MarineMax(HZO) - 2021 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for periods ended March 31, 2021, show significant growth in revenue and net income, increased assets, and a shift to positive operating cash flow Condensed Consolidated Statements of Operations The statements show substantial revenue growth of 69.6% to $523.1 million and net income surge of 668.7% to $38.9 million for the three months ended March 31, 2021 Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2021 | Three Months Ended Mar 31, 2020 | Change (%) | Six Months Ended Mar 31, 2021 | Six Months Ended Mar 31, 2020 | Change (%) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $523,095 | $308,475 | 69.6% | $934,618 | $612,647 | 52.6% | | Gross Profit | $156,806 | $78,776 | 99.0% | $280,207 | $158,794 | 76.4% | | Income from Operations | $52,870 | $9,716 | 444.1% | $84,853 | $25,348 | 234.7% | | Net Income | $38,935 | $5,065 | 668.7% | $62,535 | $14,124 | 342.8% | | Diluted EPS | $1.69 | $0.23 | 634.8% | $2.73 | $0.64 | 326.6% | Condensed Consolidated Balance Sheets Total assets increased to $925.1 million as of March 31, 2021, driven by acquisitions and operating lease assets, while short-term borrowings significantly decreased Balance Sheet Summary (in thousands) | Account | March 31, 2021 | September 30, 2020 | | :--- | :--- | :--- | | Total Current Assets | $515,054 | $503,327 | | Total Assets | $925,126 | $775,319 | | Total Current Liabilities | $240,176 | $272,534 | | Total Liabilities | $401,822 | $319,922 | | Total Shareholders' Equity | $523,304 | $455,397 | - Short-term borrowings decreased substantially to $35.8 million at March 31, 2021, from $144.4 million at September 30, 2020[16] - Goodwill and other intangible assets increased from $84.3 million to $142.2 million, largely due to the SkipperBud's acquisition[16][57] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities significantly improved to $146.6 million for the six months ended March 31, 2021, driven by higher net income and working capital management Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended Mar 31, 2021 | Six Months Ended Mar 31, 2020 | | :--- | :--- | :--- | | Net cash from Operating Activities | $146,640 | $(18,608) | | Net cash from Investing Activities | $(64,260) | $(5,125) | | Net cash from Financing Activities | $(95,094) | $49,569 | | Net (Decrease) Increase in Cash | $(12,605) | $25,895 | | Cash at End of Period | $142,888 | $64,406 | - Cash used in acquisitions was $50.3 million for the six months ended March 31, 2021, compared to $1.4 million in the prior year period[21] Notes to Condensed Consolidated Financial Statements The notes detail business background, accounting policies, and key financial components, including the SkipperBud's acquisition, revenue recognition, and credit facility terms - The company is the largest recreational boat and yacht retailer in the U.S., operating 77 retail locations in 21 states as of March 31, 2021[23] - In October 2020, the company acquired SkipperBud's for an aggregate purchase price of $55 million, plus a potential earnout of up to $9.3 million, adding approximately $56.4 million in goodwill[26][52][55] - Revenue from goods and services transferred at a point in time constituted 93.1% of total revenue for the three months ended March 31, 2021[44] - The company has a $440 million credit facility expiring in May 2023, with $35.8 million outstanding and approximately $181 million additional availability as of March 31, 2021[60][63] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes strong performance to robust consumer demand, leading to significant comparable-store sales growth, expanded gross margins, improved operating leverage, and strong liquidity Consolidated Results of Operations Revenue increased 69.6% to $523.1 million for the three months ended March 31, 2021, driven by comparable-store sales and acquisitions, with gross margin improving to 30.0% Q2 FY2021 vs Q2 FY2020 Performance (Three Months Ended March 31) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $523.1M | $308.5M | +69.6% | | Comparable-Store Sales | - | - | +45.5% | | Gross Profit | $156.8M | $78.8M | +99.0% | | Gross Margin | 30.0% | 25.5% | +450 bps | | SG&A as % of Revenue | 19.9% | 22.4% | -250 bps | H1 FY2021 vs H1 FY2020 Performance (Six Months Ended March 31) | Metric | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $934.6M | $612.6M | +52.6% | | Comparable-Store Sales | - | - | +32.9% | | Gross Profit | $280.2M | $158.8M | +76.4% | | Gross Margin | 30.0% | 25.9% | +410 bps | | SG&A as % of Revenue | 20.9% | 21.8% | -90 bps | - The increase in gross profit margin was primarily due to demand-driven increases in new and used boat margins and growth in higher-margin businesses, including contributions from the Northrop & Johnson acquisition[98][103] Liquidity and Capital Resources The company maintains a strong liquidity position, with $146.6 million cash from operations and $181 million available under its credit facility, ensuring adequate resources for future needs - Cash provided by operating activities was $146.6 million for the six months ended March 31, 2021, a stark contrast to the $18.6 million used in the same period of 2020[110] - The company has a $440 million credit facility with leverage and current ratio covenants, and was in compliance with all covenants as of March 31, 2021[109][114] - As of March 31, 2021, additional available borrowings under the Credit Facility were approximately $181 million[117] Quantitative and Qualitative Disclosures About Market Risk The company faces market risks from interest rates and foreign currency exchange rates, with a 100 basis point interest rate increase impacting pre-tax expense by $0.4 million - A hypothetical 100 basis point increase in interest rates would raise annual pre-tax interest expense by about $0.4 million, based on the short-term debt balance as of March 31, 2021[122] - The company faces foreign currency exchange risk from products purchased from European and Chinese manufacturers, which could affect product pricing and profitability, and is not currently using hedging transactions[123] Controls and Procedures Management concluded that disclosure controls and procedures were effective, and the company is implementing internal controls for the newly acquired SkipperBud's subsidiary - The CEO and CFO evaluated disclosure controls and procedures and found them to be effective at a reasonable assurance level as of the end of the reporting period[126] - Following the acquisition of SkipperBud's on October 1, 2020, the company is implementing its standard accounting processes and internal controls over financial reporting for the new subsidiary[127] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal actions arising in the ordinary course of business, which are not expected to have a material adverse effect - The company is party to various legal actions arising in the ordinary course of business, which are not expected to have a material adverse effect[131] Risk Factors No new risk factors were disclosed in this quarterly report - No new risk factors were disclosed in this quarterly report[132] Exhibits This section lists exhibits filed with the Form 10-Q, including executive retention agreements and CEO/CFO certifications - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and Key Executive Retention Agreements[138]