MarineMax had near-record sales in its December quarter and strong sales growth in New Jersey during MarineMax’s first quarter of the fiscal year could be a sign that the Northeast is recovering from Hurricane Sandy.
Outboard fishing boats once again emerged as one of the segments that has beaten expectations and outpaced sales in the company’s first fiscal quarter, which ended Dec. 31.
“Our same-store sales increased by over 9 percent following an 8 percent increase in the same period a year ago,” MarineMax CFO Mike McLamb said during a conference call with analysts and investors on Thursday. “Florida led our growth, but interestingly, New Jersey had very strong year-over-year growth. This could be a good sign for the Northeast as the recovery from Hurricane Sandy has finally begun.”
CEO William “Bill” McGill said during the question-and-answer part of the conference call that it might still be too soon to realize sales from those who lost boats in the storm.
“I think that this year … we won't be capitalizing on all the people that lost their boats or had severe damage to their boats … but over the next two to three years we will see a very good market there and a lot of opportunity,” McGill told analysts.
The company saw strong growth in other markets, as well, McLamb said.
“Generally, larger products from the inboard boat segment propelled our growth, as did outboard fishing product,” he said.
“For the quarter, we grew gross profit about $3.6 million, or about 14 percent. Gross profit as a percentage of revenue increased to 27.3 percent, which is among the highest we have ever had in the December quarter,” McLamb said.
“The increase in our margins is worth mentioning because as boat sales rise, consolidated margins has traditionally been pressured since boats carried the lowest margin of all of our business categories,” McLamb added. “The increase in gross profit dollars and overall margin expansion was primarily the result of increased margins on boat sales generally across all product segments that we carry.”
The company is preparing for all segments to improve, in part because of Sea Ray’s innovative new products, combined with hitting the right price points.
Getting inventory to meet consumer demand has been challenging as builders such as Sea Ray are weeding older models from the pipeline to make room for new products. (See Brunswick Corp.’s fourth-quarter earnings story in Trade Only Today.)
Sea Ray’s new 350 SLX has had “unbelievable results,” McGill said, and MarineMax has sold a lot of them. “Quite frankly, the first ones haven’t even rolled in yet, so as the Sea Ray team gets them launched into manufacturing in a big way … we will get that inventory into the field and into the hands of the consumer a little bit quicker. What’s good is that Brunswick has responded. Sea Ray has picked up the production on it.”
“The manufacturers need to be thinking greater about what’s going to happen to retail sales because of the pent-up demand,” McLamb added. “I think it’s a real good problem at the end of the day. I mean, this is going to drive margins higher. It’s going to drive sales higher. I think you will see the sterndrive segment experience greater growth as the products come out.”
Sea Ray did not have a product that competed in that size range of dayboat prior to the 350 SLX, but “a lot of our competitors did,” McGill said. “So yes, we lost business last year if we didn’t have the product. But that being said, we are absolutely killing it with the new 350 SLX.”
“There have been some models that some of our core suppliers just stopped building, quite frankly,” McLamb added. “It's a bigger issue from a unit perspective than it really is from a revenue perspective. I mean, yes, it probably has impacted our top line.”
The “strike” in bigger boats hasn’t completely offset that impact, but it has helped the company through a period when models were discontinued, but are “by and large coming back this summer,” McLamb said.
“So we won't have [the new products] for the March quarter or really for the June quarter. We will start having the fight again in the September quarter,” McLamb said.