MarineMax(HZO) - 2022 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion for the three months ended December 31, 2021 Item 1. Financial Statements Presents MarineMax, Inc.'s unaudited condensed consolidated financial statements for the three months ended December 31, 2021, with comparative data and detailed notes Condensed Consolidated Statements of Operations Details the company's revenue, gross profit, operating income, and net income for the three months ended December 31, 2021 and 2020 Three Months Ended December 31 (in thousands, except per share data) | Financial Metric | 2020 | 2021 | | :--- | :--- | :--- | | Revenue | $411,524 | $472,691 | | Gross profit | $123,401 | $167,199 | | Income from operations | $31,984 | $47,202 | | Net income | $23,600 | $35,943 | | Diluted net income per common share | $1.04 | $1.59 | Condensed Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and shareholders' equity as of September 30, 2021, and December 31, 2021 Balance Sheet Data (in thousands) | Account | Sep 30, 2021 | Dec 31, 2021 | | :--- | :--- | :--- | | Total current assets | $517,519 | $597,915 | | Inventories, net | $230,984 | $325,396 | | Total assets | $1,007,823 | $1,175,136 | | Total current liabilities | $251,093 | $379,920 | | Short-term borrowings | $23,943 | $113,461 | | Total liabilities | $412,931 | $541,784 | | Total shareholders' equity | $594,892 | $633,352 | Condensed Consolidated Statements of Cash Flows Outlines the cash flows from operating, investing, and financing activities for the three months ended December 31, 2021 and 2020 Cash Flow Summary for Three Months Ended Dec 31 (in thousands) | Cash Flow Activity | 2020 | 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(12,839) | $8,079 | | Net cash used in investing activities | $(55,177) | $(92,578) | | Net cash provided by financing activities | $33,095 | $78,996 | | Net decrease in cash and cash equivalents | $(34,554) | $(5,877) | Notes to Condensed Consolidated Financial Statements Provides additional information on the company's business, significant acquisitions, accounting policies, and segment reporting - The company is the largest recreational boat and yacht retailer, operating through 79 retail locations in 21 states as of December 31, 2021[22] - In November 2021, the company acquired Intrepid, a powerboat manufacturer, and Texas Marine Holdings ("Texas MasterCraft"), a watersports dealer[25] - Effective May 2, 2021, the company changed its reportable segments to two new segments: Retail Operations and Product Manufacturing, following the acquisition of Cruisers Yachts[34][90] Segment Revenue and Income from Operations (Three Months Ended Dec 31, in thousands) | Segment | Revenue 2021 | Income from Operations 2021 | | :--- | :--- | :--- | | Retail Operations | $454,618 | $45,123 | | Product Manufacturing | $34,244 | $3,443 | | Elimination of intersegment | $(16,171) | $(1,364) | | Total | $472,691 | $47,202 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the quarter ended December 31, 2021, highlighting revenue growth, margin expansion, liquidity, and capital resources Consolidated Results of Operations Analyzes the company's revenue, gross profit, and selling, general, and administrative expenses for the three months ended December 31, 2021 - Revenue for the three months ended Dec 31, 2021, increased by $61.2 million (14.9%) to $472.7 million, compared to the same period in 2020[109] - The revenue increase was driven by an 8.9% increase in comparable-store sales ($36.6 million) and a $24.6 million net increase from acquisitions and manufacturing operations[109] - Gross profit margin increased to 35.4% from 30.0% year-over-year, primarily due to demand-driven price increases and growth in higher-margin businesses[110] - Selling, General, and Administrative (SG&A) expenses increased by 31.3% to $120.0 million, driven by acquisitions and a business mix shift towards higher-margin businesses that have a higher expense structure[111] Liquidity and Capital Resources Discusses the company's cash flow activities, credit facility, and ability to meet short-term and long-term liquidity needs - Cash provided by operating activities was $8.1 million for the three months ended Dec 31, 2021, a significant improvement from the $12.8 million used in the prior-year period[116] - Cash used in investing activities was $92.6 million, primarily for acquisitions (including Intrepid and Texas MasterCraft) and property and equipment purchases[117] - The company has a credit facility of up to $500.0 million, expiring in July 2024. As of December 31, 2021, the company was in compliance with all covenants[119][120] - Management believes cash from operations and existing capital resources are adequate to meet liquidity needs for at least the next 12 months, excluding potential significant acquisitions[123] Item 3. Quantitative and Qualitative Disclosures About Market Risk Identifies the company's primary market risks, including interest rate risk and foreign currency exchange rate risk - The company is exposed to interest rate risk on its variable-rate debt. A hypothetical 100 basis point increase in interest rates would result in an estimated $1.5 million increase in annual pre-tax interest expense[127] - Foreign currency exchange risk exists from purchasing products from European and Chinese manufacturers and from the operations of Fraser Yachts Group and Northrop & Johnson, which have transactions in currencies other than the U.S. dollar[128][129] Item 4. Controls and Procedures Details management's evaluation of the company's disclosure controls and procedures, including implementation for new acquisitions - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[131] - During the quarter, the company began implementing internal controls over financial reporting for the newly acquired Intrepid, which was acquired on November 1, 2021[132] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, and exhibits filed with the quarterly report Item 1. Legal Proceedings Addresses ongoing legal actions arising in the ordinary course of business and their expected impact on the company's financials - The company states that ongoing legal actions from the ordinary course of business are not expected to have a material adverse effect on its financial condition or results[137] Item 1A. Risk Factors States that no new material risk factors were reported for the current period - No new risk factors were reported in this quarterly filing[138] Item 6. Exhibits Lists the supporting documents and certifications filed with the Form 10-Q - The exhibits include amendments to the company's Loan and Security Agreement and certifications from the CEO and CFO[145]