MarineMax reacts to declining boat sales

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MarineMax increased its marketing budget in light of industry trends that show new-boat sales down 6 percent year-to-date.

The company said the tougher environment created unit growth across many brands, segments and markets — in part to fill the void left by Sea Ray’s exit from yachts and sport yachts — and that contributed to its 3 percent same-store sales growth.

“Given that those larger Sea Rays made up over 10 percent of our revenue, combined with the tougher environment, it is especially noteworthy to point out our same-store sales growth in this quarter,” MarineMax CEO Brett McGill said during a call with investors to discuss third-quarter earnings.

The Fraser acquisition will help the company expand its geographic reach, “potentially unlocking other future opportunity,” McGill said.

“We are also glad to be able to expand with the Benetti Class, which was executed at the same time as the Fraser merger,” McGill said. “The Benetti Class starts generally at 95 feet and goes to 150 feet. It will provide a very good migration choice for our current customers who outgrow the size of products we currently offer. We have the United States and Canada as our market, which gives us a strong area to create future sales. Benetti Class gives us another brand with a very large market in which to operate, in addition to Galeon, Azimut, Aviara, Ocean Alexander and Aquila.”

Interest expense in the quarter rose due to increased borrowing from additional inventory, according to CFO Mike McLamb. While comfortable with the age and mix, MarineMax is working with manufacturers to align its inventory with consumer demand, though the industry by and large hasn’t yet seen deep discounting, McGill said, adding that some of the additional inventory was due to the acquisition of Texas-based Sail and Ski.

The company lowered its expectations in light of recent sales data.

“Given the recent worsening of industry trends and the likelihood that challenges in the industry will persist, we believe it'd be prudent to lower our guidance for fiscal 2019 earnings per share to $1.60 to $1.70,” McLamb said. “Obviously, we're going to strive to do better. Our guidance considers that we're up against 22 percent same-store sales growth in our fourth quarter last year, and factors in the contribution from our Sail and Ski acquisition made earlier in the year and now includes a few cents from the Fraser acquisition this quarter.”