MarineMax(HZO) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides MarineMax, Inc.'s unaudited condensed consolidated financial statements, management's discussion, market risk disclosures, and controls and procedures ITEM 1. Financial Statements This section presents MarineMax, Inc.'s unaudited condensed consolidated financial statements, including statements of operations, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes on key accounting areas Condensed Consolidated Statements of Operations This section details the company's financial performance, including revenue, cost of sales, gross profit, operating income, and net income for the specified periods Condensed Consolidated Statements of Operations (Amounts in thousands, except share and per share data): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue | $657,159 | $757,720 | $1,757,135 | $1,867,886 | | Cost of sales | 457,538 | 515,621 | 1,198,349 | 1,259,885 | | Gross profit | 199,621 | 242,099 | 558,786 | 608,001 | | Selling, general, and administrative expenses | 172,106 | 181,072 | 469,558 | 506,574 | | Goodwill impairment | 69,055 | — | 69,055 | — | | (Loss) income from operations | (41,540) | 61,027 | 20,173 | 101,427 | | Interest expense | 16,936 | 18,229 | 53,860 | 55,968 | | (Loss) income before income tax (benefit) provision | (58,476) | 42,798 | (33,687) | 45,459 | | Income tax (benefit) provision | (6,506) | 11,085 | (3,003) | 11,452 | | Net (loss) income | (51,970) | 31,713 | (30,684) | 34,007 | | Net (loss) income attributable to MarineMax, Inc. | $(52,146) | $31,550 | $(30,780) | $34,067 | | Basic net (loss) income per common share | $(2.42) | $1.42 | $(1.38) | $1.53 | | Diluted net (loss) income per common share | $(2.42) | $1.37 | $(1.38) | $1.48 | Condensed Consolidated Statements of Comprehensive Income This section presents the company's net income adjusted for other comprehensive income items, such as foreign currency translation and interest rate swap contract changes Condensed Consolidated Statements of Comprehensive Income (Amounts in thousands): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net (loss) income | $(51,970) | $31,713 | $(30,684) | $34,007 | | Foreign currency translation adjustments | 8,291 | (458) | 5,232 | 1,161 | | Interest rate swap contract | (85) | (47) | (119) | (272) | | Total other comprehensive income (loss), net of tax | 8,206 | (505) | 5,113 | 889 | | Comprehensive (loss) income | (43,764) | 31,208 | (25,571) | 34,896 | | Comprehensive (loss) income attributable to MarineMax, Inc. | $(44,627) | $31,104 | $(26,089) | $34,849 | Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and shareholders' equity at specific points in time Condensed Consolidated Balance Sheets (Amounts in thousands): | Asset/Liability/Equity | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :-------------- | :----------------- | | ASSETS | | | | Cash and cash equivalents | $151,017 | $224,326 | | Accounts receivable, net | 106,849 | 106,409 | | Inventories | 906,219 | 906,641 | | Total current assets | 1,197,878 | 1,273,211 | | Property and equipment, net | 551,912 | 532,766 | | Goodwill | 527,144 | 592,293 | | Total assets | $2,487,737 | $2,605,068 | | LIABILITIES | | | | Accounts payable | $44,504 | $54,481 | | Contract liabilities (customer deposits) | 48,900 | 64,845 | | Accrued expenses | 116,892 | 197,295 | | Short-term borrowings (Floor Plan) | 735,215 | 708,994 | | Total current liabilities | 991,149 | 1,069,143 | | Long-term debt, net of current maturities | 365,070 | 355,906 | | Total liabilities | 1,536,414 | 1,618,819 | | SHAREHOLDERS' EQUITY | | | | Total shareholders' equity attributable to MarineMax, Inc. | 940,530 | 975,795 | | Non-controlling interests | 10,793 | 10,454 | | Total shareholders' equity | 951,323 | 986,249 | | Total liabilities and shareholders' equity | $2,487,737 | $2,605,068 | Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in the company's shareholders' equity, including net income, treasury stock transactions, and stock-based compensation Changes in Shareholders' Equity (Amounts in thousands, except share data) for Nine Months Ended June 30, 2025: | Item | Common Stock (Shares) | Common Stock (Amount) | Additional Paid-in Capital | Accumulated Other Comprehensive Income (loss) | Retained Earnings | Treasury Stock | Non-controlling Interests | Total Shareholders' Equity | | :------------------------------------ | :-------------------- | :-------------------- | :------------------------- | :------------------------------------------ | :---------------- | :------------- | :------------------------ | :------------------------- | | Balance, September 30, 2024 | 29,898,545 | $30 | $343,911 | $4,636 | $778,015 | $(150,797) | $10,454 | $986,249 | | Net income (loss) | — | — | — | — | (30,684) | — | 96 | (30,588) | | Purchase of treasury stock | — | — | — | — | — | (27,480) | — | (27,480) | | Stock-based compensation | 3,299 | — | 16,437 | — | — | — | — | 16,437 | | Other comprehensive income (loss) | — | — | — | 4,686 | — | — | 1,026 | 5,712 | | Balance, June 30, 2025 | 30,130,499 | $30 | $362,216 | $9,322 | $747,239 | $(178,277) | $10,793 | $951,323 | Condensed Consolidated Statements of Cash Flows This section reports the cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Amounts in thousands) for Nine Months Ended June 30: | Activity | 2025 | 2024 | | :------------------------------------------ | :----- | :----- | | Net cash provided by (used in) operating activities | $11,354 | $(24,878) | | Net cash used in investing activities | $(42,065) | $(64,824) | | Net cash (used in) provided by financing activities | $(43,100) | $130,129 | | Effect of exchange rate changes on cash | $502 | $541 | | NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | $(73,309) | $40,968 | | CASH AND CASH EQUIVALENTS, beginning of period | $224,326 | $201,456 | | CASH AND CASH EQUIVALENTS, end of period | $151,017 | $242,424 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies and significant estimates 1. Company Background MarineMax, Inc. is the world's largest recreational boat and yacht retailer and superyacht services company, with over 120 global locations, whose revenue is significantly influenced by key brands and recent acquisitions, while facing negative impacts from economic conditions and interest rates - MarineMax is the world's largest recreational boat and yacht retailer, marina operator, and superyacht services company, operating over 120 locations worldwide as of June 30, 2025[23] - Sales of new Brunswick boats (Sea Ray and Boston Whaler) accounted for approximately 20% of fiscal 2024 revenue, with Azimut yachts contributing approximately 8%[24][25] - Recent acquisitions include Boatzon (digital retail platform), C&C Boat Works (boat dealer), AGY (luxury charter management), Williams Tenders USA (distributor), Native Marine (boat dealer), Aviara brand rights, and two marinas (Treasure Island Marina service/parts, Shelter Bay Marina)[26] - Economic conditions, particularly in Florida (53% of fiscal 2024 dealership revenue), consumer discretionary spending, higher long-term interest rates, and tariffs have negatively impacted revenues and profits[28][29][30] 2. Basis of Presentation The unaudited condensed consolidated financial statements are prepared under GAAP for interim reporting, incorporating normal recurring adjustments and significant estimates, with all intercompany transactions eliminated - Unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information, with all adjustments being normal recurring adjustments[32] - Significant estimates include valuation allowances, goodwill and intangible assets, long-lived assets, and contingent consideration liabilities, which could lead to differences between actual and estimated results[33] 3. New Accounting Pronouncements The Company is evaluating the impact of new FASB ASUs on Segment Reporting, Income Taxes, and Income Statement Expenses, effective for fiscal years ending September 30, 2025, 2026, and 2028, respectively, which are expected to enhance disclosures - ASU 2023-07, 'Segment Reporting,' effective for fiscal year ending September 30, 2025, is expected to result in expanded disclosures about segment operations and significant segment expenses[35] - ASU 2023-09, 'Income Taxes,' effective for fiscal year ending September 30, 2026, will enhance income tax disclosures through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction[36] - ASU 2024-03, 'Income Statement Expenses,' effective for fiscal year ending September 30, 2028, requires additional information about certain expenses in the financial statements[37] 4. Fair Value Measurements The Company measures financial assets and liabilities at fair value using a hierarchy of inputs, with interest rate swaps as Level 2 and contingent consideration liabilities as Level 3, which significantly decreased for the nine months ended June 30, 2025 Fair Value Measurements (Amounts in thousands): | Item | June 30, 2025 (Level 2) | June 30, 2025 (Level 3) | September 30, 2024 (Level 2) | September 30, 2024 (Level 3) | | :------------------------------ | :---------------------- | :---------------------- | :--------------------------- | :--------------------------- | | Interest rate swap contract | $553 | — | $716 | — | | Contingent consideration liabilities | — | $4,532 | — | $81,311 | Changes in Fair Value of Contingent Consideration Liabilities (Amounts in thousands): | Item | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------ | :------------------------------ | | Beginning balance - September 30, | $81,311 | $86,059 | | Additions from business acquisitions | — | 1,313 | | Settlements | (51,127) | (3,032) | | Change in fair value and net present value of contingency | (25,655) | 2,393 | | Ending balance June 30, | $4,529 | $86,733 | - The fair value of contingent consideration liabilities is a Level 3 measurement, determined using financial projections, market participant assumptions, and Monte Carlo simulation analysis[43] 5. Revenue Recognition Revenue is primarily recognized from boat, motor, and trailer sales upon transfer of control to the customer, with other streams including services and rentals recognized over time, and the majority of Retail Operations revenue recognized at a point in time - Revenue from boat, motor, and trailer sales is recognized upon transfer of control to the customer, typically upon acceptance[46] - Revenue from maintenance and repair services, service operations, and slip and storage rentals is recognized over time as services are performed or performance obligations are met[48][52] Revenue Recognition Timing by Reportable Segment: | Segment | Three Months Ended June 30, 2025 (Point in Time) | Three Months Ended June 30, 2025 (Over Time) | Nine Months Ended June 30, 2025 (Point in Time) | Nine Months Ended June 30, 2025 (Over Time) | | :-------------------- | :----------------------------------- | :--------------------------- | :---------------------------------- | :-------------------------- | | Retail Operations | 87.0% | 13.0% | 86.8% | 13.2% | | Product Manufacturing | 100.0% | — | 100.0% | — | Revenue Disaggregation by Category (Total Revenue): | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | New boat sales | 63.6% | 69.9% | 62.7% | 67.4% | | Used boat sales | 12.2% | 8.9% | 12.5% | 9.4% | | Maintenance and repair services | 5.1% | 4.1% | 5.0% | 4.6% | | Storage and charter rentals | 6.4% | 5.6% | 7.5% | 6.9% | | Finance and insurance products | 3.6% | 3.0% | 3.4% | 2.9% | | Parts and accessories | 4.6% | 4.0% | 4.6% | 4.5% | | Brokerage sales | 4.5% | 4.5% | 4.3% | 4.3% | | Total Revenue | 100.0% | 100.0% | 100.0% | 100.0% | 6. Leases MarineMax primarily leases real estate as operating leases, incurring approximately $9.3 million in expenses for three months and $25.4 million for nine months ended June 30, 2025, while also generating lease income as a lessor - Operating lease expenses were approximately $9.3 million for the three months ended June 30, 2025 (vs. $8.9 million in 2024) and $25.4 million for the nine months ended June 30, 2025 (vs. $25.1 million in 2024)[57] - As of June 30, 2025, the weighted-average remaining lease term for operating leases was approximately 19 years, and the weighted-average discount rate used was approximately 6.6%[56][60] Operating Lease Income (Amounts in thousands) for Nine Months Ended June 30: | Income Type | 2025 | 2024 | | :-------------------- | :----- | :----- | | Operating lease income | $7,171 | $7,470 | | Variable lease income | $560 | $536 | | Total rental income | $7,731 | $8,006 | 7. Inventories Inventories are valued at the lower of cost or net realizable value, primarily on a specific identification basis, with total inventories remaining stable at approximately $906.2 million as of June 30, 2025 - Inventories are stated at the lower of cost or net realizable value, with new and used boats, motors, and trailers accounted for on a specific identification basis[65] Inventories Composition (Amounts in thousands): | Category | June 30, 2025 | September 30, 2024 | | :-------------------------------- | :-------------- | :----------------- | | New and used boats, motors, and trailers | $805,226 | $784,152 | | In transit inventory and deposits | 53,441 | 60,470 | | Parts, accessories, and other | 13,410 | 14,569 | | Work-in-process | 18,090 | 24,996 | | Raw materials | 16,052 | 22,454 | | Total Inventories | $906,219 | $906,641 | 8. Goodwill Goodwill is tested for impairment annually, with MarineMax recognizing a $69.1 million non-cash, pre-tax impairment charge for the Product Manufacturing segment due to declining performance, eliminating its carrying value, while no impairment was recorded for Retail Operations - A non-cash, pre-tax goodwill impairment charge of $69.1 million was recognized for the Product Manufacturing reporting unit and segment during the three and nine months ended June 30, 2025, due to declining performance[72] - As a result of the impairment, there was no remaining carrying value of goodwill for the Product Manufacturing segment as of June 30, 2025[72] - No impairments were recorded for the Retail Dealerships, Superyacht Services, or IGY Marinas reporting units within the Retail Operations segment, as their fair values exceeded carrying values[72] Changes in Carrying Amount of Goodwill by Reportable Segment (Amounts in thousands) for Nine Months Ended June 30, 2025: | Item | Retail Operations | Product Manufacturing | Total | | :-------------------------- | :---------------- | :-------------------- | :------ | | Balance as of September 30, 2024 | $523,238 | $69,055 | $592,293 | | Goodwill acquired | 680 | — | 680 | | Foreign currency translation | 3,226 | — | 3,226 | | Goodwill impairment | — | (69,055) | (69,055) | | Balance as of June 30, 2025 | $527,144 | $- | $527,144 | 9. Income Taxes MarineMax recognized an income tax benefit of $6.5 million for three months and $3.0 million for nine months ended June 30, 2025, primarily due to goodwill impairment, resulting in a significantly decreased effective income tax rate Income Tax (Benefit) Provision and Effective Tax Rate: | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Income tax (benefit) provision | $(6,506) | $11,085 | $(3,003) | $11,452 | | Effective income tax rate | 11.1% | 25.9% | 8.9% | 25.2% | - The changes in the effective income tax rates are primarily a result of recording the goodwill impairment[75] 10. Short-term Borrowings and Long-term Debt MarineMax operates under an Amended Credit Facility with a $950 million Floor Plan and other loans maturing in August 2027, with short-term borrowings totaling $735.2 million and long-term debt at $365.1 million as of June 30, 2025, while remaining in compliance with all financial covenants - The Amended Credit Facility provides a Floor Plan of up to $950 million, a $100 million revolving credit facility, a $400 million delayed draw term loan, and a $100 million delayed draw mortgage loan, all maturing in August 2027[77] - As of June 30, 2025, outstanding short-term borrowings (Floor Plan) were approximately $735.2 million, with an interest rate of approximately 7.8% (down from 8.8% in 2024)[80][81] - The Company was in compliance with all covenants under the Amended Credit Agreement as of June 30, 2025, including a leverage ratio not exceeding 3.35 to 1.0 and a consolidated fixed charge coverage ratio greater than 1.10 to 1.0[79] Long-term Debt (Amounts in thousands): | Debt Type | June 30, 2025 | September 30, 2024 | | :------------------------------------------ | :-------------- | :----------------- | | Mortgage facility payable to Flagship Bank | $5,039 | $5,411 | | Mortgage facility payable to Seacoast National Bank | 14,360 | 15,378 | | Mortgage facility payable to Hancock Whitney Bank | 19,931 | 21,366 | | Mortgage facility payable to M&T Bank | 36,540 | — | | Term loan payable to M&T Bank | 325,000 | 347,500 | | Loan payable to TRANSPORT S.a.s di Taula Vittorio & C. | 1,393 | 1,531 | | Total long-term debt | 402,263 | 391,186 | | Less: current portion | (35,593) | (33,766) | | Less: unamortized debt issuance costs | (1,600) | (1,514) | | Long-term debt, net current portion and unamortized debt issuance costs | $365,070 | $355,906 | 11. Stock-Based Compensation MarineMax recognized stock-based compensation expense of approximately $5.6 million for three months and $16.4 million for nine months ended June 30, 2025, with cash received from option exercises at approximately $2.6 million for both nine-month periods - Stock-based compensation expense was approximately $5.6 million for the three months ended June 30, 2025 (vs. $6.1 million in 2024) and $16.4 million for the nine months ended June 30, 2025 (vs. $17.5 million in 2024)[88] - Cash received from option exercises under all share-based compensation arrangements was approximately $2.6 million for both the nine months ended June 30, 2025 and 2024[89] 12. The Incentive Stock Plans Shareholders approved an increase of 495,000 shares to the 2021 Stock-Based Compensation Plan in February 2025, with 1,256,392 shares available for grant and 25,000 options outstanding as of June 30, 2025, and no options granted during the nine-month periods - In February 2025, shareholders approved increasing the total number of available shares under the 2021 Plan by 495,000[90] Incentive Stock Plan Activity (September 30, 2024 to June 30, 2025): | Metric | Shares Available for Grant | Options Outstanding | | :-------------------------- | :------------------------- | :------------------ | | Balance as of September 30, 2024 | 1,295,064 | 30,750 | | Shares authorized | 495,000 | — | | Options exercised | — | (5,750) | | Restricted stock awards granted | (574,132) | — | | Restricted stock awards forfeited | 45,509 | — | | Additional shares of stock issued | (5,049) | — | | Balance as of June 30, 2025 | 1,256,392 | 25,000 | - No options were granted during the nine months ended June 30, 2025 and 2024[92] 13. Restricted Stock Awards The Company grants non-vested restricted stock awards and RSUs with two to four-year vesting periods, with approximately $23.1 million of unrecognized compensation cost as of June 30, 2025, to be recognized over 2.0 years Restricted Stock Award Activity (September 30, 2024 to June 30, 2025): | Metric | Shares/Units | | :-------------------------------- | :----------- | | Non-vested balance as of September 30, 2024 | 1,453,229 | | Awards granted | 574,132 | | Awards vested | (133,509) | | Awards forfeited | (45,509) | | Non-vested balance as of June 30, 2025 | 1,848,343 | - As of June 30, 2025, total unrecognized compensation cost related to non-vested restricted stock awards was approximately $23.1 million, to be recognized over a weighted average period of 2.0 years[95] 14. Employee Stock Purchase Plan In February 2025, shareholders approved an increase of 500,000 shares to the Stock Purchase Plan, allowing employees to purchase common stock at a discount, with 1,428,555 shares issued as of June 30, 2025 - Shareholders approved an increase of 500,000 shares to the Stock Purchase Plan in February 2025, making up to 2,000,000 shares available for purchase by employees[96] - As of June 30, 2025, 1,428,555 shares of common stock have been issued under the Stock Purchase Plan[97] Black-Scholes Model Weighted Average Assumptions for Stock Purchase Plan: | Assumption | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Dividend yield | 0.0% | 0.0% | 0.0% | 0.0% | | Risk-free interest rate | 4.3% | 5.4% | 4.3% | 5.4% | | Volatility | 53.3% | 50.7% | 57.5% | 46.0% | | Expected life | Six Months | Six Months | Six Months | Six Months | 15. Net Income Per Share The weighted average common shares outstanding for basic net income per share were 21,515,092 for three months and 22,249,076 for nine months ended June 30, 2025, with dilutive options and restricted stock being anti-dilutive and excluded Weighted Average Shares Used in Net Income Per Share Calculation: | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Weighted average common shares outstanding used in calculating basic net income per share | 21,515,092 | 22,268,758 | 22,249,076 | 22,254,619 | | Effect of dilutive options and non-vested restricted stock awards | — | 780,339 | — | 697,615 | | Weighted average common and common equivalent shares used in calculating diluted net income per share | 21,515,092 | 23,049,097 | 22,249,076 | 22,952,234 | - Approximately 1.9 million weighted average shares of options and non-vested restricted stock were anti-dilutive for the three months ended June 30, 2025, and 1.8 million for the nine months ended June 30, 2025, and thus excluded from diluted EPS calculation[98] 16. Commitments and Contingencies The Company is involved in various legal actions in the ordinary course of business, but these are not expected to have a material adverse effect on its financial condition, results of operations, or cash flows - The Company is party to various legal actions arising in the ordinary course of business, but these are not expected to have a material adverse effect on its financial condition, results of operations, or cash flows[99] 17. Segment Information MarineMax operates in Retail Operations and Product Manufacturing segments, with Retail Operations revenue decreasing by 12.8% and operating income by 52.2%, while Product Manufacturing revenue decreased by 15.5% and incurred a significant operating loss due to goodwill impairment for the three months ended June 30, 2025 - MarineMax's reportable segments are Retail Operations (selling new/used boats, marine products, services, marinas, superyacht services) and Product Manufacturing (Cruisers Yachts and Intrepid Powerboats)[101][102] Revenue and (Loss) Income from Operations by Reportable Segment (Amounts in thousands): | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenue: | | | | | | Retail Operations | $655,750 | $752,171 | $1,750,439 | $1,855,433 | | Product Manufacturing | 32,150 | 38,062 | 105,591 | 124,372 | | Elimination of intersegment revenue | (30,741) | (32,513) | (98,895) | (111,919) | | Total Revenue | $657,159 | $757,720 | $1,757,135 | $1,867,886 | | (Loss) Income from operations: | | | | | | Retail Operations | $28,079 | $58,733 | $90,271 | $94,204 | | Product Manufacturing | (72,363) | (548) | (75,570) | 2,508 | | Intersegment adjustments | 2,744 | 2,842 | 5,472 | 4,715 | | Total (Loss) Income from operations | $(41,540) | $61,027 | $20,173 | $101,427 | - The Product Manufacturing segment's operating loss for the three and nine months ended June 30, 2025, includes a $69.1 million non-cash goodwill impairment charge[103] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses MarineMax's financial condition and results, highlighting decreased revenue and gross profit due to a challenging retail environment, the $69.1 million goodwill impairment, liquidity, capital resources, and the impact of seasonality and weather 2.1 Overview and Business Environment This section provides an overview of MarineMax as the world's largest recreational boat and yacht retailer, detailing recent acquisitions and the negative impact of economic conditions on its operating results - MarineMax is the world's largest recreational boat and yacht retailer, marina operator, and superyacht services company, with over 70 retail locations in 21 states[108][117] - Recent acquisitions include Boatzon, C&C Boat Works, AGY, Williams Tenders USA, Native Marine, Aviara brand rights, and two marinas, continuing the company's acquisition strategy[109][110] - Operating results are negatively impacted by general economic conditions, consumer discretionary spending, higher long-term interest rates, and tariffs, leading to decreased revenues and profits[111][112][114] - The company believes its core strengths and retailing strategies, including its digital platform, will enable it to capitalize on growth opportunities despite industry cyclicality[116] 2.2 Application of Critical Accounting Policies This section discusses the company's critical accounting policies, particularly goodwill impairment testing, which resulted in a $69.1 million charge for the Product Manufacturing segment - The company tests goodwill for impairment at least annually, or when events indicate carrying value may not be recoverable, using income and market approaches for fair value estimation[120][122] - A non-cash, pre-tax goodwill impairment charge of $69.1 million was recognized for the Product Manufacturing reporting unit during the three and nine months ended June 30, 2025, due to declining performance[124] - No impairments were recorded for the Retail Dealerships, Superyacht Services, or IGY Marinas reporting units, as their fair values exceeded carrying values, with excesses ranging from 4% to 15%[125] 2.3 Recent Accounting Pronouncements This section refers to Note 3 for details on recent accounting pronouncements and their potential impact on financial disclosures - Refer to Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for information on recent accounting pronouncements[126] 2.4 Consolidated Results of Operations This section analyzes the company's consolidated financial performance, detailing changes in revenue, gross profit, expenses, and net income for the three and nine months ended June 30, 2025 2.4.1 Three Months Ended June 30, 2025 Compared with Three Months Ended June 30, 2024 This section compares the company's financial performance for the three months ended June 30, 2025, against the prior year, highlighting decreases in revenue and gross profit, and the impact of goodwill impairment Key Financial Changes (Three Months Ended June 30, 2025 vs. 2024, Amounts in thousands): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------------ | :------- | :------- | :--------- | :--------- | | Revenue | $657,159 | $757,720 | $(100,561) | (13.3%) | | Gross Profit | $199,621 | $242,099 | $(42,478) | (17.6%) | | Gross Profit as % of Revenue | 30.4% | 32.0% | (1.6 pp) | | | Selling, General, and Administrative Expenses | $172,106 | $181,072 | $(8,966) | (5.0%) | | Goodwill impairment | $69,055 | $— | $69,055 | N/A | | Interest Expense | $16,936 | $18,229 | $(1,293) | (7.1%) | | Income Taxes (Benefit) Provision | $(6,506) | $11,085 | $(17,591) | (158.7%) | | Effective Income Tax Rate | 11.1% | 25.9% | (14.8 pp) | | - Revenue decrease was driven by a 9% decrease in comparable-store sales and a $33.5 million net decrease from closed stores and manufacturing revenue, primarily due to challenging retail environment and economic uncertainty[128] - Gross profit percentage decreased due to lower boat margins in a challenging retail environment[129] - The significant increase in goodwill impairment is due to a non-cash charge related to the product manufacturing reporting unit[131] 2.4.2 Nine Months Ended June 30, 2025 Compared with Nine Months Ended June 30, 2024 This section compares the company's financial performance for the nine months ended June 30, 2025, against the prior year, showing decreases in revenue and gross profit, and reduced selling, general, and administrative expenses Key Financial Changes (Nine Months Ended June 30, 2025 vs. 2024, Amounts in thousands): | Metric | 2025 | 2024 | Change ($) | Change (%) | | :------------------------------------------ | :----------- | :----------- | :--------- | :--------- | | Revenue | $1,757,135 | $1,867,886 | $(110,751) | (5.9%) | | Gross Profit | $558,786 | $608,001 | $(49,215) | (8.1%) | | Gross Profit as % of Revenue | 31.8% | 32.5% | (0.7 pp) | | | Selling, General, and Administrative Expenses | $469,558 | $506,574 | $(37,016) | (7.3%) | | Goodwill impairment | $69,055 | $— | $69,055 | N/A | | Interest Expense | $53,860 | $55,968 | $(2,108) | (3.8%) | | Income Taxes (Benefit) Provision | $(3,003) | $11,452 | $(14,455) | (126.2%) | | Effective Income Tax Rate | 8.9% | 25.2% | (16.3 pp) | | - Revenue decrease was due to a 3% decrease in comparable-store sales and a $50.1 million net decrease from closed stores and manufacturing revenue, driven by challenging retail environment and economic uncertainty[134] - Selling, general, and administrative expenses decreased primarily due to changes in the fair value of contingent consideration liabilities and cost-saving initiatives[136] 2.5 Liquidity and Capital Resources This section analyzes MarineMax's liquidity and capital resources, detailing cash flows from operating, investing, and financing activities, and outlining the Amended Credit Facility and compliance with covenants - Cash provided by operating activities was $11.4 million for the nine months ended June 30, 2025, a significant improvement from $24.9 million cash used in the prior year[143] - Cash used in investing activities decreased to $42.1 million in 2025 from $64.8 million in 2024, primarily for property and equipment, acquisitions, and notes receivable[144] - Cash used in financing activities was $43.1 million in 2025, compared to $130.1 million provided in 2024, mainly due to debt payments, contingent consideration, and treasury stock purchases, partially offset by short-term borrowings[145] - The Amended Credit Facility provides a Floor Plan of up to $950 million, a $100 million revolving credit facility, a $400 million delayed draw term loan, and a $100 million delayed draw mortgage loan, all maturing in August 2027[146] - As of June 30, 2025, the Company was in compliance with all covenants under the Amended Credit Facility and believes existing capital resources will be adequate for at least the next 12 months, excluding significant acquisitions[142][151] 2.6 Impact of Seasonality and Weather on Operations This section discusses how the recreational boating industry's seasonality and adverse weather patterns, such as prolonged winters or hurricanes, can significantly impact the company's sales and operations - The recreational boating industry is highly seasonal, with lower sales and higher inventories typically in the December and March quarters, except in Florida[152] - Business is subject to adverse weather patterns (e.g., prolonged winters, droughts, excessive rain, hurricanes) which can curtail customer demand and disrupt operations, despite geographic diversity[153] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk MarineMax is exposed to market risks from interest rate changes on variable-rate debt and foreign currency fluctuations, with a 100 basis point interest rate increase potentially raising annual pre-tax interest expense by $10.9 million 3.1 Interest Rate Risk This section details the company's exposure to interest rate risk, noting that a 100 basis point increase would raise annual pre-tax interest expense by approximately $10.9 million - A hypothetical 100 basis point increase in interest rates would result in an approximate $10.9 million increase in annual pre-tax interest expense, based on outstanding variable-rate debt as of June 30, 2025[154] 3.2 Foreign Currency Exchange Rate Risk This section discusses the company's exposure to foreign currency exchange rate risk, which can impact product pricing, competitiveness, and the financial results of international operations - Fluctuations in the U.S. dollar exchange rate can impact the retail price and competitiveness of products purchased from European and Chinese manufacturers[155] - The Fraser Yachts Group, Northrop & Johnson, and IGY Marinas have transactions and balances denominated in currencies other than the U.S. dollar, primarily euros[158] - Net revenues whose functional currency was not the U.S. dollar accounted for approximately 4% of total revenues in fiscal 2024[158] ITEM 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter, acknowledging inherent control limitations 4.1 Evaluation of Disclosure Controls and Procedures This section confirms that the CEO and CFO evaluated and concluded the company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[160] 4.2 Changes in Internal Controls This section states that there were no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or were reasonably likely to materially affect, internal control over financial reporting[161] 4.3 Limitations on the Effectiveness of Controls This section acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as faulty judgments, errors, circumvention, or management override - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as faulty judgments, simple errors, circumvention by individuals or collusion, and management override[162] 4.4 CEO and CFO Certifications This section refers to the CEO and CFO Certifications included as Exhibits 31.1 and 31.2, as required by Section 302 of the Sarbanes-Oxley Act of 2002 - Exhibits 31.1 and 31.2 contain the Certifications of the Chief Executive Officer and Chief Financial Officer, respectively, as required by Section 302 of the Sarbanes-Oxley Act of 2002[163] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, risk factors, equity security sales, defaults, mine safety disclosures, other information, and exhibits ITEM 1. Legal Proceedings MarineMax is involved in various legal actions in the ordinary course of business, but these are not expected to have a material adverse effect on its financial condition, results of operations, or cash flows - The Company is party to various legal actions arising in the ordinary course of business, but these are not believed to have a material adverse effect on its financial condition, results of operations, or cash flows[165] ITEM 1A. Risk Factors No new material risk factors are reported for this quarterly period - No new material risk factors are reported in this quarterly period[166] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds During the three months ended June 30, 2025, MarineMax repurchased 783,932 shares of common stock at an average price of $19.20 per share, as part of a $100 million repurchase program through March 31, 2026 Common Stock Repurchases (Three Months Ended June 30, 2025): | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that may be Purchased Under the Plans or Programs | | :----------------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :----------------------------------------------------------------------- | | April 1, 2025 - April 30, 2025 | 783,932 | $19.20 | 783,932 | 3,279,531 | | May 1, 2025 - May 31, 2025 | - | - | - | 3,319,752 | | June 1, 2025 - June 30, 2025 | - | - | - | 2,799,472 | | Total | 783,932 | $19.20 | 783,932 | 2,799,472 | - The share repurchase program, announced on March 11, 2024, authorizes the Company to purchase up to $100 million of its common stock through March 31, 2026[168] ITEM 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - No defaults upon senior securities were reported[170] ITEM 4. Mine Safety Disclosures This item is not applicable to the Company - Mine Safety Disclosures are not applicable[171] ITEM 5. Other Information No officers or directors adopted or terminated Rule 10b5-1 trading arrangements during the three months ended June 30, 2025, and the Board adopted Amended and Restated Bylaws enhancing shareholder nomination and proposal requirements - None of the Company's officers or directors adopted or terminated any Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[172] - The Board adopted Amended and Restated Bylaws, effective April 14, 2025, which enhance procedural mechanics and disclosure requirements for shareholder nominations of directors and proposals[173] ITEM 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and XBRL data files - The report includes exhibits such as Articles of Incorporation, Amended and Restated Bylaws, Specimen of Common Stock Certificate, CEO and CFO Certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents (101.INS, 101.SCH, 104)[176] SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the report - The report was signed on July 24, 2025, by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director (Principal Accounting and Financial Officer) of MarineMax, Inc[180]