An increase of fresh product in stores and better weather in the Midwest and Northeast have helped MarineMax gain sales momentum in June and July.
“I do think that what we're seeing is probably some delayed reaction in some of the markets that had maybe not the best weather to start the summer with,” MarineMax CEO William McGill said during a conference call to discuss third-quarter earnings on Wednesday.
“I think that's part of it, and I also think as we get more fresher product in our stores and the stores are getting the proper level of inventory, the fresher product, that's certainly helping sales,” McGill said. “Whereas maybe in the June quarter, for some of the models we would get one, it would sell, and you would wait a week or two to get another one. I think we're starting to get more product in, which is helping from a unit sale perspective, also.”
Products such as the new Sea Ray 59 and 65 are so popular they are selling despite a backlog.
“We haven't got it yet, and the new SPX series from Sea Ray is doing very, very, very well, so much so that we've got a shortage,” MarineMax CFO Mike McLamb said. “So as the new products start to roll in and we get the quantities that we need, plus the newer products that are coming for next year, that's where you will see our gross margin start to really take off.”
“We had thought that by the March quarter, last quarter, that we would be seeing enough of the new models to offset some of the pressure from the old, and we were wrong,” McLamb said. “Our margins were down and our margins are down because of mix of use, but new margins are up. I would think when we will be sitting on this call next year, we will be talking about increased margins.”
Margins also have improved as the availability of late-model used boats becomes scarce, McLamb said.
New product from Azimut, Boston Whaler and Scarab has been coming to MarineMax stores, as well, helping those products to “really take off across the country,” McGill said.
Center console outboard powerboats are becoming more important to MarineMax results and they've generally performed well in the quarter, McGill said.
“Unfortunately, this segment is still less material to us than the day boats and the inboard boat segments,” he said.
Revenue increased to almost $232 million, primarily from strong same-store sales growth, McLamb said.
“While we started the quarter with a good backlog, we did not completely escape the challenges the industry experienced in the key segments we operate within,” McLamb said.
“It's worth of reflecting that for the first three quarters of the year we have seen substantial improvement over 2014, with revenues up 22 percent and 2.5 times last year's earnings,” McGill said. “Not to mention, we're having strength in our balance sheet.
“We're making progress on increasing the sales of new products we've been investing in and adding to the mix,” McGill said. “These brands resonate with our customers and we believe we are finally building the inventory levels we need to support the growing demand. As our manufacturing partners make progress in developing new innovations and in delivering us these new models, it will help us drive additional sales as we move ahead.”
The company continues to focus on acquisitions in coastal markets, McGill said.