MarineMax(HZO) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) This section presents unaudited condensed consolidated financial statements, including statements of operations, balance sheets, cash flows, and detailed accounting notes Condensed Consolidated Statements of Operations Revenue increased for both periods, but gross profit and net income declined due to lower margins and higher expenses Three Months Ended June 30, 2024 vs. 2023 | Metric | 2024 (Thousands) | 2023 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Revenue | $757,720 | $721,844 | +5.0% | | Gross Profit | $242,099 | $243,808 | -0.7% | | Net Income | $31,713 | $44,328 | -28.5% | | Basic EPS | $1.42 | $2.03 | -30.1% | | Diluted EPS | $1.37 | $1.98 | -30.8% | Nine Months Ended June 30, 2024 vs. 2023 | Metric | 2024 (Thousands) | 2023 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Revenue | $1,867,886 | $1,800,111 | +3.8% | | Gross Profit | $608,001 | $631,614 | -3.7% | | Net Income | $34,007 | $94,239 | -63.9% | | Basic EPS | $1.53 | $4.31 | -64.5% | | Diluted EPS | $1.48 | $4.22 | -64.9% | Condensed Consolidated Statements of Comprehensive Income Comprehensive income significantly decreased for both periods, primarily due to lower net income and negative foreign currency adjustments Three Months Ended June 30, 2024 vs. 2023 | Metric | 2024 (Thousands) | 2023 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Net Income | $31,713 | $44,328 | -28.5% | | Foreign Currency Translation Adjustments | $(458) | $120 | N/A | | Interest Rate Swap Contract | $(47) | $114 | N/A | | Total Other Comprehensive Income (Loss) | $(505) | $234 | N/A | | Comprehensive Income | $31,208 | $44,562 | -29.9% | Nine Months Ended June 30, 2024 vs. 2023 | Metric | 2024 (Thousands) | 2023 (Thousands) | Change | | :----- | :--------------- | :--------------- | :----- | | Net Income | $34,007 | $94,239 | -63.9% | | Foreign Currency Translation Adjustments | $1,161 | $6,430 | -81.9% | | Interest Rate Swap Contract | $(272) | $(137) | N/A | | Total Other Comprehensive Income (Loss) | $889 | $6,293 | -85.9% | | Comprehensive Income | $34,896 | $100,532 | -65.3% | Condensed Consolidated Balance Sheets Total assets increased due to higher inventories and cash, while total liabilities rose from increased short-term borrowings Balance Sheet Highlights (June 30, 2024 vs. September 30, 2023) | Metric | June 30, 2024 (Thousands) | Sept 30, 2023 (Thousands) | Change | | :-------------------------------- | :------------------------ | :------------------------ | :----- | | Total Current Assets | $1,261,202 | $1,123,176 | +12.3% | | Inventories | $880,419 | $812,830 | +8.3% | | Cash and Cash Equivalents | $242,424 | $201,456 | +20.3% | | Total Assets | $2,593,665 | $2,421,305 | +7.1% | | Total Current Liabilities | $1,054,442 | $847,049 | +24.5% | | Short-term borrowings (Floor Plan) | $701,185 | $537,060 | +30.6% | | Total Liabilities | $1,616,731 | $1,502,888 | +7.6% | | Total Shareholders' Equity | $976,934 | $918,417 | +6.4% | Condensed Consolidated Statements of Shareholders' Equity Total shareholders' equity increased from net income, stock-based compensation, and non-controlling interests, partially offset by treasury stock - Beginning balance (Sept 30, 2023): $918.4 million[52] - Net income: $34.0 million (sum of 930, 1587, 31550 from chunk 52)[52] - Stock-based compensation: $17.5 million (sum of 5419, 5984, 6080 from chunk 52)[52] - Non-controlling interests in subsidiaries from acquisitions: $6.8 million (sum of 6655, 129 from chunk 52)[52] - Purchase of Treasury Stock: -$2.1 million[52] - Ending balance (June 30, 2024): $976.9 million[52] Condensed Consolidated Statements of Cash Flows Cash used in operating and investing activities decreased, while cash provided by financing activities declined due to lower debt proceeds Cash Flow Summary (Nine Months Ended June 30, 2024 vs. 2023) | Activity | 2024 (Thousands) | 2023 (Thousands) | Change | | :-------------------------- | :--------------- | :--------------- | :----- | | Net cash used in operating activities | $(24,878) | $(196,937) | +87.4% (less cash used) | | Net cash used in investing activities | $(64,824) | $(564,065) | +88.5% (less cash used) | | Net cash provided by financing activities | $130,129 | $756,771 | -82.8% | | Net increase in cash and cash equivalents | $40,968 | $(2,140) | N/A | - Key Drivers for Operating Cash Flow (9M 2024): * Increases in inventory: -$63.8 million * Increases in accounts receivable: -$19.5 million * Decreases in accounts payable: -$26.3 million * Net income adjusted for non-cash items (e.g., depreciation, stock-based comp): Positive contribution[56] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on company background, accounting policies, fair value, revenue, leases, inventories, goodwill, taxes, debt, and compensation 1. COMPANY BACKGROUND MarineMax, the world's largest recreational boat and superyacht services company, expanded through acquisitions but remains sensitive to economic conditions - Global Presence: Over 125 locations worldwide, including over 75 retail dealerships and 65 marina/storage locations[59] - Key Brands/Services: Largest retailer of Sea Ray and Boston Whaler (Brunswick brands), exclusive dealer for Azimut Yachts in the US, operates Fraser Yachts and Northrop & Johnson (superyacht services), IGY Marinas (luxury marinas), Cruisers Yachts and Intrepid Powerboats (manufacturing)[59] - Recent Acquisitions (FY2024): Acquired Williams Tenders USA (March 2024) and a controlling interest in AGY (October 2023)[59][87] - Economic Sensitivity: Highly susceptible to general economic conditions, consumer discretionary spending, interest rate increases, and local influences (e.g., weather, specific events)[59][61] 2. BASIS OF PRESENTATION Unaudited condensed consolidated financial statements are prepared under GAAP, relying on management estimates and assumptions, with prior period reclassifications for comparability - Accounting Basis: Prepared in accordance with GAAP for interim financial information, instructions to Form 10-Q, and Rule 10-01 of Regulation S-X[62] - Estimates and Assumptions: Significant estimates include valuation allowances, goodwill, intangible assets, long-lived assets, and contingent consideration liabilities[62] - Comparability: Certain amounts from previously reported consolidated financial statements have been reclassified to conform to the current period's presentation[62] 3. NEW ACCOUNTING PRONOUNCEMENTS The company adopted ASU 2022-04 with no impact and is evaluating ASU 2023-07 and ASU 2023-09 for future fiscal years - ASU 2022-04 (Supplier Finance Programs): Adopted in Q1 FY2024; no impact on consolidated financial statement disclosures[63] - ASU 2023-07 (Segment Reporting): Effective for fiscal years beginning after December 15, 2023 (FY2025 for the Company); currently evaluating impact[63] - ASU 2023-09 (Income Tax Disclosures): Effective for annual periods beginning after December 15, 2024 (FY2026 for the Company); currently evaluating impact[65] 4. FAIR VALUE MEASUREMENTS Financial assets and liabilities are measured using a three-level hierarchy, with an interest rate swap at Level 2 and contingent consideration at Level 3 - Fair Value Hierarchy: Uses Level 1 (quoted prices), Level 2 (observable inputs), and Level 3 (unobservable inputs)[66] - Interest Rate Swap Contract: Valued at $1.0 million (June 30, 2024) using Level 2 inputs[66][75] - Contingent Consideration Liabilities: Valued at $86.7 million (June 30, 2024) using Level 3 inputs[66][76] Level 3 Unobservable Inputs (June 30, 2024) | Unobservable Input: | June 30, 2024 | | :------------------------------------ | :------------ | | Earnout projected growth (including net operating income) | 23% - 25% | | Discount rate | 11.0% | Changes in Contingent Consideration Liabilities (9M 2024) | Metric | 2024 (Thousands) | | :------------------------------------ | :--------------- | | Beginning balance - September 30, 2023 | $15,207 | | Additions from business acquisitions | $1,313 | | Settlement of contingent consideration liabilities | $(3,032) | | Change in fair value and net present value of contingency | $2,393 | | Ending balance - June 30, 2024 | $86,733 | 5. REVENUE RECOGNITION Revenue from boat sales is recognized upon transfer of control, with contract liabilities primarily from customer deposits, mostly recognized at a point in time - Boat Sales: Revenue recognized upon transfer of control to the customer, typically upon acceptance[90] - Parts and Service: Revenue recognized over time as services are performed, using an input method based on labor hours[77] - Contract Liabilities: Primarily customer deposits, recognized as revenue upon acceptance and transfer of control[77] Revenue Recognition Timing (Three Months Ended June 30, 2024) | Segment | Goods & Services Transferred at a Point in Time | Goods & Services Transferred Over Time | | :-------------------- | :-------------------------------------------- | :------------------------------------- | | Retail Operations | 88.9% | 11.1% | | Product Manufacturing | 100.0% | — | Revenue Disaggregation (Three Months Ended June 30, 2024) | Category | Retail Operations | Product Manufacturing | Total | | :-------------------------- | :---------------- | :-------------------- | :---- | | New boat sales | 69.5% | 98.4% | 69.9% | | Used boat sales | 9.0% | — | 8.9% | | Maintenance and repair services | 4.2% | — | 4.1% | | Storage and charter rentals | 5.7% | — | 5.6% | | Finance and insurance products | 3.0% | — | 3.0% | | Parts and accessories | 4.0% | 1.6% | 4.0% | | Brokerage sales | 4.6% | — | 4.5% | 6. LEASES The company primarily uses operating leases for real estate and equipment, with a weighted-average term of 21 years and a 6.5% discount rate - Lessee Operations: * Weighted-average remaining lease term (June 30, 2024): ~21 years * Weighted-average discount rate (June 30, 2024): ~6.5% * Operating lease expenses (3M ended June 30, 2024): $8.9 million * Operating lease expenses (9M ended June 30, 2024): $25.1 million[79][82] Lessee Lease Liabilities Maturities (June 30, 2024) | Fiscal Year | Total Lease Payments (Thousands) | | :----------------- | :------------------------------- | | 2024 (remaining) | $3,833 | | 2025 | $17,330 | | 2026 | $15,857 | | 2027 | $15,456 | | 2028 | $14,815 | | Thereafter | $267,082 | | Total lease payments | $334,373 | | Less: interest | $(198,895) | | Present value of lease liabilities | $135,478 | - Lessor Operations: * Total rental income (9M ended June 30, 2024): $8.0 million[85] 7. INVENTORIES Inventories are valued at the lower of cost or net realizable value, with total inventories increasing to $880.4 million, mainly from new and used boats - Valuation: Lower of cost or net realizable value[86] - Accounting Basis: Specific identification for boats/motors/trailers; average cost for raw materials/parts/accessories[86] Inventory Composition (June 30, 2024 vs. September 30, 2023) | Category | June 30, 2024 (Thousands) | Sept 30, 2023 (Thousands) | Change | | :-------------------------- | :------------------------ | :------------------------ | :----- | | New and used boats, motors, and trailers | $754,481 | $625,287 | +20.7% | | In transit inventory and deposits | $64,229 | $115,879 | -44.7% | | Parts, accessories, and other | $16,551 | $18,712 | -11.6% | | Work-in-process | $23,908 | $22,340 | +7.0% | | Raw materials | $21,250 | $30,612 | -30.6% | | Total Inventories | $880,419 | $812,830 | +8.3% | 8. GOODWILL Goodwill increased to $589.9 million due to recent acquisitions, with no impairment recognized as of June 30, 2024 - Goodwill Balance (June 30, 2024): $589.9 million[96] - Goodwill Acquired (9M FY2024): $29.3 million, primarily from Williams Tenders USA and AGY acquisitions[96][87] - Impairment Testing: Annual impairment test performed in the third fiscal quarter; no impairment loss recognized as of June 30, 2024[112] Goodwill by Segment (June 30, 2024) | Segment | Goodwill (Thousands) | | :-------------------- | :------------------- | | Retail Operations | $520,915 | | Product Manufacturing | $69,034 | | Total | $589,949 | 9. INCOME TAXES The company recognized an income tax provision of $11.1 million for three months and $11.5 million for nine months, with effective rates of 25.9% and 25.2% respectively - Income Tax Provision (3M ended June 30, 2024): $11.1 million (vs. $15.5 million in 2023)[113] - Income Tax Provision (9M ended June 30, 2024): $11.5 million (vs. $34.7 million in 2023)[113] - Effective Income Tax Rate (3M ended June 30, 2024): 25.9% (same as 2023)[113] - Effective Income Tax Rate (9M ended June 30, 2024): 25.2% (vs. 26.9% in 2023)[113] 10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT The Amended Credit Facility provides up to $950 million for Floor Plan, with $701.2 million outstanding short-term borrowings and $364.1 million long-term debt - Amended Credit Facility: * Floor Plan: Up to $950 million * Revolving Credit Facility: Up to $100 million * Delayed Draw Term Loan: Up to $400 million * Delayed Draw Mortgage Loan: Up to $100 million * Maturity: August 2027 for all facilities[97] - Outstanding Debt (June 30, 2024): * Short-term borrowings (Floor Plan): $701.2 million * Long-term debt (net of current maturities and unamortized costs): $364.1 million[99][101] - Interest Rate (Floor Plan): Approximately 8.8% as of June 30, 2024[99] - Covenant Compliance: In compliance with all covenants under the Amended Credit Agreement as of June 30, 2024[99] Long-term Debt Composition (June 30, 2024) | Debt Type | Amount (Thousands) | | :------------------------------------ | :----------------- | | Mortgage facility to Flagship Bank | $5,535 | | Mortgage facility to Seacoast National Bank | $15,717 | | Mortgage facility to Hancock Whitney Bank | $21,844 | | Term loan to M&T Bank | $355,000 | | Loan to TRANSPORT S.a.s | $1,445 | | Total Long-term Debt | $399,541 | 11. STOCK-BASED COMPENSATION Stock-based compensation expense was $6.1 million for three months and $17.5 million for nine months, with $2.6 million cash from option exercises - Stock-based Compensation Expense (3M ended June 30, 2024): $6.1 million (vs. $5.5 million in 2023)[102] - Stock-based Compensation Expense (9M ended June 30, 2024): $17.5 million (vs. $15.7 million in 2023)[102] - Cash from Option Exercises (9M ended June 30, 2024): $2.6 million (vs. $1.1 million in 2023)[102] 12. THE INCENTIVE STOCK PLANS The 2021 Stock-Based Compensation Plan allows various awards, with 1,318,880 shares available for grant and 26,250 options outstanding as of June 30, 2024 - 2021 Plan: Replaced the 2011 Plan, provides for various awards (options, restricted stock, etc.) to executives, employees, officers, directors, and independent contractors[103] - Available Shares: Total number of shares that may be subject to awards under the 2021 Plan is 2,300,000 plus certain forfeited/unissued shares[103] Incentive Stock Plan Activity (September 30, 2023 to June 30, 2024) | Metric | Shares Available for Grant | Options Outstanding | | :-------------------------- | :------------------------- | :------------------ | | Balance as of Sept 30, 2023 | 1,984,588 | 54,750 | | Options cancelled/forfeited/expired | 21,000 | (21,000) | | Options exercised | — | (7,500) | | Restricted stock awards granted | (726,903) | — | | Restricted stock awards forfeited | 45,498 | — | | Additional shares of stock issued | (5,303) | — | | Balance as of June 30, 2024 | 1,318,880 | 26,250 | - Options Granted (9M FY2024): No options were granted[105] 13. EMPLOYEE STOCK PURCHASE PLAN The Amended 2008 Employee Stock Purchase Plan allows eligible employees to purchase common stock at 85% of market price, with 1,381,608 shares issued - Plan Details: Allows regular employees (1+ year service) to purchase common stock[1] - Shares Available: Up to 1,500,000 shares of common stock available, increased by 500,000 in Feb 2019[1] - Purchase Price: Lower of (i) 85% of closing price on first day of offering or (ii) 85% of closing price on last day of offering[1] - Shares Issued: 1,381,608 shares issued as of June 30, 2024[2] Weighted Average Assumptions (9M ended June 30, 2024) | Assumption | Value | | :-------------------- | :---- | | Dividend yield | 0.0% | | Risk-free interest rate | 5.4% | | Volatility | 46.0% | | Expected life | Six Months | 14. RESTRICTED STOCK AWARDS Non-vested restricted stock awards and RSUs totaled 1,860,660 shares/units, with $29.0 million unrecognized compensation cost to be recognized over 1.8 years - Awards Granted: Restricted stock and RSUs granted under the 2021, 2011, and 2007 Plans[4] - Vesting Periods: Generally two to four years, with performance-based awards for officers ranging from 0% to 175% of target[4] Restricted Stock Award Activity (September 30, 2023 to June 30, 2024) | Metric | Shares/Units | Weighted Average Grant Fair Value | | :-------------------------- | :----------- | :------------------------------ | | Non-vested balance as of Sept 30, 2023 | 1,341,151 | $35.02 | | Awards granted | 726,903 | $31.09 | | Awards vested | (161,446) | $20.64 | | Awards forfeited | (45,948) | $34.80 | | Non-vested balance as of June 30, 2024 | 1,860,660 | N/A | - Unrecognized Compensation Cost: Approximately $29.0 million as of June 30, 2024, to be recognized over a weighted average period of 1.8 years[107] 15. NET INCOME PER SHARE Basic and diluted net income per share are calculated, with certain options and restricted stock excluded as anti-dilutive for both periods Shares Used in EPS Calculation (3M ended June 30, 2024 vs. 2023) | Metric | 2024 | 2023 | | :------------------------------------ | :----------- | :----------- | | Basic weighted average common shares | 22,268,758 | 21,885,400 | | Diluted weighted average common shares | 23,049,097 | 22,427,443 | Shares Used in EPS Calculation (9M ended June 30, 2024 vs. 2023) | Metric | 2024 | 2023 | | :------------------------------------ | :----------- | :----------- | | Basic weighted average common shares | 22,254,619 | 21,831,350 | | Diluted weighted average common shares | 22,952,234 | 22,321,269 | - Anti-dilutive Shares (3M ended June 30, 2024): 10,000 weighted average shares of options and non-vested restricted stock[108] - Anti-dilutive Shares (9M ended June 30, 2024): 11,751 weighted average shares of options and non-vested restricted stock[108] 16. COMMITMENTS AND CONTINGENCIES The company is involved in various legal actions but does not expect a material adverse effect on its financial condition or operations - Legal Actions: Party to various legal actions arising in the ordinary course of business[5][143] - Materiality: Believes these matters will not have a material adverse effect on financial condition, results of operations, or cash flows as of June 30, 2024[5][143] 17. SEGMENT INFORMATION The company operates Retail Operations and Product Manufacturing segments, with Retail Operations revenue increasing and Product Manufacturing revenue and income decreasing - Reportable Segments: * Retail Operations: Sale of new/used recreational boats, marine products, repair/maintenance, slip/storage rentals, financing, insurance, brokerage, yacht charter services, and luxury marinas (IGY Marinas, Fraser Yachts, Northrop & Johnson) * Product Manufacturing: Manufacturing of sport yachts and powerboats (Cruisers Yachts, Intrepid Powerboats)[130][118][11] Revenue and Income from Operations (3M ended June 30, 2024 vs. 2023) | Metric | 2024 (Thousands) | 2023 (Thousands) | Change (Revenue) | Change (Income from Operations) | | :-------------------------- | :--------------- | :--------------- | :--------------- | :------------------------------ | | Retail Operations Revenue | $752,171 | $709,307 | +6.0% | N/A | | Product Manufacturing Revenue | $38,062 | $51,884 | -26.7% | N/A | | Total Revenue | $757,720 | $721,844 | +5.0% | N/A | | Retail Operations Income from Operations | $58,733 | $68,050 | N/A | -13.7% | | Product Manufacturing Income from Operations | $(548) | $5,089 | N/A | N/A (loss vs. profit) | | Total Income from Operations | $61,027 | $74,581 | N/A | -18.2% | Revenue and Income from Operations (9M ended June 30, 2024 vs. 2023) | Metric | 2024 (Thousands) | 2023 (Thousands) | Change (Revenue) | Change (Income from Operations) | | :-------------------------- | :--------------- | :--------------- | :--------------- | :------------------------------ | | Retail Operations Revenue | $1,855,433 | $1,770,565 | +4.8% | N/A | | Product Manufacturing Revenue | $124,372 | $164,959 | -24.6% | N/A | | Total Revenue | $1,867,886 | $1,800,111 | +3.8% | N/A | | Retail Operations Income from Operations | $94,204 | $158,514 | N/A | -40.6% | | Product Manufacturing Income from Operations | $2,508 | $17,834 | N/A | -85.9% | | Total Income from Operations | $101,427 | $166,486 | N/A | -39.1% | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's business, acquisitions, economic impacts, financial performance, liquidity, capital resources, and seasonality General MarineMax, the world's largest recreational boat and superyacht services company, expanded through acquisitions but is sensitive to economic conditions - Business Overview: World's largest recreational boat, yacht, and superyacht services company with over 75 retail locations in 21 states[117][118] - Acquisition Strategy: Completed 33 recreational boat dealers, five boat brokerage operations, two full-service yacht repair operations, five boat brokerage operations, and two boat and yacht manufacturers since 1998. Completed four acquisitions in FY2023 and three in FY2024[118] - Recent Acquisitions: IGY Marinas (Oct 2022), Midcoast Marine Group (Dec 2022), Boatzon (Jan 2023), C&C Boat Works (June 2023), AGY (Oct 2023), Williams Tenders USA (March 2024)[117][118] - Economic Impact: Operations are negatively impacted by general economic conditions, reduced consumer discretionary spending, higher interest rates, and inflation, especially for luxury goods[118] - Strategic Response: Historically reduced acquisition programs, delayed store openings, and managed inventory during downturns, while aiming to outperform the industry and gain market share[118] Three Months Ended June 30, 2024 Compared with Three Months Ended June 30, 2023 Revenue increased by 5.0% to $757.7 million, but gross profit decreased due to lower boat margins, while expenses and interest expense rose - Revenue: Increased $35.9 million (+5.0%) to $757.7 million, driven by $27.9 million (+4%) comparable-store sales increase and $8.0 million from acquisitions/new locations[12] - Gross Profit: Decreased $1.7 million (-0.7%) to $242.1 million. Gross profit as a percentage of revenue decreased to 32.0% from 33.8% due to lower new and used boat margins[12] - Selling, General, and Administrative Expenses: Increased $11.9 million (+7.0%) to $181.1 million, primarily due to inflation and recent acquisitions[12] - Interest Expense: Increased $3.4 million to $18.2 million, due to increased interest rates and higher inventory levels[12] - Income Tax Expense: Decreased $4.4 million to $11.1 million, with an effective tax rate of 25.9%[12] Nine Months Ended June 30, 2024 Compared with Nine Months Ended June 30, 2023 Revenue increased by 3.8% to $1.868 billion, but gross profit decreased due to lower boat margins, while expenses and interest expense rose significantly - Revenue: Increased $68.0 million (+3.8%) to $1.868 billion, driven by $59.8 million (+3%) comparable-store sales increase and $8.2 million from acquisitions/new locations[137] - Gross Profit: Decreased $23.6 million (-3.7%) to $608.0 million. Gross profit as a percentage of revenue decreased to 32.5% from 35.1% due to lower new and used boat margins[121] - Selling, General, and Administrative Expenses: Increased $41.5 million (+8.9%) to $506.6 million, primarily due to inflation and recent acquisitions[121] - Interest Expense: Increased $18.4 million to $56.0 million, due to increased interest rates and higher inventory levels[121] - Income Tax Expense: Decreased $23.2 million to $11.5 million, with an effective tax rate of 25.2%[121] Liquidity and Capital Resources Cash needs for working capital and acquisitions are financed by operations and the Amended Credit Facility, with adequate resources expected for the next 12 months - Cash Needs: Primarily for working capital (inventory), off-season liquidity, and acquisitions[138] - Financing Sources: Cash from operations and borrowings under the Amended Credit Facility[138] Cash Flow Summary (9M ended June 30, 2024 vs. 2023) | Activity | 2024 (Thousands) | 2023 (Thousands) | | :-------------------------- | :--------------- | :--------------- | | Net cash used in operating activities | $(24,878) | $(196,937) | | Net cash used in investing activities | $(64,824) | $(564,065) | | Net cash provided by financing activities | $130,129 | $756,771 | - Credit Facility Compliance: In compliance with all covenants under the Amended Credit Facility as of June 30, 2024[138] - Liquidity Outlook: Believes cash generated from sales and existing capital resources will be adequate for at least the next 12 months, except for possible significant acquisitions[139] Impact of Seasonality and Weather on Operations The recreational boating industry is highly seasonal, with lower sales in Q1/Q2, and operations are vulnerable to adverse weather patterns - Seasonality: Significantly lower sales, higher inventories, and increased short-term borrowings in Q1 and Q2 (Dec 31 and Mar 31 quarters), with sales stimulated by public boat shows in January[14] - Weather Impact: Adverse weather (prolonged winter, drought, excessive rain, hurricanes) can limit access to boating locations, render boating dangerous, or curtail customer demand[14] - Geographic Diversity: Geographic diversity may reduce the overall impact of adverse weather in any one market, but these conditions remain potential material adverse risks[14] Application of Critical Accounting Policies No material changes to critical accounting policies have occurred since the FY2023 Annual Report on Form 10-K - No Material Changes: No material changes to critical accounting policies since the FY2023 10-K[134] Recent Accounting Pronouncements Refer to Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for details on recent accounting pronouncements - Reference: See Note 3 for details on recent accounting pronouncements[135] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, specifically interest rate risk on variable-rate debt and foreign currency exchange rate risk Interest Rate Risk The company is exposed to interest rate risk on variable-rate debt, with a 100 basis point increase potentially raising annual pre-tax interest expense by $10.6 million - Exposure: Risk from changes in interest rates on outstanding variable-rate short-term borrowings and long-term debt[15] Hypothetical Impact on Annual Pre-tax Interest Expense Increase | Interest Rate Increase | Estimated Increase (Millions) | | :--------------------- | :---------------------------- | | 100 basis points | $10.6 | | 200 basis points | $21.1 | | 300 basis points | $31.7 | - Assumptions: Based on outstanding balances as of June 30, 2024, assuming no mitigating changes or additional interest assistance[155] Foreign Currency Exchange Rate Risk The company faces foreign currency exchange rate risk, primarily from euro-denominated transactions in its international operations, without hedging - Exposure: Fluctuations in U.S. dollar exchange rate impact retail prices of foreign products and affect revenue, cost of goods sold, cash flows, and earnings[156] - Primary Currencies: Most non-U.S. dollar transactions are denominated in euros[156] - Impacted Operations: Fraser Yachts Group, Northrop & Johnson, and IGY Marinas have transactions and balances in non-U.S. dollar currencies[156] - Hedging: Not currently engaged in foreign currency exchange hedging transactions[156] ITEM 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures, states no material changes in internal controls, and acknowledges inherent limitations Evaluation of Disclosure Controls and Procedures The CEO and CFO evaluated and concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024 - Evaluation: CEO and CFO evaluated disclosure controls and procedures as of June 30, 2024[141] - Conclusion: Disclosure controls and procedures were effective at the reasonable assurance level[141] Changes in Internal Controls No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2024 - No Material Changes: No material changes in internal control over financial reporting during the quarter ended June 30, 2024[16] Limitations on the Effectiveness of Controls Management acknowledges that control systems provide only reasonable assurance due to inherent limitations like faulty judgments, errors, and circumvention - Reasonable Assurance: Control systems provide only reasonable, not absolute, assurance[17] - Inherent Limitations: Faulty judgments, simple errors, circumvention (individual acts, collusion, management override), resource constraints, and assumptions about future events[17] CEO and CFO Certifications Exhibits 31.1 and 31.2 contain the CEO and CFO certifications as required by Section 302 of the Sarbanes-Oxley Act of 2002 - Certifications: Exhibits 31.1 and 31.2 are the Section 302 Certifications of the CEO and CFO[24] - Requirement: Required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002[24] PART II. OTHER INFORMATION ITEM 1. Legal Proceedings The company is involved in various legal actions but does not expect a material adverse effect on its financial condition, results of operations, or cash flows - Legal Actions: Party to various legal actions arising in the ordinary course of business[143] - Materiality: Does not believe these matters will have a material adverse effect on financial condition, results of operations, or cash flows[143] ITEM 1A. Risk Factors Refer to the "Risk Factors" section in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023, for a comprehensive discussion of potential risks - Reference: See "Risk Factors" in the Annual Report on Form 10-K for the fiscal year ended September 30, 2023[131] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 87,216 shares of common stock at an average price of $24.55 per share during the quarter, as part of a $100 million repurchase program Share Repurchases (Three Months Ended June 30, 2024) | Period | Total Number of Shares Purchased | Average Price per Share | Maximum Number of Shares that may be Purchased Under the Plans or Programs | | :----------------------------------- | :------------------------------- | :---------------------- | :----------------------------------------------------------------------- | | April 1, 2024 to April 30, 2024 | 53,127 | $24.45 | 4,000,845 | | May 1, 2024 to May 31, 2024 | 34,089 | $24.69 | 3,436,064 | | June 1, 2024 to June 30, 2024 | - | - | 3,023,142 | | Total | 87,216 | $24.55 | 3,023,142 | - Repurchase Program: Authorized to purchase up to $100 million of common stock through March 31, 2026[146] ITEM 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - No Defaults: None[147] ITEM 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable: Not applicable[148] ITEM 5. Other Information No officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2024 - Insider Trading Arrangements: No Rule 10b5-1 trading arrangements adopted or terminated by officers or directors during the three months ended June 30, 2024[148] ITEM 6. Exhibits The company listed various exhibits, including its Articles of Incorporation, Bylaws, a Key Executive Retention Agreement, and CEO/CFO certifications - Key Exhibits: * 3.1 Articles of Incorporation * 3.2 Bylaws * 10.1* Key Executive Retention Agreement * 31.1 Certification of CEO * 31.2 Certification of CFO * 32.1 Certification pursuant to 18 U.S.C. Section 1350 * 32.2 Certification pursuant to 18 U.S.C. Section 1350 * 101.SCH, 101.INS, 104 (XBRL documents)[160][149][150][161][162] SIGNATURES The report was duly signed on behalf of MarineMax, Inc. by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director, on July 25, 2024 - Signatory: Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director[33][163] - Date: July 25, 2024[163]