Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MarineMax Inc (HZO, Financial) achieved a 5% topline growth in the third quarter despite a challenging retail environment.
- Same-store sales grew by 4%, demonstrating the effectiveness of the company's strategy.
- The company maintained a gross margin of 32%, marking 15 consecutive quarters above 30%.
- Strategic acquisitions have expanded geographic reach, product offerings, and customer base.
- The new SuperYacht Division (SYD) is expected to generate operational and commercial synergies.
Negative Points
- Gross margins declined due to higher promotional activity and pressure on boat margins.
- SG&A expenses increased by 6%, excluding transaction costs and other items.
- Interest expense rose due to higher interest rates and increased inventory.
- Adjusted net income decreased to $34.8 million from $46.5 million in the previous year.
- The company faces ongoing challenges in the industry, including elevated inventories and weakened consumer sentiment.
Q & A Highlights
Q: With two months left in the quarter, why did you not narrow the guidance range for fiscal year 2024?
A: We produced a strong quarter in a tough environment, but the industry is clearly challenged. We ran various scenarios and felt it was prudent to keep the guidance range wide given the uncertainties in the industry. - Michael Mclamb, CFO
Q: Can you quantify the savings and revenue impact of closing some dealerships as part of your strategic cost reduction plan?
A: Our goal is to get SG&A expenses in 2024 back to 2023 levels, aiming to reduce costs by $20 million to $25 million. Some closed stores were duplicative and should not affect revenue. - Michael Mclamb, CFO and William Mcgill, CEO
Q: What was the breakdown of the same-store sales number between ASPs and units, and what is the same-store sales assumption in your guidance?
A: For the full fiscal year, we expect low-to-mid single-digit same-store sales growth. In the June quarter, we had 4% same-store sales growth, holding units flat year over year with growth driven by an increase in average unit selling price. - Michael Mclamb, CFO
Q: When do you think the market bottoms, and how much would interest rates need to move to spark demand?
A: Any signaling of interest rate relief would help consumers. We believe we are skimming along the bottom of this cycle, but the market remains challenged. - Michael Mclamb, CFO
Q: Can you expound on your inventory position compared to the industry and how you see inventory trending over the next few quarters?
A: We are well-positioned with low levels of non-current inventory. Inventory typically rises seasonally through the summer, and we expect it to increase by the end of September, depending on retail trends and manufacturer build rates. - Michael Mclamb, CFO and William Mcgill, CEO
Q: How confident are you in sustaining gross margins at or above 30%?
A: We are confident in maintaining margins above 30% due to our higher margin business strategy. Current boat margins are under pressure, but there is long-term upside as the industry stabilizes. - Michael Mclamb, CFO
Q: What were the retail trends throughout the quarter?
A: April was strong, and we finished the quarter strong despite industry data showing declines. No specific region stood out, but Florida, the Midwest, and the Northeast performed well seasonally. - Michael Mclamb, CFO
Q: How do you see the cost reduction efforts impacting fiscal year 2025?
A: Our goal is to align SG&A expenses with 2023 levels, aiming for $20 million to $25 million in cost reductions. This should be on a run rate for fiscal 2025, subject to inflation and other changes. - Michael Mclamb, CFO
Q: Do you expect OEMs to maintain current incentive levels, and how much upside is there for boat margins?
A: Boat margins are currently under pressure, but there is long-term upside as the industry stabilizes. Manufacturers are likely to continue supporting retail with incentives. - Michael Mclamb, CFO and William Mcgill, CEO
Q: How do you see the acquisition cadence given the current environment?
A: The industry trends and focus on cash flow have throttled acquisition activity somewhat, but we continue to look for opportunities to grow. - Michael Mclamb, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
