MarineMax executives discuss impacts of Sea Ray transition and storms

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MarineMax was working to sell 60 Sea Ray yachts and sport yachts when the builder announced it would discontinue those models, but it had fewer than 20 at the end of its fiscal year, incoming MarineMax CEO Brett McGill told investors during a conference call to discuss fourth quarter and fiscal year 2018 results.

MarineMax will likely carry a few of those into the March quarter, which is fewer than projected when Sea Ray parent company Brunswick Corp. announced it would take brand off the market after a year of being for sale.

“The demand for the last sport yachts and yachts has been better than probably anybody anticipated,” said MarineMax CFO Mike McLamb.

MarineMax had already increased orders of Galeon and Azimut yachts because Sea Ray was for sale, but it had “additional work to do with both manufacturers” when Sea Ray stopped building larger boats, McLamb said.

“Manufacturers of both Galeon and Azimut have stepped it up and made available models for us and product for us to fill the void from Sea Ray. … And in many cases the product is either on the ground or coming,” he said.

“Both of them have been very flexible and have in some cases changed proportion and changed models to better align their product with the U.S. market. And they have done it very rapidly, which has been fantastic,” McLamb said. “They’ve kept the quality up and everything else that you would expect, but now both have laid out their production capabilities.”

MarineMax stores have seen a “good cadence” of Galeon and Azimut sales, McGill said, and sales staff have steered would-be Sea Ray buyers into those brands, rather than losing their business.

The company has sent sales team members to the Galeon factory in Poland and the Azimut factory in Italy so they can better understand the boats, McGill said.

“Some of these customers who bought three, four, five, 10 boats from us over their lifetime of boating — we want to keep that going,” he said.

Storms were another topic of discussion, as the company had to recover from three during the fiscal year.

MarineMax’s charter operations in the British Virgin Islands are still rebounding from last year’s Hurricane Irma, but progress is being made.

The company’s Wrightsville Beach, N.C., location required repairs after flooding from Hurricane Florence in September.

“As for Hurricane Michael, our operation in Panama City was hit pretty hard, while other locations west of there were fine,” McGill said. “I'm sure you've all seen the extensive damage in the Panama City and surrounding areas.”

MarineMax saw a “meaningful spike in healthcare claims” as a result of that storm, as well as costs from the stores being shut down preparing for Hurricane Florence, McLamb said.

Outgoing CEO William McGill addressed his move from CEO to executive chairman during the call, saying he will continue to work with son Brett McGill and the entire team during the transition.

“Given their years of experience, I expect the transition to be smooth,” McGill said. “I will also work with the board and Brett on our various strategies for the future. So while my role has changed, I will stay actively involved and excited about our future, our future successes and performance.”

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