What changed in this filing

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Item 1. Financial Statements

2022-02-01 compared with 2021-07-27 · 217 added, 277 removed, 368 unchanged (57% of the section changed)

5 unchanged sentences

Three Months Ended

Nine Months Ended

Cost of sales

14 unchanged sentences

Three Months Ended

Nine Months Ended

Other comprehensive gain (loss), net of tax:

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

Interest rate swap contract

Total other comprehensive income, net of tax

Total other comprehensive income (loss), net of tax

Comprehensive income

32 unchanged sentences

Preferred stock, $ .001 par value, 1,000,000 shares authorized, none issued or outstanding

as of September 30, 2020 and June 30, 2021

as of September 30, 2021 and December 31, 2021

Common stock, $ .001 par value, 40,000,000 shares authorized, 28,588,863 and

28,743,957 shares issued and 21,821,842 and 21,976,936 shares outstanding as of

September 30, 2020 and June 30, 2021, respectively

September 30, 2021 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Retained earnings

Treasury stock, at cost, 6,267,021 and 6,556,844 shares held as of September 30, 2020

and June 30, 2021, respectively

Treasury stock, at cost, 6,767,021 shares held as of September 30, 2021

and December 31, 2021

Total shareholders’ equity

9 unchanged sentences

Shares issued pursuant to employee stock purchase plan

Shares issued upon vesting of equity awards, net

of minimum tax withholding

Shares issued upon exercise of stock options

Stock-based compensation

Other comprehensive income

BALANCE, December 31, 2020

Shares issued upon vesting of equity awards, net

of minimum tax withholding

Shares issued upon vesting of equity awards,

net of minimum tax withholding

Shares issued upon exercise of stock options

1 unchanged sentence

Other comprehensive loss

BALANCE, March 31, 2021

Purchase of treasury stock

Shares issued pursuant to employee stock purchase plan

Shares issued upon exercise of stock options

Stock-based compensation

Other comprehensive income

BALANCE, June 30, 2021

See accompanying notes to condensed consolidated financial statements

MARINEMAX, INC.

AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity

(Amounts in thousands, except share data)

BALANCE, December 31, 2021

Comprehensive

2 unchanged sentences

Shares issued pursuant to employee stock purchase plan

Shares issued upon vesting of equity awards, net

of minimum tax withholding

Shares issued upon vesting of equity awards,

net of minimum tax withholding

Shares issued upon exercise of stock options

1 unchanged sentence

Other comprehensive income

Cumulative effect of change in accounting

principle - leases, net after tax

BALANCE, December 31, 2020

Purchase of treasury stock

Shares issued upon exercise of stock options

Stock-based compensation

Other comprehensive loss

BALANCE, March 31, 2020

Purchase of treasury stock

Shares issued pursuant to employee stock purchase plan

Shares issued upon vesting of equity awards, net

of minimum tax withholding

Shares issued upon exercise of stock options

Stock-based compensation

Other comprehensive income

BALANCE, June 30, 2020

See accompanying Notes to Condensed Consolidated Financial Statements

3 unchanged sentences

(Amounts in thousands)

Nine Months Ended June 30,

Three Months Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating

Adjustments to reconcile net income to net cash (used in) provided by operating

Depreciation and amortization

Deferred income tax provision

Gain on sale of property and equipment

Proceeds from insurance settlements

Loss (gain) on sale of property and equipment

Stock-based compensation expense

7 unchanged sentences

Accrued expenses and other liabilities

Net cash provided by operating activities

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

Purchases of investments

Proceeds from insurance settlements

Proceeds from sale of property and equipment

1 unchanged sentence

CASH FLOWS FROM FINANCING ACTIVITIES:

Net payments for short-term borrowings

Net (payments) borrowings on short-term borrowings

Proceeds from long-term debt

2 unchanged sentences

Contingent acquisition consideration payments

Purchase of treasury stock

Net proceeds from issuance of common stock under incentive compensation and

1 unchanged sentence

Payments on tax withholdings for equity awards

Net cash used in financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash

NET INCREASE IN CASH AND CASH EQUIVALENTS

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of period

3 unchanged sentences

Non-cash items:

Initial operating lease right-of-use assets for adoption of ASU 2016-02

Initial current and noncurrent operating lease liabilities for adoption of

Contingent consideration liabilities from acquisitions

4 unchanged sentences

COMPANY BACKGROUND:

We are the largest recreational boat and yacht retailer in the United States.

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

We engage primarily in the retail sale, brokerage, and service of new and used boats, motors, trailers, marine parts and accessories and offer slip and storage accommodations in certain locations.

1 unchanged sentence

We also offer the charter of power yachts in the British Virgin Islands.

As of June 30, 2021, we operated through 77 retail locations in 21 states, consisting of 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.

As of December 31, 2021, we operated through 79 retail locations in 21 states, consisting of 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.

Our MarineMax Vacations operation maintains a facility in Tortola, 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.

Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufactures boats and yachts with sales through our select retail dealership locations and through independent dealers.

We are the nation’s largest retailer of Sea Ray and Boston Whaler recreational boats which are manufactured by Brunswick Corporation (“Brunswick”).

Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers .

Intrepid Powerboats (“Intrepid”) is recognized as a world class producer of customized boats, carefully reflecting the unique desires of each individual owner.

We are the largest retailer of Sea Ray and Boston Whaler recreational boats which are manufactured by Brunswick Corporation (“Brunswick”).

Sales of new Brunswick boats accounted for approximately 27 % of our revenue in fiscal 2021.

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We believe non-Brunswick brands offer a migration for our existing customer base or fill a void in our product offerings, and accordingly, do not compete with the business generated from our other prominent brands.

In May 2021, we purchased all of the outstanding equity of KCS International Inc.

(“Cruisers Yachts”).

This acquisition provides us a premium, American built yacht for our product portfolio.

Prior to the acquisition, we were a dealer for Cruiser Yachts.

Cruisers Yachts also operates with independent dealers and is recognized as one of the world’s premier manufacturers of premium yachts.

In October 2020, we purchased all of the outstanding equity of Skipper Marine Corp., Skipper Marine of Madison, Inc., Skipper Marine of Fox Valley, Inc., Skipper Bud’s of Illinois, Inc., Skipper Marine of Chicago-Land, Inc., Skipper Marine of Michigan, Inc., and Skipper Marine of Ohio, LLC, (collectively, “SkipperBud’s”).

This acquisition significantly increased our presence in the Great Lakes region and the West Coast of the United States.

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

As is typical in the industry, we deal with most of our manufacturers, other than Sea Ray, Boston Whaler, and Azimut Yachts, under renewable annual dealer agreements, each of which gives us the right to sell various makes and models of boats within a given geographic region.

Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory or marketing practices, including rebate or incentive programs, could adversely affect our results of operations.

Although there are a limited number of manufacturers of the type of boats and products that we sell, we believe that adequate alternative sources would be available to replace any manufacturer other than Sea Ray and Azimut as a product source.

These alternative sources may not be available at the time of any interruption, and alternative products may not be available at comparable terms, which could affect operating results adversely.

From March 2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government or health officials as a result of the COVID-19 global pandemic .

In November 2021, we acquired Intrepid, a premier manufacturer of powerboats, and Texas Marine Holdings (“Texas MasterCraft”), a premier watersports dealer in Northern Texas.

Intrepid is recognized as a world class producer of customized boats, carefully reflecting the unique desires of each individual owner.

Texas MasterCraft specializes in ski and wakeboard boats.

The activity of Intrepid is included in our Product Manufacturing segment.

The activity of Texas MasterCraft is included in our Retail Operations segment.

From March 2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government or health officials as a result of the COVID-19 pandemic.

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

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Management expects its business, across all of its geographies, will be impacted to some degree, but the significance of the impact of the COVID-19 pandemic on the Company’s business and the duration for which it may have an impact cannot be determined at this time.

These alternative sources may not be available at the time of any interruption, and alternative products may not be available at comparable terms, which could affect operating results adversely.

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

Unfavorable local, regional, national, or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets we serve and adversely affect our business.

Economic conditions in areas in which we operate dealerships,

particularly Florida , in which we generated approximately 51 %, 54 % and 54 % of our revenue during fiscal 2018, 2019, and 2020, respectively, can have a major impact on our operations.

Local influences, such as corporate downsizing, military base closings, inclement weather such as Hurricane Sandy in 2012 or Hurricanes Harvey and Irma in 2017, 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.

Economic conditions in areas in which we operate dealerships, particularly Florida in which we generated approximately 54 % and 50 % of our revenue during fiscal 2020 and 2021, respectively, can have a major impact on our operations.

Local influences, such as corporate downsizing, military base closings, inclement weather, such as Hurricane Sandy in 2012 or Hurricanes Harvey and Irma in 2017, 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 an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large reductions in the sale of luxury goods.

9 unchanged sentences

All adjustments, consisting of only normal recurring adjustments considered necessary for fair presentation, have been reflected in these Unaudited Condensed Consolidated Financial Statements.

As of June 30, 2021, our financial instruments consisted of cash and cash equivalents, accounts receivable, accounts payable, customer deposits, short-term borrowings, long-term debt, and an interest rate swap contract.

The carrying amounts of our financial instruments reported on the balance sheet as of June 30, 2021, approximated fair value due either to length to maturity or existence of variable interest rates, which approximate prevailing market rates.

The interest rate swap contract is reported at fair value and is designated as a cash flow hedge with changes in fair value reported in other comprehensive income.

The operating results for the nine months ended June 30, 2021, are not necessarily indicative of the results that may be expected in future periods.

The operating results for the three months ended December 31, 2021, are not necessarily indicative of the results that may be expected in future periods.

The preparation of Unaudited Condensed Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Unaudited Condensed Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting periods.

Significant estimates made by us in the accompanying unaudited condensed consolidated financial statements include valuation allowances, valuation of goodwill and intangible assets, valuation of long-lived assets, and valuation of accruals.

Significant estimates made by us in the accompanying Unaudited Condensed Consolidated Financial Statements include valuation allowances, valuation of goodwill and intangible assets, and valuation of long-lived assets.

Actual results could differ from those estimates.

5 unchanged sentences

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

and the 30 recreational boat dealers, four boat brokerage operations, two full-service yacht repair operations, and one manufacturer acquired as of June 30, 2021 (the “acquired dealers,” and together with the brokerage and repair operations, “operating subsidiaries” or the “acquired companies”).

and the 32 recreational boat dealers, four boat brokerage operations, two full-service yacht repair operations, and two manufacturers acquired as of December 31, 2021 (the “acquired dealers,” and together with the brokerage and repair operations, “operating subsidiaries” or the “acquired companies”).

The Unaudited Condensed Consolidated Financial Statements include our accounts and the accounts of our subsidiaries, all of which are wholly owned.

1 unchanged sentence

NEW ACCOUNTING PRONOUNCEMENTS:

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing costs associated with developing or obtaining internal-use software.

The guidance amends Accounting Standards Codification (“ASC”) 350 to include in its scope implementation costs of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which implementation costs should be capitalized in such a cloud computing arrangement.

This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019.

We adopted ASU 2018-05 effective October 1, 2020 the first day of fiscal 2021.

The adoption of this standard had no impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses.

ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other commitments to extend credit rather than the current “incurred loss” model.

These expected credit losses for financial assets held at the reporting date are to be based on historical experience, current conditions, and reasonable and supportable forecasts.

This ASU will also require enhanced disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality.

This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019.

We adopted ASU 2016-13 effective October 1, 2020 the first day of fiscal 2021.

The adoption of this standard had no impact on our consolidated financial statements.

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires contract assets and contract liabilities (i.e., unearned revenue) acquired in a business combination to be recognized and measured in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

This guidance is effective for interim and annual periods beginning after December 15, 2022.

We are currently evaluating the impact that this standard will have on our consolidated financial statements.

FAIR VALUE MEASUREMENTS:

The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible.

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market.

When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

Level 2 - Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

Level 3 - Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The following tables summarize the Company’s financial assets and liabilities measured at fair value in the accompanying Unaudited Condensed Consolidated Balance Sheets:

December 31, 2021

(Amounts in thousands)

Interest rate swap contract

Contingent consideration liabilities

September 30, 2021

(Amounts in thousands)

Interest rate swap contract

Contingent consideration liabilities

There were no transfers between the valuation hierarchy Levels 1, 2, and 3 for the three months ended December 31, 2020, and 2021.

The fair value of the Company’s interest rate swap contract is calculated as the present value of expected future cash flows, determined on the basis of forward interest rates and present value factors.

The inputs to the fair value measurements reflect Level 2 inputs.

The interest rate swap contract balance is included in other long-term assets in the accompanying Unaudited Condensed Consolidated Balance Sheets.

The interest rate swap contract is designated as a cash flow hedge with changes in fair value reported in other comprehensive income in the accompanying Unaudited Condensed Consolidated Statements of Comprehensive Income.

We estimate the fair value of our contingent consideration liabilities using a probability-weighted discounted cash flow model.

The contingent consideration liabilities are estimated based on forecasted pre-tax earnings as a base scenario (among other assumptions) subject to a Monte Carlo simulation.

The fair value of the contingent consideration liabilities, which reflect Level 3 inputs, is reassessed on a quarterly basis.

The contingent consideration liabilities balance is included in accrued expenses and other long-term liabilities in the accompanying Unaudited Condensed Consolidated Balance Sheets.

Changes in fair value and net present value of the contingent consideration liabilities are included in selling, general, and administrative expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

The following table sets forth the changes in fair value of our contingent consideration liabilities, which reflect Level 3 inputs, for the three months ended December 31, 2020 and 2021:

Contingent Consideration Liabilities

(Amounts in thousands)

Beginning balance - September 30,

Additions from business acquisitions

Settlement of contingent consideration liabilities

Change in fair value and net present value of contingency

Ending balance - December 31,

We determined the carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, short-term borrowings, and the revolving mortgage facility approximate their fair values because of the nature of their terms and current market rates of these instruments.

The fair value of our mortgage facilities, which are not carried at fair value in the accompanying Unaudited Condensed Consolidated Balance Sheets, was determined using Level 2 inputs based on the discounted cash flow method.

We estimate the fair value of our mortgage facilities using a present value technique based on current market interest rates for similar types of financial instruments that reflect Level 2 inputs.

The following table summarizes the carrying value and fair value of our mortgage facilities as of September 30, 2021 and December 31, 2021:

September 30, 2021

December 31, 2021

Carrying Value

(Amounts in thousands)

Mortgage facility payable to Flagship Bank

Mortgage facility payable to Seacoast National Bank

Mortgage facility payable to Hancock Whitney Bank

REVENUE RECOGNITION:

The majority of our revenue is from contracts with customers for the sale of boats, motors, and trailers.

We recognize revenue from boat, motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer.

We recognize revenue from boat, motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance of the boat, motor, and trailer by the customer and the satisfaction of our performance obligations.

The transaction price is determined with the customer at the time of sale.

Customers may trade in boats to apply toward the purchase of a new or used boat.

The trade-in is a type of noncash consideration measured at fair value, based on external and internal market data and applied as payment to the contract price for the purchased boat.

At the time of acceptance or delivery, the customer is able to direct the use of, and obtain substantially all of the benefits of, the boat, motor, or trailer at such time.

We recognize commissions earned from a brokerage sale when the related brokerage transaction closes upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance or delivery to the customer.

Customers may trade in a used boat to apply toward the purchase of a new or used boat.

The trade-in is a type of noncash consideration measured at fair value, based on external and internal observable and unobservable market data and applied as payment to the contract price for the purchased boat.

At the time of acceptance, the customer is able to direct the use of, and obtain substantially all of, the benefits of the boat, motor, or trailer.

We do not directly finance our customers’ boat, motor, or trailer purchases.

2 unchanged sentences

Pursuant to negotiated agreements with financial institutions, we are charged back for a portion of these fees should the customer terminate or default on the related finance contract before it is outstanding for a stipulated minimum period of time.

We base the chargeback allowance, which was not material to the unaudited condensed consolidated financial statements taken as a whole as of June 30, 2021, on our experience with repayments or defaults on the related finance contracts.

We base the chargeback allowance, which was not material to the Unaudited Condensed Consolidated Financial Statements taken as a whole as of December 31, 2021, on our experience with repayments or defaults on the related finance contracts.

We recognize variable consideration from commissions earned on extended warranty service contracts sold on behalf of third-party insurance companies at generally the later of customer acceptance of the service contract terms as evidenced by contract execution or recognition of the related boat sale.

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As a practical expedient, because repair and maintenance service contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period or when we expect to recognize such revenue.

We recognize revenue from the sale of our manufactured yachts when control of the yacht is transferred to the dealer, which is generally upon acceptance or delivery to the dealer.

At the time of acceptance or delivery, the dealer is able to direct the use of, and obtain substantially all of the benefits of the yacht.

Contract assets, recorded in prepaid expenses and other current assets, totaled approximately $ 5.7 million and $ 6.1 million as of September 30, 2021 and December 31, 2021, respectively.

We recognize revenue from the sale of our manufactured yachts when control of the yacht is transferred to the dealer, which is generally upon acceptance by the dealer.

At the time of acceptance, the dealer is able to direct the use of, and obtain substantially all of the benefits of, the yacht.

We have elected to record shipping and handling activities that occur after the dealer has obtained control of the yacht as a fulfillment activity.

Contract liabilities primarily consist of customer deposits.

We recognize contract liabilities (customer deposits) as revenue at the time of delivery or acceptance by the customers.

Contract assets, recorded in prepaid expenses and other current assets, totaled approximately $ 2.6 million and $ 6.8 million as of September 30, 2020 and June 30, 2021, respectively.

We recognize contract liabilities (customer deposits) as revenue at the time of acceptance and the transfer of control to the customers.

We recognize deferred revenue from service operations and slip and storage services over time on a straight-line basis over the term of the contract as our performance obligations are met.

We recognize income from the rentals of chartering power yachts over time on a straight-line basis over the term of the contract as our performance obligations are met.

The following tables set forth percentages on the timing of revenue recognition for the three and nine months ended June 30,

Retail Operations

Product Manufacturing

Three Months Ended

June 30, 2020

June 30, 2021

June 30, 2020

June 30, 2021

Goods and services transferred

at a point in time

Goods and services transferred over time

Total revenue

The following table sets forth percentages on the timing of revenue recognition for the three months ended December 31,

Retail Operations

Product Manufacturing

Nine Months Ended

June 30, 2020

June 30, 2021

June 30, 2020

June 30, 2021

Goods and services transferred

at a point in time

Goods and services transferred at a point in time

Goods and services transferred over time

Total revenue

The majority of leases that we enter into are real estate leases.

Substantially all of the leases that we enter into are real estate leases.

We lease numerous facilities relating to our operations, including showrooms, display lots, marinas, service facilities, slips, offices, equipment and our corporate headquarters.

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In addition, we lease certain charter boats for our yacht charter business.

As of June 30, 2021, the weighted-average remaining lease term for our leases was approximately 13 years .

All of our leases are classified as operating leases, which are included as ROU assets and operating lease liabilities in our unaudited condensed consolidated balance sheet.

For the three months ended June 30, 2020 and 2021, operating lease expenses recorded in selling, general, and administrative expenses were approximately $ 3.6 million and $ 6.0 million, respectively.

For the nine months ended June 30, 2020 and 2021, operating lease expenses recorded in selling, general, and administrative expenses were approximately $ 10.3 million and $ 18.3 million, respectively.

As of December 31, 2021, the weighted-average remaining lease term for our leases was approximately 13 years .

All of our leases are classified as operating leases, which are included as ROU assets and operating lease liabilities in the accompanying Unaudited Condensed Consolidated Balance Sheets.

For the three months ended December 31, 2020 and 2021, operating lease expenses recorded in selling, general, and administrative expenses were approximately $ 5.8 million.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

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The fixed payments, including the effects of changes in the fixed rate or amount, and renewal options reasonably certain to be exercised, are included in the measurement of the related lease liability.

Most of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to five

years or more.

Most of our real estate leases include one or more options to renew, with renewal terms that can extend the lease term from one to five years or more.

The exercise of lease renewal options is at our sole discretion.

If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our right of use assets and lease liabilities.

If it is reasonably certain that we will exercise such options, the periods covered by such options are included in the lease term and are recognized as part of our right of use assets and

lease liabilities.

The depreciable life of assets and leasehold improvements are limited by the expected lease term, which includes renewal options reasonably certain to be exercised .

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We determine discount rates based upon our hypothetical credit rating, taking into consideration our short-term borrowing rates, and then adjusting as necessary for the appropriate lease term.

As of June 30, 2021, the weighted-average discount rate used was approximately 5.7 %.

As of June 30, 2021, maturities of lease liabilities by fiscal year are summarized as follows:

As of December 31, 2021, the weighted-average discount rate used was approximately 5.6 %.

As of December 31, 2021, maturities of lease liabilities by fiscal year are summarized as follows:

(Amounts in thousands)

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Present value of lease liabilities

Supplemental cash flow information related to leases was as follows (amounts in thousands):

Nine Months Ended

Supplemental cash flow information related to leases was as follows:

Three Months Ended

(Amounts in thousands)

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Operating leases

Inventory costs consist of the amount paid to acquire inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, and transportation costs relating to acquiring inventory for sale.

We state new and used boat, motor, and trailer inventories at the lower of cost, determined on a specific-identification basis, or net realizable value.

We state parts and accessories at the lower of cost, determined on an average cost basis, or net realizable value.

Inventories are stated at the lower of cost or net realizable value.

The cost of inventories purchased from our vendors consist of the amount paid to acquire the inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, inventory deposits, and transportation costs relating to acquiring inventory for sale.

Trade-in used boats are initially recorded at fair value and adjusted for reconditioning and other costs.

The cost of inventories that are manufactured by the Company consist of material, labor, and manufacturing overhead.

Unallocated overhead and abnormal costs are expensed as incurred.

New and used boats, motors, and trailers inventories are accounted for on a specific identification basis.

Raw materials and parts, accessories, and other inventories are accounted for on an average cost basis.

We utilize our historical experience, the aging of the inventories, and our consideration of current market trends as the basis for determining a lower of cost or net realizable value.

We do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions we use to calculate our valuation allowance which would result in a material effect on our operating results.

As of September 30, 2020 and June 30, 2021, our valuation allowance for new and used boat, motor, and trailer inventories was $ 2.4 million and $ 0.6 million, respectively.

As of September 30, 2021 and December 31, 2021, our valuation allowance for new and used boat, motor, and trailer inventories was $ 0.4 million and $ 0.5 million, respectively.

If events occur and market conditions change, causing the fair value to fall below carrying value, the valuation allowance could increase.

Inventories, net consisted of the following:

Inventories, net consisted of the following as of:

September 30, 2021

December 31, 2021

(Amounts in thousands)

As of September 30, 2020

As of June 30, 2021

New and used boats, motors, and trailers

2 unchanged sentences

Raw materials

Total inventories

Inventories, net

IMPAIRMENT OF LONG-LIVED ASSETS:

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Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored.

Based upon our most recent analysis, we believe no impairment of long-lived assets existed as of June 30, 2021.

Based upon our most recent analysis, we believe no impairment of long-lived assets existed as of December 31, 2021.

We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”).

For business combinations, the excess of the purchase price over the estimated fair value of net assets acquired in a business combination is recorded as goodwill.

In May 2021, we purchased all of the outstanding equity of Cruisers Yachts for an aggregate purchase price of $ 62.7 million, subject to certain customary closing and post-closing adjustments, and net working capital adjustments including certain holdbacks.

The former owners of Cruisers Yachts are subject to certain customary post-closing covenants and indemnities.

The following table summarizes the consideration paid for Cruisers Yachts and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

(Amounts in thousands)

Consideration:

Fair value of total consideration transferred

Recognized amounts of identifiable assets acquired and liabilities assumed:

Current assets, net of cash acquired of $ 5,933

Property and equipment

Intangible assets

Current liabilities

Total identifiable net assets acquired:

The fair value of current assets acquired includes accounts receivable and inventory of approximately $ 3.1 million and $ 26.2 million, r espectively.

The fair value of current liabilities assumed includes short-term borrowings of approximately $ 11.7 million, accrued expenses of approximately $ 10.3 million, and accounts payable of approximately $ 3.0 million.

The intangible assets acquired include the trade name and customer relationships.

The purchase price allocations are preliminary pending receipt of final valuation analysis of certain assets from our valuation advisors.

The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the acquisition.

The majority of the goodwill is expected to be deductible for tax purposes.

The customer relationships have a weighted average useful life of approximately 2.0 years.

The tradename has an indefinite life.

Our results for the nine months ended June 30, 2021 include results from Cruisers Yachts between May 2, 2021 and June 30, 2021.

Refer to Note 17 for disclosure of the revenues and income from operations.

Cruisers Yachts’ financial information for the nine months ended June 30, 2020 and prior to acquisition on May 2, 2021, was not practical to obtain for comparative purposes and as such is not presented because Cruisers Yachts’ historical monthly internal accounting and reporting processes and practices would not provide complete information sufficient for the purposes of this pro forma disclosure.

In October 2020, we purchased all of the outstanding equity of SkipperBud’s for an aggregate purchase price of $ 55.0 million, subject to certain customary closing and post-closing adjustments, and net working capital adjustments including certain holdbacks.

In addition, the former equity owners of SkipperBud’s (“Skippers Sellers”), have the opportunity to earn additional consideration as part of an earnout subject to the achievement of certain pre-tax earnings levels .

The maximum amount of consideration that can be paid under the earnout is approximately $ 9.3 million.

The fair value of $ 8.2 million of the contingent consideration arrangement was estimated by a third party valuation expert by applying an income valuation approach.

The earnout was estimated based on forecasted pre-tax earnings as a base scenario (among other assumptions) subject to a Monte Carlo simulation.

The Skippers Sellers are subject to

certain customary post-closing covenants and indemnities.

The acquisition of SkipperBud’s enhances our sales, brokerage, service and marina/storage presence in the Great Lakes region and West Coast of the Unites States.

The following table summarizes the consideration paid for SkipperBud’s and the preliminary allocation of the purchase consideration to the estimated fair value of the assets acquired and liabilities assumed at the acquisition date.

(Amounts in thousands)

Consideration:

Cash purchase price and net working capital adjustments, net of cash acquired of $ 30,615

Contingent consideration arrangement

Fair value of total consideration transferred

Recognized amounts of identifiable assets acquired and liabilities assumed:

Current assets, net of cash acquired of $ 30,615

Property and equipment

Intangible assets

Current liabilities

Total identifiable net assets acquired:

The fair value of current assets acquired includes accounts receivable and inventory of approximately $ 5.4 million and $ 42.3 million, respectively.

The fair value of current liabilities assumed includes short-term borrowings of approximately $ 30.5 million, accrued expenses of approximately $ 14.6 million, and customer deposits of approximately $ 7.5 million.

We recorded approximately $ 56.4 million in goodwill and approximately $ 2.0 million of other identifiable intangibles (trade name and customer relationships) in connection with the SkipperBud’s acquisition.

The goodwill represents our enhanced geographic reach and brand infrastructure in the Great Lakes region and West Coast of the Unites States.

The majority of the goodwill is expected to be deductible for tax purposes.

The intangible assets have a weighted average useful life of approximately 3.3 years.

For the nine months ended June 30, 2021, SkipperBud’s revenue was approximately $ 230.1 million and estimated income before taxes was approximately $ 25.3 million.

SkipperBud’s financial information for the nine months ended June 30, 2020 was not practical to obtain for comparative purposes and as such is not presented because SkipperBud’s historical monthly internal accounting and reporting processes and practices would not provide complete information sufficient for the purposes of this pro forma disclosure.

In July 2020, we purchased Northrop & Johnson, a leading superyacht brokerage and services company.

In March 2020, we purchased Boatyard, a digital platform with an expansive range of on-demand services to streamline the boating experience by qualified service providers from a smartphone.

In total, current and previous acquisitions have resulted in the recording of $ 84.3 million and $ 186.7 million in goodwill and other intangible assets as of September 30, 2020 and June 30, 2021, respectively.

In November 2021, we completed acquisitions for Intrepid, a premier manufacturer of powerboats, and Texas MasterCraft, a watersports dealer in Northern Texas for aggregate consideration of approximately $ 67.1 million (net of cash acquired of $ 9.4 million), including estimated contingent consideration of $ 6.0 million.

Tangible assets acquired, net of liabilities and cash acquired, totaled approximately $ 20.3 million;

intangible assets acquired totaled $ 7.3 million;

and total goodwill recognized was approximately $ 39.5 million.

Approximately $ 10.6 million of goodwill related to the acquisitions, wholly attributable to Texas MasterCraft, is deductible for tax purposes.

Purchase price allocations are preliminary pending receipt of final valuation analyses of certain assets from our valuation advisor.

In July 2021 we purchased Nisswa Marine a full-service dealer located in Nisswa, Minnesota.

In May 2021, we purchased Cruisers Yachts, a manufacturer of sport yacht 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 sport yacht and yachts.

In October 2020, we purchased SkipperBud’s, one of the largest boat sales, brokerage, service and marina/storage groups in the United States.

In total, current and previous acquisitions have resulted in the recording of $ 201.1 million and $ 247.1 million in goodwill and other intangible assets as of September 30, 2021 and December 31, 2021, respectively.

In accordance with ASC 350, we test goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

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If the carrying amount of a reporting unit’s goodwill exceeds its fair value we recognize an impairment loss in accordance with ASC 350.

As of June 30, 2021 , and based upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our reporting units are less than their carrying values.

As of December 31, 2021 , and based upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our reporting units are less than their carrying values.

As a result, we were not required to perform a quantitative goodwill impairment .

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.

As a result, the Company allocated goodwill to its reporting units within the Company’s two reportable segments.

The following table sets forth the changes in carrying amount of goodwill by reportable segment during the nine months ended June 30, 2021:

(Amounts in thousands)

The following table sets forth the changes in carrying amount of goodwill by reportable segment during the three months ended December 31, 2021:

Retail Operations

Product Manufacturing

(Amounts in thousands)

Balance as of September 30, 2021

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Foreign currency translation

Balance as of June 30, 2021

Balance as of December 31, 2021

INCOME TAXES:

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Under ASC 740, we recognize deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or settled.

We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect those temporary differences to be recovered or

We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by considering all available positive and negative evidence.

During the three months ended June 30, 2020 and 2021, we recognized an income tax provision of $ 11.6 million and $ 20.7 million, respectively.

During the nine months ended June 30, 2020 and 2021, we recognized an income tax provision of $ 16.4 million and $ 40.6 million, respectively.

The effective income tax rate for the three months ended June 30, 2020 and 2021 was 24.9 % and 25.7 %, respectively .

The effective income tax rate for the nine months ended June 30, 2020 and 2021 was 25.1 % and 24.9 %, respectively

During the three months ended December 31, 2020 and 2021, we recognized an income tax provision of $ 7.1 million and $ 10.6 million, respectively.

The effective income tax rate for the three months ended December 31, 2020 and 2021 was 23.2 % and 22.8 %, respectively .

SHORT-TERM BORROWINGS AND LONG-TERM DEBT:

Short-term Borrowings

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.

In May 2020, we entered into a Loan and Security Agreement, which was subsequently amended in July 2021 (as amended to date, 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 $ 500.0 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 .

Subsequent to June 30, 2021, the Company amended the Credit Facility.

The Credit Facility 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 interest rate for amounts outstanding under the Credit Facility is 345 basis points plus the greater of 75 basis points or the one-month LIBOR.

The Credit Facility allows for the transition of the benchmark interest rate used from LIBOR to the Secured Overnight Finance Rate (“SOFR”).

There is an unused line fee of ten basis points on the unused portion of the Credit Facility.

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

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

New inventory borrowing eligibility will generally mature 1,080 days from the original invoice date.

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

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 $ 102.9 million based upon the outstanding borrowing base availability.

As of December 31, 2021, our indebtedness associated with financing our inventory and working capital needs totaled approximately $ 113.7 million and included unamortized debt issuance costs of approximately $ 0.2 million.

As of December 31, 2020 and 2021, the interest rate on the outstanding short-term borrowings was approximately 4.20 %.

As of December 31, 2021, our additional available borrowings under our Credit Facility were approximately $ 19.4 million based upon the outstanding borrowing base availability.

As is common in our industry, we receive interest assistance directly from boat manufacturers, including Brunswick.

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The below table summarizes the Company's long-term debt.

September 30, 2021

December 31, 2021

(Amounts in thousands)

June 30, 2021

Mortgage facility payable to Flagship Bank bearing interest at 2.25 % ( prime minus 100 basis points with a floor of 2.00 % ).

Requires monthly principal and interest payments with a balloon payment of approximately $ 4.0 million due August 2027 .

Mortgage facility payable to Seacoast National Bank bearing interest at 3.00 % ( greater of 3.00% or prime minus 62.5 basis points ).

Requires monthly interest payments for the first year and then monthly principal and interest payments with a balloon payment of approximately $ 6.0 million due September 2031 .

Mortgage facility payable to Hancock Whitney Bank bearing interest at 2.63 % ( prime minus 62.5 basis points with a floor of 2.25 % ).

Requires monthly principal and interest payments with a balloon payment of approximately $ 15.5 million due November 2027 .

50 % of the outstanding borrowings are hedged with an interest rate swap contract with a fixed rate of 3.20 %.

Revolving mortgage facility with FineMark National Bank & Trust bearing interest at 3.00 % ( base minus 25 basis points with a floor of 3.00 % ).

Facility matures in September 2027 .

Current available borrowings under the facility were approximately $ 26.1 million at June 30, 2021.

Less current portion

Less unamortized portion of debt issuance costs

Mortgage facility payable to Flagship Bank bearing interest at 2.25 % as of December 31,

2021 ( prime minus 100 basis points with a floor of 2.00 % ).

Requires monthly principal

and interest payments with a balloon payment of approximately $ 4.0 million due

August 2027 .

Mortgage facility payable to Seacoast National Bank bearing interest at 3.00 % as of

December 31, 2021 ( greater of 3.00% or prime minus 62.5 basis points ).

monthly interest payments for the first year and then monthly principal and interest

payments with a balloon payment of approximately $ 6.0 million due September 2031 .

Mortgage facility payable to Hancock Whitney Bank bearing interest at 2.63 % as of

December 31, 2021 ( prime minus 62.5 basis points with a floor of 2.25 % ).

monthly principal and interest payments with a balloon payment of approximately

$ 15.5 million due November 2027 .

50 % of the outstanding borrowings are hedged

with an interest rate swap contract with a fixed rate of 3.20 %.

Revolving mortgage facility with FineMark National Bank & Trust bearing interest at

3.00 % as of December 31, 2021 ( base minus 25 basis points with a floor of 3.00 % ).

Facility matures in October 2027 .

Current available borrowings under the facility

were approximately $ 25.8 million at December 31, 2021.

Total long-term debt

current portion

unamortized portion of debt issuance costs

Long-term debt, net current portion and unamortized debt issuance costs

STOCK-BASED COMPENSATION:

We account for our stock-based compensation plans following the provisions of FASB ASC 718, “Compensation — Stock Compensation” (“ASC 718”).

In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all options granted (Note 12) and shares purchased under our Amended 2008 Employee Stock Purchase Plan (“Stock Purchase Plan”) (Note 13).

In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all options granted (Note 13) and shares purchased under our Amended 2008 Employee Stock Purchase Plan (“Stock Purchase Plan”).

We measure compensation for restricted stock awards and restricted stock units (Note 15) at fair value on the grant date based on the number of shares expected to vest and the quoted market price of our common stock.

We recognize compensation cost for all awards in operations on a straight-line basis over the requisite service period for each separately vesting portion of the award.

During the three months ended June 30, 2020 and 2021, we recognized stock-based compensation expense of approximately $ 2.2 million and $ 2.5 million, respectively, and for the nine months ended June 30, 2020 and 2021, we recognized stock-based compensation expense of approximately $ 5.5 million and $ 6.9 million, respectively, in selling, general, and administrative expenses in the unaudited condensed consolidated statements of operations.

Cash received from option exercises under all share-based compensation arrangements for the three months ended June 30, 2020 and 2021, was approximately $ 0.6 million and $ 0.9 million, respectively and for the nine months ended June 30, 2020 and 2021 was approximately $ 1.6 million and $ 2.6 million, respectively.

During the three months ended December 31, 2020 and 2021, we recognized stock-based compensation expense of approximately $ 2.0 million and $ 3.3 million, respectively, in selling, general, and administrative expenses in the accompanying Unaudited Condensed Consolidated Statements of Operations.

Cash received from option exercises under all share-based compensation arrangements for the three months ended December 31, 2020 and 2021, was approximately $ 1.5 million and $ 1.1 million, respectively.

We currently expect to satisfy share-based awards with registered shares available to be issued from the Stock Purchase Plan.

THE INCENTIVE STOCK PLANS:

During February 2020, our shareholders approved a proposal to amend the 2011 Stock-Based Compensation Plan (“2011 Plan”) to increase the 3,200,456 share threshold by 1,000,000 shares to 4,200,456 shares.

During January 2011, our shareholders approved a proposal to authorize our 2011 Plan, which replaced our 2007 Incentive Compensation Plan (“2007 Plan”).

In February 2020, our shareholders approved a proposal to amend the 2011 Stock-Based Compensation Plan (“2011 Plan”) to increase the 3,200,456 share threshold by 1,000,000 shares to 4,200,456 shares.

In January 2011, our shareholders approved a proposal to authorize our 2011 Plan, which replaced our 2007 Incentive Compensation Plan (“2007 Plan”).

Our 2011 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards, and performance awards (collectively “awards”), that may be settled in cash, stock, or other property.

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(ii) the number of shares with respect to which awards granted under the 2011 Plan and the 2007 Plan terminate without the issuance of the shares or where the shares are forfeited or repurchased;

(iii) with respect to awards granted under the 2011 Plan and the 2007 Plan, the number of shares that are not issued as a result of the award being settled for cash or otherwise not issued in connection with the exercise or payment of the award;

and (iv) the number of shares that are surrendered or withheld in payment of the exercise price of any award or any tax

withholding requirements in connection with any award granted under the 2011 Plan or the 2007 Plan.

The 2011 Plan terminates in February 2030 , and awards may be granted at any time du ring the life of the 2011 Plan.

and (iv) the number of shares that are surrendered or withheld in payment of the exercise price of any award or any tax withholding requirements in connection with any award granted under the 2011 Plan or the 2007 Plan.

The 2011 Plan terminates in February 2030 , and awards may be granted at any time during the life of the 2011 Plan.

The dates on which awards vest are determined by the Board of Directors or the Plan Administrator.

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To date, we have not settled or been under any obligation to settle any awards in cash.

The following table summarizes activity from our incentive stock plans from September 30, 2020 through June 30, 2021:

The following table summarizes activity from our incentive stock plans from September 30, 2021 through December 31, 2021:

Options Outstanding

Intrinsic Value

(in thousands)

(Amounts in thousands)

Remaining Contractual

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Options exercised

Restricted stock awards issued

Restricted stock awards granted

Restricted stock awards forfeited

Additional shares of stock issued

Balance as of June 30, 2021

Exercisable as of June 30, 2021

No options were granted for the nine months ended June 30, 2020 and 2021.

The total intrinsic value of options exercised during the nine months ended June 30, 2020 and 2021, was $ 0.4 million and $ 1.8 million, respectively.

Balance as of December 31, 2021

Exercisable as of December 31, 2021

No options were granted for the three months ended December 31, 2020 and 2021.

The total intrinsic value of options exercised during the three months ended December 31, 2020 and 2021, was $ 1.1 million.

We used the Black-Scholes model to estimate the fair value of options granted.

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EMPLOYEE STOCK PURCHASE PLAN:

During February 2019, our shareholders approved a proposal to amend our Stock Purchase Plan to increase the number of shares available under that plan by 500,000 shares.

In February 2019, our shareholders approved a proposal to amend our Stock Purchase Plan to increase the number of shares available under that plan by 500,000 shares.

The Stock Purchase Plan as amended provides for up to 1,500,000 shares of common stock to be available for purchase by our regular employees who have completed at least one year of continuous service.

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Three Months Ended

Nine Months Ended

Dividend yield

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Expected life

As of June 30, 2021, we had issued 1,139,547 shares of common stock under our Stock Purchase Plan.

As of December 31, 2021, we have issued 1,161,946 shares of common stock under our Stock Purchase Plan since its inception.

RESTRICTED STOCK AWARDS:

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Accordingly, the fair value of the restricted stock awards, including performance-based awards, is measured on the grant date and recognized in earnings over the requisite service period for each separately vesting portion of the award.

The following table summarizes restricted stock award activity from September 30, 2020 through June 30, 2021:

The following table summarizes restricted stock award activity from September 30, 2021 through December 31, 2021:

Shares/ Units

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Awards forfeited

Non-vested balance as of June 30, 2021

As of June 30, 2021, we had approximately $ 12.0 million of total unrecognized compensation cost, assuming applicable performance conditions are met, related to non-vested restricted stock awards.

Non-vested balance as of December 31, 2021

As of December 31, 2021, we had approximately $ 28.2 million of total unrecognized compensation cost, assuming applicable performance conditions are met, related to non-vested restricted stock awards.

We expect to recognize that cost over a weighted average period of 2.5 years.

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Three Months Ended

Nine Months Ended

Weighted average common shares outstanding used in

calculating basic income per share

calculating basic net income per share

Effect of dilutive options and non-vested restricted stock

Weighted average common and common equivalent shares

used in calculating diluted income per share

For the three months ended June 30, 2020 and 2021, there were 15,000 and no weighted average shares of options outstanding, respectively, that were not included in the computation of diluted income per share because the options’ exercise prices were greater than the average market price of our common stock, and therefore, their effect would be anti-dilutive.

For the nine months ended June 30, 2020 and 2021, there were 29,601 and 578 weighted average shares of options outstanding, respectively, that were not included in the computation of diluted income per share because the options’ exercise prices were greater than the average market price of our common stock, and therefore, their effect would be anti-dilutive.

used in calculating diluted net income per share

For the three months ended December 31, 2020 and 2021, there were 30,807 and 328,185 weighted average shares of options and non-vested restricted stock outstanding, respectively, that were not included in the computation of diluted net income per share because the options’ exercise prices or non-vested restricted stock prices were greater than the average market price of our common stock, and therefore, their effect would be anti-dilutive.

COMMITMENTS AND CONTINGENCIES:

We are party to various legal actions arising in the ordinary course of business.

While it is not feasible to determine the actual outcome of these actions as of June 30, 2021, we believe that these matters should not have a material adverse effect on our unaudited condensed consolidated financial condition, results of operations, or cash flows.

While it is not feasible to determine the actual outcome of these actions as of December 31, 2021, we believe that these matters should not have a material adverse effect on our unaudited condensed consolidated financial condition, results of operations, or cash flows.

SEGMENT INFORMATION:

Change in Reportable Segments

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:

Effective May 2, 2021, our operating 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 operating segments, which are also reporting segments:

Retail Operations and Product Manufacturing.

Reportable Segments

The Company’s segments are defined by management’s reporting structure and operating activities.

The Company’s operating segments are defined by management’s reporting structure and operating activities.

Our chief operating decision maker (“CODM”) is our Chief Executive Officer.

Our CODM reviews operational income statement information by segment for purposes of making operating decisions, assessing financial performance, and allocating resources.

The CODM is not provided asset information by segment.

The Company’s reportable segments are the following:

Retail Operations.

As of June 30, 2021, the Retail Operations segment includes the activity of our 77 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 December 31, 2021, the Retail Operations segment includes the sale of 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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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.

and we offer boat and yacht brokerage sales;

and yacht charter services.

In the British Virgin Islands we offer the charter of catamarans, through MarineMax Vacations.

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.

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

Product Manufacturing.

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.

As of December 31, 2021, the Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid.

Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufacturing sport yacht 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 sport yacht and yachts, producing models from 33 ’ to 60 ’ feet.

Intrepid, also a wholly-owned MarineMax subsidiary, is recognized as a world class producer of customized boats, carefully reflecting the unique desires of each individual owner .

Intrepid follows a direct-to- consumer distribution model and has received many awards and accolades for its innovations and high-quality craftsmanship that create industry leading products in their categories.

Intersegment revenue represents yachts that were manufactured in our Product Manufacturing segment and were sold to our Retail Operations segment.

The Product Manufacturing segment supplies our Retail Operations segment along with various independent dealers.

The following table sets forth revenue and income from operations for each of the Company’s reportable segments for the three and nine months ended June 30,

The following table sets forth revenue and income from operations for each of the Company’s reportable segments for the three months ended December 31,

Three Months Ended

Nine Months Ended

(Amounts in thousands)

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Income from operations

SUBSEQUENT EVENT:

On July 9, 2021, the Company amended its Credit Facility to increase the borrowing availability to $ 500 million, extend the term to expire by one year to July 2024 , with two one-year options to renew, subject to lender approval, and modify certain provisions to provide additional liquidity to the Company.

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 1. Financial Statements