MarineMax sees better spring sales after 2Q sales dip

Posted on Written by Reagan Haynes

Though cold weather negatively affected second-quarter boat sales for MarineMax, company executives remain confident that the lag will be offset by early spring sales.

“We continue to see demand in just about everything that is new, somewhat innovative and priced right,” MarineMax CEO Bill McGill told analysts and investors during a conference call Thursday to discuss quarterly earnings. “In some cases the demand for new product is the strongest I’ve seen in my 41 years in the industry.”

The company has had a hard time getting enough boats to meet demand, even in the challenged sterndrive and inboard segments, McGill said.

Anticipated new product from core suppliers such as Brunswick Corp. “should help push demand and drive additional sales and growth,” McGill said.

Revenue was $136.6 million for the quarter that ended March 31, compared with $160 million in the comparable quarter last year, the company reported Thursday. Same-store sales declined about 16 percent, primarily because of poor weather, after two consecutive March quarters of double-digit percentage same-store sales growth on a year-over-year basis.

Still, the company emphasized the toll bad weather had taken. “The persistent cold weather that enveloped the industry negatively impacted sales,” McGill said. “The 2014 winter turned out to be one of the coldest since records began. Amazing, because we thought last year was cold.”

“During the March quarter we had more days where stores closed than in their prior 16 years in the market,” CFO Mike McLamb said.

“As March ended we had significantly greater backlog than last year,” McLamb said. “As we approach the end of April, we believe we’ll end with strong double-digit improvement over last year, potentially fully offsetting the decline. May and June are critical months. While the momentum feels good, we have work to do. We started April with a materially larger improvement in backlog. We have the potential to make up entirely for March with our April backlog. That will give you an idea of the uptick of contracts we’re in.”

“We still have the selling months ahead of us, based on what we’re hearing from customers, based on backlogs … we believe this will be a fine quarter,” McGill said. “We need things to go right up there. We understand there will be cold weather up north … after a little break. Customers are looking forward to the country warming up so they can get back on the water.”

MarineMax delivered about a half-dozen Sea Ray SLX 350 models during the quarter, but has more than 50 under contract, McGill said. “The same goes for 650s and 510s. You know, this quarter would’ve looked better if we could’ve gotten those 50 SLXs delivered.”

McLamb said he believes that what did not close in March will close this month, and large inboard boats seemed to be “showing the best consistency for sustained improvement.”

A “one-price” strategy has helped increase margins for the company, McGill said.

“The basic premise is that we believe that our customers have the right to our best price, but we are also committed to protecting and enhancing our margin so we are able to deliver the MarineMax experience,” he said. “While we do pay incrementally greater commissions to our sales teams, we have expanded our margins.”

As the program ages — it turns a year old at the end of April — MarineMax should continue to see additional growth in margins.

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