Russo Marine — now called MarineMax Russo Marine following last week's acquisition by the largest boat dealership chain in the country — brought in $35 million in revenue in 2015 and represented MarineMax’s largest acquisition since 2006.
The partnership, which will see the well-known Russo family continue to run day-to-day operations, will benefit both parties, MarineMax CEO Bill McGill told investors and analysts during a conference call on Tuesday to discuss quarterly earnings.
“If you look at real synergies, the ability to access inventory both new and used all across MarineMax for Russo is a huge synergy,” McGill said.
For example, the Boston Whaler 420 Outrage — a boat that has been in high demand and has experienced a large backlog — might be available four to six months earlier to MarineMax than it would be to a private dealership, McGill said.
Adding brands such as Azimut and Ocean Alexander to the Boston region will benefit both, McGill said. Added avenue from finance and insurance, with Newcoast Finance, for example, will help customers get financing for boats.
“We have a real competitive advantage over almost any dealer that's out there in the marketplace today, and of course that becomes an advantage for Russo,” McGill said.
The merger is also favorable because of similar cultural mindsets, McGill said.
“I can tell you that they have some business practices and things that they're doing which will be an advantage to all of MarineMax,” McGill said. “There’s things that they're doing that we will learn from, and so they will be part of our team, and as we get our general managers and our store managers and regional presidents together — which is actually occurring in a couple of weeks — they will be part of that. And one plus one equals three when you get good minds together.”
MarineMax is working to acquire other dealerships in other significant markets, McGill said, emphasizing that there has to be a similar cultural mindset between companies.
“There's others that we're in discussion with, and similar-type cultures and some great markets,” McGill said. “ And when the time is right we will add them to the family, as well, and we could do something almost immediately with a couple of them. But at the end of the day they're in the peak of the season, too. So we don't want to disrupt business with transition and being part of the MarineMax family, as well.”
Acquisitions are becoming more favorable as dealerships become “more meaningfully profitable” emerging from the downturn, said CFO Mike McLamb.
“That was a crucial thing that had to occur to have more robust discussions with the different dealers that we're talking to,” McLamb said. “And just like our own earnings have doubled from last year and may have doubled the year before that. I mean, the other dealers are seeing that, as well, so when you start to put a multiple on something there's at least something you can discuss from a payment perspective which resulted in healthier discussions, quite frankly.”
McLamb and McGill reiterated that new models had been the driver of sales increases.
“It's new that sells, whether it's Sailfish or Harris or Crest,” McGill said. “We're getting it from pretty well all of our manufacturers, and so it’s very exciting times because it's really what was missing. If you look at the downturn in 2008 and 2009, the thing that we were missing as a company from our primary supplier, Brunswick, was fresh new products, and it hurt. If we had had fresh new product during that time, they would have sold even in the downturn.”