MarineMax's CEO Discusses F3Q2012 Results - Earnings Call Transcript

MarineMax, Inc. (HZO)

F3Q2012 Earnings Call

July 26, 2012 10:00 a.m. ET


Brad Cohen – Senior Managing Director

William McGill – Chairman, President and CEO

Michael McLamb – Chief Financial Officer


Jimmy Baker – B. Riley & Company
Greg McKinley – Dougherty



Good day, everyone. And welcome to the MarineMax 2012 Fiscal Third Quarter 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.

Brad Cohen

Thank you very much, Operator. Good morning, everyone. And thank you for joining this discussion of MarineMax’s 2012 fiscal third 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 directly.

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

Michael 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.

William McGill

Thank you, Mike, and good morning, everyone. In our historically largest quarter of the year, our team's effort resulted in revenue of $151 million and $4.6 million of earnings for the quarter. Although we had a slight year-over-year reduction in total revenue, we had a positive same-store sales growth as we operated fewer stores in the quarter than a year ago. It is also important to recall that last year we had an exceptionally good June quarter partially fueled by larger boat sales, which drove the same-store sales growth of over 33%.

During the current quarter, we were reminded that then industry's recovery can be choppy when negative headlines strain consumer confidence as we have seen from the ongoing European issues and to a degree, a political banter, which creates pause for customers. But at the same time, the fact that we have positive same-store sales growth supports the mounting evidence that the industry is indeed improving.

I'm extremely proud that we grew earnings over 37% on slightly less revenue as we once again were able to produce greater growth profit dollars on basically flat revenues. We are also able to reduce expenses on a year-over-year basis. The structural changes we implemented as we emerged from the depths of the recession are really paying off.

As we have said many times, the 53 stores that we operate today did over a $1 billion in revenue in 2006 and 2007. As such, we are achieving leverage from our fixed costs. This combined with our relentless focus on costs, which do not negatively impact our customers experience with MarineMax, is allowing us to improve our earnings at given revenue levels.

We have stressed that we are focused on managing the areas of the business that we can control like our higher margins businesses and expenses. Part of our gross profit growth came from the continued incremental growth we are seeing in service, parts and accessories, financing insurance, and brokerage.

Interestingly through June, our gross margin percentage is the highest it has been in the history of MarineMax. I attribute this to the improving product margins and our team efforts at growing the higher margin businesses.

During the quarter, the brands which we had expanded with continued to help drive unit growth. However, our average unit selling price dropped somewhat in the quarter due to what we believe is the timing of larger yacht sales. The quarter also saw a generally improving industry reports adding further support to the recovery. Most of the reports focused on improvements in aluminum and small fiberglass outboard boats. However, I wish to point out that the core products that we sell, Stern Drive and inboard pleasure boats, are still challenged, albeit these customers are actively boating, and pent up demand is increasing.

Industry data is mixed but would point to a decline in Stern Drives for the quarter to basically being flat. Unfortunately, accurate data won't be available for about 90 days. This is one of the reasons we have diversified into segments of the industry that are doing better, like we're beginning to grow our aluminum and our outboard power products.

I am pleased that we are profitable for the nine months ending June. This is the first year since 2007 that we've been able to say that. The great news is that we still have greater margin upside opportunity when the margins on our boat sales returned to historical levels. We are still approximately 75- 100 basis points below our historical levels.

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