MarineMax said it is withdrawing its fiscal 2020 guidance — an EPS target of $1.82 to $1.92 — in response to the “rapidly changing market uncertainty from the COVID-19 pandemic.” It also announced steps to preserve its near-term liquidity.
Many of MarineMax’s 59 locations are fully or partially operational, though the company said it would furlough team members associated with temporary closures as a strategy to preserve capital.
The company is also working to extract capital from its “debt-free, sizeable real estate holdings,” which it said had a net book value of $123 million in September and an estimated fair value that was “significantly higher.”
MarineMax also said it is delaying or reducing capital expenditures, monetizing unlevered inventory, which was approximately $100 million in December, and reducing incoming orders from manufacturers, though several have suspended operations, including Brunswick Corp.
The company expects total revenue for its second quarter, which ended Thursday, to range from $303 million to $308 million, compared to $303.6 million for the same of quarter 2019.
“We, our industry and the country continue to face a historic global pandemic,” CEO Brett McGill said in a statement. “Our top priority remains the health and safety of our team members, customers, business partners and our communities. In addition, as we have successfully done over the past 20 plus years, we are focused on proactively managing through these challenging times for the long-term success and growth of our company.”
Sales were brisk through early March, McGill said. “We began to feel the impact of COVID-19 shortly thereafter and have continued to evolve and implement changes in how we operate our business,” he said. “To manage our inventory, we are proactively working with our manufacturers to adjust future orders while continuing to engage with customers on our digital platform and in our stores, many of which remain fully or partially open.”
MarineMax said it has temporarily closed departments or locations based on guidance from local governments or health officials and is following guidelines to ensure stores are safe. Where possible, MarineMax is offering private personal showings, as well as virtual appointments, and said its digital platform is serving as an effective solution, with “very robust” online activity.
The company ended its first quarter of fiscal 2020 with $74 million of liquidity on its balance sheet, comprising $36 million in cash and cash equivalents, along with $38 million available under its floorplan financing facility.
MarineMax’s $440 million floorplan facility had $334 million outstanding Dec. 31; the loan does not mature until October 2022.
The company said it owns about half of its locations, and all are debt-free. It said there are no operating covenants in its floorplan facility and that the company’s leases are short-term in nature, enhancing flexibility, according to the statement.
“With its strong liquidity position and significant real estate levers, the company, which has successfully navigated through other economic challenges, is well-positioned to manage through a variety of ever-changing scenarios,” the statement said.
MarineMax said it will respond to the rapidly evolving coronavirus situation and continue to comply with local and state orders. The company will provide a further business update as part of its second quarter earnings announcement.
Although financial analysts downgraded stocks for some public marine companies, and price targets took a hit, MarineMax stocks remained at a “buy” status for most analysts, including those at SunTrust and B Riley. The latter firm’s price target for MarineMax dropped from $26.50 to $13.50 on Monday.
Wednesday’s close was $9.03. The 52-week high was $23.15 and the low — hit this week —was $7.24.