What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-01-23 compared with 2024-07-25 · 49 added, 74 removed, 120 unchanged (51% of the section changed)

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the impact of our core strengths and retailing strategies on our growth and earnings potential;

impacts of steps taken to counteract weak market conditions;

our plans to accelerate our growth through acquisitions and new store openings;

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and the Company’s ability to manage growth effectively.

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.

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, 2024.

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

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We also own Fraser Yachts Group, a leading superyacht brokerage and luxury yacht services company with operations in multiple countries, Northrop & Johnson, another leading superyacht brokerage and services company with operations in multiple countries, SkipperBud’s, one of the largest boat sales, brokerage, service and marina/storage groups in the United States, and Cruisers Yachts, a manufacturer of sport yacht and yachts with sales through our select retail dealership locations and through independent dealers.

In November 2021, we acquired Intrepid Powerboats, a manufacturer of powerboats, and Texas MasterCraft, a watersports dealer in Northern Texas.

In April 2022, through Northrop & Johnson, we acquired Superyacht Management, S.A.R.L., better known as SYM, a superyacht management company based in Golfe-Juan, France.

In August 2022, we expanded our presence in Texas by acquiring Endeavour Marina in Seabrook.

In October 2022, we completed the acquisition of IGY Marinas.

IGY Marinas maintains a network of luxury marinas situated in yachting and sport fishing destinations around the world.

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.

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

In December 2022, we acquired Midcoast Marine Group, a leading full-service marine construction company based on Central Florida's Gulf Coast.

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

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In March 2024, we acquired Williams Tenders USA, a premier distributor and retailer for UK-based Williams Jet Tenders Ltd., the world’s leading manufacturer of rigid inflatable jet tenders for the luxury yacht market.

In March 2024, we also acquired Native Marine, a boat dealer based in Islamorada, Florida.

In October 2024, our Cruisers Yachts subsidiary assumed the rights to MasterCraft's Aviara brand of luxury dayboats.

In January 2025, we acquired the service and parts departments at our retail location in Panama City Beach, Florida.

MarineMax was incorporated in January 1998 (and reincorporated in Florida in March 2015).

We commenced operations with the acquisition of five independent recreational boat dealers on March 1, 1998.

Since the initial acquisitions in March 1998, we have, as of the filing of this Quarterly Report on Form 10-Q, acquired 33 recreational boat dealers, five boat brokerage operations, two full-service yacht repair operations, five boat brokerage operations, and two boat and yacht manufacturers.

Since the initial acquisitions in March 1998, we have, as of the filing of this Quarterly Report on Form 10-Q, acquired 35 recreational boat dealers, multiple marinas, five boat brokerage operations, six superyacht service companies, two full-service yacht repair operations, and two boat and yacht manufacturers.

As a part of our acquisition strategy, we frequently engage in discussions with various recreational boat dealers regarding their potential acquisition by us.

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As a result of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal agreements and are not consummated.

We completed four acquisitions in the fiscal year ending September 30, 2023, and three acquisitions to date in fiscal 2024.

We completed three acquisitions in the fiscal year ending September 30, 2024, and two acquisitions to date in fiscal 2025.

General economic conditions and consumer spending patterns can negatively impact our operating results.

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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.

Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels, even if prevailing economic conditions are favorable.

Additionally, the Federal Reserve's increases of its benchmark interest rate, along with potential future increases and/or market expectations of such increases, have resulted in, and may further result in, significantly higher long-term interest rates and a downturn in the overall economy, each of which has negatively impacted our customers’ willingness or desire to purchase our products.

Additionally, the Federal Reserve's prior increases of its benchmark interest rate have resulted in significantly higher long-term interest rates, which may continue to negatively impact our customers’ willingness or desire to purchase our products.

As a result, an economic downturn or inflation could impact us more than certain of our competitors due to our strategic focus on a higher end of our market.

However, the Federal Reserve has recently cut interest rates but future decreases or increases are uncertain.

Although we have expanded our operations during periods of stagnant or modestly declining industry trends, the cyclical nature of the recreational boating industry or the lack of industry growth may adversely affect our business, financial condition, and results of operations.

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Although past economic conditions have adversely affected our operating results, we believe during and after such conditions we have capitalized on our core strengths to substantially outperform the industry, resulting in market share gains.

Our ability to capture such market share supports the alignment of our retailing strategies with the desires of consumers.

Our ability to capture

such market share supports the alignment of our retailing strategies with the desires of consumers.

We believe the steps we have taken to address weak market conditions in the past have yielded, and we believe are likely to yield in the future, an increase in revenue.

Acquisitions remain an important strategy for us, and, subject to a number of conditions, including macro-economic conditions and finding attractive acquisition targets, we plan to explore opportunities through this strategy.

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 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 expect 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 December 31, 2024, the Retail Operations segment includes the activity of over 70 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 June 30, 2024, the Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid Powerboats, both wholly owned MarineMax subsidiaries.

As of December 31, 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 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 $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 $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 $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 $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.

The following discussion compares the three months ended December 31, 2024, with the three months ended December 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 December 31, 2024 Compared with Three Months Ended December 31, 2023

Revenue decreased $58.8 million, or 11.2%, to $468.5 million for the three months ended December 31, 2024, from $527.3 million for three months ended December 31, 2023.

The decrease was due to a decrease of $57.0 million or 11% in comparable-store sales in addition to a $1.8 million net decrease primarily from manufacturing revenue, which is not included in comparable retail store sales, partially offset by revenue from new locations that are not eligible for inclusion in comparable-store sales.

The comparable-store decrease was primarily driven by declines in new boat revenue resulting from challenging economic trends and the lingering impact of Hurricanes Helene and Milton.

Gross Profit.

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.

Gross profit decreased $5.8 million, or 3.3%, to $169.7 million for the three months ended December 31, 2024, from $175.5 million for the three months ended December 31, 2023.

Gross profit as a percentage of revenue increased to 36.2% for the three months ended December 31, 2024, from 33.3% for the three months ended December 31, 2023.

The increase in gross profit as a percentage of revenue was attributable to the promotional environment, mix of sales, and increased contribution from our higher-margin businesses.

Selling, General, and Administrative Expenses.

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.

Selling, general, and administrative expenses decreased $25.8 million, or 16.5% to $130.7 million for the three months ended December 31, 2024, from $156.5 million for the three months ended December 31, 2023.

The decrease in selling, general, and administrative expenses was primarily the result of changes in the fair value of contingent consideration liabilities and cost-saving initiatives implemented in the prior fiscal year.

Interest Expense.

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.

Interest expense increased $0.3 million to $18.7 million for the three months ended December 31, 2024, from $18.4 million for the three months ended December 31, 2023.

The increase in interest expense was primarily the result of increased borrowings from higher inventory levels.

Income Taxes.

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.

Income tax increased $2.3 million to $2.1 million, for the three months ended December 31, 2024, from a benefit of $0.2 million for the three months ended December 31, 2023.

The effective income tax rate for the three months ended December 31, 2024 and 2023 before discrete items was 25.1% and 26.4%, 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 June 30, 2024, we were in compliance with all covenants under the Amended Credit Facility.

As of December 31, 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 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.

For the three months ended December 31, 2024 and 2023, cash used in operating activities was approximately $146.1 million and $89.1 million, respectively.

For the three months ended December 31, 2024, cash used in operating activities was primarily related to increases in inventory, decreases in accounts payable, decreases 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 three months ended December 31, 2023, 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 three months ended December 31, 2024 and 2023, cash used in investing activities was approximately $6.5 million and $17.3 million, respectively.

For the three months ended December 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 the sale of property and equipment and other assets and proceeds from the acquisition of a trade name.

For the three months ended December 31, 2023, 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 three months ended December 31, 2024 and 2023, cash provided by financing activities was approximately $74.7 million and $114.3 million, respectively.

For the three months ended December 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 and payments on tax withholdings for equity awards.

For the three months ended December 31, 2023, 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.

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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Advances on used inventory will mature 361 days from the date we acquire the used inventory.

Each advance is subject to a curtailment schedule, which requires that we pay down the balance of each advance on a periodic basis starting six months after receiving such advance.

Each advance is subject to a curtailment schedule, which requires that we pay down the balance of each advance on a periodic basis starting six months

after receiving such advance.

The curtailment schedule varies based on the type and value of the inventory.

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

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.

As of December 31, 2024, our indebtedness associated with our short-term borrowings, which solely consisted of the Floor Plan, and our long-term debt, totaled approximately $795.2 million and $347.3 million, respectively.

As of December 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 $1.2 million and $1.4 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.

Except as specified in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Unaudited Condensed Consolidated Financial Statements in the “Financial Statements (Unaudited)”, we have no material commitments for capital for the next 12 months.

Based on the information currently available to us (including the impacts on consumer demand of the current supply chain and inventory challenges, inflation, higher interest rates, and potential recession, all of which are uncertain), we believe that the cash generated from sales and our existing capital resources will be adequate to meet our liquidity and capital requirements for at least the next 12 months and thereafter for the foreseeable future, except in the case of possible significant acquisitions.

Based on the information currently available to us (including the potential re-emergence of or increase in inflation, the effects of potentially higher interest rates, and potential recession, all of which are uncertain), we believe that the cash generated from sales and our existing capital resources will be adequate to meet our liquidity and capital requirements for at least the next 12 months, and thereafter for the foreseeable future, except in the case of possible significant acquisitions.

Impact of Seasonality and Weather on Operations

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In addition, unseasonably cool weather and prolonged winter conditions may lead to a shorter selling season in certain locations.

Hurricanes and other storms could result in disruptions of our operations or damage to our boat inventories and facilities, as has been the case when Florida and other markets were affected by hurricanes, such as Hurricanes Harvey and Irma in 2017 and Hurricane Ian in 2022.

Although our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area, these conditions will continue to represent potential, material adverse risks to us and our future financial performance.

Although we believe our geographic diversity is likely to reduce the overall impact to us of adverse weather conditions in any one market area, these conditions will continue to represent potential, material adverse risks to us and our future financial performance.

QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK

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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 $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.

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 $11.3 million, $22.7 million, or $34.0 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 December 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.

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