PART I. FINANCIAL INFORMATION This section provides MarineMax, Inc.'s unaudited condensed consolidated financial statements, management's discussion and analysis of operations, market risk disclosures, and internal controls evaluation for the three months ended December 31, 2020 [ITEM 1. Financial Statements (Unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of MarineMax, Inc. for the three months ended December 31, 2020 and 2019, including statements of operations, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining accounting policies, acquisitions, debt, and equity compensation [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations Table | Metric | 3 Months Ended Dec 31, 2019 (in thousands) | 3 Months Ended Dec 31, 2020 (in thousands) | Change (%) | | :--------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------- | | Revenue | $304,172 | $411,524 | 35.3% | | Cost of sales | $224,154 | $288,123 | 28.5% | | Gross profit | $80,018 | $123,401 | 54.2% | | Selling, general, and administrative expenses | $64,386 | $91,417 | 42.0% | | Income from operations | $15,632 | $31,984 | 104.6% | | Interest expense | $3,344 | $1,268 | -62.1% | | Income before income tax provision | $12,288 | $30,716 | 150.0% | | Income tax provision | $3,229 | $7,116 | 120.4% | | Net income | $9,059 | $23,600 | 160.5% | | Basic net income per common share | $0.42 | $1.07 | 154.8% | | Diluted net income per common share | $0.41 | $1.04 | 153.7% | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income Table | Metric | 3 Months Ended Dec 31, 2019 (in thousands) | 3 Months Ended Dec 31, 2020 (in thousands) | Change (%) | | :---------------------------------- | :--------------------------------------- | :--------------------------------------- | :--------- | | Net income | $9,059 | $23,600 | 160.5% | | Foreign currency translation adjustments | $606 | $1,115 | 84.0% | | Interest rate swap contract | $— | $(195) | N/A | | Total other comprehensive income, net of tax | $606 | $920 | 51.8% | | Comprehensive income | $9,665 | $24,520 | 153.7% | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets Table | Asset/Liability/Equity | Sep 30, 2020 (in thousands) | Dec 31, 2020 (in thousands) | Change (in thousands) | Change (%) | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | **ASSETS** | | | | | | Cash and cash equivalents | $155,493 | $120,939 | $(34,554) | -22.2% | | Inventories, net | $298,002 | $378,863 | $80,861 | 27.1% | | Total current assets | $503,327 | $558,386 | $55,059 | 10.9% | | Property and equipment, net | $141,934 | $149,657 | $7,723 | 5.4% | | Operating lease right-of-use assets, net | $37,991 | $105,633 | $67,642 | 178.0% | | Goodwill and other intangible assets, net | $84,293 | $143,114 | $58,821 | 69.8% | | Total assets | $775,319 | $964,888 | $189,569 | 24.4% | | **LIABILITIES** | | | | | | Short-term borrowings | $144,393 | $163,394 | $19,001 | 13.2% | | Contract liabilities (customer deposits) | $31,821 | $55,389 | $23,568 | 74.1% | | Total current liabilities | $272,534 | $321,184 | $48,650 | 17.8% | | Long-term debt, net of current maturities | $7,343 | $50,124 | $42,781 | 582.6% | | Total liabilities | $319,922 | $482,306 | $162,384 | 50.8% | | **SHAREHOLDERS' EQUITY** | | | | | | Total shareholders' equity | $455,397 | $482,582 | $27,185 | 6.0% | [Condensed Consolidated Statements of Shareholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Condensed Consolidated Statements of Shareholders' Equity Table | Metric | Sep 30, 2020 (in thousands) | Dec 31, 2020 (in thousands) | Change (in thousands) | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Shareholders' Equity | $455,397 | $482,582 | $27,185 | | Net income | — | $23,600 | $23,600 | | Additional Paid-in Capital | $280,436 | $283,101 | $2,665 | | Accumulated Other Comprehensive Income | $829 | $1,749 | $920 | | Retained Earnings | $277,699 | $301,299 | $23,600 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows Table | Cash Flow Activity | 3 Months Ended Dec 31, 2019 (in thousands) | 3 Months Ended Dec 31, 2020 (in thousands) | Change (in thousands) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :-------------------- | | Net cash used in operating activities | $(19,298) | $(12,839) | $6,459 | | Net cash used in investing activities | $(4,398) | $(55,177) | $(50,779) | | Net cash provided by financing activities | $20,962 | $33,095 | $12,133 | | Net decrease in cash and cash equivalents | $(2,526) | $(34,554) | $(32,028) | | Cash and cash equivalents, end of period | $35,985 | $120,939 | $84,954 | - Cash used in investing activities in Q1 FY2021 included **$48.3 million** for business acquisitions, net of cash acquired, a **significant increase** from no acquisitions in the prior year period[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. Company Background](index=8&type=section&id=1.%20COMPANY%20BACKGROUND) - MarineMax is the **largest recreational boat and yacht retailer in the U.S.**, with **77 retail locations in 21 states** and international operations (Fraser Yachts Group, Northrop & Johnson)[23](index=23&type=chunk) - The company completed the acquisition of SkipperBud's in **October 2020**, **significantly increasing its presence** in the Great Lakes region and West Coast[26](index=26&type=chunk) 1. Company Background Table | Manufacturer | % of Revenue (Fiscal 2020) | Exclusivity | | :----------- | :------------------------- | :---------- | | Brunswick (total) | ~33% | N/A | | Sea Ray (Brunswick) | ~15% | Exclusive in geographic markets | | Boston Whaler (Brunswick) | ~16% | Exclusive in geographic markets | | Azimut Yachts (Azimut-Benetti Group) | ~9% | Exclusive for entire U.S. | [2. Basis of Presentation](index=9&type=section&id=2.%20BASIS%20OF%20PRESENTATION) - Financial statements are **unaudited** and prepared under GAAP for interim reporting, with **all significant intercompany transactions eliminated**[32](index=32&type=chunk)[35](index=35&type=chunk) - Significant estimates include **valuation allowances, goodwill and intangible assets, long-lived assets, and accruals**, which could differ from actual results[33](index=33&type=chunk) [3. New Accounting Pronouncements](index=10&type=section&id=3.%20NEW%20ACCOUNTING%20PRONOUNCEMENTS) - Adopted **ASU 2018-15** (Cloud Computing Arrangement Costs) and **ASU 2016-13** (Financial Instruments — Credit Losses) effective **October 1, 2020**[37](index=37&type=chunk)[38](index=38&type=chunk) - The adoption of these new accounting standards had **no impact** on the consolidated financial statements[37](index=37&type=chunk)[38](index=38&type=chunk) [4. Revenue Recognition](index=10&type=section&id=4.%20REVENUE%20RECOGNITION) - Revenue from boat, motor, and trailer sales, and brokerage commissions, is recognized at a **point in time** upon customer acceptance or delivery[39](index=39&type=chunk) - Revenue from parts and service operations, slip and storage, and yacht chartering is recognized **over time** as services are performed or over the contract term[41](index=41&type=chunk)[43](index=43&type=chunk) 4. Revenue Recognition Table | Timing of Revenue Recognition | 3 Months Ended Dec 31, 2019 | 3 Months Ended Dec 31, 2020 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Goods and services transferred at a point in time | 90.8% | 90.5% | | Goods and services transferred over time | 9.2% | 9.5% | [5. Leases](index=11&type=section&id=5.%20LEASES) - Majority of leases are real estate leases for showrooms, marinas, service facilities, and corporate headquarters, **all classified as operating leases**[45](index=45&type=chunk) 5. Leases Table | Metric | 3 Months Ended Dec 31, 2019 (in thousands) | 3 Months Ended Dec 31, 2020 (in thousands) | Change (in thousands) | Change (%) | | :------------------------------------------------ | :--------------------------------------- | :--------------------------------------- | :-------------------- | :--------- | | Operating lease expenses | $3,300 | $5,800 | $2,500 | 75.8% | | Operating cash flows from operating leases | $2,588 | $4,296 | $1,708 | 66.0% | | Right-of-use assets obtained in exchange for lease obligations | $560 | $70,275 | $69,715 | 12449.1% | - **Weighted-average remaining lease term is approximately 13 years**, and the **weighted-average discount rate used for lease liabilities as of December 31, 2020, was approximately 5.7%**[45](index=45&type=chunk)[48](index=48&type=chunk) [6. Inventories](index=12&type=section&id=6.%20INVENTORIES) - New and used boat, motor, and trailer inventories are valued at the **lower of cost (specific-identification) or net realizable value**[50](index=50&type=chunk) 6. Inventories Table | Inventory Valuation Allowance | Sep 30, 2020 (in millions) | Dec 31, 2020 (in millions) | | :---------------------------- | :------------------------- | :------------------------- | | New and used boat, motor, and trailer inventories | $2.4 | $2.3 | [7. Impairment of Long-Lived Assets](index=12&type=section&id=7.%20IMPAIRMENT%20OF%20LONG-LIVED%20ASSETS) - Long-lived assets are reviewed for impairment based on undiscounted future net cash flows[51](index=51&type=chunk) - **No impairment of long-lived assets was believed to exist** as of December 31, 2020[51](index=51&type=chunk) [8. Goodwill](index=12&type=section&id=8.%20GOODWILL) - Goodwill **increased significantly** due to the acquisition of SkipperBud's in **October 2020** for **$55 million**, including a contingent consideration arrangement of **$8.2 million**[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) 8. Goodwill Table | Metric | Sep 30, 2020 (in millions) | Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :-------------------------------- | :------------------------- | :------------------------- | :------------------- | :--------- | | Goodwill and other intangible assets, net | $84.3 | $143.1 | $58.8 | 69.8% | - The SkipperBud's acquisition added approximately **$56.4 million** in goodwill and **$2.0 million** in other identifiable intangibles (trade name and customer relationships)[55](index=55&type=chunk) - Goodwill is tested for impairment at least **annually**; a qualitative assessment as of **December 31, 2020**, indicated **no impairment was likely**[57](index=57&type=chunk) [9. Income Taxes](index=13&type=section&id=9.%20INCOME%20TAXES) - Deferred tax assets and liabilities are recognized for **future tax consequences of temporary differences**[58](index=58&type=chunk) 9. Income Taxes Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Income tax provision | $3.2 | $7.1 | $3.9 | 121.9% | | Effective income tax rate | 26.3% | 23.2% | -3.1% | -11.8% | - The decrease in the effective income tax rate was **primarily attributed to excess equity compensation for tax purposes**[117](index=117&type=chunk) [10. Short-Term Borrowings and Long-Term Debt](index=14&type=section&id=10.%20SHORT-TERM%20BORROWINGS%20AND%20LONG-TERM%20DEBT) - The company has a **$440 million Credit Facility** for working capital and inventory financing, expiring in **May 2023**, with **$133.4 million additional available borrowings** as of **December 31, 2020**[60](index=60&type=chunk)[63](index=63&type=chunk) 10. Short-Term Borrowings and Long-Term Debt Table | Metric | Dec 31, 2019 (in thousands) | Dec 31, 2020 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :--------- | | Short-term borrowings | N/A | $163,394 | N/A | N/A | | Interest rate on short-term borrowings | 5.6% | 4.2% | -1.4% | -25.0% | | Long-term debt, net of current maturities | N/A | $50,124 | N/A | N/A | - The company was in **compliance with all Credit Facility covenants** (leverage ratio not exceeding **2.75 to 1.0**, current ratio greater than **1.2 to 1.0**) as of **December 31, 2020**[61](index=61&type=chunk) [11. Stock-Based Compensation](index=15&type=section&id=11.%20STOCK-BASED%20COMPENSATION) 11. Stock-Based Compensation Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :----------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Stock-based compensation expense | $1.5 | $2.0 | $0.5 | 33.3% | | Cash received from option exercises | $0.6 | $1.5 | $0.9 | 150.0% | - Compensation for options is valued using the **Black-Scholes model**, while restricted stock awards and units are measured at **fair value on the grant date**[68](index=68&type=chunk) [12. The Incentive Stock Plans](index=15&type=section&id=12.%20THE%20INCENTIVE%20STOCK%20PLANS) - The **2011 Stock-Based Compensation Plan** was amended in **February 2020** to increase authorized shares to **4,200,456** and extended to **February 2030**[71](index=71&type=chunk) 12. The Incentive Stock Plans Table | Metric | Sep 30, 2020 | Dec 31, 2020 | Change | | :-------------------------------- | :----------- | :----------- | :------- | | Shares Available for Grant | 1,275,415 | 950,547 | -324,868 | | Options Outstanding | 196,329 | 129,583 | -66,746 | | Aggregate Intrinsic Value (in thousands) | $2,636 | $3,116 | $480 | | Weighted Average Exercise Price | $12.12 | $11.71 | -$0.41 | - Total intrinsic value of options exercised **increased from $0.1 million in Q1 FY2020 to $1.1 million in Q1 FY2021**[73](index=73&type=chunk) [13. Employee Stock Purchase Plan](index=16&type=section&id=13.%20EMPLOYEE%20STOCK%20PURCHASE%20PLAN) - The **Employee Stock Purchase Plan** was amended in **February 2019**, increasing available shares to **1,500,000**[75](index=75&type=chunk) - Employees can purchase common stock at **85% of the closing price** on the first or last day of the offering, whichever is lower[75](index=75&type=chunk) 13. Employee Stock Purchase Plan Table | Black-Scholes Assumption | 3 Months Ended Dec 31, 2019 | 3 Months Ended Dec 31, 2020 | Change | | :----------------------- | :-------------------------- | :-------------------------- | :----- | | Risk-free interest rate | 1.8% | 0.1% | -1.7% | | Volatility | 52.4% | 70.2% | 17.8% | [14. Restricted Stock Awards](index=17&type=section&id=14.%20RESTRICTED%20STOCK%20AWARDS) - Restricted stock awards and RSUs generally vest over **two to four years**, with performance-based awards for officers ranging from **0% to 175% of target shares**[79](index=79&type=chunk) 14. Restricted Stock Awards Table | Metric | Sep 30, 2020 | Dec 31, 2020 | | :-------------------------------- | :----------- | :----------- | | Non-vested balance (Shares/Units) | 902,631 | 1,083,097 | | Awards granted (Shares/Units) | N/A | 336,091 | | Awards vested (Shares/Units) | N/A | (152,625) | | Unrecognized compensation cost (in millions) | N/A | $16.3 | | Weighted average recognition period | N/A | 2.6 years | [15. Net Income Per Share](index=17&type=section&id=15.%20NET%20INCOME%20PER%20SHARE) 15. Net Income Per Share Table | Metric | 3 Months Ended Dec 31, 2019 | 3 Months Ended Dec 31, 2020 | Change | | :---------------------------------------------------- | :-------------------------- | :-------------------------- | :----- | | Weighted average common shares outstanding (basic) | 21,453,914 | 22,025,898 | 571,984 | | Effect of dilutive options and non-vested restricted stock awards | 436,151 | 719,227 | 283,076 | | Weighted average common and common equivalent shares (diluted) | 21,890,065 | 22,745,125 | 855,060 | - Approximately **30,807 weighted average options** were anti-dilutive and excluded from diluted EPS calculation in **Q1 FY2021**[81](index=81&type=chunk) [16. Commitments and Contingencies](index=17&type=section&id=16.%20COMMITMENTS%20AND%20CONTINGENCIES) - The company is party to various legal actions arising in the **ordinary course of business**[82](index=82&type=chunk) - These legal matters are **not expected to have a material adverse effect** on the company's financial condition, results of operations, or cash flows as of **December 31, 2020**[82](index=82&type=chunk) [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides management's perspective on MarineMax's financial condition and results of operations, highlighting the impact of COVID-19, strategic acquisitions, critical accounting policies, and a detailed comparison of financial performance for the three months ended December 31, 2020, versus 2019. It also discusses liquidity, capital resources, and the effects of seasonality and weather [General](index=18&type=section&id=General) - **COVID-19 impacts remain unpredictable**, but the company is **operating safely**, offering virtual appointments, and **leveraging its digital platform**[84](index=84&type=chunk) - MarineMax is the **largest recreational boat and yacht retailer in the U.S.**, with **fiscal 2020 revenue over $1.5 billion**, **operating 77 retail locations in 21 states**[85](index=85&type=chunk) - **Acquisitions, including SkipperBud's in October 2020 and Northrop & Johnson in July 2020, remain a key growth strategy**[85](index=85&type=chunk)[86](index=86&type=chunk)[90](index=90&type=chunk) - The business is **susceptible to general economic conditions**, consumer discretionary spending on luxury goods, and local influences (e.g., weather), particularly in Florida, which accounts for approximately **54% of revenue**[87](index=87&type=chunk)[88](index=88&type=chunk) [Application of Critical Accounting Policies](index=19&type=section&id=Application%20of%20Critical%20Accounting%20Policies) - Management makes **significant estimates and assumptions** for financial reporting, particularly for valuation allowances, goodwill, intangible assets, long-lived assets, and accruals[92](index=92&type=chunk) - Actual results could differ significantly from these estimates under different assumptions and conditions[92](index=92&type=chunk) [Revenue Recognition](index=19&type=section&id=Revenue%20Recognition_Critical_Policy) - Revenue from boat, motor, and trailer sales is recognized at a **point in time** upon customer acceptance or delivery[93](index=93&type=chunk) - Commissions from third-party financing and extended warranty contracts are recognized when related boat sales occur or terms are accepted[94](index=94&type=chunk) - Revenue from parts and service operations, slip and storage, and yacht chartering is recognized **over time**[95](index=95&type=chunk)[97](index=97&type=chunk) [Vendor Consideration Received](index=20&type=section&id=Vendor%20Consideration%20Received) - Interest assistance from manufacturers is classified as a reduction of inventory cost and related cost of sales[98](index=98&type=chunk) - Co-op assistance programs from manufacturers are netted against related advertising expenses[98](index=98&type=chunk) [Inventories](index=20&type=section&id=Inventories_Critical_Policy) - New and used boat, motor, and trailer inventories are stated at the **lower of cost (specific-identification) or net realizable value**[99](index=99&type=chunk) Inventories Table | Inventory Valuation Allowance | Sep 30, 2020 (in millions) | Dec 31, 2020 (in millions) | | :---------------------------- | :------------------------- | :------------------------- | | New and used boat, motor, and trailer inventories | $2.4 | $2.3 | [Goodwill](index=20&type=section&id=Goodwill_Critical_Policy) - **Goodwill and other intangible assets increased from $84.3 million (Sep 30, 2020) to $143.1 million (Dec 31, 2020) due to acquisitions**, including SkipperBud's, Northrop & Johnson, and Boatyard[100](index=100&type=chunk) - Goodwill is reviewed for impairment at least **annually**; a qualitative assessment as of **December 31, 2020**, determined **no impairment was likely**[100](index=100&type=chunk)[101](index=101&type=chunk) [Impairment of Long-Lived Assets](index=22&type=section&id=Impairment%20of%20Long-Lived%20Assets_Critical_Policy) - Long-lived assets are reviewed for impairment when events indicate the carrying amount may not be recoverable, measured by comparing to undiscounted future net cash flows[102](index=102&type=chunk) - **No impairment of long-lived assets was believed to exist** as of December 31, 2020[102](index=102&type=chunk) [Stock-Based Compensation](index=22&type=section&id=Stock-Based%20Compensation_Critical_Policy) - Stock-based compensation is accounted for under ASC 718, using the **Black-Scholes model** for options and **fair value** for restricted stock awards/units[103](index=103&type=chunk) - Valuation models require judgments on stock price volatility, dividend yield, employee turnover, and exercise behaviors[103](index=103&type=chunk) [Income Taxes](index=22&type=section&id=Income%20Taxes_Critical_Policy) - Deferred tax assets and liabilities are recognized for temporary differences, with valuation allowances recorded as needed[104](index=104&type=chunk) - The CARES Act, which allows NOL carrybacks and increased interest deduction limits, did not result in material adjustments to the income tax provision or net deferred tax assets for the three months ended December 31, 2020[107](index=107&type=chunk)[108](index=108&type=chunk) [Recent Accounting Pronouncements](index=23&type=section&id=Recent%20Accounting%20Pronouncements) - **Refer to Note 3 for details on new accounting pronouncements**[110](index=110&type=chunk) [Consolidated Results of Operations](index=23&type=section&id=Consolidated%20Results%20of%20Operations) - The discussion compares financial results for the three months ended December 31, 2020, with the same period in 2019[111](index=111&type=chunk) [Three Months Ended December 31, 2020 Compared with Three Months Ended December 31, 2019](index=23&type=section&id=Three%20Months%20Ended%20December%2031,%202020%20Compared%20with%20Three%20Months%20Ended%20December%2031,%202019) [Revenue](index=23&type=section&id=Revenue_Results) Revenue Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :----- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Revenue | $304.2 | $411.5 | $107.3 | 35.3% | - Revenue increase was due to a **20.2% rise in comparable-store sales** and **$45.8 million from new stores and acquisitions**[112](index=112&type=chunk) [Gross Profit](index=23&type=section&id=Gross%20Profit_Results) Gross Profit Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :--------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Gross profit | $80.0 | $123.4 | $43.4 | 54.2% | | Gross profit as % of revenue | 26.3% | 30.0% | 3.7% | 14.1% | - Margin expansion was driven by **demand-driven increases in new and used boat margins** and **higher-margin businesses**, including Northrop & Johnson[113](index=113&type=chunk) [Selling, General, and Administrative Expenses](index=23&type=section&id=Selling,%20General,%20and%20Administrative%20Expenses_Results) Selling, General, and Administrative Expenses Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :------------------------------------ | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Selling, General, and Administrative Expenses | $64.4 | $91.4 | $27.0 | 42.0% | - Increase in SG&A was driven by **higher revenue from comparable-store sales and acquisitions**[114](index=114&type=chunk) [Interest Expense](index=23&type=section&id=Interest%20Expense_Results) Interest Expense Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Interest expense | $3.3 | $1.3 | $(2.0) | -60.6% | | Interest expense as % of revenue | 1.1% | 0.3% | -0.8% | -72.7% | - Decrease in interest expense was **primarily due to decreased interest rates and lower borrowings**[115](index=115&type=chunk) [Income Taxes](index=23&type=section&id=Income%20Taxes_Results) Income Taxes Table | Metric | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | Change (%) | | :-------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | :--------- | | Income tax expense | $3.2 | $7.1 | $3.9 | 121.9% | | Effective income tax rate | 26.3% | 23.2% | -3.1% | -11.8% | - The decrease in the effective income tax rate was **primarily attributed to excess equity compensation for tax purposes**[117](index=117&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) - Cash needs are primarily for **working capital, inventory, and growth through acquisitions**, financed by cash from operations and the Credit Facility[118](index=118&type=chunk)[119](index=119&type=chunk) Liquidity and Capital Resources Table | Cash Flow Activity | 3 Months Ended Dec 31, 2019 (in millions) | 3 Months Ended Dec 31, 2020 (in millions) | Change (in millions) | | :----------------------------------- | :--------------------------------------- | :--------------------------------------- | :------------------- | | Net cash used in operating activities | $(19.3) | $(12.8) | $6.5 | | Net cash used in investing activities | $(4.4) | $(55.2) | $(50.8) | | Net cash provided by financing activities | $21.0 | $33.1 | $12.1 | - As of **December 31, 2020**, the company had **$163.4 million in short-term borrowings** and **$50.1 million in long-term debt**, with **$133.4 million available** under its Credit Facility[127](index=127&type=chunk)[128](index=128&type=chunk) - Management believes existing capital resources will be **adequate for the next 12 months**, excluding possible significant acquisitions[129](index=129&type=chunk) [Impact of Seasonality and Weather on Operations](index=25&type=section&id=Impact%20of%20Seasonality%20and%20Weather%20on%20Operations) - The recreational boating industry is **highly seasonal**, with **lower sales and higher inventories** typically in the December and March quarters, except in Florida[130](index=130&type=chunk) - Business is subject to **adverse weather patterns** (e.g., prolonged winters, droughts, excessive rain, hurricanes) which can curtail customer demand and disrupt operations[131](index=131&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines MarineMax's exposure to market risks, specifically interest rate risk due to variable-rate short-term debt and foreign currency exchange rate risk from international purchases and operations, and the potential impact of these risks on financial performance [Interest Rate Risk](index=25&type=section&id=Interest%20Rate%20Risk) - All short-term debt bears **variable interest tied to LIBOR**, exposing the company to **interest rate risk**[132](index=132&type=chunk) - A hypothetical **100 basis point increase** in interest rates would result in an approximate **$1.6 million increase** in annual pre-tax interest expense[132](index=132&type=chunk) [Foreign Currency Exchange Rate Risk](index=25&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) - Fluctuations in the **U.S. dollar exchange rate** can impact the retail price and profitability of foreign products purchased from European and Chinese manufacturers[133](index=133&type=chunk) - Fraser Yachts Group and Northrop & Johnson have transactions in non-U.S. dollar currencies, but these revenues were **less than 2% of total revenues** in **fiscal 2020**[134](index=134&type=chunk) - The company is **not currently engaged in foreign currency exchange hedging transactions**[133](index=133&type=chunk) [ITEM 4. Controls and Procedures](index=26&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section details the evaluation of MarineMax's disclosure controls and procedures, noting their effectiveness as of December 31, 2020, and the ongoing integration of controls for the newly acquired SkipperBud's. It also acknowledges the inherent limitations of any control system [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - CEO and CFO concluded that disclosure controls and procedures were **effective at the reasonable assurance level** as of **December 31, 2020**[136](index=136&type=chunk) [Changes in Internal Controls](index=26&type=section&id=Changes%20in%20Internal%20Controls) - **No material changes** in internal control over financial reporting occurred, except for the implementation of controls for the acquired SkipperBud's subsidiary[137](index=137&type=chunk) [Limitations on the Effectiveness of Controls](index=26&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls) - Control systems provide only **reasonable, not absolute, assurance** due to inherent limitations such as faulty judgments, simple errors, collusion, or management override[138](index=138&type=chunk) [CEO and CFO Certifications](index=26&type=section&id=CEO%20and%20CFO%20Certifications) - **CEO and CFO Certifications (Exhibits 31.1 and 31.2)** are provided in accordance with **Section 302 of the Sarbanes-Oxley Act of 2002**[139](index=139&type=chunk) PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults on senior securities, mine safety disclosures, other information, and a list of exhibits filed with the report [ITEM 1. Legal Proceedings](index=26&type=section&id=ITEM%201.%20Legal%20Proceedings) MarineMax is involved in routine legal actions but does not anticipate any material adverse effect on its financial condition, results of operations, or cash flows as of December 31, 2020 - The company is party to various legal actions arising in the **ordinary course of business**[141](index=141&type=chunk) - These matters are **not expected to have a material adverse effect** on the company's financial condition, results of operations, or cash flows[141](index=141&type=chunk) [ITEM 1A. Risk Factors](index=26&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that no new material risk factors have been identified since the last annual report - **No new material risk factors** were reported in this quarterly filing[142](index=142&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=27&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During November 2020, MarineMax repurchased 27,822 shares of common stock at an average price of $31.30 per share, primarily for tax withholdings related to equity awards. The company has authorization to purchase up to 9,919,764 additional shares through March 2022 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds Table | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Shares Available Under Plans | | :--------------------------------- | :--------------------- | :--------------------------- | :----------------------------------- | | October 1, 2020 - October 31, 2020 | - | - | 9,919,764 | | November 1, 2020 - November 30, 2020 | 27,822 | $31.30 | 9,919,764 | | December 1, 2020 - December 31, 2020 | - | - | 9,919,764 | | Total | 27,822 | $31.30 | 9,919,764 | - The **27,822 shares** repurchased in **November 2020** were attributable to shares tendered by employees for tax withholdings on equity awards[145](index=145&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=27&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - **No defaults upon senior securities** were reported[146](index=146&type=chunk) [ITEM 4. Mine Safety Disclosures](index=27&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are **not applicable to the company**[147](index=147&type=chunk) [ITEM 5. Other Information](index=27&type=section&id=ITEM%205.%20Other%20Information) This section states that no other information is required to be reported - **No other information** was reported[148](index=148&type=chunk) [ITEM 6. Exhibits](index=28&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate documents, sales agreements, acquisition agreements, and certifications - The report includes **various exhibits** such as Articles of Incorporation, Bylaws, Sales and Service Agreements (Boston Whaler, Sea Ray), Equity Purchase Agreement (Skipper Marine Holdings), and **CEO/CFO Certifications**[151](index=151&type=chunk) SIGNATURES This section confirms the official signing of the report by MarineMax, Inc.'s Executive Vice President, Chief Financial Officer, Secretary, and Director on February 2, 2021 - The report was **signed by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director, on February 2, 2021**[155](index=155&type=chunk)

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |-------|-------|-------|-------|-------|----------------------------------------------|-------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | TED by WA MARINEMAX | | | t | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | and and and of the result of the productions | | | | | | 2 DISCLAIMER Information contained in this presentation, other than historical information, should be considered forward-looking ...

MarineMax, Inc. (NYSE:HZO) Q1 2021 Earnings Conference Call January 28, 2021 10:00 AM ET Corporate Participants Dawn Francfort - ICR Brett McGill - President and Chief Executive Officer Mike McLamb - Chief Financial Officer Conference Call Participants Joseph Altobello - Raymond James James Hardiman - Wedbush Securities Eric Wold - B. Riley Frederick Wightman - Wolfe Research Scott Stember - CL King & Associates Mike Swartz - Truist Securities Brandon Rolle - Northcoast Research Partners Operator Greetings ...

PART I [Item 1. Business](index=4&type=section&id=Item%201%20Business) MarineMax is the largest U.S. recreational boat and yacht retailer, expanding its superyacht and marina services through strategic acquisitions - **MarineMax** is the largest recreational boat and yacht retailer in the United States, with **77 retail locations** across 21 states, focusing on premium brands[17](index=17&type=chunk)[226](index=226&type=chunk) - The company significantly expanded its presence in the Great Lakes region and West Coast of the United States through the acquisition of **SkipperBud's** in October 2020, which also increased marina/storage services[18](index=18&type=chunk) - Sales of new **Brunswick boats** (Sea Ray and Boston Whaler) accounted for approximately **33% of revenue** in fiscal 2020, with Azimut boats and yachts contributing about **9%**[19](index=19&type=chunk)[40](index=40&type=chunk) - The average selling price for a new boat in fiscal 2020 was approximately **$215,000**, a slight increase from $204,000 in fiscal 2019, significantly higher than the industry average of $56,000[22](index=22&type=chunk)[41](index=41&type=chunk) - The company's strategy includes enhancing its position as the leading retailer, broadening superyacht brokerage and luxury yacht services, increasing marina/storage services to potentially boost margins, and strengthening digital initiatives[25](index=25&type=chunk)[26](index=26&type=chunk) Fiscal Year Sales Growth | Metric | Fiscal 2018 | Fiscal 2019 | Fiscal 2020 | | :----- | :---------- | :---------- | :---------- | | Same-store sales growth | 10% | 1% | 25% | [Introduction](index=4&type=section&id=Introduction) MarineMax is the largest U.S. recreational boat retailer, emphasizing premium brands and customer service with expanded marina and superyacht offerings - MarineMax operates **77 retail locations** across 21 states, selling new and used recreational boats, marine products, and offering repair, maintenance, financing, insurance, brokerage, and yacht charter services[17](index=17&type=chunk) - The acquisition of **SkipperBud's** in October 2020 significantly increased MarineMax's presence in the Great Lakes region and West Coast, and is expected to help decrease seasonality through increased marina/storage services[18](index=18&type=chunk) - The company's average new boat selling price in fiscal 2020 was approximately **$215,000**, significantly higher than the industry average of $56,000, reflecting a focus on premium brands[22](index=22&type=chunk)[41](index=41&type=chunk) Revenue Contribution by New Boat Manufacturer (Fiscal 2020) | Manufacturer | % of Revenue | | :----------- | :----------- | | Brunswick (Total) | 33% | | Sea Ray (Brunswick) | 15% | | Boston Whaler (Brunswick) | 16% | | Azimut | 9% | Same-Store Sales Growth | Fiscal Year | Growth | | :---------- | :----- | | 2018 | 10% | | 2019 | 1% | | 2020 | 25% | [Material Updates to Our Strategy](index=5&type=section&id=Material%20Updates%20to%20Our%20Strategy) The company's strategy focuses on expanding into superyacht brokerage, luxury yacht services, and marina operations through acquisitions and digital initiatives - Primary goal remains to enhance position as the nation's leading recreational boat and yacht retailer[25](index=25&type=chunk) - Broadened strategy to increase superyacht brokerage, luxury yacht services, and marina/storage services through acquisitions (**Fraser Yachts Group, Northrop & Johnson, SkipperBud's**) to potentially increase margins[25](index=25&type=chunk) - Continuing to strengthen digital initiatives, including the **Boatyard digital platform**, to offer full selection of boats, yachts, and charters, and expert team support virtually[26](index=26&type=chunk) [Development of the Company; Expansion of Business](index=5&type=section&id=Development%20of%20the%20Company%3B%20Expansion%20of%20Business) The company has grown significantly through numerous acquisitions of dealers and brokerage operations, alongside strategic new store openings and closures - Since March 1998, MarineMax has acquired **30 recreational boat dealers**, four boat brokerage operations, and two full-service yacht repair operations[27](index=27&type=chunk) - The company continuously enhances its business by providing a full range of services, extensive product lines, prime retail locations, a **'MarineMax One Price'** hassle-free sales approach, and high customer service[28](index=28&type=chunk) - MarineMax evaluates opportunities for expansion through acquisitions, new retail locations, and new product/service offerings, including contract manufacturing or vertical integration[29](index=29&type=chunk) - The company has opened **35 new retail locations** and closed 74 since March 1998, including 11 in the last three fiscal years, based on performance monitoring[30](index=30&type=chunk) - New product lines are added to offer migration paths for existing customers or fill product gaps, aiming for complementary offerings that do not negatively impact prominent brands[35](index=35&type=chunk) Acquisitions Since Fiscal Year 2011 | Acquired Companies | Date | Geographic Region | | :----------------- | :--- | :---------------- | | Treasure Island Marina, LLC | Feb 2011 | Florida Panhandle | | Bassett Marine, LLC | Sep 2012 | CT, RI, W. MA | | Parker Boat Company | Mar 2013 | Central Florida | | Ocean Alexander Yachts | Apr 2014 | Eastern United States | | Bahia Mar Marina | Jan 2016 | Florida Panhandle | | Russo Marine | Apr 2016 | E. MA, RI | | Hall Marine Group | Jan 2017 | NC, SC, GA | | Island Marine Center | Jan 2018 | New Jersey | | Tera Miranda | Apr 2018 | Oklahoma | | Bay Pointe Marina | Sep 2018 | Massachusetts | | Sail & Ski Center | Apr 2019 | Texas | | Fraser Yachts Group | Jul 2019 | US, Europe | | Boatyard, Inc. | Feb 2020 | Worldwide | | Northrop & Johnson | Jul 2020 | US, Europe | | SkipperBud's | Oct 2020 | Great Lakes, West Coast US | [U.S. Recreational Boating Industry](index=7&type=section&id=U.S.%20Recreational%20Boating%20Industry) The highly fragmented U.S. recreational boating industry presents consolidation opportunities for professionally managed companies like MarineMax - Retail sales of new and used boats, engines, trailers, equipment, and accessories accounted for approximately **$33.4 billion** of total sales in calendar 2019[24](index=24&type=chunk)[37](index=37&type=chunk) - The industry is highly fragmented, with many small, individually-owned dealers, creating opportunities for consolidation and competitive advantage for larger, professionally managed companies like MarineMax[24](index=24&type=chunk)[38](index=38&type=chunk) U.S. Recreational Boating Industry Retail Sales | Year | Retail Sales (USD Billions) | | :--- | :-------------------------- | | 2018 | $41.8 | | 2019 | $43.1 | Total Powerboats Sold | Year | Units Sold | | :--- | :--------- | | 2018 | 206,900 | | 2019 | 201,400 | [Products and Services](index=7&type=section&id=Products%20and%20Services) The company offers a comprehensive suite of products and services, with new boat sales from premium brands constituting the largest revenue segment - MarineMax offers new and used recreational boats, related marine products (engines, trailers, parts, accessories), and services such as financing, insurance, extended service contracts, maintenance, repair, slip/storage, brokerage, and yacht charter[39](index=39&type=chunk) - New boat sales, primarily from Brunswick (Sea Ray, Boston Whaler, Harris) and Azimut-Benetti Group, accounted for **70.2% of fiscal 2020 revenue**, totaling **$1.06 billion**[40](index=40&type=chunk) - Used boat sales generated **15.1% ($228 million)** of fiscal 2020 revenue, with 45.1% being Brunswick models, primarily sourced through customer trade-ins and marketed digitally[51](index=51&type=chunk)[52](index=52&type=chunk) - Maintenance, repair, and storage services accounted for **4.8% ($72 million)** of fiscal 2020 revenue, including repair services ($47 million), parts for repairs ($10 million), and storage rentals ($15 million)[62](index=62&type=chunk) - F&I products (financing, insurance, extended service contracts) generated **2.7% ($41 million)** of fiscal 2020 revenue, providing competitive financing and additional coverage[67](index=67&type=chunk) - Brokerage sales, including superyacht brokerage through Fraser Yachts and Northrop & Johnson, contributed **2.6% ($39 million)** of fiscal 2020 revenue[68](index=68&type=chunk) - Yacht charter services, including a business in the British Virgin Islands and services through Fraser Yachts and Northrop & Johnson, accounted for **1.6% ($24 million)** of fiscal 2020 revenue[72](index=72&type=chunk) Revenue Contribution by Product/Service (Fiscal 2020) | Category | % of Revenue | | :------------------------------------ | :----------- | | New boat sales | 70.2% | | Used boat sales | 15.1% | | Maintenance, repair, storage, and charter services | 6.4% | | Finance and insurance products | 2.7% | | Parts and accessories | 3.0% | | Brokerage sales | 2.6% | [Retail Locations](index=12&type=section&id=Retail%20Locations) MarineMax operates 77 retail locations across 21 states, many of which are waterfront properties in popular boating areas - Operates **77 retail locations** across 21 states, including Alabama, California, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Washington, and Wisconsin[74](index=74&type=chunk) - Each location generally includes an indoor showroom, outdoor display area, business office for F&I, maintenance/repair facilities, and often boat storage services[74](index=74&type=chunk) - Many retail locations are waterfront properties on popular boating locations, serving as in-water showrooms and enabling immediate in-water demonstrations[75](index=75&type=chunk) [Operations](index=12&type=section&id=Operations) The company employs a decentralized dealership management approach with centralized administrative functions, focusing on a lifestyle-oriented sales philosophy - Dealership operations are generally decentralized, with local general managers overseeing day-to-day activities, supported by regional/district presidents and centralized administrative functions[76](index=76&type=chunk) - Sales philosophy focuses on the boating lifestyle, hassle-free **'One Price' sales**, customer education, and post-sale events like MarineMax Getaways!®[77](index=77&type=chunk)[80](index=80&type=chunk)[83](index=83&type=chunk) - Digital marketing is crucial, with most leads coming through **MarineMax.com** and social media, complemented by online experience events and traditional boat shows[81](index=81&type=chunk)[82](index=82&type=chunk) - New boat inventory is primarily purchased directly from manufacturers, with **Brunswick and Azimut** accounting for significant portions of revenue (**33% and 9%** respectively in FY2020)[85](index=85&type=chunk)[86](index=86&type=chunk) - The company utilizes a **$440 million Credit Facility** for working capital and inventory financing, with interest assistance from manufacturers classified as a reduction of inventory cost[91](index=91&type=chunk)[93](index=93&type=chunk) - A comprehensive management information system integrates purchasing, inventory, receivables, payables, financial reporting, budgeting, and sales management across all dealerships, enhancing efficiency and cross-selling[94](index=94&type=chunk) [Human Capital Resources](index=14&type=section&id=Human%20Capital%20Resources) The company employs 1,736 people, prioritizing training through MarineMax University and using performance-based compensation to retain talent - The company is not party to any collective bargaining agreements and considers employee relations excellent[95](index=95&type=chunk) - **MarineMax University (MMU)** provides modular, instructor-led, and online training on retail philosophies, sales, customer service, F&I, accounting, leadership, and human resources[96](index=96&type=chunk) - Compensation includes competitive base salaries, performance-based cash incentive bonuses (based on pretax income, aged inventory, financial targets, customer satisfaction), and stock-based awards to align with shareholder value[99](index=99&type=chunk) Employee Count (September 30, 2020) | Category | Number | Percentage | | :------- | :----- | :--------- | | Total Employees | 1,736 | 100% | | Store-level Operations | 1,626 | 94% | | Corporate Administration & Management | 110 | 6% | [Trademarks and Service Marks](index=15&type=section&id=Trademarks%20and%20Service%20Marks) MarineMax holds numerous registered trade names and trademarks in the U.S. and internationally to protect its brand and services - Registered trade names and trademarks in the U.S. include **"MarineMax," "MarineMax Getaways!®," "MarineMax Care," "United by Water,"** and others[100](index=100&type=chunk) - International registrations for "MarineMax" and "United by Water" exist in the European Union, China, Australia, Brazil, India, and Cuba, and in Canada for several marks[100](index=100&type=chunk) [Seasonality and Weather Conditions](index=15&type=section&id=Seasonality%20and%20Weather%20Conditions) The business is highly seasonal, with sales peaking in the summer quarters and vulnerable to adverse weather patterns - Business is highly seasonal, with average revenue distribution for quarters ending December 31, March 31, June 30, and September 30 being approximately **20%, 22%, 32%, and 26%** of annual revenues, respectively[101](index=101&type=chunk) - Lower sales and higher inventory levels are typical in Q1 and Q2 (December 31 and March 31), except in Florida, with January boat shows stimulating sales[101](index=101&type=chunk) - Adverse weather (prolonged winter, drought, excessive rain, hurricanes) can limit boating access, render it dangerous, or shorten selling seasons, impacting demand and operations[102](index=102&type=chunk) - Expansion into boat storage may help reduce seasonality and cyclicality[101](index=101&type=chunk) [Governmental Regulations, including Environmental Regulations](index=15&type=section&id=Governmental%20Regulations%2C%20including%20Environmental%20Regulations) Operations are subject to extensive regulations, including environmental laws governing emissions, storage tanks, and hazardous substances - Operations are subject to extensive foreign, federal, state, and local regulations, including consumer protection, privacy, workers' safety, and environmental laws (air, water, soil)[103](index=103&type=chunk)[104](index=104&type=chunk) - Compliance with **EPA emissions standards** for marine engines is critical; increased costs or manufacturer non-compliance could adversely affect the business[105](index=105&type=chunk) - The company owns and operates underground and above-ground storage tanks for petroleum products, subject to regulations requiring testing, upgrading, and remediation of contamination[106](index=106&type=chunk) - Business involves handling and disposal of hazardous substances (motor oil, paint thinner, fuels), subject to federal, state, and local regulations[107](index=107&type=chunk) - No material environmental liabilities are currently anticipated, and compliance costs are not expected to have a material adverse effect[108](index=108&type=chunk) [Environmental Responsibility](index=16&type=section&id=Environmental%20Responsibility) The company is committed to environmental responsibility through its formal policy, partnerships with sustainable manufacturers, and high operational standards - Commitment to environmental responsibility is outlined in its **'Environmental Policy,'** reviewed annually by the Board of Directors[111](index=111&type=chunk)[112](index=112&type=chunk) - Seeks manufacturers committed to sustainability and low-emissions, such as **Mercury Marine** (recognized for sustainable products and practices) and **Azimut Yachts** (ISO 14001 certified and RINA Green Plus notation)[113](index=113&type=chunk) - Makes targeted investments in new technology and research to reduce emissions and support environmental stewardship in the marine industry[114](index=114&type=chunk) - Fraser Yachts Group signed the **Pact for Energy Transition** with the Monaco Government to improve energy efficiency and promote renewable energy[114](index=114&type=chunk) - Several Florida locations are designated **'Clean Marinas'** by the Florida Department of Environmental Protection, recognizing environmental best practices[115](index=115&type=chunk) [Corporate Social Responsibility](index=17&type=section&id=Corporate%20Social%20Responsibility) The company's social responsibility is guided by its Human Rights Policy, core values, and community support initiatives - Commitment to social responsibility is outlined in its **'Human Rights Policy,'** reviewed annually by the Board of Directors[116](index=116&type=chunk) - Guided by core values: honesty, trust, loyalty, professionalism, consistency, doing what is right, treating others well, and long-term consideration[116](index=116&type=chunk) - Supports local communities through team member volunteering and charitable donations to **Habitat for Humanity**[116](index=116&type=chunk) - Supports **4ocean's mission** to end plastic pollution by actively removing trash from oceans and coastlines[116](index=116&type=chunk) [Product Liability](index=17&type=section&id=Product%20Liability) MarineMax mitigates potential product liability claims through third-party insurance, supplementing manufacturers' coverage - Products sold or serviced may expose the company to potential liabilities for personal injury or property damage claims[117](index=117&type=chunk) - Maintains third-party product liability insurance, supplementing manufacturers' insurance, which is believed to be adequate[117](index=117&type=chunk) - Risk of claims exceeding insurance coverage, not being covered, or resulting in negative publicity and increased premiums[117](index=117&type=chunk) [Executive Officers](index=18&type=section&id=Executive%20Officers) The executive team possesses extensive experience in the marine industry and within the company's operations - William H. McGill Jr. served as CEO from 1998 to 2018 and Chairman since 1998, with extensive experience in the company and marine industry[118](index=118&type=chunk) - William Brett McGill, son of William H. McGill Jr., became CEO in October 2018 and President in October 2017, having held various leadership roles within MarineMax since 1996[119](index=119&type=chunk) Executive Officers (as of December X, 2020) | Name | Age | Position | | :------------------ | :-- | :------------------------------------------------ | | William H. McGill Jr. | 76 | Executive Chairman of the Board and Director | | William Brett McGill | 52 | Chief Executive Officer, President and Director | | Michael H. McLamb | 55 | Executive Vice President, Chief Financial Officer, Secretary, and Director | | Charles A. Cashman | 57 | Executive Vice President and Chief Revenue Officer | | Anthony E. Cassella, Jr | 51 | Vice President and Chief Accounting Officer | [Item 1A. Risk Factors](index=19&type=section&id=Item%201A%20Risk%20Factors) The company faces risks from manufacturer dependence, competition, seasonality, acquisition integration, financing availability, and economic conditions [Competition and Industry Conditions Risk Factors](index=19&type=section&id=Competition%20and%20Industry%20Conditions%20Risk%20Factors) Success is heavily reliant on key manufacturers like Brunswick and Azimut, while seasonality and intense competition pose ongoing challenges - Significant dependence on **Brunswick (33% of FY2020 revenue)** and **Azimut-Benetti Group (9% of FY2020 revenue)** for product quality and supply[124](index=124&type=chunk) - Boat manufacturers, particularly Brunswick and Azimut, exercise substantial control over dealers through exclusive agreements, specified territories, and approval rights, with non-compliance potentially leading to termination or reduced incentives[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[132](index=132&type=chunk) - Business is highly seasonal, with lower sales and higher inventory in Q1 and Q2 (Dec 31, Mar 31), except in Florida[133](index=133&type=chunk) - Reliance on manufacturer rebates and incentives; any changes could reduce margins and competitive position[134](index=134&type=chunk) - Faces intense competition from single-location dealers, national specialty marine stores, online retailers, and private used boat sales in a highly fragmented industry[136](index=136&type=chunk)[137](index=137&type=chunk) - Difficulty in forecasting optimal inventory levels due to changing economic conditions, consumer preferences, new model deliveries, and timing of large boat/yacht sales can negatively impact inventory costs and operating margins[139](index=139&type=chunk) [Strategy Risk Factors](index=21&type=section&id=Strategy%20Risk%20Factors) Growth strategies involving acquisitions, new business lines, and digital expansion carry inherent integration, operational, and international risks - Failure to successfully implement strategies to grow higher-margin businesses (F&I, parts, service, yacht charter, brokerage, boat storage) or digital sales could adversely affect performance[140](index=140&type=chunk) - Success of acquisitions depends on identifying suitable candidates, attractive pricing, and effective integration, which can place significant demands on management and infrastructure[141](index=141&type=chunk) - Pursuing acquisitions in new lines of business (e.g., contract manufacturing, vertical integration, marinas) introduces risks related to inexperience, corporate image, financial uncertainties, and different legal/operational risks[142](index=142&type=chunk)[143](index=143&type=chunk) - Growth through new locations and product offerings depends on obtaining additional distribution rights, securing suitable facilities, hiring qualified personnel, and effective integration, with potential for increased costs and adverse impact on profitability[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Digital channels are subject to risks including technology changes, cybersecurity, consumer privacy concerns, regulatory changes, and service provider failures[151](index=151&type=chunk) - International operations (e.g., sales of yachts from Italy, Poland, China; Fraser Yachts, Northrop & Johnson) expose the company to political, economic, foreign currency, and trade policy risks (e.g., tariffs)[152](index=152&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [Operational Risk Factors](index=24&type=section&id=Operational%20Risk%20Factors) Operational vulnerabilities include dependence on financing, fuel costs, insurance availability, brand perception, and retention of key personnel - Availability and cost of borrowed funds (e.g., Credit Facility) directly affect the ability to obtain and maintain boat inventory and customers' willingness to finance purchases[156](index=156&type=chunk)[159](index=159&type=chunk) - Higher energy and fuel costs can negatively impact boat sales, demand for parts/accessories, and increase inventory costs due to petroleum-based raw materials[160](index=160&type=chunk) - The ability of customers to secure reasonably affordable boat insurance is critical for sales[161](index=161&type=chunk) - Yacht charter business risks include difficulty finding purchasers for charter fleet yachts, insufficient vacation charter customers, and safety concerns (e.g., catastrophic disaster, adverse weather, mechanical failure, health issues like COVID-19)[162](index=162&type=chunk)[163](index=163&type=chunk) - Dependence on income from F&I products (customer financing, insurance, extended service contracts); changes in lender agreements, regulations, or manufacturer warranties could reduce profit margins[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Success is dependent on positive perceptions of the MarineMax brand; negative publicity or incidents could adversely affect sales and team member retention[168](index=168&type=chunk) - Operations are dependent on key personnel and team members; inability to attract, train, and retain qualified staff, or inadequate succession planning, poses a risk[169](index=169&type=chunk) [Environmental and Geographic Risk Factors](index=26&type=section&id=Environmental%20and%20Geographic%20Risk%20Factors) The business is vulnerable to weather, climate change, and a high concentration of sales in Florida, alongside extensive environmental regulations - Weather and environmental conditions (droughts, excessive rain, hurricanes) can adversely impact operating results by limiting boating access or rendering it dangerous[171](index=171&type=chunk) - Climate change risks include more frequent and severe weather events, rising sea levels, long-term shifts in climate patterns, and related social/economic disruptions[172](index=172&type=chunk) - Operations are subject to extensive federal, state, and local environmental regulations (e.g., EPA emissions, storage tanks, hazardous substances), with potential for increased compliance costs or liabilities from contamination[175](index=175&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[181](index=181&type=chunk) - Potential for new state licensing requirements for recreational boat operation could discourage first-time buyers and limit future sales[182](index=182&type=chunk) Revenue from Florida | Fiscal Year | % of Revenue from Florida | | :---------- | :------------------------ | | 2018 | 51% | | 2019 | 54% | | 2020 | 54% | [General Risk Factors](index=28&type=section&id=General%20Risk%20Factors) General risks include economic downturns, the COVID-19 pandemic, adverse tax policies, cybersecurity threats, and interest rate fluctuations - General economic conditions and consumer spending patterns, especially for luxury goods, can materially adversely affect business, leading to reduced acquisitions, store closures, and inventory cuts during downturns[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk) - The **COVID-19 pandemic** has caused adverse impacts, including reduced demand, operational inefficiencies, and temporary closures, with the full significance and duration of its impact remaining uncertain[186](index=186&type=chunk)[188](index=188&type=chunk) - Adverse federal or state tax policies, such as luxury taxes on boat purchases or increased tax rates, can negatively affect sales[189](index=189&type=chunk) - Increased cybersecurity requirements and threats pose risks to information systems, networks, data, and third-party service providers, potentially leading to business disruptions, data breaches, reputational damage, and regulatory actions[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - The company's stock repurchase plans (authorized up to **10 million shares** through March 2022) are subject to uncertainties and may not successfully mitigate dilution[195](index=195&type=chunk)[196](index=196&type=chunk) - MarineMax has never paid cash dividends and has no current intention to do so, planning to retain earnings for business growth[197](index=197&type=chunk) - Material increases in interest rates (e.g., Federal Reserve policy changes, LIBOR transition) could negatively impact customer willingness to purchase products and increase financing costs[198](index=198&type=chunk)[199](index=199&type=chunk) [Item 1B. Unresolved Staff Comments](index=30&type=section&id=Item%201B%20Unresolved%20Staff%20Comments) This section indicates that there are no unresolved staff comments from the SEC [Item 2. Properties](index=30&type=section&id=Item%202%20Properties) The company operates 77 retail locations, comprising 28 owned and 55 leased properties across the U.S. and British Virgin Islands - MarineMax leases its corporate offices in Clearwater, Florida, and **55 other properties** in the U.S. and British Virgin Islands, often with multi-year renewal options and responsibility for taxes, utilities, and maintenance[201](index=201&type=chunk) - The company owns **28 properties** associated with its retail locations and four additional owned retail locations that are currently closed[201](index=201&type=chunk) - Fraser Yachts Group and Northrop & Johnson lease offices in the United States (Ft. Lauderdale, San Diego) and Europe (Monaco, France, Italy, Spain, UK)[208](index=208&type=chunk) - The table details 77 operational retail locations across 21 states and the British Virgin Islands, indicating ownership status, approximate square footage, facilities (retail, service, marina, storage), operation start date, and waterfront access[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk) [Item 3. Legal Proceedings](index=33&type=section&id=Item%203%20Legal%20Proceedings) The company is involved in ordinary course legal actions not expected to have a material adverse effect on its financial condition - The company is party to various legal actions in the ordinary course of business[209](index=209&type=chunk) - As of September 30, 2020, these legal matters are not expected to have a material adverse effect on consolidated financial condition, results of operations, or cash flows[209](index=209&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to MarineMax, Inc PART II [Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=34&type=section&id=Item%205.%20Market%20for%20the%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock (HZO) is listed on the NYSE, with an active share repurchase plan and no history of paying cash dividends - Common stock is listed on the New York Stock Exchange under the symbol **HZO**[212](index=212&type=chunk) - As of November 25, 2020, there were approximately **100 record holders** and **9,400 beneficial owners** of common stock[213](index=213&type=chunk) - The company has never declared or paid cash dividends and plans to retain earnings for business growth[214](index=214&type=chunk) - **44,927 shares** purchased in September 2020 were attributable to shares tendered by employees for payment of withholding taxes on restricted stock/unit awards[216](index=216&type=chunk) Common Stock High and Low Sale Prices (2018-2020) | Period | High ($) | Low ($) | | :----------------------------- | :------- | :------ | | 2018 Q4 | 26.11 | 16.57 | | 2019 Q1 | 21.09 | 17.11 | | 2019 Q2 | 19.99 | 15.34 | | 2019 Q3 | 17.33 | 13.73 | | 2019 Q4 | 18.76 | 14.56 | | 2020 Q1 | 23.15 | 7.25 | | 2020 Q2 | 23.00 | 7.80 | | 2020 Q3 | 34.06 | 21.93 | | 2020 Q4 (through Nov 25, 2020) | 35.22 | 25.54 | Issuer Purchases of Equity Securities (Q3 2020) | Period | Total Shares Purchased | Average Price Paid per Share ($) | Total Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Shares Remaining Under Plans or Programs | | :-------------------------------- | :--------------------- | :------------------------------- | :--------------------------------------------------- | :---------------------------------------------- | | July 1, 2020 to July 31, 2020 | — | — | — | 9,919,764 | | August 1, 2020 to August 31, 2020 | — | — | — | 9,919,764 | | September 1, 2020 to September 30, 2020 | 44,927 | 25.67 | — | 9,919,764 | | **Total** | **44,927** | **25.67** | **—** | **9,919,764** | [Item 6. Selected Financial Data](index=36&type=section&id=Item%206%20Selected%20Financial%20Data) The company achieved significant growth in fiscal 2020, with revenue reaching $1.510 billion and net income more than doubling to $74.6 million Selected Financial Data (Fiscal Years Ended September 30, in thousands) | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | | :-------------------------------- | :----- | :----- | :----- | :----- | :----- | | **Statement of Operations Data:** | | | | | | | Revenue | $942,050 | $1,052,320 | $1,177,371 | $1,237,153 | $1,509,713 | | Gross profit | $226,028 | $265,315 | $298,233 | $322,832 | $398,713 | | Income from operations | $40,252 | $45,289 | $63,183 | $60,532 | $106,715 | | Net income | $22,582 | $23,547 | $39,312 | $35,985 | $74,634 | | Diluted EPS | $0.91 | $0.95 | $1.71 | $1.57 | $3.37 | | **Other Data (as of year-end):** | | | | | | | Number of retail locations | 56 | 62 | 63 | 59 | 57 | | Sales per store | $18,539 | $18,364 | $19,873 | $19,554 | $25,780 | | Same-store sales growth | 22% | 5% | 10% | 1% | 25% | | **Balance Sheet Data:** | | | | | | | Working capital | $159,232 | $139,069 | $179,276 | $155,690 | $230,793 | | Total assets | $546,688 | $639,990 | $640,538 | $784,083 | $775,319 | | Goodwill and other intangible assets, net | $10,000 | $26,005 | $27,491 | $64,077 | $84,293 | | Total shareholders' equity | $312,473 | $302,198 | $353,092 | $368,819 | $455,397 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=37&type=section&id=Item%207%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Fiscal 2020 revenue grew 22% to $1.510 billion, driven by 25% comparable-store sales growth and contributions from recent acquisitions [Overview](index=37&type=section&id=Overview) The company achieved over $1.5 billion in revenue in fiscal 2020, expanding its luxury yacht and marina services through recent acquisitions - MarineMax is the largest recreational boat and yacht retailer in the U.S., with fiscal 2020 revenue exceeding **$1.5 billion**, operating 77 retail locations in 21 states[226](index=226&type=chunk) - The company's offerings include new and used boats, marine products, financing, insurance, maintenance, brokerage, yacht charter, and slip/storage services[226](index=226&type=chunk) - Recent acquisitions include **Fraser Yachts Group, Northrop & Johnson** (superyacht brokerage/luxury services), and **SkipperBud's** (sales, brokerage, service, marina/storage)[226](index=226&type=chunk) - General economic conditions and consumer discretionary spending, especially for luxury goods, significantly impact operating results. **Florida accounted for approximately 54% of revenue** in fiscal 2019 and 2020[228](index=228&type=chunk) - The **COVID-19 pandemic** led to temporary department/location closures and operational modifications, with the full impact on business and duration remaining undetermined[225](index=225&type=chunk) - Acquisitions remain an important strategy, with three completed in FY2018, two in FY2019, and two in FY2020[227](index=227&type=chunk) [Application of Critical Accounting Policies](index=38&type=section&id=Application%20of%20Critical%20Accounting%20Policies) Critical accounting policies involve significant estimates for revenue recognition, inventory valuation, goodwill impairment, and income taxes - Revenue from boat, motor, and trailer sales is recognized upon transfer of control to the customer (acceptance/delivery)[234](index=234&type=chunk) - Revenue from parts and service operations (maintenance/repairs) is recognized over time as services are performed, using an input method based on labor hours[236](index=236&type=chunk) - Vendor interest assistance from manufacturers is classified as a reduction of inventory cost and related cost of sales, not netted against interest expense[238](index=238&type=chunk) - Inventories are stated at the lower of cost (specific-identification for boats, average cost for parts) or net realizable value, with a valuation allowance of **$2.4 million** as of September 30, 2020[239](index=239&type=chunk) - Goodwill and other intangible assets increased by **$20.2 million** in FY2020 due to acquisitions (Northrop & Johnson, Boatyard), totaling **$84.3 million**. Goodwill is tested for impairment annually, with a qualitative assessment in FY2020 indicating no impairment[240](index=240&type=chunk) - Long-lived assets are reviewed for impairment when circumstances indicate carrying value may not be recoverable, measured by comparison to undiscounted future net cash flows. No impairment was believed to exist as of September 30, 2020[241](index=241&type=chunk)[242](index=242&type=chunk) - Stock-based compensation is valued using the Black-Scholes model for options and fair value on grant date for restricted stock, recognized over the service period[243](index=243&type=chunk) - Income taxes involve deferred tax assets/liabilities, with recoverability of deferred tax assets dependent on future taxable income. The **CARES Act** in March 2020 did not result in material adjustments to the FY2020 income tax provision[244](index=244&type=chunk)[245](index=245&type=chunk)[248](index=248&type=chunk)[250](index=250&type=chunk) [Recent Accounting Pronouncements](index=41&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to Note 3 of the Consolidated Financial Statements for details on recent accounting pronouncements - Refers to Note 3 of the Notes to the Consolidated Financial Statements for details on recent accounting pronouncements[252](index=252&type=chunk) [Results of Operations](index=41&type=section&id=Results%20of%20Operations) Fiscal 2020 revenue increased 22.0% to $1.510 billion, driven by 25% comparable-store sales growth, resulting in a doubling of net income - Fiscal Year Ended September 30, 2020, Compared with Fiscal Year Ended September 30, 2019:[254](index=254&type=chunk) - Revenue increased by **$272.6 million (22.0%)** to $1.510 billion, driven by a **25% increase** in comparable-store sales[254](index=254&type=chunk) - Gross profit increased by **$75.9 million (23.5%)** to $398.7 million, with gross profit margin increasing to **26.4%** (from 26.1%) due to higher-margin businesses and acquisitions[255](index=255&type=chunk) - Selling, general and administrative expenses increased by **$29.7 million (11.3%)** to $292.0 million but decreased as a percentage of revenue to **19.3%** (from 21.2%)[256](index=256&type=chunk) - Interest expense decreased by **$2.3 million (19.9%)** to $9.3 million, primarily due to lower interest rates and less overall borrowings[258](index=258&type=chunk) - Income tax expense increased by **$9.8 million (75.9%)** to $22.8 million, with the effective income tax rate decreasing to **23.4%** (from 26.5%) due to excess equity compensation[259](index=259&type=chunk) - Fiscal Year Ended September 30, 2019, Compared with Fiscal Year Ended September 30, 2018:[260](index=260&type=chunk) - Revenue increased by **$59.8 million (5.1%)** to $1.237 billion, with a **1% increase** in comparable-store sales[260](index=260&type=chunk) - Gross profit increased by **$24.6 million (8.2%)** to $322.8 million, with gross profit margin increasing to **26.1%** (from 25.3%) due to higher-margin businesses and the Fraser Yachts Group acquisition[261](index=261&type=chunk) - Selling, general and administrative expenses increased by **$27.3 million (11.6%)** to $262.3 million, primarily due to acquisitions, new store openings, and marketing expenses[262](index=262&type=chunk) - Interest expense increased by **$1.7 million (16.9%)** to $11.6 million, primarily due to increased borrowings[263](index=263&type=chunk) - Income tax expense decreased by **$1.0 million (7.2%)** to $13.0 million, with the effective income tax rate increasing to **26.5%** (from 26.2%) due to increased tax expense from foreign jurisdictions[264](index=264&type=chunk) Financial Data as a Percentage of Revenue (Fiscal Years Ended September 30, in thousands) | Metric | 2018 | 2019 | 2020 | | :-------------------------------- | :----- | :----- | :----- | | Revenue | $1,177,371 (100.0%) | $1,237,153 (100.0%) | $1,509,713 (100.0%) | | Cost of sales | 879,138 (74.7%) | 914,321 (73.9%) | 1,111,000 (73.6%) | | Gross profit | 298,233 (25.3%) | 322,832 (26.1%) | 398,713 (26.4%) | | Selling, general and administrative expenses | 235,050 (20.0%) | 262,300 (21.2%) | 291,998 (19.3%) | | Income from operations | 63,183 (5.3%) | 60,532 (4.9%) | 106,715 (7.1%) | | Interest expense | 9,903 (0.8%) | 11,579 (0.9%) | 9,275 (0.6%) | | Income before income taxes | 53,280 (4.5%) | 48,953 (4.0%) | 97,440 (6.5%) | | Income tax provision | 13,968 (1.2%) | 12,968 (1.0%) | 22,806 (1.5%) | | Net income | $39,312 (3.3%) | $35,985 (3.0%) | $74,634 (5.0%) | [Quarterly Data and Seasonality](index=43&type=section&id=Quarterly%20Data%20and%20Seasonality) The business is highly seasonal, with lower sales in the winter quarters and vulnerability to adverse weather conditions - Business is highly seasonal, with lower sales and higher inventory levels in the quarterly periods ending December 31 and March 31, except in Florida[265](index=265&type=chunk) - Public boat and recreation shows in January typically stimulate boat sales and help reduce inventory levels[265](index=265&type=chunk) - Adverse weather patterns (prolonged winter, drought, excessive rain, hurricanes) can negatively affect results by limiting boating access or rendering it dangerous, curtailing customer demand[266](index=266&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by cash from operations and a $440 million Credit Facility, with a significant increase in operating cash flow in fiscal 2020 - Cash needs are primarily for working capital (inventory), off-season liquidity, and growth through acquisitions, financed by cash from operations and the Credit Facility[267](index=267&type=chunk)[268](index=268&type=chunk) - Cash provided by operating activities in FY2020 was primarily due to decreases in inventory and accounts receivable, and increases in accrued expenses and accounts payable[269](index=269&type=chunk) - Cash used in investing activities in FY2020 was mainly for property and equipment purchases and business acquisitions[270](index=270&type=chunk) - Cash used in financing activities in FY2020 was primarily due to a decrease in net short-term borrowings and common stock repurchases[272](index=272&type=chunk) - The company has a **$440 million Credit Facility** with Wells Fargo and other banks, expiring May 2023, for working capital and inventory financing, with **$82.0 million available** as of September 30, 2020[273](index=273&type=chunk)[276](index=276&type=chunk) - Indebtedness for inventory and working capital was **$144.4 million** as of September 30, 2020, with an interest rate of approximately **4.2%**[276](index=276&type=chunk) - A mortgage facility of approximately **$7.4 million**, secured by one retail location, had an interest rate of **2.25%** as of September 30, 2020[277](index=277&type=chunk) Cash Flow Summary (Fiscal Years Ended September 30, in thousands) | Cash Flow Activity | 2018 | 2019 | 2020 | | :-------------------------------- | :----- | :----- | :----- | | Net cash provided by (used in) operating activities | $70,414 | $(12,426) | $304,675 | | Net cash used in investing activities | $(23,315) | $(56,334) | $(30,109) | | Net cash provided (used in) financing activities | $(40,229) | $58,630 | $(158,129) | [Commitments and Commercial Commitments](index=45&type=section&id=Commitments%20and%20Commercial%20Commitments) Total contractual obligations and commercial commitments amounted to $215.6 million, with the majority due within one year - Estimates of future interest payments for short-term borrowings are excluded from the table, as amounts are contingent on outstanding balances and variable interest rates (approx. 4.2% as of Sep 30, 2020)[280](index=280&type=chunk) - Other liabilities primarily consist of estimated claims for workers' compensation insurance and future contingent acquisition consideration payments[280](index=280&type=chunk) Contractual Obligations and Commercial Commitments (as of September 30, 2020, in thousands) | Payments Due by Period Ending September 30, | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More Than 5 Years | | :------------------------------------------ | :---- | :--------------- | :-------- | :-------- | :---------------- | | Short-term Borrowings | $144,393 | $144,393 | — | — | — | | Long-term Debt | 7,850 | 507 | 1,445 | 992 | 4,906 | | Other Liabilities | 3,101 | 1,663 | 1,438 | — | — | | Operating Leases | 60,241 | 9,433 | 14,312 | 8,728 | 27,768 | | **Total** | **$215,585** | **$155,996** | **$17,195** | **$9,720** | **$32,674** | [Off-Balance Sheet Arrangements](index=45&type=section&id=Off-Balance%20Sheet%20Arrangements) The company does not engage in off-balance sheet arrangements or use special purpose entities for financing or hedging - No transactions, arrangements, or relationships with unconsolidated entities are likely to materially affect financial condition, liquidity, or capital resources[281](index=281&type=chunk) - Does not use special purpose entities for off-balance sheet financing, liquidity, or risk support, nor does it engage in hedging or R&D services that create unreflected liabilities[281](index=281&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=45&type=section&id=Item%207A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exposed to interest rate risk from variable-rate debt and foreign currency exchange risk from international purchases - All short-term debt bears a variable interest rate tied to LIBOR. A hypothetical **100 basis point increase** in interest rates would increase annual pre-tax interest expense by approximately **$1.4 million**[282](index=282&type=chunk) - Purchases from European and Chinese manufacturers are transacted in U.S. dollars, exposing the company to foreign currency exchange rate risk that can impact retail prices, revenue, cost of goods sold, cash flows, and earnings[283](index=283&type=chunk) - The company is not currently engaged in foreign currency exchange hedging transactions[283](index=283&type=chunk) - Net revenues from non-U.S. dollar functional currencies were **less than 2%** of total revenues in fiscal 2020[284](index=284&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=46&type=section&id=Item%208%20Financial%20Statements%20and%20Supplementary%20Data) This section refers to the consolidated financial statements, notes, and the independent auditor's report, commencing on page F-1 - Refers to the financial statements, notes, and the report thereon, commencing on page F-1 of this report, which are incorporated herein by reference[285](index=285&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=46&type=section&id=Item%209%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section states that there have been no changes in or disagreements with accountants on accounting and financial disclosure [Item 9A. Controls and Procedures](index=46&type=section&id=Item%209A%20Controls%20and%20Procedures) Management evaluated disclosure controls and internal control over financial reporting as effective at a reasonable assurance level - CEO and CFO evaluated disclosure controls and procedures as **effective** at the reasonable assurance level as of September 30, 2020[288](index=288&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2020[289](index=289&type=chunk) - Control systems provide only **reasonable, not absolute, assurance** and have inherent limitations, such as faulty judgments, simple errors, collusion, or management override[290](index=290&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of September 30, 2020, based on COSO criteria[292](index=292&type=chunk) - **Northrop & Johnson's** internal control over financial reporting was excluded from management's assessment due to its acquisition in 2020, representing 1% of total assets and revenues[293](index=293&type=chunk) - **KPMG LLP**, the independent registered public accounting firm, audited and expressed an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of September 30, 2020[294](index=294&type=chunk)[297](index=297&type=chunk) [Item 9B. Other Information](index=50&type=section&id=Item%209B%20Other%20Information) This section states that there is no other information to report PART III [Item 10. Directors, Executive Officers and Corporate Governance](index=50&type=section&id=Item%2010%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the 2021 Proxy Statement - Information on directors and corporate governance is incorporated by reference from the definitive proxy statement for the 2021 Annual Meeting of Shareholders[308](index=308&type=chunk) - Information on executive officers is included in Item 1. Business[308](index=308&type=chunk) - A **"Code of Ethics for the CEO and Senior Financial Officers"** is adopted and available on the company's website, with amendments or waivers disclosed there[308](index=308&type=chunk)[309](index=309&type=chunk) [Item 11. Executive Compensation](index=50&type=section&id=Item%2011%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2021 Proxy Statement - Information on executive compensation is incorporated by reference from the 2021 Proxy Statement[310](index=310&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=50&type=section&id=Item%2012%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the 2021 Proxy Statement - Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the 2021 Proxy Statement[311](index=311&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=50&type=section&id=Item%2013%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions and director independence is incorporated by reference from the 2021 Proxy Statement - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the 2021 Proxy Statement[312](index=312&type=chunk) [Item 14. Principal Accountant Fees and Services](index=50&type=section&id=Item%2014%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2021 Proxy Statement[313](index=313&type=chunk) PART IV [Item 15. Exhibits, Financial Statement Schedules](index=50&type=section&id=Item%2015%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the 10-K report - Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this report[315](index=315&type=chunk) - No financial statement schedules are included as they are not applicable, not required, or information is included in consolidated financial statements/notes[315](index=315&type=chunk) - Exhibits include various agreements (e.g., employment, sales and service, loan and security), stock plans, certifications (CEO, CFO), and Inline XBRL documents[316](index=316&type=chunk)[317](index=317&type=chunk) - Certain information in exhibits has been omitted and filed separately with the SEC for confidential treatment[318](index=318&type=chunk) SIGNATURES [SIGNATURES](index=53&type=section&id=SIGNATURES) The report is duly signed by principal executive, financial, and accounting officers, as well as directors, as of December 2, 2020 - The report is signed by **W. Brett McGill** (Chief Executive Officer and President) and **Michael H. McLamb** (Executive Vice President, Chief Financial Officer, Secretary and Director) on December 2, 2020[321](index=321&type=chunk)[322](index=322&type=chunk) - Other directors and officers, including **William H. McGill Jr.** (Executive Chairman of the Board), also signed the report[322](index=322&type=chunk) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS [Report of Independent Registered Public Accounting Firm](index=55&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued unqualified opinions on the company's consolidated financial statements and the effectiveness of its internal control over financial reporting - **KPMG LLP** issued an **unqualified opinion** on MarineMax's consolidated financial statements for the three-year period ended September 30, 2020, stating they present fairly in all material respects, in conformity with U.S. GAAP[326](index=326&type=chunk) - **KPMG LLP** also issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of September 30, 2020, based on COSO criteria[327](index=327&type=chunk) - The audit of internal control over financial reporting excluded an evaluation of **Northrop & Johnson's** internal control due to its acquisition in 2020, which represented 1% of total assets and revenues[299](index=299&type=chunk) - The company changed its accounting method for leases (effective Oct 1, 2019) and revenue (effective Oct 1, 2018) due to the adoption of ASU 2016-02 and ASU 2014-09, respectively[328](index=328&type=chunk) [Consolidated Balance Sheets](index=56&type=section&id=Consolidated%20Balance%20Sheets) Total assets were $775.3 million as of September 30, 2020, with a significant increase in cash and decrease in inventories and short-term borrowings Consolidated Balance Sheets (Amounts in thousands) | ASSETS | Sep 30, 2019 | Sep 30, 2020 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $38,511 | $155,493 | | Accounts receivable, net | $42,398 | $40,195 | | Inventories, net | $477,468 | $298,002 | | Prepaid expenses and other current assets | $10,206 | $9,637 | | Total current assets | $568,583 | $503,327 | | Property and equipment, net | $144,298 | $141,934 | | Operating lease right-of-use assets, net | — | $37,991 | | Goodwill and other intangible assets, net | $64,077 | $84,293 | | Other long-term assets | $7,125 | $7,774 | | **Total assets** | **$784,083** | **$775,319** | | **LIABILITIES AND SHAREHOLDERS' EQUITY** | | | | Accounts payable | $33,674 | $37,343 | | Contract liabilities (customer deposits) | $24,305 | $31,821 | | Accrued expenses | $42,849 | $52,123 | | Current operating lease liabilities | — | $6,854 | | Short-term borrowings | $312,065 | $144,393 | | Total current liabilities | $412,893 | $272,534 | | Noncurrent operating lease liabilities | — | $33,473 | | Deferred tax liabilities, net | $1,142 | $4,509 | | Long-term debt, net of current maturities | — | $7,343 | | Other long-term liabilities | $1,229 | $2,063 | | **Total liabilities** | **$415,264** | **$319,922** | | **SHAREHOLDERS' EQUITY** | | | | Common stock | $28 | $28 | | Additional paid-in capital | $269,969 | $280,436 | | Accumulated other comprehensive (loss) income | $(669) | $829 | | Retained earnings | $202,455 | $277,699 | | Treasury stock | $(102,964) | $(103,595) | | **Total shareholders' equity** | **$368,819** | **$455,397** | | **Total liabilities and shareholders' equity** | **$784,083** | **$775,319** | [Consolidated Statements of Operations](index=57&type=section&id=Consolidated%20Statements%20of%20Operations) Net income for fiscal 2020 increased significantly to $74.6 million on revenue of $1.510 billion, with diluted EPS reaching $3.37 Consolidated Statements of Operations (Amounts in thousands except share and per share data) | Metric | 2018 | 2019 | 2020 | | :------------------------------------------------ | :----- | :----- | :----- | | Revenue | $1,177,371 | $1,237,153 | $1,509,713 | | Cost of sales | $879,138 | $914,321 | $1,111,000 | | Gross profit | $298,233 | $322,832 | $398,713 | | Selling, general and administrative expenses | $235,050 | $262,300 | $291,998 | | Income from operations | $63,183 | $60,532 | $106,715 | | Interest expense | $9,903 | $11,579 | $9,275 | | Income before income tax provision | $53,280 | $48,953 | $97,440 | | Income tax provision | $13,968 | $12,968 | $22,806 | | **Net income** | **$39,312** | **$35,985** | **$74,634** | | Basic net income per common share | $1.77 | $1.61 | $3.46 | | Diluted net income per common share | $1.71 | $1.57 | $3.37 | | Weighted average number of common shares (Diluted) | 23,030,662 | 22,881,147 | 22,125,338 | [Consolidated Statements of Comprehensive Income](index=58&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for fiscal 2020 was $76.1 million, including a positive foreign currency translation adjustment of $1.5 million Consolidated Statements of Comprehensive Income (Amounts in thousands) | Metric | 2018 | 2019 | 2020 | | :-------------------------------- | :----- | :----- | :----- | | Net income | $39,312 | $35,985 | $74,634 | | Foreign currency translation adjustments | — | $(669) | $1,498 | | Total other comprehensive (loss) gain, net of tax | — | $(669) | $1,498 | | **Comprehensive income** | **$39,312** | **$35,316** | **$76,132** | [Consolidated Statements of Shareholders' Equity](index=59&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) Total shareholders' equity increased to $455.4 million as of September 30, 2020, driven primarily by strong net income Consolidated Statements of Shareholders' Equity (Amounts in thousands except share data) | Metric | Sep 30, 2017 | Sep 30, 2018 | Sep 30, 2019 | Sep 30, 2020 | | :-------------------------------- | :----------- | :----------- | :----------- | :----------- | | Total Shareholders' Equity | $302,198 | $353,092 | $368,819 | $455,397 | | Net income | $23,547 | $39,312 | $35,985 | $74,634 | | Purchase of treasury stock | $(695) | $(695) | $(27,708) | $(631) | | Shares issued pursuant to employee stock purchase plan | $950 | $950 | $1,022 | $1,004 | | Shares issued upon vesting of equity awards, net of minimum tax withholding | $(1,643) | $(1,643) | $(1,216) | $(1,659) | | Shares issued upon exercise of stock options | $6,733 | $6,733 | $1,390 | $3,625 | | Stock-based compensation | $6,237 | $6,237 | $6,524 | $7,497 | | Foreign currency translation adjustments, net of tax | — | — | $(669) | $1,498 | | Cumulative effect of change in accounting principle - revenue recognition, net of tax | — | — | $399 | — | | Cumulative effect of change in accounting principle - leases, net of tax | — | — | — | $610 | [Consolidated Statements of Cash Flows](index=60&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated $304.7 million in cash from operating activities in fiscal 2020, primarily driven by inventory reduction Consolidated Statements of Cash Flows (Amounts in thousands) | Cash Flow Activity | 2018 | 2019 | 2020 | | :------------------------------------------------ | :----- | :----- | :----- | | Net cash provided by (used in) operating activities | $70,414 | $(12,426) | $304,675 | | Net cash used in investing activities | $(23,315) | $(56,334) | $(30,109) | | Net cash provided (used in) financing activities | $(40,229) | $58,630 | $(158,129) | | Effect of exchange rate changes on cash | — | $(181) | $545 | | NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $6,870 | $(10,311) | $116,982 | | CASH AND CASH EQUIVALENTS, beginning of year | $41,952 | $48,822 | $38,511 | | **CASH AND CASH EQUIVALENTS, end of year** | **$48,822** | **$38,511** | **$155,493** | | **Supplemental Disclosures of Cash Flow Information:** | | | | | Cash paid for: Interest | $12,021 | $13,669 | $13,082 | | Cash paid for: Income taxes | $9,424 | $9,152 | $18,930 | - Non-cash items in 2020 included initial operating lease right-of-use assets of **$42.1 million** and corresponding liabilities of **$44.0 million** due to ASU 2016-02 adoption[343](index=343&type=chunk) [Notes to Consolidated Financial Statements](index=61&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed information on accounting policies, financial statement line items, and key business dependencies [1. COMPANY BACKGROUND AND BASIS OF PRESENTATION](index=61&type=section&id=1.%20COMPANY%20BACKGROUND%20AND%20BASIS%20OF%20PRESENTATION) The company is the largest U.S. recreational boat retailer, highly dependent on key manufacturers and sensitive to economic conditions - MarineMax is the largest recreational boat and yacht retailer in the U.S., operating 57 retail locations in 16 states and a facility in Tortola, British Virgin Islands, offering sales, brokerage, service, and charter[345](index=345&type=chunk) - Highly dependent on **Brunswick Corporation (33% of FY2020 revenue)** and **Azimut-Benetti Group (9% of FY2020 revenue)** for new boat sales, holding exclusive dealer agreements for Sea Ray, Boston Whaler, and Azimut in its markets[346](index=346&type=chunk)[347](index=347&type=chunk) - The **COVID-19 pandemic** led to temporary closures and operational adjustments, with the full impact and duration still undetermined[348](index=348&type=chunk) - Business is significantly impacted by general economic conditions, consumer spending, and local factors, especially in **Florida**, which accounted for **51-54% of revenue** from FY2018-2020[350](index=350&type=chunk) - In economic downturns, the company has historically reduced acquisitions, delayed store openings, cut inventory, closed locations, and amended credit facilities[354](index=354&type=chunk) [2. SIGNIFICANT ACCOUNTING POLICIES](index=62&type=section&id=2.%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Key accounting policies cover revenue recognition, inventory valuation, goodwill impairment, leases, and income taxes - Cash and cash equivalents include highly liquid investments with original maturities of three months or less, excluding Fraser Yachts Group customer charter management cash accounts[355](index=355&type=chunk) - Vendor interest assistance is classified as a reduction of inventory cost and related cost of sales, per ASC 606[356](index=356&type=chunk) - Inventories are stated at the lower of cost (specific-identification for boats, average cost for parts) or net realizable value, with a valuation allowance of **$2.4 million** as of September 30, 2020[357](index=357&type=chunk) - Property and equipment are recorded at cost, net of accumulated depreciation, and depreciated using the straight-line method over estimated useful lives (5-40 years for buildings, 3-10 for machinery/equipment)[358](index=358&type=chunk) - Goodwill and other intangible assets totaled **$84.3 million** as of September 30, 2020, primarily from acquisitions. Goodwill is tested for impairment annually, with a qualitative assessment in FY2020 indicating no impairment[361](index=361&type=chunk) - Long-lived assets are reviewed for impairment when circumstances indicate carrying value may not be recoverable; no impairment was believed to exist as of September 30, 2020[362](index=362&type=chunk) - Revenue from boat sales is recognized upon transfer of control. Commissions from brokerage sales are recognized when the transaction closes. F&I product fees are recognized upon related boat sales or contract execution[364](index=364&type=chunk)[366](index=366&type=chunk) - Revenue from parts and service operations is recognized over time as services are performed, using an input method based on labor hours[367](index=367&type=chunk) - Stock-based compensation is valued

MarineMax, Inc. (NYSE:HZO) Q4 2020 Earnings Conference Call October 28, 2020 9:00 AM ET Company Participants Dawn Francfort - ICR Michael McLamb - EVP, CFO, Secretary & Director William McGill - President, CEO & Director Conference Call Participants Frederick Wightman - Wolfe Research Joseph Altobello - Raymond James & Associates Eric Wold - B. Riley Securities Michael Swartz - Truist Securities Scott Stember - CL King & Associates James Hardiman - Wedbush Securities Brandon Rolle - Northcoast Research Part ...

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020. Commission File Number. 1-14173 Florida 59-3496957 2600 McCormick Drive, Suite 200 Clearwater, Florida 33759 (Address of Principal Executive Offices) (ZIP Code) 727-531-1700 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: | Title o ...

MarineMax, Inc. (NYSE:HZO) Q3 2020 Earnings Conference Call July 23, 2020 10:00 AM ET Company Participants Dawn Francfort – Investor Relations Mike McLamb – Chief Financial Officer Brett McGill – President and Chief Executive Officer Conference Call Participants Joe Altobello – Raymond James Mike Swartz – SunTrust Scott Stember – CL King James Hardiman – Wedbush Securities Ryan Sigdahl – Craig-Hallum Capital Group Gerrick Johnson – BMO Capital Markets Brandon Rolle – Northcoast Research Marc Torrente – Well ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2020. Commission File Number. 1-14173 MARINEMAX, INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number) Florida 59-3496957 2600 McCormick Drive, Suite 200 Clearwater, Florida 33759 (Address of ...

MarineMax, Inc. (NYSE:HZO) Q2 2020 Earnings Conference Call April 23, 2020 10:00 AM ET Company Participants Brad Cohen – Investor Relations Brett McGill – President and Chief Executive Officer Mike McLamb – Chief Financial Officer Conference Call Participants Eric Wold – B. Riley FBR Joe Altobello – Raymond James Ryan Sigdahl – Craig-Hallum Mike Swartz – SunTrust Scott Stember – C.L. King James Hardiman – Wedbush Securities David MacGregor – Longbow Research Operator Greetings and welcome to the MarineMax I ...