Marinemax's CEO Discusses F2Q2012 Results - Earnings Call Transcript

Marinemax Inc. (HZO)

F2Q2012 Results Earnings Call

April 26, 2012 11:00 AM ET


Brad Cohen – Senior Managing Director

Bill McGill – Chairman, President and CEO

Mike McLamb – Chief Financial Officer


James Hardiman – Longbow Research

Greg McKinley – Dougherty

Michael Fox – Park City Capital

Jimmy Baker – B. Riley & Company



Please standby. Good day, everyone. And welcome to the MarineMax, Incorporated Second Quarter 2012 Earnings Conference Call. Today’s call is being recorded.

At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Brad Cohen. Please go ahead, sir.

Brad Cohen

Thank you, Operator. Good morning, everyone. And thank you for joining this discussion of MarineMax’s 2012 fiscal second quarter results. I’m sure that you’ve all received a copy of the press release that went out this morning, but if you have not, please call Linda Cameron at 727-531-1700 and she will fax or e-mail one to you.

I would now like to introduce the management team of MarineMax, Mr. Bill McGill, Chairman, President and Chief Executive Officer; and Mr. Mike McLamb, Chief Financial Officer of the company. Management will make some comments about the quarter and then will be available for your questions. Mike?

Mike McLamb

Thank you, Brad. Good morning, everyone, and thank you for joining this call.

Before I turn the call over to Bill, I’d like to tell you that certain of our comments are forward-looking statements as defined in the Private Securities Litigation Reform Act. These statements involve risks and uncertainties that may cause actual results to differ materially from expectations.

These risks include but are not limited to the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company’s ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission.

With that in mind, I’d like to turn the call over to Bill.

Bill McGill

Thank you, Mike, and good morning, everyone. I may just start with a thank you to our team. I’m proud of our team’s effort that produced a $144 million of revenue and more importantly, earnings in the March quarter. This was our sixth quarter in a row of new unit sales growth.

Our growth has largely been in contrast to industry reports, which until recently had not reported unit growth in the segments in which we primarily operate. We produced an increase of 26% in same-store sales for the quarter with a portion of the increase coming from the brand expansions that we executed on during the past downturn.

It is encouraging to see the success that is just beginning to occur from these expansions. We are now tapping into segments of the industry that we never addressed before the downturn started.

Our experience is that it takes a few years for new brands to gain momentum. These brands should continue to contribute to our growth as they ramp, especially as business continues to improve.

From the industry perspective, there are increasing reports that indicate the industry is gradually improving as economic conditions and consumer confidence gets better. It is also very encouraging to note that in addition to the 26% same-store sale growth, we grew gross profit dollars 28%, and we were able to hold our costs essentially flat as we obtained sustainable SG&A leverage.

As we have said before, 53 of our 54 stores that we operate today did over $1 billion in revenues in 2006 and 2007. As such, we should expect some additional leverage when our volume returns and we’ll begin to benefit more from the cost controls we implemented during the downturn.

We are constantly managing expenses albeit with the focus of not cutting cost that could negatively impact the experiences of our customers such as our Getaway events, mobile service and Women on Water courses.

Our margins for the quarter continued to increase. The increase in gross margin was supported by incremental growth in our higher margin businesses of storage, service, parts and accessories, and financing insurance.

For the six-month period through March, we are close to profitability and have produced positive cash flows when adding back our non-cash expenses. Interestingly, our consolidated gross margins are the highest we have ever posted for the first six months of any fiscal year.

This again is evidence of the ongoing incremental growth we have managed to achieve in our higher margin businesses. As Mike will discuss in a few minutes, we still have greater margin upside opportunity when the margins on our boat sales return to historical levels.

MarineMax Vacations, the charter business we launched in October, should help to offset some of the cyclicality that comes with boat sales. We have made progress generating interest from our customers base and others for this charter business, which is based in the British Virgin Islands.

This is a long-term venture that will take time to grow and maximize and we expect it to be very profitable venture over the long-term. Our team is committed to writing the best charter experience in the world just as we do with our primary businesses.

With that update, I’ll now ask Mike to provide more detailed comments on the quarter. Mike?

Mike McLamb

Thank you, Bill, and good morning again, everyone. Before I go through the numbers, I also want to thank our team for a strong quarter and for delivering the first March quarter’s profits in several years.

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