Boating Industry

February 2014

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"Will we make mistakes? Heck, yes, we'll make mistakes, but we'll fix them. If you're not making mistakes, you're not doing anything." Boating Industry: You mentioned that sense of excitement. One thing I noticed in talking to Nautic employees here is that there seems to be a new sense of enthusiasm in the company. Why do you think that is? MALONE: I'd like to think I had something to do with it and my own enthusiasm for it. I also think we have … people at the leadership level in the organization that enjoy sharing the enthusiasm for each other's success. And we enjoy having other people buy into what's going on. At the base of that is that we've – now this is a corny word and overused – but we've empowered people to get after it and go do what they know how to do, and people love that. They love that people have confidence in them. Will we make mistakes? Heck, yes, we'll make mistakes, but we'll fix them. If you're not making mistakes, you're not doing anything. Boating Industry: You've talked about making significant capital investments in 2014. What parts of the business are those in? on bigger hulls, bigger boats, is significant and we're going to be there. MALONE: We're blessed with not having to spend money on building plants. We've got plenty of plant space – 30 acres under roof. So we can spend money on equipment, we can spend money on process. Boating Industry: What is Nautic doing to control costs and keep boating affordable? Boating Industry: Nautic has benefited from the fact that the pontoon market has been very strong. Do you think you can continue to grow that segment? MALONE: We do. We think pontoons continue to be an opportunity for us. We think there's great opportunity on share. Not only do we believe we can grow our share, but we also believe the segment is growing. Boating Industry: Any market segments that Nautic isn't in right now that you find attractive? MALONE: You can't be a boater and live in Florida all your life like I have and not see the saltwater as a great opportunity. We've got product that works there now, but it'd be fun to have more product aimed at that market. We think that the Hurricane opportunity MALONE: We think that we continue to have the best value situation. It's incumbent on us to have the best value, but if somebody wants a [personal watercraft] as an entry-level we don't do that and we don't have any interest in doing that. Those that want to stay in the industry, as they develop more and more economic means, can do that. I think there are plenty of ways for young people to be in the market, at a lesser price, frankly, than we come down to. We're a couple steps up the food chain and I think we're OK with that. Boating Industry: We talked about affordability, but what do you see as some of the major potential obstacles to industry growth? MALONE: The biggest one is the macroeconomic environment. As people develop more disposable income, they'll be in a position to make those decisions. I think, to your earlier question, that there are so many different ways for families to get into boating and have the experience and have the fun that we just have to keep driving away at that. New Nautic Global Group CEO Jim Malone expects Nautic to continue growing its share of the pontoon market. Boating Industry: What do you see as some of the key things Nautic Global Group needs to focus on to be successful in 2014? MALONE: Continuing to drive down lead times so we can meet [our dealers'] expectations of when people are getting their product. I think that becomes an important issue. To do that, we have the challenge of increasing our capacity, which we're doing. We're anticipating by ramping up our production, we're up over 20 percent this year over last year. P16x17-BI14FEB-CornerOfficeQ&A.indd 17 February 2014 | Boating Industry | 17 1/8/14 12:23 PM

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