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MarineMax deals with third-quarter revenue decline

Revenue at MarineMax declined by more than $108 million in the third quarter, which ended June 30, compared to the same period of 2007, the company announced this morning.

Revenue was $271.3 million for the quarter, compared with $379.8 million for the comparable quarter last year. Same-store sales declined about 27 percent compared with a 9 percent decrease in the comparable quarter last year.

Net loss for the quarter was $113.3 million, or $6.15 a share.

“The marine industry, similar to many industries in the United States, is experiencing difficult conditions that continue to dramatically impact business,” chairman, president and CEO William H. McGill, Jr. said in a statement. “We are continuing to take steps to further strengthen our balance sheet and reduce our operating costs including store consolidations.

“Our inventory levels fell seasonally from the end of the March quarter, but came in slightly ahead of the third quarter last year due to the greater-than-expected sales decline,” he added.

In mid-morning, MarineMax’s stock was trading at $7.21 per share. Its 52-week high and low ranged from $21.96 to $4.92 per share.

In a call this morning with analysts, McGill called the economic climate “one of the most challenging periods on record.”

Clearwater, Fla.-based MarineMax, with 87 retail locations throughout the country, is the nation’s largest boat retailer.

Officials this morning outlined plans to close seven more stores this year, in addition to three stores that have already been closed. These closings should not affect market share, Michael McLamb, the company’s CFO, said in this morning’s call, but should strengthen the position of neighboring stores.

For example, the Tampa, Fla., store is slated to close, but because of its proximity to the Clearwater, Fla. store, Marine Max should retain its market share in that area, company officials said.

While the company plans to order about 40 percent fewer 2009 models from its manufacturers, it noted that the 2009 models have been slow to come in because of plant shutdowns. This has helped MarineMax move some older inventory, officials said.

As a result of its falling stock market valuation, MarineMax was required to write off its “intangible” assets. The company recognized a non-cash charge of $122.1 million, or about $6.33 per share. This write-off does not impact the cash available to run the business.

“While we would have preferred to not have been required to write off the intangibles, it does not impact the significant strength of our balance sheet,” the company said in a statement to its “team members.” “Educated investors will quickly look beyond the write-off and focus on how we, as an organization, are dealing with the tough environment. However, we suspect competitors and perhaps some customers will confuse the write off as a more significant event.”

Excluding the non-cash charge described above, earnings per diluted share were 18 cents for the three-month period ending June 30, 2008. The company reported earnings per diluted share of 73 cents for the comparable quarter last year.

Revenue declined 23 percent to $719.8 million for the nine-month period ending June 30, from $940.6 million for the comparable period in fiscal 2007. Same-store sales declined 23 percent compared with a less than 1 percent decline in the year-ago period.

Net loss for the nine months ending June 30, 2008 was $123.2 million, or $6.70 per diluted share, compared with net income of $13.4 million, or 70 cents per diluted share, for the comparable period last year.

Despite this morning’s news, McGill noted that people are going out on the water and events such as Aquapalooza have been well attended.

“(Boaters) are there, they have not lost their passion,” he said. “Passion for boating is not cyclical.”

— Beth Rosenberg



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