MarineMax Reports Fiscal 2024 Second Quarter Results

Rhea-AI Summary

MarineMax, Inc. (NYSE: HZO) reports fiscal 2024 second-quarter revenue of $582.9 million, up 2% year-over-year, with comparable same-store sales growth of 2%. The gross profit margin was 32.7%, net income stood at $1.6 million, with adjusted diluted EPS of $0.18. The company revised its fiscal 2024 financial guidance and hosted an earnings conference call.

Positive

• Revenue in the fiscal 2024 second quarter increased by 2% to $582.9 million compared to the previous year.
• Gross profit margin decreased to 32.7% from 35.2% in the same period last year.
• Net income for the quarter was $1.6 million, or $0.07 per diluted share, compared to $30.0 million, or $1.35 per diluted share, in the same period last year.
• Adjusted EBITDA for the quarter was $29.6 million, a decrease from $57.4 million in the comparable period last year.
• The company revised its fiscal 2024 financial guidance for adjusted net income to a range of $2.20 to $3.20 per diluted share and adjusted EBITDA to a range of $155 million to $190 million.
• MarineMax completed the purchase of Williams Tenders USA during the quarter, enhancing its growth strategy by gaining distribution exclusivity in the U.S. and the Caribbean for rigid inflatable jet tenders for the luxury yacht market.

Negative

• Gross profit margin decreased by 250 basis points due to higher promotional activity amid challenging retail conditions.
• Adjusted SG&A expenses increased by $16.4 million or 11% compared to the same period in fiscal 2023.
• Interest expense increased to $19.4 million, or 3.3% of revenue, reflecting higher interest rates and increased inventory compared with the previous year.
• Net income and adjusted EBITDA decreased significantly compared to the same period last year.
• The company's performance was impacted by ongoing softness in the marine market and broader macroeconomic concerns.

Insights

Market Research Analyst

The modest revenue growth reported by MarineMax indicates a resilient yet cautious market uptake. With a 2% increase in same-store sales, it's clear that despite headwinds such as higher interest rates and ongoing inflation, the consumer interest in boating persists. However, this interest seems to be sustained by more aggressive promotional activities which have, in turn, pressured margins. While this strategy may support top-line growth, the 250 basis points decline in gross profit margin reflects a potentially unsustainable approach if promotional pressures persist. It's important for investors to monitor how MarineMax balances the need to stimulate sales with the potential erosion of profitability. The acquisition of Williams Tenders USA, aimed at growth through high-margin business avenues, could be a strategic move to enhance the company's margin profile in the longer term.

Financial Analyst

MarineMax's revision of its fiscal 2024 financial guidance and the reported decrease in net income from $30.0 million to $1.6 million year-over-year is a red flag that may concern investors. One can deduce that the company is navigating considerable market and economic turbulence. The increase in SG&A expenses, as well as higher interest expenses reflecting elevated rates and inventory levels, are noteworthy contributors to this decline. Long-term investors should carefully weigh the company's cost reduction strategies and monitor their effectiveness against the backdrop of a potentially protracted period of high-interest rates and economic uncertainty. Furthermore, investors should also analyze the revised Adjusted EBITDA guidance, which indicates forward-looking expectations and the management's confidence in their strategic initiatives despite current challenges.

Retail Analyst

The performance of MarineMax as a retailer in the luxury goods sector may serve as an indicator of consumer discretionary spending patterns. In the face of economic headwinds, the organization's need to engage in more aggressive promotions could point to a wider trend of decreased consumer confidence and spending power. Retail investors should consider the company's readjustment of financial guidance as a realistic response to market conditions and retail trends. Keeping an eye on how these trends evolve could provide insight into the broader retail sector's health and future stock performance.

~ Posts March Quarter Revenue of $582.9 Million, Up 2% Year-over-Year ~

~ Reports Comparable Same-Store Sales Growth of 2% ~

~ Revises Fiscal 2024 Financial Guidance ~

~ Hosts Earnings Conference Call at 10:00 a.m. ET Today ~

CLEARWATER, Fla.--(BUSINESS WIRE)-- MarineMax, Inc. (NYSE: HZO), the world’s largest recreational boat, yacht and superyacht services company, today announced results for its second quarter ended March 31, 2024.

Fiscal 2024 Second Quarter Summary

• March quarter revenue of $582.9 million
• Same-store sales increase of 2%
• Gross profit margin of 32.7%
• Net income of $1.6 million, or diluted EPS of $0.07; Adjusted diluted EPS¹ of $0.18
• Adjusted EBITDA¹ of $29.6 million

CEO & President Commentary

“Although we continue to operate in a challenging market environment, as evidenced by industrywide larger than expected declines in boat registrations, we drove an increase in sales in the second quarter. Our gross margin also remains strong as a direct result of the strategic growth in our higher-margin businesses,” said Brett McGill, Chief Executive Officer and President of MarineMax. “Our performance was impacted by ongoing softness in the marine market, highlighting broader macroeconomic concerns including elevated interest rates and persistent inflation. While interest in boating remains encouraging, more aggressive promotional activity was required to assist consumers in making purchase decisions.

“We continue to focus on driving growth through investments in strong, higher-margin businesses that enhance the customer experience and expand our margin profile. During the quarter, we completed the purchase of Williams Tenders USA. This transaction advances our growth strategy, giving MarineMax distribution exclusivity in the U.S. and the Caribbean for the world’s premier brand of rigid inflatable jet tenders for the luxury yacht market.

“We are taking additional steps to reduce expenses while maintaining our customer experience and service. These additional measures are directed at better aligning our cost structure with the current environment. Our actions will enhance our strong cash position and healthy balance sheet, positioning us for greater opportunities as market conditions improve,” McGill said.

Fiscal 2024 Second Quarter Results

Revenue in the fiscal 2024 second quarter increased 2% to $582.9 million from $570.3 million in the comparable period last year. The top-line growth was primarily driven by an increase in boat sales. On a comparable same-store basis, revenue increased 2%.

Gross profit decreased 5.2% to $190.4 million from $200.9 million in the prior-year period. Gross profit margin of 32.7% decreased 250 basis points from 35.2% in the comparable period last year, as a higher level of promotional activity amid challenging retail conditions resulted in lower boat margins.

Selling, general, and administrative (SG&A) expenses totaled $169.0 million, or 29.0% of revenue, in the second quarter, compared with $145.5 million, or 25.5% of revenue, for the comparable period last year. Excluding transaction costs, changes in contingent consideration, weather events and other non-recurring items in the 2024 period, adjusted SG&A increased $16.4 million, or 11%, from the same period in fiscal 2023.

Interest expense was $19.4 million, or 3.3% of revenue in the second quarter, compared with $13.3 million, or 2.3% of revenue in the prior-year period, reflecting higher interest rates and increased inventory compared with the second quarter of fiscal 2023.

Net income in the second quarter was $1.6 million, or $0.07 per diluted share, compared with net income of $30.0 million, or $1.35 per diluted share, in the same period last year. Adjusted net income¹ in the second quarter was $4.1 million, or $0.18 per diluted share, compared with $27.4 million, or $1.23 per diluted share, in the prior-year period. Adjusted EBITDA¹ for the quarter ended March 31, 2024, was $29.6 million, compared with $57.4 million for the comparable period last year.

Company Revises Fiscal 2024 Guidance

Based on results to date, current business conditions, retail trends and other factors, the Company is updating its fiscal year 2024 Adjusted net income^1,2 guidance to a range of $2.20 to $3.20 per diluted share. The Company also is revising fiscal year 2024 Adjusted EBITDA^1,2 guidance to a range of $155 million to $190 million. These expectations do not consider or give effect for, among other things, material acquisitions that may be completed by the Company during fiscal 2024 or other unforeseen events, including changes in global economic conditions.

Conference Call Information

MarineMax will discuss its fiscal 2024 second quarter financial results on a conference call starting at 10:00 a.m. ET today. The conference call can be accessed via the “Investors” section of the Company's website: www.marinemax.com, or by dialing 877-407-0789 (U.S. and Canada) or 201-689-8562 (International). An online replay will be available within one hour of the conclusion of the call and will be archived on the website for one year.

About MarineMax

As the world’s largest lifestyle retailer of recreational boats and yachts, as well as yacht concierge and superyacht services, MarineMax (NYSE: HZO) is United by Water. We have over 130 locations worldwide, including 83 dealerships and 66 marina and storage facilities. Our integrated business includes IGY Marinas, which operates luxury marinas in yachting and sport fishing destinations around the world; Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services companies; Cruisers Yachts, one of the world’s premier manufacturers of premium sport yachts and motor yachts; and Intrepid Powerboats, a premier manufacturer of powerboats. To enhance and simplify the customer experience, we provide financing and insurance services as well as leading digital technology products that connect boaters to a network of preferred marinas, dealers, and marine professionals through Boatyard and Boatzon. In addition, we operate MarineMax Vacations in Tortola, British Virgin Islands, which offers our charter vacation guests the luxury boating adventures of a lifetime. Land comprises 29% of the earth’s surface. We’re focused on the other 71%. Learn more at www.marinemax.com.

Forward-Looking Statement

Certain statements in this press release are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include ongoing softness in the marine market, more aggressive promotional activity, the Company’s focus on driving growth through the acquisition of strong, higher-margin businesses, the Company’s strategy to invest in brands, products and services that enhance the customer experience and expand the Company’s margin profile, the Company’s operational improvement measures and the related expected annualized cost savings and our fiscal 2024 guidance. These statements are based on current expectations, forecasts, risks, uncertainties, and assumptions that may cause actual results to differ materially from expectations as of the date of this release. These risks, assumptions, and uncertainties include the Company’s abilities to reduce inventory, manage expenses and accomplish its goals and strategies, the quality of the new product offerings from the Company’s manufacturing partners, the performance and integration of the recently-acquired businesses, general economic conditions, as well as those within the Company's industry, the liquidity and strength of our bank group partners, the level of consumer spending, and numerous other factors identified in the Company’s Form 10-K for the fiscal year ended September 30, 2023 and other filings with the Securities and Exchange Commission. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

____________________
¹ This is a non-GAAP measure. See below for an explanation and quantitative reconciliation of each non-GAAP financial measure.
² See “Non-GAAP Financial Measures” below for a discussion of why reconciliations of forward-looking Adjusted Net Income and Adjusted EBITDA are not available without unreasonable effort.

MarineMax, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Amounts in thousands, except share and per share data) (Unaudited)
		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2024				2023				2024				2023
Revenue		$	582,892			$	570,340			$	1,110,166			$	1,078,267
Cost of sales			392,471				369,431				744,264				690,461
Gross profit			190,421				200,909				365,902				387,806
Selling, general, and administrative expenses			169,020				145,504				325,502				295,901
Income from operations			21,401				55,405				40,400				91,905
Interest expense			19,374				13,280				37,739				22,764
Income before income tax provision			2,027				42,125				2,661				69,141
Income tax provision			578				12,201				367				19,230
Net income			1,449				29,924				2,294				49,911
Less: Net (loss) income attributable to non-controlling interests			(138	)			(111	)			(223	)			186
Net income attributable to MarineMax, Inc.		$	1,587			$	30,035			$	2,517			$	49,725
Basic net income per common share		$	0.07			$	1.37			$	0.11			$	2.28
Diluted net income per common share		$	0.07			$	1.35			$	0.11			$	2.23
Weighted average number of common shares used in computing net income per common share:
Basic			22,299,599				21,853,557				22,247,587				21,804,326
Diluted			22,999,229				22,314,262				22,903,840				22,268,183

MarineMax, Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Amounts in thousands) (Unaudited)
		March 31,				March 31,
		2024				2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	216,684			$	204,339
Accounts receivable, net			121,639				116,910
Inventories			932,607				711,296
Prepaid expenses and other current assets			21,996				21,710
Total current assets			1,292,926				1,054,255
Property and equipment, net			536,175				499,418
Operating lease right-of-use assets, net			140,882				138,525
Goodwill			590,344				558,613
Other intangible assets, net			39,174				42,134
Other long-term assets			31,488				31,783
Total assets		$	2,630,989			$	2,324,728
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	61,339			$	44,598
Contract liabilities (customer deposits)			79,095				113,934
Accrued expenses			124,332				113,803
Short-term borrowings			736,717				498,647
Current maturities on long-term debt			33,766				32,409
Current operating lease liabilities			10,359				9,981
Total current liabilities			1,045,608				813,372
Long-term debt, net of current maturities			372,624				407,335
Noncurrent operating lease liabilities			126,224				121,813
Deferred tax liabilities, net			58,156				47,638
Other long-term liabilities			87,919				83,310
Total liabilities			1,690,531				1,473,468
SHAREHOLDERS' EQUITY:
Preferred stock			—				—
Common stock			29				29
Additional paid-in capital			334,939				313,848
Accumulated other comprehensive income			2,531				3,013
Retained earnings			742,466				680,392
Treasury stock			(148,656	)			(148,656	)
Total shareholders’ equity attributable to MarineMax, Inc.			931,309				848,626
Non-controlling interests			9,149				2,634
Total shareholders’ equity			940,458				851,260
Total liabilities and shareholders’ equity		$	2,630,989			$	2,324,728

MarineMax, Inc. and Subsidiaries Segment Financial Information (Amounts in thousands) (Unaudited)
		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2024				2023				2024				2023
Revenue:
Retail Operations		$	579,177			$	558,872			$	1,103,262			$	1,061,258
Product Manufacturing			40,182				56,749				86,310				113,075
Elimination of intersegment revenue			(36,467	)			(45,281	)			(79,406	)			(96,066	)
Revenue		$	582,892			$	570,340			$	1,110,166			$	1,078,267
Income from operations:
Retail Operations		$	20,665			$	53,737			$	35,470			$	90,465
Product Manufacturing			(914	)			6,243				3,056				12,745
Intersegment adjustments			1,650				(4,575	)			1,874				(11,305	)
Income from operations		$	21,401			$	55,405			$	40,400			$	91,905

MarineMax, Inc. and Subsidiaries Supplemental Financial Information (Amounts in thousands, except share and per share data) (Unaudited)
		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2024				2023				2024				2023
Net income attributable to MarineMax, Inc.		$	1,587			$	30,035			$	2,517			$	49,725
Transaction costs (1)			119				80				3,225				6,116
Intangible amortization (2)			1,429				1,890				3,163				3,595
Change in fair value of contingent consideration (3)			949				1,183				1,167				2,230
Weather expenses (recoveries)			987				(1,685	)			698				(191	)
Gain on acquisition of equity investment (4)			—				(5,129	)			—				(5,129	)
Tax adjustments for items noted above (5)			(993	)			1,062				(1,139	)			(1,841	)
Adjusted net income attributable to MarineMax, Inc.		$	4,078			$	27,436			$	9,631			$	54,505
Diluted net income per common share		$	0.07			$	1.35			$	0.11			$	2.23
Transaction costs (1)			0.01				—				0.14				0.27
Intangible amortization (2)			0.06				0.08				0.14				0.16
Change in fair value of contingent consideration (3)			0.04				0.05				0.05				0.10
Weather expenses (recoveries)			0.04				(0.08	)			0.03				(0.01	)
Gain on acquisition of equity investment (4)			—				(0.22	)			—				(0.22	)
Tax adjustments for items noted above (5)			(0.04	)			0.05				(0.05	)			(0.08	)
Adjusted diluted net income per common share		$	0.18			$	1.23			$	0.42			$	2.45

(1)		Transactions costs relate to acquisition transaction and integration costs in the period.
(2)		Represents amortization expense for acquisition-related intangible assets.
(3)		Represents expenses to record contingent consideration liabilities at fair value.
(4)		Represents gain on a previously held equity investment upon acquisition of the entire business.
(5)		Adjustments for taxes for items are calculated based on the effective tax rate for each respective period presented.

		Three Months Ended								Six Months Ended
		March 31,								March 31,
		2024				2023				2024				2023
Net income attributable to MarineMax, Inc.		$	1,587			$	30,035			$	2,517			$	49,725
Interest expense (excluding floor plan)			7,522				6,819				15,278				13,184
Income tax provision			578				12,201				367				19,230
Depreciation and amortization			10,965				8,853				21,897				17,972
Stock-based compensation expense			5,984				5,368				11,402				10,213
Transaction costs			119				80				3,225				6,116
Gain on acquisition of equity investment			—				(5,129	)			—				(5,129	)
Change in fair value of contingent consideration			949				1,183				1,167				2,230
Weather expenses (recoveries)			987				(1,685	)			698				(191	)
Foreign currency			908				(371	)			(308	)			(2,801	)
Adjusted EBITDA		$	29,599			$	57,354			$	56,243			$	110,549

Non-GAAP Financial Measures

This press release, along with the above Supplemental Financial Information table, contains “Adjusted net income”, “Adjusted diluted EPS” and “Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization” (“Adjusted EBITDA”), which are non-GAAP financial measures as defined under applicable securities legislation. In determining these measures, the Company excludes certain items which are otherwise included in determining the comparable GAAP financial measures. The Company believes these non-GAAP financial measures are key performance indicators that improve the period-to-period comparability of the Company’s results and provide investors with more insight into, and an additional tool to understand and assess, the performance of the Company's ongoing core business operations. Investors and other readers are encouraged to review the related GAAP financial measures and the above reconciliation and should consider these non-GAAP financial measures as a supplement to, and not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP.

In addition, we have not reconciled our fiscal year 2024 Adjusted earnings and Adjusted EBITDA guidance to net income (the corresponding GAAP measure for each), which is not accessible on a forward-looking basis due to the high variability and difficulty in making accurate forecasts and projections, particularly with respect to acquisition contingent consideration and acquisition costs. Acquisition contingent consideration and transaction costs, which are likely to be significant to the calculation of net income, are affected by the integration and post-acquisition performance of our acquirees, which is difficult to predict and subject to change. Accordingly, reconciliations of forward-looking Adjusted earnings and Adjusted EBITDA are not available without unreasonable effort.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240424515359/en/

Mike McLamb

Chief Financial Officer

727-531-1700

investors@marinemax.com

Scott Solomon

Sharon Merrill Advisors

857-383-2409

HZO@investorrelations.com

Source: MarineMax, Inc.

FAQ

What was MarineMax's revenue in the fiscal 2024 second quarter?

MarineMax reported revenue of $582.9 million in the fiscal 2024 second quarter.

What was the net income for MarineMax in the second quarter?

MarineMax's net income in the second quarter was $1.6 million, or $0.07 per diluted share.

What is MarineMax's revised fiscal 2024 adjusted net income guidance?

MarineMax revised its fiscal 2024 adjusted net income guidance to a range of $2.20 to $3.20 per diluted share.

What strategic acquisition did MarineMax complete during the quarter?

MarineMax completed the purchase of Williams Tenders USA, gaining distribution exclusivity in the U.S. and the Caribbean for rigid inflatable jet tenders for the luxury yacht market.

How did MarineMax's adjusted EBITDA performance compare in the fiscal 2024 second quarter?

MarineMax's adjusted EBITDA for the quarter ended March 31, 2024, was $29.6 million, a decrease from $57.4 million for the comparable period last year.