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‘All cylinders firing’

MarineMax

MarineMax executives spoke with financial analysts in positive terms about its record “December” Q1 following the release of the quarterly data yesterday, while remaining cautious about the rest of the year.

“I'm very proud to announce 24 percent same-store sales growth driven entirely by increased units, which is attributable to our proven strategies in the highly desired brands we represent,” said MarineMax CEO Brett McGill in a question-and-answer session with analysts. “Our growth this quarter built on the improving trends we saw as we ended our fiscal 2019.”

The company reported quarterly sales of $304 million, with same-store sales up 24 percent. Its share price yesterday rose in early trading by 26 percent.

McGill said the market still “shows some choppiness,” which made MarineMax reluctant to raise its full-year guidance even higher.

The December quarter is traditionally MarineMax’s “smallest quarter,” added chief financial officer Michael McLamb. “While it appears that the industry has taken steps toward stability and improved trends, in our view, we believe we need to be thoughtful in our approach to guidance and get more visibility before we really start feeling a lot better,” he said.

MarineMax’s rolling 12-month same-store sales growth is tracking at 6 percent, McLamb said. “This would imply that in a very short period of time, we have dramatically improved our inventory,” he said. “We accomplished this by closely working with our manufacturing partners to align orders with trends, as well as the tremendous efforts of our team to drive sales.”

The first quarter’s increased sales and earnings were lifted by MarineMax’s acquisition of Fraser Yacht Sales and Sail and Ski in Austin, Texas.

“We could not be happier with the integration and the performance [of Fraser],” McGill said. “We look forward to continuing to grow while expanding our resources and capabilities over time. This is a global, high-gross-margin business that clearly supports our strategic plan.”

Inventory levels dropped in the December quarter, McGill said, while the national retailer also saw “strong growth across most brands and categories.” He said sales growth in larger boats was up over the same period a year ago. The company will continue to reduce inventory in the months ahead by lowering margins.

“We're still expecting some modest margin pressure as we move into the larger seasonal quarters, as everyone in the industry seems to be rationally managing inventory to better levels,” McGill said.

MarineMax raised its EPS guidance to $1.82 to $1.92, from $1.58 to $1.68. The company expects same-store sales to rise from its previous forecast of low-single digits to mid-single digits.

“We’re taking more of a cautious and prudent approach to guidance, and just waiting to get more of the boat shows and see how the March quarter plays out, and if warranted, we'll revisit guidance at that time,” McLamb added.

McGill said there is “nothing alarming” in terms of heavy discounting taking place. “We look at pricing and our competitors, and it seems decent,” he said.

“No one out there is doing deep discounting or desperation-type activity at all,” McLamb said. “I think everybody is incrementally more aggressive — all the dealers at the beginning of the model year last summer ordered less product for 2020 along with the manufacturing partners. So everybody believes the industry will work its way through the inventory position as we get into the seasonally larger quarters. Given that no one's having any deep discounts, it's a very rational environment.”

“January will close with positive same-store sales, and our backlog is higher than last year, both encouraging trends,” McGill said. “We continue to feel better by how the industry is positioned, but we have a lot of work to do in front of us.”

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