What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-07-25 compared with 2024-04-25 · 51 added, 44 removed, 143 unchanged (40% of the section changed)

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Actual results could differ materially from those currently anticipated as a result of a number of factors, including those set forth under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

We believe we are the largest recreational boat and yacht retailer and superyacht services company in the world.

Through our current 83 retail locations in 21 states, we sell new and used recreational boats and related marine products, including engines, trailers, parts, and accessories.

All references to the “Company,” “MarineMax,” “we,” “us,” and “our” mean, as a combined company, MarineMax, Inc.

and its subsidiaries.

We believe we are the world’s largest recreational boat, yacht and superyacht services company.

Through our over 75 retail locations in 21 states, we sell new and used recreational boats and related marine products, including engines, trailers, parts, and accessories.

We also arrange related boat financing, insurance, and extended service contracts;

provide boat repair and

maintenance services;

provide boat repair and maintenance services;

offer yacht and boat brokerage sales;

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IGY Marinas has created standards for service and quality in nautical tourism.

It offers a global network of marinas in the Americas, the Caribbean, Europe, and Asia, delivering year-round accommodations.

It offers a global network of marinas in the Americas, the Caribbean, Europe, and Asia, delivering

year-round accommodations.

IGY Marinas caters to a wide variety of luxury yachts, while also being exclusive home ports for some of the world’s largest megayachts.

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In January 2023, we acquired Boatzon, a boat and marine digital retail platform, through our technology entity, New Wave Innovations.

In June 2023, we acquired C&C Boat Works, a full-service boat dealer in Crosslake, Minnesota.

In June 2023, we acquired C&C Boat Works, a full-service boat dealer based in Crosslake, Minnesota.

In October 2023, we acquired a controlling interest of AGY, a luxury charter management agency based in Athens, Greece.

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Local influences, such as corporate downsizing, military base closings, and inclement weather such as hurricanes and other storms, environmental conditions, and specific events, such as the BP oil spill in the Gulf of Mexico in 2010, also could adversely affect, and in certain instances have adversely affected, our operations in certain markets.

In addition, adverse conditions imposed by national, state and/or local governmental bodies, such as the recent seizure of the Cabo Marina, S.

port in Mexico, could adversely affect, and in certain instances, have adversely affected, our operations in certain markets.

In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of luxury goods.

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We expect that our core strengths and retailing strategies, including our digital platform, will position us to capitalize on growth opportunities as they occur and will allow us to emerge with greater earnings potential.

As of March 31, 2024, the Retail Operations segment includes the activity of 83 retail locations in Alabama, California, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Washington and Wisconsin, where we sell new and used recreational boats, including pleasure and fishing boats, with a focus on premium brands in each segment.

As of June 30, 2024, the Retail Operations segment includes the activity of over 75 retail locations in Alabama, California, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Washington and Wisconsin, where we sell new and used recreational boats, including pleasure and fishing boats, with a focus on premium brands in each segment.

We also sell related marine products, including engines, trailers, parts, and accessories.

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Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services companies with operations in multiple countries, are also included in this segment.

Through IGY Marinas, which is also included in this segment, we maintain a network of strategically positioned luxury marinas situated in yachting and sport fishing destinations around the world.

Through IGY Marinas, which is also included in this segment, we maintain a network of strategically positioned luxury

marinas situated in yachting and sport fishing destinations around the world.

The Retail Operations segment includes the majority of all corporate costs.

As of March 31, 2024, the Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid Powerboats, both wholly-owned MarineMax subsidiaries.

As of June 30, 2024, the Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid Powerboats, both wholly owned MarineMax subsidiaries.

Cruisers Yachts manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers.

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Consolidated Results of Operations

The following discussion compares the three and six months ended March 31, 2024, with the three and six months ended March 31, 2023 and should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, including the related notes thereto, appearing elsewhere in this report.

Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023

Revenue increased $12.6 million, or 2.2%, to $582.9 million for the three months ended March 31, 2024, from $570.3 million for three months ended March 31, 2023.

The increase was due to an increase of $12.5 million, or 2%, in comparable-store sales, in addition to a $0.1 million net increase from acquisitions (AGY and C&C) that are not eligible for inclusion in comparable-store sales as well as a decrease in manufacturing revenue, which is not included in comparable retail store sales.

The following discussion compares the three and nine months ended June 30, 2024, with the three and nine months ended June 30, 2023 and should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements, including the related notes thereto, appearing elsewhere in this report.

Three Months Ended June 30, 2024 Compared with Three Months Ended June 30, 2023

Revenue increased $35.9 million, or 5.0%, to $757.7 million for the three months ended June 30, 2024, from $721.8 million for the three months ended June 30, 2023.

The increase was due to an increase of $27.9 million, or 4%, in comparable-store sales, in addition to an $8.0 million net increase from acquisitions and new locations that are not eligible for inclusion in comparable-store sales.

This was partially offset by a decrease in manufacturing revenue, which is not included in comparable retail store sales.

The comparable-store increase came primarily from increases in new and used boat revenue along with contributions from our other higher margin businesses.

Gross Profit.

Gross profit decreased $10.5 million, or 5.2%, to $190.4 million for the three months ended March 31, 2024, from $200.9 million for the three months ended March 31, 2023.

Gross profit as a percentage of revenue decreased to 32.7% for the three months ended March 31, 2024, from 35.2% for the three months ended March 31, 2023.

Gross profit decreased $1.7 million, or 0.7%, to $242.1 million for the three months ended June 30, 2024, from $243.8 million for the three months ended June 30, 2023.

Gross profit as a percentage of revenue decreased to 32.0% for the three months ended June 30, 2024, from 33.8% for the three months ended June 30, 2023.

The decrease in gross profit as a percentage of revenue was primarily the result of lower new and used boat margins as we aggressively drove sales during a softer retail environment.

Selling, General, and Administrative Expenses.

Selling, general, and administrative expenses increased $23.5 million, or 16.2%, to $169.0 million for the three months ended March 31, 2024, from $145.5 million for the three months ended March 31, 2023.

Selling, general, and administrative expenses increased $11.9 million, or 7.0%, to $181.1 million for the three months ended June 30, 2024, from $169.2 million for the three months ended June 30, 2023.

The increase in selling, general, and administrative expenses was primarily the result of inflation and recent acquisitions.

Interest Expense.

Interest expense increased $6.1 million to $19.4 million for the three months ended March 31, 2024, from $13.3 million for the three months ended March 31, 2023.

Interest expense increased $3.4 million to $18.2 million for the three months ended June 30, 2024, from $14.8 million for the three months ended June 30, 2023.

The increase in interest expense was primarily the result of increased interest rates and increased borrowings due primarily to higher inventory levels.

Income Taxes.

Income tax expense decreased $11.6 million to $0.6 million, for the three months ended March 31, 2024, from $12.2 million for the three months ended March 31, 2023.

The effective income tax rate for the three months ended March 31, 2023 and 2024 was 29.0% and 28.5%, respectively.

Six Months Ended March 31, 2024 Compared with Six Months Ended March 31, 2023

Revenue increased $32.0 million, or 3.0%, to $1.110 billion for the six months ended March 31, 2024, from $1.078 billion for six months ended March 31, 2023.

The increase is due to a $31.6 million, or 3%, increase in comparable-store sales in addition to a $0.4 million net increase from acquisitions (AGY and C&C) that are not eligible for inclusion in comparable-store sales as well as a decrease in manufacturing revenue, which is not included in comparable retail store sales.

Income tax expense decreased $4.4 million to $11.1 million, for the three months ended June 30, 2024, from $15.5 million for the three months ended June 30, 2023.

The effective income tax rate for the three months ended June 30, 2023 and 2024 was 25.9%.

Nine Months Ended June 30, 2024 Compared with Nine Months Ended June 30, 2023

Revenue increased $68.0 million, or 3.8%, to $1.868 billion for the nine months ended June 30, 2024, from $1.800 billion for the nine months ended June 30, 2023.

The increase is due to a $59.8 million, or 3%, increase in comparable-store sales in addition to an $8.2 million net increase from acquisitions and new locations that are not eligible for inclusion in comparable-store sales.

This was partially offset by a decrease in manufacturing revenue, which is not included in comparable retail store sales.

The comparable-store increase came primarily from increases in new and used boat revenue along with contributions from our other higher margin businesses.

Gross Profit.

Gross profit decreased $21.9 million, or 5.6%, to $365.9 million for the six months ended March 31, 2024, from $387.8 million for the six months ended March 31, 2023.

Gross profit as a percentage of revenue decreased to 33.0% for the six months ended March 31, 2024, from 36.0% for the six months ended March 31, 2023.

Gross profit decreased $23.6 million, or 3.7%, to $608.0 million for the nine months ended June 30, 2024, from $631.6 million for the nine months ended June 30, 2023.

Gross profit as a percentage of revenue decreased to 32.5% for the nine months ended June 30, 2024, from 35.1% for the nine months ended June 30, 2023.

The decrease in gross profit was primarily the result of lower new and used boat margins, as we aggressively drove sales during a softer retail environment.

Selling, General, and Administrative Expenses.

Selling, general, and administrative expenses increased $29.6 million, or 10.0% to $325.5 million for the six months ended March 31, 2024, from $295.9 million for the six months ended March 31, 2023.

Selling, general, and administrative expenses increased $41.5 million, or 8.9% to $506.6 million for the nine months ended June 30, 2024, from $465.1 million for the nine months ended June 30, 2023.

The increase in selling, general, and administrative expenses was primarily the result of inflation and recent acquisitions.

Interest Expense.

Interest expense increased $14.9 million to $37.7 million for the six months ended March 31, 2024, from $22.8 million for the six months ended March 31, 2023.

Interest expense increased $18.4 million to $56.0 million for the nine months ended June 30, 2024, from $37.6 million for the nine months ended June 30, 2023.

The increase in interest expense was primarily the result of increased interest rates and increased borrowings due primarily to higher inventory levels.

Income Taxes.

Income tax expense decreased $18.8 million, to $0.4 million for the six months ended March 31, 2024, from $19.2 million for the six months ended March 31, 2023.

The effective income tax rate for the six months ended March 31, 2023 and 2024 before discrete items was 27.9%.

Income tax expense decreased $23.2 million, to $11.5 million for the nine months ended June 30, 2024, from $34.7 million for the nine months ended June 30, 2023.

The effective income tax rate for the nine months ended June 30, 2024 and 2023 was 25.2% and 26.9%, respectively.

Liquidity and Capital Resources

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Any turmoil in the credit markets and weakness in the retail markets may interfere with our ability to remain in compliance with the covenants of the Amended Credit Facility and therefore affect our ability to utilize the Amended Credit Facility to fund operations.

As of March 31, 2024, we were in compliance with all covenants under the Amended Credit Facility.

As of June 30, 2024, we were in compliance with all covenants under the Amended Credit Facility.

We currently depend upon dividends and other payments from our businesses and the Amended Credit Facility to fund our current operations and meet our cash needs.

As the majority owner of each of our businesses, we determine the amounts of such distributions subject to applicable law, and currently, no agreements exist that restrict this flow of funds from our businesses.

For the six months ended March 31, 2024 and 2023, cash used in operating activities was approximately $111.2 million and $250.5 million, respectively.

For the six months ended March 31, 2024, cash used in operating activities was primarily related to increases in inventory, increases in accounts receivable, decreases in accounts payable, decreases in in contract liabilities (customer deposits), partially offset by our net income adjusted for non-cash expenses and gains such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense.

For the six months ended March 31, 2023, cash used in operating activities was primarily related to increases in inventory, increases in accounts receivable, and increases in accrued expenses and other liabilities, partially offset by decreases in customer deposits and our net income adjusted for non-cash expenses and gains such as depreciation and amortization expense, deferred income tax provision, stock-based compensation expense, and gain on acquisition of previously held equity investment.

For the six months ended March 31, 2024 and 2023, cash used in investing activities was approximately $49.9 million and $524.2 million, respectively.

For the six months ended March 31, 2024, cash used in investing activities was primarily used to purchase property and equipment associated with improving existing retail facilities, partially offset by proceeds from insurance settlements.

For the six months ended March 31, 2023, cash used in investing activities was primarily used for the IGY Marinas acquisition and to purchase property and equipment associated with improving existing retail facilities.

For the six months ended March 31, 2024 and 2023, cash provided by financing activities was approximately $175.4 million and $748.9 million, respectively.

For the six months ended March 31, 2024, cash provided by financing activities was primarily attributable to net increases in short-term borrowings, which solely consisted of the Floor Plan, and net proceeds from issuance of common stock under incentive compensation and employee purchase plans, partially offset by payments on long-term debt, contingent acquisition

consideration payments and payments on tax withholdings for equity awards.

For the six months ended March 31, 2023, cash provided by financing activities was primarily attributable to proceeds from long term debt and net increases in short-term borrowings, partially offset by payments on long-term debt, contingent acquisition consideration payments and payments on tax withholdings for equity awards.

For the nine months ended June 30, 2024 and 2023, cash used in operating activities was approximately $24.9 million and $196.9 million, respectively.

For the nine months ended June 30, 2024, cash used in operating activities was primarily related to increases in inventory, increases in accounts receivable, decreases in accounts payable, decreases in in contract liabilities (customer deposits), partially offset by our net income adjusted for non-cash expenses and gains such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense.

For the nine months ended June 30, 2023, cash used in operating activities was primarily related to increases in inventory and increases in accounts receivable, partially offset by decreases in customer deposits increases in accrued expenses, and our net income adjusted for non-cash expenses and gains such as depreciation and amortization expense, deferred income tax provision, stock-based compensation expense, and gain on acquisition of previously held equity investment.

For the nine months ended June 30, 2024 and 2023, cash used in investing activities was approximately $64.8 million and $564.1 million, respectively.

For the nine months ended June 30, 2024, cash used in investing activities was primarily used to purchase property and equipment associated with improving existing retail facilities and acquisitions, partially offset by proceeds from insurance settlements.

For the nine months ended June 30, 2023, cash used in investing activities was primarily used for the acquisition of IGY Marinas, and to purchase investments, property and equipment associated with improving existing retail facilities, partially offset by proceeds from insurance settlements and proceeds from investments.

For the nine months ended June 30, 2024 and 2023, cash provided by financing activities was approximately $130.1 million and $756.8 million, respectively.

For the nine months ended June 30, 2024, cash provided by financing activities was primarily attributable to net increases in short-term borrowings, which solely consisted of the Floor Plan (as defined below), and net proceeds from issuance of common stock under incentive compensation and employee purchase plans, partially offset by payments on long-term debt, contingent acquisition consideration payments, purchases of treasury stock, and payments on tax withholdings for equity awards.

For the nine months ended June 30, 2023, cash provided by financing activities was primarily attributable to proceeds from long term debt, net increases in short-term borrowings, which solely consisted of the Floor Plan, and net proceeds from issuance of common stock under incentive compensation and employee purchase plans, partially offset by payments on long-term debt, contingent acquisition consideration payments and payments on tax withholdings for equity awards.

We are party to the Amended Credit Facility with Manufacturers and Traders Trust Company as Administrative Agent, Swingline Lender, and Issuing Bank, Wells Fargo Commercial Distribution Finance, LLC, as Floor Plan Agent, and the lenders party thereto.

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None of our real estate has been pledged for collateral for the Amended Credit Agreement.

As of March 31, 2024, our indebtedness associated with our short-term borrowings, which solely consisted of the Floor Plan, and our long-term debt including the current portion totaled approximately $736.7 million and $406.4 million, respectively.

As of March 31, 2024, short-term borrowings, which solely consisted of the Floor Plan, and long-term debt recorded on the Unaudited Condensed Consolidated Balance Sheets included unamortized debt issuance costs of approximately $1.4 million and $1.7 million, respectively.

As of June 30, 2024, our indebtedness associated with our short-term borrowings, which solely consisted of the Floor Plan, and our long-term debt, including the current portion, totaled approximately $701.2 million and $364.1 million, respectively.

As of June 30, 2024, short-term borrowings, which solely consisted of the Floor Plan, and long-term debt recorded on the Unaudited Condensed Consolidated Balance Sheets included unamortized debt issuance costs of approximately $1.4 million and $1.6 million, respectively.

Refer to Note 10 of the Notes to the Consolidated Financial Statements for disclosure of borrowing availability, interest rates, and terms of our short-term borrowings (Floor Plan) and long-term debt.

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Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic markets.

With the exception of Florida, we generally realize significantly lower sales, higher levels of inventories, and related short-term borrowings, which solely consisted of the Floor Plan, in the quarterly periods ending December 31 and March 31.

With the exception of Florida, we generally realize significantly lower sales, higher levels of inventories, and increased related short-term borrowings, which solely consisted of the Floor Plan, in the quarterly periods ending December 31 and March 31.

The onset of the public boat and recreation shows in January generally stimulates boat sales and typically allows us to reduce our inventory levels and related short-term borrowings, which solely consisted of the Floor Plan, throughout the remainder of the fiscal year.

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Changes in the underlying interest rates on our short-term borrowings and long-term debt, which have variable interest rates, could affect our earnings.

For example, a hypothetical 100 basis point, 200 basis point, or 300 basis point increase in the interest rate would result in an increase of approximately $11.0 million, $22.0 million, or $33.0 million, respectively, in annual pre-tax interest expense.

These estimated increases are based upon the outstanding balance of our short-term borrowings and long-term debt as of March 31, 2024 and assumes no mitigating changes by us to reduce the outstanding balances and no additional interest assistance that could be received from vendors due to the interest rate increase.

For example, a hypothetical

100 basis point, 200 basis point, or 300 basis point increase in the interest rate would result in an increase of approximately $10.6 million, $21.1 million, or $31.7 million, respectively, in annual pre-tax interest expense.

These estimated increases are based upon the outstanding balance of our short-term borrowings and long-term debt as of June 30, 2024 and assumes no mitigating changes by us to reduce the outstanding balances and no additional interest assistance that could be received from vendors due to the interest rate increase.

Foreign Currency Exchange Rate Risk

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis