MarineMax, Inc. (HZO) on Q3 2021 Results - Earnings Call Transcript

Operator: Good morning, and welcome to the MarineMax, Incorporated 2021 Fiscal Third Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn the call over to Dawn Francfort of ICR, Investor Relations for MarineMax. Please go ahead. Dawn Francfort: Thank you, operator. Good morning, everyone, and thank you for joining this discussion of MarineMax's fiscal third quarter 2021 conference call. I'm sure that you've all received a copy of the press release that went out this morning, but if not, please call Linda Cameron at 727-531-1712, and she will email one to you right away. I now would like to introduce the management team of MarineMax. Mr. Brett McGill, President and Chief Executive Officer; and Mr. Mike McLamb, Chief Financial Officer of the company. Management will make a few comments about the quarter and then be available for your questions. Michael McLamb: Thank you, Dawn. Good morning, everyone, and thank you for joining this call. Before I turn the call over to Brett, I'd like to remind you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission. With that in mind, I'd like to turn the call over to Brett. Brett? Brett McGill: Thank you, Mike. Good morning, everyone, and thank you for joining the call. Our team continues to set records with their performance and our third quarter was no exception. They produced record sales, record margins, record profit and on top of that, record net promoter scores. Today, I'd like to share the highlights from our very productive third quarter and then discuss the results of our strategic growth plan, which will continue to create shareholder value in 2021 and beyond. Then, Mike will discuss our financial results in more detail and provide color on our updated 2021 financial outlook. Let me start by touching on our third quarter performance. I'm extremely excited about our results in the quarter with both sales and earnings exceeding expectations, and I'm especially proud of the MarineMax team for continuing a high level of execution on our key strategic initiatives, which continue to gain traction and resonate with customers. We have capitalized on a favorable consumer spending backdrop along with a continued demand and consumer seeking the boating lifestyle. The record sales and earnings growth we delivered was driven by solid 6% same-store sales growth, which is on top of a robust 37% same-store sales growth a year ago. From a nine-month perspective, same-store sales growth was up 21% on top of 22% a year ago. Our significant geographic and product diversification along with the effective utilization of our digital platform is driving sustained growth. Additionally, the marine industry continues to experience a significant acceleration in new customers. Given our scale, and global position, we are benefiting from our growing share of the market and based on available industry data, we believe we continue to gain market share. We have meaningful revenue growth across most brands and categories of products and continue to leverage our investments in technology, which is driving the leads that are being converted into sales and enhanced profitability. We built on our prior quarter's profitability and increased our operating margin to over 12%. This performance is directly attributable to our ability to execute against our strategy, focusing on higher gross margin businesses including finance and insurance, marinas, storage, parts, services and brokerage. The gross margin strength we produced in the first half of the year, accelerated in the June quarter to 30.7%. Michael McLamb: Thank you, Brett. And good morning again, everyone. I'd like to start by thanking our team for producing a fifth consecutive record quarter, which significantly topped last year's outstanding June quarter. For the quarter, revenue grew 34% to over $666 million due largely to same-store sales growth of 6%, which was on top of 37% a year ago, plus the strong results from the acquisitions we have completed namely, SkipperBud's, Northrop & Johnson and Cruisers Yachts. Overall, our growth has been demand-driven across generally all segments of products. As expected, the supply chain challenges have resulted in low industry inventory, which led to reduced overall unit sales versus our record last year. However, with greatly increased backlog visibility, coupled with our broad product portfolio and production insights from our manufacturing partners, we were positioned to drive growth in many of our key categories. This approach resulted in a double-digit expansion of our average unit selling price. We also believe this strategy will continue to work well, as we move ahead. Our gross profit dollars increased over $81 million, while our gross margin rose 590 basis points to 30.7%. Our initiatives to drive margin growth over the last several years is clearly working. Margins rose with contributions from multiple segments and businesses, including new and used boats, storage, our higher-margin finance, insurance and brokerage business, as well as our global super-yacht services businesses, Northrop & Johnson and Fraser Yachts. We would note that the super-yacht charter business is starting to see improvement with the reopening of Europe. Assuming the reopening continues, we would expect a much-improved charter season compared to August and September last year. Regarding SG&A, the majority of the increase was again due to rising sales and related commissions, combined with the recent acquisitions. Generally, expense trends are on track. Our operating leverage in the quarter was over 20% which drove a very strong earnings growth, setting another quarterly record with pretax earnings of over $80 million. Our record June quarter saw both net income and earnings per share rise more than 60%, generating $2.59 in EPS versus $1.58 a year ago. For the first nine months of the year, I will make just a few comments. Our revenue exceeds $1.6 billion, driven by a 21% increase in comparable store sales. Gross margins exceed 30%. Our operating leverage is around 20%. Our EPS is at $5.33 and our EBITDA is over $180 million, a very impressive nine months. Brett McGill: Thank you, Mike. As evidenced in today's results, we are pleased to see our business continue to build momentum. Our team's performance in the first nine months of fiscal 2021 continues to show excellent execution even on top of a record performance last year, which included very impressive same-store sales. Much of our strategic work is still underway, with the true benefit to be realized in the coming quarters and years. We remain committed to creating exceptional customer experiences, through our teams, services, products and technology. Record high net promoter scores show that our customer-centric approach is fully aligned to drive high levels of satisfaction and repeat business. We will continue to uncover significant opportunities for brand expansions and higher margin businesses that will strengthen our overall business, while staying focused on our strategy to create long-term shareholder value. And with that, operator, let's open up the call for questions. Operator: We will now begin the question-and-answer session. The first question comes from Joe Altobello with Raymond James. Please go ahead. Joseph Altobello: Great, thanks. Hey guys, good morning. So very glad to hear July comp positive. And it sounds like you're expecting positive comp growth next year as well. I guess the flip side of that is, how concerned are you about margins next year with motion levels potentially normalizing and with lowering costs going higher, hopefully on a higher inventories? Brett McGill: Did you say with promotional? Joseph Altobello: Normalizing next year. Yes, assuming they do. Michael McLamb: I don't think anybody is expecting a different promotional environment next year than the past year, that is - be very incremental. Inventory levels are very low and it's going to take a while for the industry to return to - if it returns to prior levels. We see inventory continuing to be very lean through fiscal 2022, but again with the insight we're getting from our manufacturing partners, coupled with the demand, we see a runway to same-store sales growth for 2022. Joseph Altobello: Okay, super. And then just to follow that up, is the lack of inventory impacting sales? I mean, anecdotally, we're hearing about customers canceling orders. Have you seen an uptick in order cancellations? And if so, does someone come in that afternoon to pick up that order effectively, so it's really not impacting the overall number. Michael McLamb: Yes. Joe, we really haven't seen any uptick in cancellations at all. People are locked in. I think there is a dynamic out there that in the past, people - boaters have always upgraded boat, right. They want a larger boat one day and I think in the past, people would say, hey, next season let's go looking for boats, right? Now, people are looking at it and saying we better get our boat on order now if we want it for next season. So there is - that's creating some patients in and of itself, as people are being more proactive about their future purchase and we're figuring it out a way to keep them on the hook but no order canceling at all. Brett McGill: But I do think your first part of that question was, with sales be even higher, I think the answer to that is, yes. I think every dealer would tell you that. You just look at our backlog, our customer deposits and the strength of demand today. So I think the industry trends would be even stronger if it wasn't for some of the supply chain challenges that - it's seen. Joseph Altobello: Okay, great. Thank you, guys. Michael McLamb: Thanks, Joe. Operator: The next question comes from Jamie Hardiman with Wedbush Securities. Please go ahead. James Hardiman: Hey, good morning. So I wanted to drill down a little bit on the really strong trends that you're seeing in pricing, like you said it was double-digit for the quarter. Maybe walk us through how much of that is the function of mix, right? The higher price boat versus the lower price boats. And how much of that is, like-for-like pricing? Are customers - are you seeing any customers walk at that price increases? And then the July same-store sales, I think you said was - you're going to finish positive. Should we expect a similar trend to what we saw in the third quarter, meaning some declines in units but big growth in AUP there? Brett McGill: Hey, great question, James. And I would tell you, in the current quarter, in terms of my comment around what drove same-store sales, the overwhelming majority of it was a mix change to larger product, more expensive product. The incremental pricing on new and used product, which we are also seeing, which is helping to drive the margins, was part, but it'd be a small part of the overall increase. And the pricing environment doesn't seem to be dampening demand at all currently, from that perspective. And then, I think from an industry perspective on your July commentary, if you look at the industry, if I remember right, in April, the units for the industry were up 86% in May. They were up 2% of - thinking about that trajectory, 86% to 2%. I think - I think when June get published, because of supply, there is going to be a negative print on units posted in June, because of supply, and probably with July. And so, we're still targeting high same-store sales in the high teens, then yes, we would still be expecting increases in AUP in July. James Hardiman: Got it. And then sort of maybe roll that question forward, really encouraged by the confidence you have in growing same-store sales in 2022. I guess, let me drill down on that a little bit. Do you think that units sold can actually grow in 2022 or is that primarily - that confidence primarily a function of just the momentum with respect to AUP? Brett McGill: Great question. And based on all the feedback and insight we have from our manufacturing partners and we'll obviously get more into this on our call next quarter. But sitting here today, it looks like that we can have unit growth next year based on our manufacturing partners. There's a lot of moving pieces in that, but that's what it does look like, which is great news. James Hardiman: Really encouraging. Okay, thanks guys. I'll hop in the queue. Brett McGill: Thank you. Operator: The next question comes from Eric Wold with B. Riley Securities. Please go ahead. Eric Wold: Thanks, good morning guys. Just a couple of questions kind of on the cost side, if I will. I guess, one, as we kind of approach the boating season again, clearly you guys did a great job kind of managing to the pandemic and kind of people shifting ability and desire to going to purchase large items kind of online and in-person. I guess if you get back to a normal all boat shows open, full capacity situation, like we did in pre-pandemic, how would you expect your spending to look like in that environment, your involvement look like in that versus pre-pandemic. We get back to where it was or would you be scaled down somewhat? Brett McGill: Now, I'll let Mike comment a little more detail, but I'll mention first. I think we're really working with the show promoters and the manufacturers to figure out a way to get back to shows in a much different than more cost effective way. So we definitely don't want to return to the old expense structure. That's going to take a lot of work in time, but that's just a general comment. We don't want to allow it to get back to there for a lot of reasons. So Mike, can you just add? Michael McLamb: No. But if we start going back to shows, there would be a - an incremental increase in SG&A in the marketing side of things, for sure. If I remember right, last year we did at the Fort Lauderdale show in the fall, the December quarter and really no other major shows after that and I can remember up top my head. So if there is any impact, it would probably be in the back half of the year. Eric Wold: And is that cost savings from the more cost effective way of going about it? If cost savings pocketed, so to speak, or moved in a different category of spend? Brett McGill: Just like in this past year, it wasn't all just pocketed. We put it towards other marketing efforts, just holding in-house events and/or Getaways events are more costly now because you got to be much different and safer. So we put the money to work, but not all of it. Eric Wold: And then, the last question. Obviously with the cash flow you got now until there was no floor plan financing on the books for the quarter, a couple of million bucks. What are your strategy around that going forward assuming the inventory does start to catch up over the next 12 to 18 months, come back to end, but obviously business will be strong in the meantime, what is your strategy around kind of how much of inventory like the finance versus what you did in prior years? Michael McLamb: Well, you may have seen, we put out a release last week. I think it was that we did amend our facility and like that for another three years. I mean, we do see in that time period inventories beginning to build. I'm not sure in that time period. I don't think they're going to build it even back to the levels they were before, but I think we wanted to have the facility in place to give us the flexibility with how we finance the business. So, I would - I see the overall industry and I see us kind of returning to some reasonable level. A floor plan financing facilities are very flexible, basically accounts payable, which is a very attractive financing facility for us. So we like it. So there'll be some of that the future, but there's not going to be much of it for a while. Eric Wold: Sounds good. Okay. Brett McGill: Thank you. Operator: The next question comes from David MacGregor with Longbow Research. Please go ahead. Joe Nolan: Hi, this is Joe Nolan on for David MacGregor. Brett McGill: Hey, Joe. Joe Nolan: Hi. I was just wondering, could you talk about the recent acquisition of Cruisers Yachts, and just the whole that a vertical integration plays into the strategic direction of the company? And then, also just on top of that; are you planning to acquire any other boat OEMs? Is that in your plans and just if so, what boating segments would you be prioritizing? Brett McGill: Great question on Cruisers. We're really proud of the Cruisers that joined in the MarineMax family. We've talked about in other releases that, that was a segment of our business that went away with the sea rates for Yachts and Yachts and when the opportunity with cruisers came available to have an American built product here and to secure our future just the opportunity lined up, along with the fact that we could grow the production levels in a substantial way at Cruisers that had a big impact on the decision to do it. So, a great acquisition with great opportunity for upward growth, they are Cruisers. And as far as other manufacturers, we will look at opportunities is there - out there, but it's not a high priority strategic pattern that you'll see from us. However, we will look at some opportunities as they come up. Joe Nolan: Got it. Thanks for that. And then also just wondering on used boats. If we could just talk about gross margins, I understand the prices have gone up quite a bit. Just wondering how that's impacting margins in the business. Michael McLamb: Yes. So, pricing on new and used boat has increased and it's helping our margins. If I had estimated probably a third of our margin increase, it's just on the product demand side which is increased new and used. The other increase in the margin is really the changes we've made to the business around F&I, storage. Some of these acquisitions that we've made that all add to our margin. So we are getting some benefit from the new and used margin increases. Joe Nolan: Got it, thanks. I'll pass it along. Michael McLamb: Thank you, Joe. Brett McGill: Thank you. Operator: The next question is from James Hardiman with Wedbush Securities. Please go ahead. James Hardiman: It looks like I'm back on. So, couple of just modeling questions. The manufacturing business, it looks like in the third quarter, it had better overall margins than retail operation. Is that - should we expect that over the course of a full year? And how do we think about sort of gross margin versus operating margin in that business? Michael McLamb: Great question. I think our 10-Q gets filed, there could be some additional language around the segment reported within the retail operations are other costs that are associated with the manufacturing segment. And so it's - what will explain that a little bit more in the queue. So the manufacturers like Cruisers are typically going to be in the high single-digit from an EBITDA perspective. So, when you start getting that down to operating margin from a GAAP basis, it's a little lower than that. That's looking back historically, when you look forward with their new plant that's coming online with some of the growth. Obviously, their plans and our plans are to grow those - that earnings stream and the earnings as a percentage of the business as well. From a margin perspective, what happens from our business as you get, we will end up getting the manufacturing margin somewhat of - one of our stores sells a Cruisers. So, we'll get the, obviously, the retail margin within our store, then we'll get the manufacturing margin. So we kind of get like a doubling of the margin on the business that we do from Cruisers. And so that way will overall - will help our overall consolidated margins. Margins on the manufacturing side in our industry tend to be in the 25% range, which is similar to what the dealers recognized. I'm not sure if I answered all your questions, but probably had a few of them, I think. James Hardiman: Yes, you did. And so, should I think about this being, I guess on a full-year basis, accretive to both the gross margin and the EBIT margin? Michael McLamb: That's correct, yes. James Hardiman: Okay. And then, similar question if I think about Nisswa, that how you say that, the recent deal that you guys acquired, $35 million in 2020 revenue, is that growing at a similar rate to your organic business? And should we think about a similar seasonality in margin structure there as well? Michael McLamb: Go ahead. Brett McGill: Nisswa, great dealership, good addition to our team. And I'll remind you that part of what made it really good is their storage component of their business. They are higher margin focused on things. So, that's very helpful. But they - let Mike comment more. But they're seeing growth like every other dealer would see and we hope we can bring some synergies to improve finance and insurance and other pieces of the business. Michael McLamb: Yes. And because of their storage profile, a typical dealer, historically is going to be in the low, maybe to mid-single-digit pretax, that they were running a really good business. These guys have been in high-single-digit, sometimes even probably breaking above that. They run a very good business. Great, great team. But from here - you asked about seasonality, obviously, they are in Minnesota. So they're going to be more - 60% of the year is going to be in the summertime, 40% is going to be in the wintertime or December and March quarters. They will be more seasonal than MarineMax. James Hardiman: Got it, perfect. Thank you, guys. Michael McLamb: Thanks, James. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. McGill for any closing remarks. Brett McGill: Thank you, again for joining the call today, everybody. And both Mike and I are available if you have any additional questions and we look forward to updating you on our future progress on the next quarterly call. Have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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MarineMax, Inc. (NYSE:HZO) Overview and Analyst Insights

  • The consensus price target for MarineMax, Inc. (NYSE:HZO) has decreased over the past year, indicating a cautious outlook from analysts.
  • Despite challenges from hurricanes, MarineMax reported a strong fiscal fourth-quarter performance with a gross profit margin of 34.3% and net income of $4 million.
  • MarineMax's earnings beat and strategic expansions suggest a potential undervaluation by the market, with an estimated 53% upside to a fair value of $49.34.

MarineMax, Inc. (NYSE:HZO) is a leading company in the recreational boat and yacht retail industry in the United States. It offers a variety of products and services, including new and used boats, marine parts, accessories, and yacht charters. The company operates through its Retail Operations and Product Manufacturing segments, with a strong presence of 79 retail locations across various states.

The consensus price target for MarineMax's stock has seen a shift over the past year. A year ago, the average price target was $41.14, but it has decreased to $35 in the last quarter and last month. This decline suggests a more cautious outlook from analysts. However, Raymond James has set a higher price target of $74, indicating confidence in the company's future growth prospects.

MarineMax's fiscal fourth-quarter results were impacted by Hurricane Helene and Hurricane Milton, yet the company's underlying performance remained strong. Despite a decline in same-store sales by 5%, the company achieved a gross profit margin of 34.3% and a net income of $4 million. This performance reflects effective cost control and strategic acquisitions, which contribute to a promising long-term earnings outlook.

The company reported quarterly earnings of $0.24 per share, surpassing the Zacks Consensus Estimate of $0.18 per share. Although this is a decrease from the $0.69 per share reported in the same quarter last year, it still indicates a positive performance relative to analyst forecasts. This earnings beat suggests that MarineMax is managing challenges effectively.

Despite the anticipated decline in Q1 earnings, MarineMax's expansion of high-margin businesses and vertical integration are expected to drive future growth. The market seems to undervalue MarineMax's earnings potential, with an estimated 53% upside to a fair value of $49.34. Investors should consider these factors when evaluating the company's stock and its potential future performance.

MarineMax, Inc. (NYSE: HZO) Analyst Sets Price Target Amid Upcoming Financial Results

MarineMax, Inc. (NYSE: HZO) is a leading company in the recreational boating industry, offering services for boats, yachts, and superyachts. As the largest in its field, MarineMax provides a wide range of services and products to boating enthusiasts. The company competes with other marine service providers, but its extensive network and comprehensive offerings set it apart.

On January 22, 2025, analyst Brandon Rolle from D.A. Davidson set a price target of $35 for MarineMax. At that time, the stock was trading at $28.28, suggesting a potential upside of approximately 23.76%. This optimistic outlook comes as MarineMax prepares to release its first quarter fiscal 2025 financial results, which could influence investor sentiment.

Currently, MarineMax's stock is priced at $28.26, reflecting a slight decrease of 1.12% with a change of $0.32. The stock has fluctuated between $27.98 and $28.81 today. Over the past year, it has seen a high of $38.20 and a low of $22.51, indicating some volatility in its trading pattern.

MarineMax has a market capitalization of approximately $641.28 million, which reflects the total market value of its outstanding shares. The trading volume stands at 97,360 shares, showing the level of investor interest and activity in the stock. As the company prepares for its financial results announcement, these figures may see changes based on market reactions.

The upcoming financial results will be announced before the New York Stock Exchange opens on January 23, 2025. A conference call will follow, hosted by CEO Brett McGill and CFO Mike McLamb. Investors can access the call via a webcast on the company's website, with a replay available shortly after, providing insights into the company's performance and future prospects.

MarineMax, Inc. (NYSE:HZO) Overview and Analyst Insights

  • The consensus price target for MarineMax, Inc. (NYSE:HZO) has decreased over the past year, indicating a cautious outlook from analysts.
  • Despite challenges from hurricanes, MarineMax reported a strong fiscal fourth-quarter performance with a gross profit margin of 34.3% and net income of $4 million.
  • MarineMax's earnings beat and strategic expansions suggest a potential undervaluation by the market, with an estimated 53% upside to a fair value of $49.34.

MarineMax, Inc. (NYSE:HZO) is a leading company in the recreational boat and yacht retail industry in the United States. It offers a variety of products and services, including new and used boats, marine parts, accessories, and yacht charters. The company operates through its Retail Operations and Product Manufacturing segments, with a strong presence of 79 retail locations across various states.

The consensus price target for MarineMax's stock has seen a shift over the past year. A year ago, the average price target was $41.14, but it has decreased to $35 in the last quarter and last month. This decline suggests a more cautious outlook from analysts. However, Raymond James has set a higher price target of $74, indicating confidence in the company's future growth prospects.

MarineMax's fiscal fourth-quarter results were impacted by Hurricane Helene and Hurricane Milton, yet the company's underlying performance remained strong. Despite a decline in same-store sales by 5%, the company achieved a gross profit margin of 34.3% and a net income of $4 million. This performance reflects effective cost control and strategic acquisitions, which contribute to a promising long-term earnings outlook.

The company reported quarterly earnings of $0.24 per share, surpassing the Zacks Consensus Estimate of $0.18 per share. Although this is a decrease from the $0.69 per share reported in the same quarter last year, it still indicates a positive performance relative to analyst forecasts. This earnings beat suggests that MarineMax is managing challenges effectively.

Despite the anticipated decline in Q1 earnings, MarineMax's expansion of high-margin businesses and vertical integration are expected to drive future growth. The market seems to undervalue MarineMax's earnings potential, with an estimated 53% upside to a fair value of $49.34. Investors should consider these factors when evaluating the company's stock and its potential future performance.

MarineMax, Inc. (NYSE: HZO) Analyst Sets Price Target Amid Upcoming Financial Results

MarineMax, Inc. (NYSE: HZO) is a leading company in the recreational boating industry, offering services for boats, yachts, and superyachts. As the largest in its field, MarineMax provides a wide range of services and products to boating enthusiasts. The company competes with other marine service providers, but its extensive network and comprehensive offerings set it apart.

On January 22, 2025, analyst Brandon Rolle from D.A. Davidson set a price target of $35 for MarineMax. At that time, the stock was trading at $28.28, suggesting a potential upside of approximately 23.76%. This optimistic outlook comes as MarineMax prepares to release its first quarter fiscal 2025 financial results, which could influence investor sentiment.

Currently, MarineMax's stock is priced at $28.26, reflecting a slight decrease of 1.12% with a change of $0.32. The stock has fluctuated between $27.98 and $28.81 today. Over the past year, it has seen a high of $38.20 and a low of $22.51, indicating some volatility in its trading pattern.

MarineMax has a market capitalization of approximately $641.28 million, which reflects the total market value of its outstanding shares. The trading volume stands at 97,360 shares, showing the level of investor interest and activity in the stock. As the company prepares for its financial results announcement, these figures may see changes based on market reactions.

The upcoming financial results will be announced before the New York Stock Exchange opens on January 23, 2025. A conference call will follow, hosted by CEO Brett McGill and CFO Mike McLamb. Investors can access the call via a webcast on the company's website, with a replay available shortly after, providing insights into the company's performance and future prospects.