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MarineMax CEO: Marketing reinvigorated sales

MarineMax sales bottomed out last summer, and the largest U.S. boat retail chain increased boat sales in double digits for the last three quarters, MarineMax CEO William McGill told investors Thursday.

In a conference call releasing third-quarter earnings, McGill told investors that the quarter was the company’s strongest in recent years. Same-store sales increased about 33 percent, compared with a 17 percent decrease in the third quarter last year, McGill said.

Gross profit as a percentage of revenue was 25.5 percent for the quarter, a historically high number that should indicate to investors that margins are slowly improving, CFO Mike McLamb said.

Clearwater, Fla.-based MarineMax spent more than usual on marketing and reinvigorating its customer base, McGill said. The largest investment was made in Internet marketing, but local cable ads and direct mailing also were included, McLamb said.

“We just got very aggressive,” McLamb said, spending upwards of an additional $1 million. “It’s not our intention to be spending that each quarter.”

Product margins aren’t back to historical levels, but are “doing reasonably well” at 300 or 400 points below their high, McLamb said. In 2009, they were 1,200 points below their high, McLamb said.

“It’s incrementally getting better,” McLamb said. “I think what’s happening still within the industry is, these scars are still so fresh on the minds of all the dealers, including ourselves. ... If we have a deal on a boat, do we walk away from it or do we take it?”

That mindset is keeping margins down, but “the longer we’re away from the financial meltdown the more confident the industry is going to be to search for that next customer and have confidence to say to that customer, ‘No, you’ve got to pay this price,’ ” McLamb said.

An increase in large-boat sales also decreased margins for MarineMax because commissions are higher, McLamb said.

Revenue was $153.2 million for the quarter, compared with $115.4 million for the comparable quarter last year.

Decreasing overall revenue was the expense associated with the addition of new brands, such as Nautique, Malibu, Bayliner and Mako, to MarineMax’s lineup in certain markets, McGill said.

Selling, general and administrative expenses increased 5.7 percent, McLamb said. The largest contributors to that increase were costs associated with expanding the presence of the new brands and increased commissions associated with an increase in large-boat sales.

Net income for the third quarter was $3.4 million, or 15 cents a diluted share, compared with net income of $512,000, or 2 cents a diluted share, for the comparable quarter last year. Included in the results was about $1 million of loan costs written off as the company entered into a new financing facility.

New brands added modest increases in sales revenue — between 3 and 5 percent, McLamb said — because inventory was just getting out into the field, McGill said. Inventory was $200.9 million on June 30, compared with $190.2 million on March 31.

Inventory was up 6 percent from the end of the previous fiscal year on Sept. 30, 2010, largely because of the addition of the new product lines.

— Reagan Haynes


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