

-10%

-2%

-8% -8%-10%

YO

Y C

ha

ng

e

source: SSI

39

GROWTH IN 2015

source: SSI

PW

C

Oth

er

Alu

min

um

Ou

tbo

ard

Oth

er

Fib

erg

lass

Ou

tbo

ard

Po

nto

on

Fib

erg

lass

Ste

rnd

rive

Inb

oa

rd S

ki

Ba

ss Jet

De

ck

Inb

oa

rd C

ruis

er

Ho

use

bo

at

14.8%

5.4%7.2% 8.8%

-7.5%

10.3%

32.9%

25.5%

9.2%

0.2%

-28.6%

9/1

5 Y

TD

YO

Y C

ha

ng

e -

Be

llwe

the

r R

eta

il S

ale

s

High Unit Volume Low Unit Volume

40

Healthy Economy

Job Creation

Consumer Spending

Housing Growth

Consumer ConfidenceWHAT DOES

BOATING NEED TO GROW?

41Source: BEA, Philadelphia Fed

REAL GDP

2012 2013 2014 2015 2016

-2%

-1%

0%

1%

2%

3%

4%

5%

Q3; 1.5%

Pe

rce

nt

Ch

an

ge

fro

m P

rec

ed

ing

Pe

rio

d

Forecasts

42

U.S. Job CreationUnemployment Rate: 5.0%

Source: BLS

43

Jan-13

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Jan-14

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

Jan-15

Feb

Mar

Apr

May

Jun

Aug

Sep

Oct

-50

0

50

100

150

200

250

300

350

400

450

Nonfarm Payrolls Manufacturing

(Th

ou

sa

nd

s o

f E

mp

loye

es)

MONTHLY CHANGES IN EMPLOYMENT

Source: BLS

44

Virginia Job CreationUnemployment Rate: 4.3%

Source: BLS

45

REAL DISPOSABLE INCOME

Jan-

14

Feb-1

4

Mar

-14

Apr-1

4

May

-14

Jun-

14

Jul-1

4

Aug-1

4

Sep-1

4

Oct-1

4

Nov-1

4

Dec-1

4

Jan-

15

Feb-1

5

Mar

-15

Apr-1

5

May

-15

Jun-

15

Jul-1

5

Aug-1

5

Sep-1

50.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

3.4%

YO

Y C

ha

ng

e

Source: BEA

46

CONSUMER SPENDING

source: BEA

200

1-Q2

200

2-Q1

200

2-Q4

200

3-Q3

200

4-Q2

200

5-Q1

200

5-Q4

200

6-Q3

200

7-Q2

200

8-Q1

200

8-Q4

200

9-Q3

201

0-Q2

201

1-Q1

201

1-Q4

201

2-Q3

201

3-Q2

201

4-Q1

201

4-Q4

201

5-Q2

-6%

-4%

-2%

0%

2%

4%

6%

8%

An

nu

ali

zed

ra

te

47

U.S. CONSUMER CONFIDENCE V. BOAT SHIPMENTS

-

50,000

100,000

150,000

200,000

250,000

300,000

0

20

40

60

80

100

120

Boat ShipmentsConsumer Confidence

R1

2M

Tra

dit

ion

al P

ow

erb

oa

t W

ho

les

ale

S

hip

me

nts

Co

ns

um

er

Co

nfi

de

nc

e R

12

M A

ve

rag

e

Source: NMMA, The Conference Board

48

U.S. NEW HOME V. BOAT SALES

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

New Homes Traditional Powerboats

Ne

w H

om

e S

ale

s, S

AA

R

R1

2M

Tra

dit

ion

al P

ow

erb

oa

t R

eta

il S

ale

s

Source: SSI, U.S. Census Bureau

49

RV V. BOAT SALES

Source: SSI

1999 Q1

2000 Q1

2001 Q1

2002 Q1

2003 Q1

2004 Q1

2005 Q1

2006 Q1

2007 Q1

2008 Q1

2009 Q1

2010 Q1

2011 Q1

2012 Q1

2013 Q1

2014 Q1

2015 Q1

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Traditional Powerboats RVs

R1

2M

Re

tail

Sa

les

YO

Y C

ha

ng

e

50

LIGHT VEHICLE V. BOAT SALES

Source: Autodata Corp., SSI

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Traditional Powerboats

Light Vehicles

R1

2M

Re

tail

Sa

les

YO

Y C

ha

ng

e

51

MOTORCYCLE V. BOAT SALES

2001 Q4

2002 Q3

2003 Q2

2004 Q1

2004 Q4

2005 Q3

2006 Q2

2007 Q1

2007 Q4

2008 Q3

2009 Q2

2010 Q1

2010 Q4

2011 Q3

2012 Q2

2013 Q1

2013 Q4

2014 Q3

2015 Q2

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Traditional Powerboats

Motorcycles

R1

2M

Re

tail

Sa

les

YO

Y C

ha

ng

e

Source: MIC, SSI

52

U.S. CITY RETAIL GAS PRICES

Source: EIA

$1.8

$2.0

$2.2

$2.4

$2.6

$2.8

$3.0

$3.2

$3.4

$3.6

$3.8

Nov-15; $2.17

Reg

ula

r, C

on

ven

tio

nal

Gas

– W

eekl

y P

rice

Series Max: July 14, 2008, $4.05

53Source: Info-Link

54

BOAT BUILDING PRODUCTION INDEX

ITR Economic Boat Building Production Forecast

0

40

80

120

160

0

40

80

120

16012MMA

12MMA Forecast

60.01666667

12MMA3MMAQUARTERLY PRODUCTION

(3MMA)

ANNUAL PRO-DUCTION

(12MMA)

OUTLOOK

MANAGEMENT NOTE

53.6

60.0

Annual Boat Building Production will remain relatively flat through

mid-2015. Rise will re-turn and steadily persist through the majority of

2017

Use this period of softer production to develop

and implement methods to streamline production.

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-1759.2 59.0 58.3 59.2 60.6 61.7 63.2 64.7 65.8 66.4 66.4 67.460.4 60.2 59.5 60.5 61.9 63.0 64.3 66.1 67.2 67.6 67.7 68.761.6 61.3 60.7 61.8 63.1 64.2 65.5 67.4 68.5 68.8 69.0 70.1

Annual Production (12MMA)

Lower Forecast Range

Upper Forecast Range

Source: ITR Economics

55

ECO-SYSTEM OF THE MARINE INDUSTRY

56

May 9-11, 2016Renaissance Hotel, Washington DC

nmma.org/abc

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www.BoatingUnited.com

QUESTIONS?