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4Q results at MarineMax impress analysts

Like much of the industry, MarineMax has experienced “choppiness” in the 40- to 60-foot boat market, but executives said the Polish-built Galeon has been performing well. Shown here is the 2018 Galeon 550 Fly.

Like much of the industry, MarineMax has experienced “choppiness” in the 40- to 60-foot boat market, but executives said the Polish-built Galeon has been performing well. Shown here is the 2018 Galeon 550 Fly.

MarineMax overcame concerns that its fourth-quarter financial results would suffer because of Hurricane Irma, as well as softness in the 40-foot-plus boat segment that the company tends to focus on.

Irma “virtually shut down Florida,” the company’s largest market, accounting for 50 percent of sales, for two to four weeks, said CEO Bill McGill, who discussed MarineMax’s results for the quarter on a conference call with analysts and investors on Tuesday.

“We had some damage at just about every facility in the state,” McGill said. “Amazingly, within 24 hours of the storm passing almost every store was in cleanup mode.”

Irma also caused the Tampa Boat Show, a “relatively high-unit show,” to be moved from September to October, MarineMax CFO Mike McLamb said during the call.

Irma was not as damaging to infrastructure as Hurricane Sandy was, McGill pointed out, although he said some areas of the Florida Keys are still without power.

“It takes a while for people to first of all take care of their homes and business before they start talking about getting the next boat or replacing a lost boat,” McGill said.

After previous storms boat replacement has taken six to 12 months, though in the case of Sandy some people are only now replacing boats five years later.

“When it’s announced a huge storm is going into St. Martin, the British Virgin Islands and potentially Puerto Rico, and by the way it looks like it’s going to hit Florida, our business pretty well stops,” McGill said. “People get in ‘let-me-get-prepared’ mode.”

Consumers aren’t focused on demo rides or taking delivery of a new boat when they are preparing for storms, he said. “Insurance shuts down, so you can’t deliver boats even if people want them,” McGill said. “Then here comes the storm. Then people are in … cleanup mode. I drive home every day, and you wouldn’t believe the stockpile of trees and limbs in Tampa. They’re still on the side of people’s homes. It takes a while to get back to normal.”

MarineMax echoed sentiments in Brunswick Corp.’s third-quarter earnings statement last week, saying there had been “choppiness” in the 40-foot-and-larger boat segment.

Though margins in the 40- to 60-foot category are generally similar to smaller-boat segments, it accounts for roughly a third of MarineMax’s revenue, McLamb said. The company is assuming that the choppiness will continue into 2018 on those boats, McLamb said.

“A lot of business owners and wealthy people are waiting to see if tax cuts are going to happen,” McGill said. “The interest is there. But the willingness to jump in and pull the trigger has slowed down a bit.”

Analysts widely applauded the company’s financial results, with several raising stock price targets from the $19- to $20-a-share range to $22 a share.

“MarineMax reported impressive Q4 results that came in well ahead of our [and] consensus expectations and overcame concerns around any short-term sales impact from Hurricane Irma,” wrote B. Riley senior analyst Eric Wold. “We believe these results demonstrate the benefits and market-share gains MarineMax is realizing through the diversification efforts from acquisitions, as well as the move into other boat categories.”

“Overall, we came away from [Tuesday’s] call even more impressed with 4Q, given the significant disruption MarineMax faced for much of September in the wake of two large storms — many Florida locations were impacted for two to four weeks,” wrote SunTrust analyst Michael Swartz.

“Included in its $1.10 to $1.20 in EPS is comparable-store growth of 5 to 10 percent year over year and operating leverage in the mid-single digits,” Swartz wrote. “Unit growth is anticipated to come in line with the broader industry [at 4 to 6 percent] with flattish pricing. We believe that was better than most expected, particularly given MarineMax’s exposure to 40-foot-plus boat categories — estimated to be 30 to 35 percent of revenue — which have softened over the past six to nine months.”

MarineMax Inc. grew revenue more than 10 percent in its fiscal fourth quarter, to $250.6 million, from $227.4 million in the quarter last year, and increased same-store sales for the quarter by 5 percent on top of 12 percent growth for the comparable period last year.

The company beat earnings expectations for the quarter, with adjusted earnings per share of 22 cents, compared with expectations of 11 cents. Net income for the quarter that ended Sept. 30 was $3.9 million, or 17 cents a diluted share, compared with $5.6 million, or 22 cents a share, in the comparable period last year.

Same-store sales for the year increased by more than 5 percent on top of 22 percent growth for the prior two consecutive fiscal years.


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