MarineMax CEO talks of more affluent customer base - Trade Only Today

MarineMax CEO talks of more affluent customer base

The middle class is a dwindling part of MarineMax’s customer base, but the loss is being offset by upper-middle-class and high-net-worth customers.
Author:
Publish date:
MarineMax CEO Bill McGill says demand for models such as this Scout 420 LXF has exceeded supply.

MarineMax CEO Bill McGill says demand for models such as this Scout 420 LXF has exceeded supply.

The middle class is a dwindling part of MarineMax’s customer base, but the loss is being offset by upper-middle-class and high-net-worth customers — and that base is expanding, in part, because retail financing is becoming easier than ever.

“There’s been a little shift in the demographics, where middle-class America is not active now in our business. There’s some, but not like it was,” MarineMax CEO Bill McGill told investors and analysts during a conference call Tuesday to discuss near-record third-quarter earnings. “The upper middle class is very active now. High-net-worth individuals are extremely active right now. There’s been a shift, and a lot of it is new business.”

The company attributed 49 percent growth in revenue and a 44 percent same-store sales boost during the quarter to unusually strong demand for large boats. The company raised its expectations for diluted earnings per share by 78 percent.

“We’re still getting lot of customers trading up, but those customers are able to do it, and the financing part of it is getting about as easy as it’s ever been,” McGill said during the call. “It’s very positive. The customers are very active out in our event, which is a great sign. The industry says that boating participation is up. So there’s a lot of very good signs right now. If you were out on the water in any of our markets this past weekend, boating is extremely active. The shift to new models gives people reasons to say, ‘Hey let’s go get that new boat.’ ”

Banks continue to be interested in getting into the marine industry to provide financing, CFO Michael McLamb said on the call.

“As automotive spreads decline, more are interested in looking to get into marine,” McLamb said. “Marine retail loans always stay on balance sheets. They never get securitized, so they’re underwritten a little different than things that get securitized. But I would say it’s a continuously improving retail lending environment and has been for a while.”

New models also have continued to drive growth, McLamb said, and production has begun to align more on popular new models with demand.

“But to Mike’s point Steve, we could have used many, many more of the new products, such as the new SLXs that are coming out from Sea Ray, and the SPXs that are new and the new 420 — 42-foot Whaler and the larger Scouts,” McGill said. “So the demand is exceeding supply right now on the hot new models. And so as [builders] continue to ramp up and get us to new models, I think we will see even greater success.”

Related

E-nnovation Lab to expand at 2018 Metstrade show

The growing demand for hybrid and electric engines is becoming more apparent within the leisure marine market, prompting Metstrade to introduce the E-nnovation Lab platform for electric propulsion technology.

Aluminum, tow boats lead moderate growth in May

Boat registrations were up 2.1 percent in May in the main powerboat categories, and rose 3.2 percent in all categories, according to preliminary data from Statistical Surveys Inc., a Michigan company that tracks new boat registrations.

Retaliatory tariffs on boats to EU start today

The 25 percent tariff the EU announced Wednesday on U.S.-built boats kicks in today, and a 10 percent tariff on boats sold to Canada will start July 1, prompting boatbuilders to worry they will lose sales to those countries.