MarineMax(US:HZO)2024-04-25 12:00Executive Summary & Highlights MarineMax reported a 2% revenue increase to $582.9 million in Q2 FY2024, facing margin pressure from promotions in a challenging market, while strategically growing higher-margin businesses and implementing cost reductions Q2 Fiscal 2024 Key Performance Indicators | Metric | Value | Change (YoY) | | :--- | :--- | :--- | | Revenue | $582.9 Million | +2% | | Same-Store Sales | N/A | +2% | | Gross Profit Margin | 32.7% | -250 bps | | Net Income | $1.6 Million | -94.7% | | Diluted EPS | $0.07 | -94.8% | | Adjusted Diluted EPS | $0.18 | -85.4% | | Adjusted EBITDA | $29.6 Million | -48.3% | - The company is operating in a challenging market characterized by industry-wide declines in boat registrations, elevated interest rates, and persistent inflation, which necessitated more aggressive promotional activity3 - Strategic actions include focusing on higher-margin businesses, completing the acquisition of Williams Tenders USA to gain exclusive distribution rights, and implementing additional cost-saving measures to enhance cash position and balance sheet health45 Detailed Financial Performance (Q2 2024) Revenue grew 2% to $582.9 million in Q2 2024, but gross profit declined 5.2% to $190.4 million due to promotions, while increased SG&A and interest expenses led to a sharp drop in net income to $1.6 million Q2 2024 vs Q2 2023 Financial Comparison | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $582.9M | $570.3M | +2.2% | | Gross Profit | $190.4M | $200.9M | -5.2% | | Gross Margin | 32.7% | 35.2% | -250 bps | | Net Income | $1.6M | $30.0M | -94.7% | | Diluted EPS | $0.07 | $1.35 | -94.8% | - Selling, general, and administrative (SG&A) expenses increased to $169.0 million (29.0% of revenue) from $145.5 million (25.5% of revenue) in the prior-year period9 - Interest expense rose to $19.4 million from $13.3 million year-over-year, attributed to higher interest rates and increased inventory levels10 Fiscal 2024 Guidance The company revised its FY2024 guidance downwards, projecting Adjusted net income per diluted share between $2.20 and $3.20, and Adjusted EBITDA from $155 million to $190 million, excluding potential acquisitions Revised Fiscal 2024 Guidance | Metric | Revised Guidance Range | | :--- | :--- | | Adjusted Net Income per Diluted Share | $2.20 to $3.20 | | Adjusted EBITDA | $155 million to $190 million | Financial Statements This section presents the company's condensed consolidated financial statements, including statements of operations, balance sheets, and segment financial information Condensed Consolidated Statements of Operations For the three months ended March 31, 2024, revenue increased slightly to $582.9 million, but income from operations dropped sharply to $21.4 million, leading to a net income plummet to $1.6 million Statement of Operations Summary (Three Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $582,892 | $570,340 | | Gross Profit | $190,421 | $200,909 | | Income from Operations | $21,401 | $55,405 | | Net Income Attributable to MarineMax, Inc. | $1,587 | $30,035 | Statement of Operations Summary (Six Months Ended March 31, in thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenue | $1,110,166 | $1,078,267 | | Gross Profit | $365,902 | $387,806 | | Income from Operations | $40,400 | $91,905 | | Net Income Attributable to MarineMax, Inc. | $2,517 | $49,725 | Condensed Consolidated Balance Sheets As of March 31, 2024, total assets increased to $2.63 billion, driven by a rise in inventories to $932.6 million, while total liabilities grew to $1.69 billion due to increased short-term borrowings Balance Sheet Highlights (as of March 31, in thousands) | Account | 2024 | 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $216,684 | $204,339 | | Inventories | $932,607 | $711,296 | | Total assets | $2,630,989 | $2,324,728 | | Liabilities & Equity | | | | Short-term borrowings | $736,717 | $498,647 | | Total liabilities | $1,690,531 | $1,473,468 | | Total shareholders' equity | $940,458 | $851,260 | Segment Financial Information In Q2 2024, Retail Operations revenue increased to $579.2 million but operating income fell to $20.7 million, while Product Manufacturing revenue declined to $40.2 million and swung to an operating loss of $0.9 million Segment Performance (Three Months Ended March 31, in thousands) | Segment | Revenue 2024 | Revenue 2023 | Income from Ops 2024 | Income from Ops 2023 | | :--- | :--- | :--- | :--- | :--- | | Retail Operations | $579,177 | $558,872 | $20,665 | $53,737 | | Product Manufacturing | $40,182 | $56,749 | $(914) | $6,243 | Non-GAAP Financial Measures Reconciliation The company provides non-GAAP measures like Adjusted Net Income and Adjusted EBITDA for comparability, with Q2 2024 Adjusted Net Income at $4.1 million and Adjusted EBITDA at $29.6 million, noting forward-looking reconciliation to GAAP is impractical - The company believes non-GAAP measures like Adjusted Net Income and Adjusted EBITDA are key performance indicators that improve period-to-period comparability and provide better insight into core business operations29 Reconciliation of Net Income to Adjusted Net Income (Q2, in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net income attributable to MarineMax, Inc. | $1,587 | $30,035 | | Adjustments (Transaction costs, amortization, etc.) | $2,491 | $(2,599) | | Adjusted net income | $4,078 | $27,436 | Reconciliation to Adjusted EBITDA (Q2, in thousands) | Description | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Net income attributable to MarineMax, Inc. | $1,587 | $30,035 | | Adjustments (Interest, Taxes, D&A, etc.) | $28,012 | $27,319 | | Adjusted EBITDA | $29,599 | $57,354 |