What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-07-27 compared with 2021-04-27 · 70 added, 57 removed, 103 unchanged (55% of the section changed)

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certain specific and isolated events;

our future estimates, assumptions and judgments, including statements regarding whether such estimates, assumptions and judgments would have a material adverse effect on our operating results;

our future estimates, assumptions and judgments, including statements regarding whether such estimates, assumptions and judgments could have a material adverse effect on our operating results;

the impact of changes in accounting policy and standards;

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the seasonality and cyclicality of our business and the effect of such seasonality and cyclicality on our business, financial results and inventory levels;

and the scope and duration of the COVID-19 pandemic and its impact on global economic systems, our employees, sites, operations, customers, suppliers and supply chain, managing growth effectively.

the scope and duration of the COVID-19 pandemic and its impact on global economic systems, our employees, sites, operations, customers, suppliers and supply chain;

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, 2020.

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As a result, from March 2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government or health officials .

Currently, virtually all of our stores are fully operational, the effects of COVID-19 (including the related international, federal, state, and local governmental actions and regulations) remain unpredictable.

Currently, all of our stores are fully operational, but the effects of COVID-19 (including the related international, federal, state, and local governmental actions and regulations) remain unpredictable.

We are following guidelines to ensure we are safely operating as recommended.

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SkipperBud’s is one of the largest boat sales, brokerage, service and marina/storage groups in the United States .

In May 2021, we purchased all of the outstanding equity of Cruisers Yachts.

Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufactures boats and yachts with sales through our select retail dealership locations and through independent dealers, and is recognized as one of the world’s premier manufacturers of premium yachts.

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 acquired 30 recreational boat dealers, four boat brokerage operations, and two full-service yacht repair facilities.

Since the initial acquisitions in March 1998, we have acquired 31 recreational boat dealers, four boat brokerage operations, two full-service yacht repair operations, and one manufacturer.

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 two acquisitions in the fiscal year ended September 30, 2019, two acquisitions in fiscal 2020, and one acquisition to date in fiscal 2021.

We completed two acquisitions in the fiscal year ended September 30, 2019, two acquisitions in fiscal 2020, and three acquisitions to date in fiscal 2021.

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

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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.

Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed management’s reporting structure and operating activities .

We now report our operations through two new reportable segments:

Retail Operations and Product Manufacturing.

See Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements.

The Retail Operations segment includes the activity of our current 78 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.

In addition, we provide repair, maintenance, and slip and storage services;

we arrange related boat financing, insurance, and extended service contracts;

we offer boat and yacht brokerage sales;

yacht charter services;

and we operate a yacht charter business in the British Virgin Islands.

We also own Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services companies with operations in multiple countries.

The Product Manufacturing segment includes activity of Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufacturing boats and yachts with sales through our select retail dealership locations and through independent dealers.

Cruisers Yachts is recognized as one of the world’s premier manufacturers of premium yachts, producing models from 33’ to 60’ feet.

Application of Critical Accounting Policies

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Consolidated Results of Operations

The following discussion compares the three and six months ended March 31, 2021, with the three and six months ended March 31, 2020 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, 2021 Compared with Three Months Ended March 31, 2020

Revenue increased $214.6 million, or 69.6%, to $523.1 million for the three months ended March 31, 2021, from $308.5 million for three months ended March 31, 2020.

The increase was due to a net increase of $140.3 million or 45.5% in comparable-store sales and an increase of $74.3 million from stores opened, stores closed, and acquisitions that are not eligible for inclusion in the comparable-store base for the full period.

The increase in our comparable-store sales was primarily due to demand driven increases in new and used boat revenue and our higher margin finance and insurance products, brokerage, parts, service, and storage services.

The following discussion compares the three and nine months ended June 30, 2021, with the three and nine months ended June 30, 2020 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, 2021 Compared with Three Months Ended June 30, 2020

Revenue increased $168.0 million, or 33.7%, to $666.3 million for the three months ended June 30, 2021, from $498.3 million for three months ended June 30, 2020.

The increase was due to a net increase of $28.5 million or 5.7% in comparable-store sales and an increase of $139.5 million from stores opened, stores closed, and acquisitions that are not eligible for inclusion in

the comparable-store base for the full period.

The increase in our comparable-store sales was primarily due to demand driven increases in new boat revenue and our higher margin finance and insurance products, brokerage, parts, service, and storage services.

Gross Profit.

Gross profit increased $ 78.0 million, or 99.0 %, to $ 156.8 million for the three months ended March 31, 2021 , from $ 78.8 million for the three months ended March 31, 20 20 .

G ross profit as a percentage of revenue increased to 30.0 % for the three months ended March 31, 2021 from 25.5 % for the three months ended March 31, 2020 .

The increase in gross profit as a percentage of revenue was primarily the result of demand driven increased new and used boat margins and increases in our higher margin businesses, including the additional sales of Northrop & Johnson (which typically carry higher margins), as a percentage of sales.

The increase in gross profit dollars was primarily attributable to increased new and used boat sales.

Gross profit increased $81.2 million, or 65.7%, to $204.7 million for the three months ended June 30, 2021, from $123.5 million for the three months ended June 30, 2020.

Gross profit as a percentage of revenue increased to 30.7% for the three months ended June 30, 2021 from 24.8% for the three months ended June 30, 2020 .

The increase in gross profit as a percentage of revenue was primarily the result of demand driven price increases resulting in greater new and used boat margins and increases in our higher margin businesses, including additional sales by Northrop & Johnson (which typically carry higher margins), as a percentage of sales.

The increase in gross profit dollars was primarily attributable to increased new boat sales.

Selling, General, and Administrative Expenses.

Selling, general, and administrative expense increased $34.8 million, or 50.4%, to $103.9 million for the three months ended March 31, 2021, from $69.1 million for the three months ended March 31, 2020.

Selling, general, and administrative expenses as a percentage of revenue decreased to 19.9% for the three months ended March 31, 2021 from 22.4% for the three months ended March 31, 2020.

The decrease in selling, general, and administrative expenses as a percentage of revenue was primarily driven by increased revenue combined with increased efficiencies and operating leverage in the business.

The increase in selling, general, and administrative expenses was driven by the increases in revenue from increases in comparable-store sales and acquisitions.

Selling, general, and administrative expense increased $49.0 million, or 65.5%, to $123.8 million for the three months ended June 30, 2021, from $74.8 million for the three months ended June 30, 2020.

Selling, general, and administrative expenses as a percentage of revenue increased to 18.6% for the three months ended June 30, 2021 from 15.0% for the three months ended June 30, 2020.

The increase in selling, general, and administrative expenses was driven by an increase in mix to our higher margin businesses which typically carry a higher expense structure and acquisitions.

Interest Expense.

Interest expense decreased $1.9 million, or 63.3%, to $1.1 million for the three months ended March 31, 2021, from $3.0 million for the three months ended March 31, 2020.

Interest expense as a percentage of revenue decreased to 0.2% for the three months ended March 31, 2021 from 1.0% for the three months ended March 31, 2020.

The decrease in interest expense was primarily the result of decreased interest rates and decreased borrowings.

Interest expense decreased $1.5 million, or 71.4%, to $0.6 million for the three months ended June 30 , 2021, from $2.1 million for the three months ended June 30 , 2020.

Interest expense as a percentage of revenue decreased to 0.1% for the three months ended June 30 , 2021 from 0.4% for the three months ended June 30 , 2020.

The decrease in interest expense was primarily the result of decreased borrowings.

Income Taxes.

Income tax expense increased $11.2 million, or 700.0%, to $12.8 million for the three months ended March 31, 2021, from $1.6 million for the three months ended March 31, 2020.

Our effective income tax rate increased to 24.8% for the three months ended March 31, 2021, from 24.4% for three months ended March 31, 2020.

Income tax expense increased $9.1 million, or 78.4%, to $20.7 million for the three months ended June 30 , 2021, from $11.6 million for the three months ended June 30 , 2020.

Our effective income tax rate increased to 25.7% for the three months ended June 30 , 2021, from 24.9% for three months ended June 30 , 2020.

The increase in the effective income tax rate was primarily attributed to minor changes in the allocation of pre-tax income between taxing jurisdictions.

Six Months Ended March 31, 2021 Compared with Six Months Ended March 31, 2020

Revenue increased $322.0 million, or 52.6%, to $934.6 million for the six months ended March 31, 2021, from $612.6 million for the six months ended March 31, 2020.

Nine Months Ended June 30, 2021 Compared with Nine Months Ended June 30, 2020

Revenue increased $490.0 million, or 44.1%, to $1.601 billion for the nine months ended June 30, 2021, from $1.111 billion for the nine months ended June 30, 2020.

The increase was due to a net increase of $230.3 million or 20.7% in comparable-store sales and an increase of $259.7 million from stores opened, stores closed, and acquisitions that are not eligible for inclusion in the comparable-store base for the full period.

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Gross Profit.

Gross profit increased $121.4 million, or 76.4%, to $280.2 million for the six months ended March 31, 2021, from $158.8 million for the six months ended March 31, 2020.

Gross profit as a percentage of revenue increased to 30.0% for the six months ended March 31, 2021 from 25.9% for the six months ended March 31, 2020 .

Gross profit increased $202.7 million, or 71.8%, to $484.9 million for the nine months ended June 30, 2021, from $282.2 million for the nine months ended June 30, 2020.

Gross profit as a percentage of revenue increased to 30.3% for the nine months ended June 30, 2021 from 25.4% for the nine months ended June 30, 2020 .

The increase in gross profit dollars was primarily attributable to increased new and used boat sales.

Selling, General, and Administrative Expenses.

Selling, general, and administrative expense increased $62.0 million, or 46.5%, to $195.4 million for the six months ended March 31, 2021, from $133.4 million for the six months ended March 31, 2020.

Selling, general, and administrative expenses as a percentage of revenue decreased to 20.9% for the six months ended March 31, 2021 from 21.8% for the six months ended March 31, 2020.

The increase in selling, general, and administrative expenses was driven by the increases in revenue from increases in comparable-store sales and acquisitions.

Selling, general, and administrative expense increased $110.8 million, or 53.2%, to $319.1 million for the nine months ended June 30, 2021, from $208.3 million for the nine months ended June 30, 2020.

Selling, general, and administrative expenses as a percentage of revenue increased to 19.9% for the nine months ended June 30, 2021 from 18.7% for the nine months ended June 30, 2020.

The increase in selling, general, and administrative expenses was driven by an increase in mix to our higher margin businesses which typically carry a higher expense structure and acquisitions.

Interest Expense.

Interest expense decreased $4.0 million, or 62.5%, to $2.4 million for the six months ended March 31, 2021, from $6.4 million for the six months ended March 31, 2020.

Interest expense as a percentage of revenue decreased to 0.3% for the six months ended March 31, 2021 from 1.0% for the six months ended March 31, 2020.

Interest expense decreased $5.5 million, or 64.7%, to $3.0 million for the nine months ended June 30 , 2021, from $8.5 million for the nine months ended June 30 , 2020.

Interest expense as a percentage of revenue decreased to 0.2% for the nine months ended June 30 , 2021 from 0.8% for the nine months ended June 30 , 2020.

The decrease in interest expense was primarily the result of decreased interest rates and decreased borrowings.

Income Taxes.

Income tax expense increased $15.1 million, or 308.2%, to $20.0 million for the six months ended March 31, 2021, from $4.9 million for the six months ended March 31, 2020.

Our effective income tax rate decreased to 24.2% for the six months ended March 31, 2021, from 25.6% for the six months ended March 31, 2020.

Income tax expense increased $24.2 million, or 147.6%, to $40.6 million for the nine months ended June 30 , 2021, from $16.4 million for the nine months ended June 30 , 2020.

Our effective income tax rate decreased to 24.9% for the nine months ended June 30 , 2021, from 25.1% for the nine months ended June 30 , 2020.

The decrease in the effective income tax rate was primarily attributed to excess equity compensation for tax purposes.

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Acquisitions remain an important strategy for us, and we plan to continue our growth through this strategy in appropriate circumstances.

However, we cannot predict the return of, or length of, favorable economic or financial conditions.

However, we cannot predict the length of favorable economic or financial conditions.

We regularly monitor the aging of our inventories and current market trends to evaluate our current and future inventory needs.

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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 Credit Facility and therefore our ability to utilize the Credit Facility to fund operations.

As of March 31, 2021, we were in compliance with all covenants under the Credit Facility.

As of June 30, 2021, we were in compliance with all covenants under the Credit Facility.

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

As 100% owner of each of our dealerships, we determine the amounts of such distributions subject to applicable law, and currently, no agreements exist that restrict this flow of funds from our dealerships.

For the six months ended March 31, 2021, cash provided by operating activities was approximately $146.6 million.

For the six months ended March 31, 2020, cash used in operating activities was approximately $18.6 million.

For the six months ended March 31, 2021, cash provided by operating activities was primarily related to decreases in inventory (excluding acquisitions), increases in contract liabilities, increases in accrued expenses and other liabilities, partially offset by increases in accounts receivable, increases in prepaid expenses and other assets and decreases in accounts payable, and our net income adjusted for non-cash expenses such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense.

For the six months ended March 31, 2020, cash used in operating activities was primarily related to increases in inventory, decreases in accounts payable and accrued expenses, partially offset by decreases in accounts receivable, increases in customer deposits, and our net income adjusted for non-cash expenses such as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense.

For the six months ended March 31, 2021 and 2020, cash used in investing activities was approximately $64.3 million and $5.1 million, respectively.

For the six months ended March 31, 2021, cash used in investing activities was primarily used for acquisitions, investments, and to purchase property and equipment associated with improving existing retail facilities.

For the six months ended March 31, 2020, 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 received from the sale of property and equipment.

For the six months ended March 31, 2021, cash used in financing activities was approximately $95.1 million.

For the six months ended March 31, 2020, cash provided by financing activities was approximately $49.6 million.

For the six months ended March 31, 2021, cash used in financing activities was primarily attributable to net payments on short-term borrowings, payments on tax withholdings for equity awards, and payments for long-term debt and debt issuance costs, partially offset by proceeds from long-term debt and proceeds from the issuance of common stock from our stock based compensation plans.

For the six months ended March 31, 2020, cash provided by financing activities was primarily attributable to net short-term borrowings as a result of increased inventory levels and proceeds from the issuance of common stock from our stock based compensation plans, partially offset by payments on tax withholdings for equity awards and by the repurchase of common stock under the share repurchase program .

In May 2020, we entered into a Loan and Security Agreement (the “Credit Facility”), with Wells Fargo Commercial Distribution Finance LLC, M&T Bank, Bank of the West, and Truist Bank.

For the nine months ended June 30, 2021 and 2020, cash provided by operating activities was approximately $329.6 million and $221.3 million, respectively.

For the nine months ended June 30, 2021, cash provided by operating activities was primarily related to decreases in inventory (excluding acquisitions), increases in contract liabilities (customer deposits), increases in accrued expenses and other liabilities, and our net income adjusted for non-cash expenses such as depreciation and amortization expense, stock-based compensation expense, and deferred income tax provision, partially offset by increases in accounts receivable, decreases in accounts payable, and increases in prepaid expenses and other assets.

For the nine months ended June 30, 2020, cash provided by operating activities was primarily related to decreases in inventory, increases in accrued expenses and other liabilities, increases in contract liabilities (customer deposits), increases in accounts payable, and our net income adjusted for non-cash expenses such as depreciation and amortization expense, stock-based compensation expense, and deferred income tax provision, partially offset by increases in accounts receivable, and increase in prepaid expenses and other assets.

For the nine months ended June 30, 2021 and 2020, cash used in investing activities was approximately $131.1 million and $7.2 million, respectively.

For the nine months ended June 30, 2021, cash used in investing activities was primarily used for acquisitions, to purchase property and equipment associated with improving existing retail facilities, and to purchase investments, partially offset by proceeds from insurance settlements.

For the nine months ended June 30, 2020, cash used in investing activities was primarily used to purchase property and equipment associated with improving existing retail facilities, and for acquisitions, partially offset by proceeds received from the sale of property and equipment.

For the nine months ended June 30, 2021 and 2020, cash used in financing activities was approximately $154.1 million and $165.9 million, respectively.

For the nine months ended June 30, 2021, cash used in financing activities was primarily attributable to net payments for short-term borrowings, purchase of treasury stock, payments on tax withholdings for equity awards, payments for long-term debt, and contingent acquisition consideration payments, partially offset by proceeds from long-term debt and net proceeds from issuance of common stock under incentive compensation and employee purchase plans.

For the nine months ended June 30, 2020, cash used in financing activities was primarily attributable to net payments for short-term borrowings , and payments on tax withholdings for equity awards, partially offset by net proceeds from issuance of common stock under incentive compensation and employee purchase plans .

In July 2021, we entered into an Amended and Restated Loan and Security Agreement (the “Credit Facility”), with Wells Fargo Commercial Distribution Finance LLC, M&T Bank, Bank of the West, and Truist Bank.

The Credit Facility provides the Company a line of credit with asset based borrowing availability of up to $500 million for working capital and inventory financing, with the amount permissible pursuant to a borrowing base formula.

The Credit Facility has a three-year term and expires in May 2023, subject to extension for two one-year periods, with lender approval.

The Credit Facility has a three-year term and expires in July 2024, subject to extension for two one-year periods, with lender approval.

The Credit Facility has certain financial covenants as specified in the agreement.

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

The collateral for the Credit Facility

is primarily the Company’s inventory that is financed through the Credit Facility and related accounts receivable.

The collateral for the Credit Facility is primarily the Company’s inventory that is financed through the Credit Facility and related accounts receivable.

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

As of March 31, 2021, our indebtedness associated with financing our inventory and working capital needs totaled approximately $35.8 million.

As of March 31, 2020 and 2021, the interest rate on the outstanding short-term borrowings was approximately 5.0% and 4.2%, respectively.

As of March 31, 2021, our additional available borrowings under our Credit Facility were approximately $181 million based upon the outstanding borrowing base availability.

As of March 31, 2021 we had approximately $49.4 million in long-term debt, net of current maturities as a result of our mortgage facilities.

As of June 30, 2021 , our indebtedness associated with financing our inventory and working capital needs totaled approximately $ 2.9 million.

As of June 30, 2020 and 2021 , the interest rate on the outstanding short-term borrowings was approximately 3.9 % and 4.2 %, respectively.

As of June 30, 2021 , our additional available borrowings under our Credit Facility were approximately $ 1 02.9 million based upon the outstanding borrowing base availability.

As of June 30, 2021 we had approximately $48.4 million in long-term debt, net of current maturities as a result of our mortgage facilities.

See Note 10 of the Notes to Unaudited Condensed Consolidated Financial Statements.

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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