MarineMax(HZO) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides MarineMax, Inc.'s unaudited condensed consolidated financial statements and related notes for the interim period ITEM 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for MarineMax, Inc. and its subsidiaries, including statements of operations, comprehensive income, balance sheets, shareholders' equity, and cash flows, along with detailed notes explaining accounting policies, fair value measurements, revenue recognition, leases, inventories, goodwill, debt, and stock-based compensation Condensed Consolidated Statements of Operations This section details the company's revenue, gross profit, operating income, and net income for the three and six months ended March 31, 2023 and 2024 Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric (in thousands) | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Revenue | $570,340 | $582,892 | $12,552 | 2.2% | | Gross profit | $200,909 | $190,421 | $(10,488) | -5.2% | | Income from operations | $55,405 | $21,401 | $(34,004) | -61.4% | | Net income attributable to MarineMax, Inc. | $30,035 | $1,587 | $(28,448) | -94.7% | | Basic net income per common share | $1.37 | $0.07 | $(1.30) | -94.9% | | Diluted net income per common share | $1.35 | $0.07 | $(1.28) | -94.8% | Condensed Consolidated Statements of Operations (Six Months Ended March 31) | Metric (in thousands) | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Revenue | $1,078,267 | $1,110,166 | $31,899 | 3.0% | | Gross profit | $387,806 | $365,902 | $(21,904) | -5.6% | | Income from operations | $91,905 | $40,400 | $(51,505) | -56.0% | | Net income attributable to MarineMax, Inc. | $49,725 | $2,517 | $(47,208) | -94.9% | | Basic net income per common share | $2.28 | $0.11 | $(2.17) | -95.2% | | Diluted net income per common share | $2.23 | $0.11 | $(2.12) | -95.1% | Condensed Consolidated Statements of Comprehensive Income This section presents the company's net income, other comprehensive income components, and total comprehensive income for the three and six months ended March 31, 2023 and 2024 Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31) | Metric (in thousands) | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Net income | $29,924 | $1,449 | $(28,475) | -95.2% | | Foreign currency translation adjustments | $1,224 | $(1,607) | $(2,831) | -231.3% | | Interest rate swap contract | $(182) | $61 | $243 | -133.5% | | Total other comprehensive income (loss), net of tax | $1,042 | $(1,546) | $(2,588) | -248.4% | | Comprehensive income (loss) | $30,966 | $(97) | $(31,063) | -100.3% | | Comprehensive income attributable to MarineMax, Inc. | $31,038 | $227 | $(30,811) | -99.3% | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended March 31) | Metric (in thousands) | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Net income | $49,911 | $2,294 | $(47,617) | -95.4% | | Foreign currency translation adjustments | $6,310 | $1,619 | $(4,691) | -74.3% | | Interest rate swap contract | $(251) | $(225) | $26 | -10.4% | | Total other comprehensive income (loss), net of tax | $6,059 | $1,394 | $(4,665) | -77.0% | | Comprehensive income (loss) | $55,970 | $3,688 | $(52,282) | -93.4% | | Comprehensive income attributable to MarineMax, Inc. | $55,544 | $3,745 | $(51,799) | -93.2% | Condensed Consolidated Balance Sheets This section provides a snapshot of the company's assets, liabilities, and shareholders' equity as of September 30, 2023, and March 31, 2024 Condensed Consolidated Balance Sheets (as of March 31, 2024 vs. September 30, 2023) | Metric (in thousands) | September 30, 2023 | March 31, 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :----------------- | :------------- | :---------------------- | :--------- | | ASSETS | | | | | | Cash and cash equivalents | $201,456 | $216,684 | $15,228 | 7.6% | | Inventories | $812,830 | $932,607 | $119,777 | 14.7% | | Total current assets | $1,123,176 | $1,292,926 | $169,750 | 15.1% | | Total assets | $2,421,305 | $2,630,989 | $209,684 | 8.7% | | LIABILITIES | | | | | | Short-term borrowings (Floor Plan) | $537,060 | $736,717 | $199,657 | 37.2% | | Total current liabilities | $847,049 | $1,045,608 | $198,559 | 23.4% | | Total liabilities | $1,502,888 | $1,690,531 | $187,643 | 12.5% | | SHAREHOLDERS' EQUITY | | | | | | Total shareholders' equity attributable to MarineMax, Inc. | $915,843 | $931,309 | $15,466 | 1.7% | | Total shareholders' equity | $918,417 | $940,458 | $22,041 | 2.4% | Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in shareholders' equity, including net income, acquisitions, stock issuance, and compensation, for the six months ended March 31, 2024 Condensed Consolidated Statements of Shareholders' Equity (Six Months Ended March 31, 2024) | Metric (in thousands) | September 30, 2023 | March 31, 2024 | | :-------------------- | :----------------- | :------------- | | Balance, September 30, 2023 | $918,417 | - | | Net income (loss) | - | $2,517 | | Non-controlling interests in subsidiaries from acquisitions | - | $6,655 | | Shares issued pursuant to employee stock purchase plan | - | $1,353 | | Stock-based compensation | - | $11,403 | | Other comprehensive income (loss) | - | $1,394 | | Balance, March 31, 2024 | - | $940,458 | Condensed Consolidated Statements of Cash Flows This section details cash flows from operating, investing, and financing activities for the six months ended March 31, 2023 and 2024 Condensed Consolidated Statements of Cash Flows (Six Months Ended March 31) | Metric (in thousands) | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Net cash used in operating activities | $(250,522) | $(111,182) | $139,340 | -55.6% | | Net cash used in investing activities | $(524,246) | $(49,889) | $474,357 | -90.5% | | Net cash provided by financing activities | $748,852 | $175,444 | $(573,408) | -76.6% | | Net (decrease) increase in cash and cash equivalents | $(23,935) | $15,228 | $39,163 | -163.6% | | Cash and cash equivalents, end of period | $204,339 | $216,684 | $12,345 | 6.0% | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of accounting policies, significant estimates, and specific financial statement line items 1. COMPANY BACKGROUND MarineMax is the world's largest recreational boat and yacht retailer, with operations significantly influenced by economic conditions in Florida - MarineMax is the world's largest recreational boat and yacht retailer and superyacht services provider, with over 130 locations worldwide as of March 31, 2024[24] - Sales of new Brunswick boats accounted for approximately 24% of revenue in fiscal 2023, with Sea Ray and Boston Whaler each contributing about 11%, and new Azimut yachts also accounted for approximately 11% of revenue in fiscal 2023[25][26] - Recent acquisitions include a controlling interest in AGY (luxury charter management agency) in October 2023 and Williams Tenders USA (premier distributor and retailer for Williams Jet Tenders Ltd.) in March 2024[27] - Economic conditions in Florida, where the company generated approximately 50-53% of its dealership revenue in fiscal years 2021-2023, have a major impact on operations, particularly consumer discretionary spending on luxury goods[29][30][31] 2. BASIS OF PRESENTATION Unaudited interim financial statements are prepared under GAAP, reflecting normal recurring adjustments and significant estimates - Unaudited Condensed Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information, with all adjustments being normal recurring adjustments[33] - Significant estimates include valuation allowances, goodwill and intangible assets, long-lived assets, and contingent consideration liabilities[34] - Goodwill was reclassified into a separate caption on the balance sheets for comparability, with no impact on net income or retained earnings[36] 3. NEW ACCOUNTING PRONOUNCEMENTS The company adopted ASU 2022-04 in Q1 fiscal 2024 and is evaluating ASU 2023-07 and ASU 2023-09 for future impact - Adopted ASU 2022-04 (Supplier Finance Programs) in Q1 fiscal 2024, with no impact on consolidated financial statement disclosures[37] - Currently evaluating ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Tax Disclosures) for their potential impact on future disclosures, with effective dates for fiscal years ending September 30, 2025, and September 30, 2026, respectively[38][39][40] 4. FAIR VALUE MEASUREMENTS Financial assets and liabilities are measured using a three-level hierarchy, including an interest rate swap and contingent consideration liabilities Fair Value Measurements (March 31, 2024, in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :------ | :------ | :------ | :------ | | Assets: Interest rate swap contract | $— | $1,111 | $— | $1,111 | | Liabilities: Contingent consideration liabilities | $— | $— | $85,908 | $85,908 | - The fair value of contingent consideration liabilities (Level 3) is determined using financial projections, market participant assumptions for revenue growth/profitability, and a Monte Carlo simulation analysis, discounted at the estimated cost of debt[45] Contingent Consideration Liabilities (Six Months Ended March 31, in thousands) | Metric | 2023 | 2024 | | :---------------------------------- | :----- | :----- | | Beginning balance - September 30, | $15,207 | $86,059 | | Additions from business acquisitions | $77,380 | $1,313 | | Settlement of contingent consideration liabilities | $(7,000) | $(2,632) | | Change in fair value and net present value of contingency | $2,230 | $1,168 | | Ending balance - March 31, | $87,817 | $85,908 | 5. REVENUE RECOGNITION Revenue from boat sales is recognized at a point in time, while services and rentals are recognized over time, with Retail Operations being 86.6% point-in-time - Revenue from boat, motor, and trailer sales is recognized upon transfer of control to the customer, typically upon acceptance[48] - Revenue from parts and service operations, slip and storage rentals, and chartering power yachts is recognized over time[50][54] Timing of Revenue Recognition by Segment (Six Months Ended March 31, 2024) | Segment | Goods and services transferred at a point in time | Goods and services transferred over time | Total Revenue | | :-------------------- | :------------------------------------------------ | :--------------------------------------- | :------------ | | Retail Operations | 86.6% | 13.4% | 100.0% | | Product Manufacturing | 100.0% | — | 100.0% | Revenue Disaggregation by Category (Six Months Ended March 31, 2024) | Category | Retail Operations | Product Manufacturing | Total | | :------------------------ | :---------------- | :-------------------- | :---- | | New boat sales | 65.4% | 98.9% | 65.7% | | Used boat sales | 9.9% | — | 9.8% | | Maintenance and repair services | 5.0% | — | 5.0% | | Storage and charter rentals | 7.8% | — | 7.8% | | Finance and insurance products | 2.8% | — | 2.8% | | Parts and accessories | 4.9% | 1.1% | 4.8% | | Brokerage sales | 4.2% | — | 4.1% | | Revenue | 100.0% | 100.0% | 100.0% | 6. LEASES The company leases real estate with a 20-year weighted-average term and recognized $16.2 million in operating lease expenses for the six months ended March 31, 2024 - As of March 31, 2024, the weighted-average remaining lease term for operating leases was approximately 20 years, with a weighted-average discount rate of approximately 6.5%[58][63] Operating Lease Expenses (in thousands) | Period | Operating Lease Expenses (in thousands) | | :-------------------- | :------------------------------ | | Three Months Ended March 31, 2023 | $7,400 | | Three Months Ended March 31, 2024 | $8,200 | | Six Months Ended March 31, 2023 | $14,300 | | Six Months Ended March 31, 2024 | $16,200 | Total Rental Income (Lessor) (Six Months Ended March 31, in thousands) | Period | Operating lease income (in thousands) | Variable lease income (in thousands) | Total rental income (in thousands) | | :-------------------- | :---------------------------- | :--------------------------- | :------------------------- | | Six Months Ended March 31, 2023 | $4,403 | $35 | $4,438 | | Six Months Ended March 31, 2024 | $4,940 | $527 | $5,467 | 7. INVENTORIES Inventories are valued at the lower of cost or net realizable value, totaling $932.607 million as of March 31, 2024, primarily new and used boats - 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[68] Inventories Composition (in thousands) | Inventory Type | September 30, 2023 (in thousands) | March 31, 2024 (in thousands) | | :-------------------------- | :-------------------------------- | :---------------------------- | | New and used boats, motors, and trailers | $625,287 | $779,969 | | In transit inventory and deposits | $115,879 | $87,220 | | Parts, accessories, and other | $18,712 | $18,949 | | Work-in-process | $22,340 | $23,531 | | Raw materials | $30,612 | $22,938 | | Total Inventories | $812,830 | $932,607 | 8. GOODWILL Goodwill increased to $590.344 million as of March 31, 2024, primarily from acquisitions in the Retail Operations segment, with no impairment recognized - Goodwill is recorded as the excess of the purchase price over the estimated fair value of net assets acquired in a business combination[70] - Recent acquisitions, including Williams Tenders USA (March 2024) and AGY (October 2023), contributed to goodwill[71] Changes in Carrying Amount of Goodwill by Reportable Segment (Six Months Ended March 31, 2024, in thousands) | Metric | Retail Operations (in thousands) | Product Manufacturing (in thousands) | Total (in thousands) | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------- | | Balance as of September 30, 2023 | $490,786 | $69,034 | $559,820 | | Goodwill acquired | $29,335 | $— | $29,335 | | Foreign currency translation | $1,189 | $— | $1,189 | | Balance as of March 31, 2024 | $521,310 | $69,034 | $590,344 | - As of March 31, 2024, no goodwill impairment test was performed as it was not 'more likely than not' that the fair values of reporting units were less than their carrying values[75] 9. INCOME TAXES Income tax provision significantly decreased to $0.6 million for the three months and $0.4 million for the six months ended March 31, 2024 Income Tax Provision (in thousands) | Period | 2023 | 2024 | Change ($ in thousands) | Change (%) | | :-------------------- | :--- | :--- | :---------------------- | :--------- | | Three Months Ended March 31 | $12,201 | $578 | $(11,623) | -95.3% | | Six Months Ended March 31 | $19,230 | $367 | $(18,863) | -98.1% | Effective Income Tax Rate | Period | 2023 | 2024 | | :-------------------- | :--- | :--- | | Three Months Ended March 31 | 29.0% | 28.5% | | Six Months Ended March 31 (before discrete items) | 27.9% | 27.9% | 10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT The company's Amended Credit Facility provides up to $950 million in Floor Plan financing, with $736.7 million outstanding as of March 31, 2024 - The Amended Credit Facility (July 2023) provides a Floor Plan 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 facility, all maturing in August 2027[79] - As of March 31, 2024, outstanding short-term borrowings (Floor Plan) were approximately $736.7 million, with an interest rate of approximately 8.8%[85][86] Long-term Debt (in thousands) | Debt Type | September 30, 2023 (in thousands) | March 31, 2024 (in thousands) | | :-------------------------- | :-------------------------------- | :---------------------------- | | Mortgage facility payable to Flagship Bank | $5,907 | $5,659 | | Mortgage facility payable to Seacoast National Bank | $16,735 | $16,056 | | Mortgage facility payable to Hancock Whitney Bank | $23,279 | $22,322 | | Term loan payable to M&T Bank | $377,500 | $362,500 | | Loan payable to TRANSPORT S.a.s di Taula Vittorio & C. | $1,478 | $1,560 | | Total long-term debt | $424,899 | $408,097 | | Less: current portion | $(33,767) | $(33,766) | | Less: unamortized debt issuance costs | $(1,901) | $(1,707) | | Long-term debt, net current portion and unamortized debt issuance costs | $389,231 | $372,624 | - The company was in compliance with all financial covenants under the Amended Credit Agreement as of March 31, 2024[83] 11. STOCK-BASED COMPENSATION Stock-based compensation expense increased to $6.0 million for the three months and $11.4 million for the six months ended March 31, 2024 Stock-Based Compensation Expense (in thousands) | Period | 2023 | 2024 | | :-------------------- | :--- | :--- | | Three Months Ended March 31 | $5,400 | $6,000 | | Six Months Ended March 31 | $10,200 | $11,400 | Cash Received from Option Exercises (in thousands) | Period | 2023 | 2024 | | :-------------------- | :--- | :--- | | Six Months Ended March 31 | $1,300 | $1,400 | 12. THE INCENTIVE STOCK PLANS The 2021 Stock-Based Compensation Plan was amended to increase available shares, with 1,314,126 shares available for grant as of March 31, 2024 - The 2021 Stock-Based Compensation Plan was amended in February 2023 to increase available shares by 1,300,000, totaling 2,300,000 shares plus certain forfeited/unissued shares[95][96] Incentive Stock Plan Activity (September 30, 2023 to March 31, 2024) | Metric | Shares Available for Grant | Options Outstanding | | :-------------------------- | :------------------------- | :------------------ | | Balance as of September 30, 2023 | 1,984,588 | 54,750 | | Options cancelled/forfeited/expired | 21,000 | (21,000) | | Options exercised | — | (5,000) | | Restricted stock awards granted | (723,111) | — | | Restricted stock awards forfeited | 35,105 | — | | Additional shares of stock issued | (3,456) | — | | Balance as of March 31, 2024 | 1,314,126 | 28,750 | | Exercisable as of March 31, 2024 | — | 27,083 | 13. EMPLOYEE STOCK PURCHASE PLAN The Employee Stock Purchase Plan allows eligible employees to purchase common stock at a discount, with 1,340,054 shares issued as of March 31, 2024 - The Stock Purchase Plan provides for up to 1,500,000 shares of common stock for eligible employees, with a purchase price at the lower of 85% of the closing price on the first or last day of the offering[99] - As of March 31, 2024, 1,340,054 shares of common stock have been issued under the Stock Purchase Plan[100] Black-Scholes Assumptions for Employee Stock Purchase Plan (Six Months Ended March 31) | Assumption | 2023 | 2024 | | :-------------------- | :--- | :--- | | Dividend yield | 0.0% | 0.0% | | Risk-free interest rate | 3.9% | 5.3% | | Volatility | 48.1% | 39.2% | | Expected life | Six Months | Six Months | 14. RESTRICTED STOCK AWARDS Non-vested restricted stock awards totaled 1,867,711 shares/units as of March 31, 2024, with $35.0 million in unrecognized compensation cost - Restricted stock awards and RSUs generally vest between two and four years after the grant date[102] Restricted Stock Award Activity (September 30, 2023 to March 31, 2024) | Metric | Shares/Units | | :-------------------------- | :----------- | | Non-vested balance as of September 30, 2023 | 1,341,151 | | Awards granted | 723,111 | | Awards vested | (161,446) | | Awards forfeited | (35,105) | | Non-vested balance as of March 31, 2024 | 1,867,711 | - As of March 31, 2024, total unrecognized compensation cost related to non-vested restricted stock awards was approximately $35.0 million, to be recognized over a weighted average period of 2.1 years[103] 15. NET INCOME PER SHARE Weighted average common shares for diluted EPS were 22,903,840 for the six months ended March 31, 2024, excluding anti-dilutive shares Shares Used in EPS Calculation (Six Months Ended March 31) | Metric | 2023 | 2024 | | :------------------------------------------------ | :----------- | :----------- | | Weighted average common shares outstanding (basic) | 21,804,326 | 22,247,587 | | Effect of dilutive options and non-vested restricted stock | 463,857 | 656,253 | | Weighted average common and common equivalent shares (diluted) | 22,268,183 | 22,903,840 | - For the six months ended March 31, 2024, 5,000 weighted average shares of options and non-vested restricted stock were excluded from diluted EPS computation due to their anti-dilutive effect[104] 16. COMMITMENTS AND CONTINGENCIES The company is involved in legal actions but does not anticipate a material adverse effect on its financial condition or results - 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[105] 17. SEGMENT INFORMATION MarineMax operates Retail Operations and Product Manufacturing segments, with Retail Operations generating $1.103 billion in revenue for the six months ended March 31, 2024 - The company's reportable segments are Retail Operations (sales, services, marinas, superyacht services) and Product Manufacturing (Cruisers Yachts and Intrepid Powerboats)[107][108] Revenue and Income from Operations by Segment (Six Months Ended March 31, in thousands) | Segment | 2023 Revenue (in thousands) | 2024 Revenue (in thousands) | 2023 Income from Operations (in thousands) | 2024 Income from Operations (in thousands) | | :-------------------------- | :-------------------------- | :-------------------------- | :--------------------------------------- | :--------------------------------------- | | Retail Operations | $1,061,258 | $1,103,262 | $90,465 | $35,470 | | Product Manufacturing | $113,075 | $86,310 | $12,745 | $3,056 | | Elimination of intersegment revenue | $(96,066) | $(79,406) | - | - | | Intersegment adjustments | - | - | $(11,305) | $1,874 | | Total | $1,078,267 | $1,110,166 | $91,905 | $40,400 | 18. SUBSEQUENT EVENTS Mexican authorities seized Cabo Marina assets on April 11, 2024, a subsidiary representing less than 4% of total assets in fiscal 2023 - On April 11, 2024, Mexican authorities seized the assets of Cabo Marina, a subsidiary of IGY Marinas, and rejected its concession application, forcing it to cease operations[112] - The company believes the takeover is illegal and is pursuing diplomatic and potentially legal avenues to resolve the dispute[113] - Cabo Marina was associated with less than 4% of total assets and less than 1% of total revenues in the consolidated financial statements for the year ended September 30, 2023[113] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses MarineMax's business, acquisitions, economic impacts, consolidated financial results, liquidity, and seasonality General Overview MarineMax is the largest global recreational boat and yacht retailer, with growth driven by acquisitions and influenced by economic conditions - MarineMax is the largest recreational boat and yacht retailer and superyacht services company globally, operating 83 retail locations in 21 states[115] - The company completed four acquisitions in fiscal 2023 and three acquisitions to date in fiscal 2024, including IGY Marinas (Oct 2022), AGY (Oct 2023), and Williams Tenders USA (Mar 2024)[118][119] - Economic downturns, lower consumer confidence, and rising interest rates negatively impact consumer discretionary spending on luxury goods, affecting the company's sales and profitability, particularly in Florida (50-53% of dealership revenue)[120][121] - The company plans to continue its growth through acquisitions, leveraging its core strengths and retailing strategies to capitalize on market opportunities[123] Segment Description The company operates Retail Operations (sales, services, marinas) and Product Manufacturing (Cruisers Yachts, Intrepid Powerboats) segments - The Retail Operations segment includes sales of new and used recreational boats, marine products, repair/maintenance, slip/storage rentals, financing, insurance, brokerage, yacht charter services, and luxury marinas (IGY Marinas)[124] - The Product Manufacturing segment includes Cruisers Yachts (sport yacht and yacht manufacturing) and Intrepid Powerboats (customized powerboat manufacturing with a direct-to-consumer model)[125] Application of Critical Accounting Policies No material changes to critical accounting policies have occurred since the fiscal year ended September 30, 2023 - There have been no material changes to the company's critical accounting policies since the Annual Report on Form 10-K for the fiscal year ended September 30, 2023[126] Recent Accounting Pronouncements Refer to Note 3 for details on recent accounting pronouncements and their potential impact - Refer to Note 3 of the Notes to Unaudited Condensed Consolidated Financial Statements for recent accounting pronouncements[127] Consolidated Results of Operations This section analyzes the company's financial performance for the three and six months ended March 31, 2024, compared to the prior year Three Months Ended March 31, 2024 Compared with Three Months Ended March 31, 2023 Revenue increased by 2.2% to $582.9 million, while gross profit declined by 5.2% due to softer retail margins - Revenue increased by $12.6 million (2.2%) to $582.9 million, driven by a 2% increase in comparable-store sales from new and used boat revenue and higher-margin businesses[129] - Gross profit decreased by $10.5 million (5.2%) to $190.4 million, with gross profit margin declining to 32.7% from 35.2%, primarily due to lower new and used boat margins in a softer retail environment[130] - Selling, general, and administrative expenses increased by $23.5 million (16.2%) to $169.0 million, mainly due to inflation and recent acquisitions[131] - Interest expense rose by $6.1 million to $19.4 million, attributed to increased interest rates and higher inventory levels[132] - Income tax expense decreased by $11.6 million to $0.6 million, with the effective tax rate at 28.5% (down from 29.0%)[133] Six Months Ended March 31, 2024 Compared with Six Months Ended March 31, 2023 Revenue increased by 3.0% to $1.110 billion, but gross profit decreased by 5.6% due to lower new and used boat margins - Revenue increased by $32.0 million (3.0%) to $1.110 billion, driven by a 3% increase in comparable-store sales from new and used boat revenue and higher-margin businesses[134] - Gross profit decreased by $21.9 million (5.6%) to $365.9 million, with gross profit margin declining to 33.0% from 36.0%, primarily due to lower new and used boat margins[135] - Selling, general, and administrative expenses increased by $29.6 million (10.0%) to $325.5 million, mainly due to inflation and recent acquisitions[136] - Interest expense rose by $14.9 million to $37.7 million, attributed to increased interest rates and higher inventory levels[137] - Income tax expense decreased by $18.8 million to $0.4 million, with the effective tax rate before discrete items at 27.9%[138] Liquidity and Capital Resources Cash needs are primarily for working capital and acquisitions, financed by operations and the Amended Credit Facility, with compliance to all covenants - Cash needs are primarily for working capital (inventory), off-season liquidity, and acquisitions, financed by operations and the Amended Credit Facility[139][140] - Cash used in operating activities decreased to $111.2 million for the six months ended March 31, 2024, from $250.5 million in the prior year, primarily due to inventory increases and changes in receivables/payables[141] - Cash used in investing activities decreased significantly to $49.9 million for the six months ended March 31, 2024, from $524.2 million in the prior year, mainly due to lower acquisition spending (IGY Marinas acquisition in prior year)[142] - Cash provided by financing activities decreased to $175.4 million for the six months ended March 31, 2024, from $748.9 million in the prior year, primarily due to lower net increases in short-term borrowings and no new long-term debt proceeds[143][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 facility, all maturing in August 2027[146] - As of March 31, 2024, 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[140][150] Impact of Seasonality and Weather on Operations The recreational boating industry is highly seasonal, with sales and inventory levels significantly affected by weather patterns - The recreational boating industry is highly seasonal, with lower sales and higher inventory/borrowings typically in the December and March quarters, except in Florida[151] - Business is subject to adverse weather patterns (e.g., prolonged winter, drought, excessive rain, hurricanes) which can disrupt operations, damage inventory, and curtail customer demand[152] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to market risks, specifically interest rate risk on its variable-rate debt and foreign currency exchange rate risk impacting product pricing and international operations Interest Rate Risk The company faces interest rate risk on variable-rate debt, with a hypothetical 100 basis point increase raising annual pre-tax interest expense by $11.0 million - The company is exposed to interest rate risk on its variable-rate short-term borrowings and long-term debt[153] - A hypothetical 100, 200, or 300 basis point increase in interest rates would result in an approximate annual pre-tax interest expense increase of $11.0 million, $22.0 million, or $33.0 million, respectively, based on March 31, 2024, outstanding balances[153] Foreign Currency Exchange Rate Risk Fluctuations in the U.S. dollar exchange rate affect product pricing and international operations, with non-U.S. dollar revenues at 3% of total in fiscal 2023 - Fluctuations in the U.S. dollar exchange rate can impact the retail price and competitiveness of products purchased from European and Chinese manufacturers[154] - The Fraser Yachts Group, Northrop & Johnson, and IGY Marinas have transactions and balances denominated in currencies other than the U.S. dollar, primarily euros[155] - Net revenues with a non-U.S. dollar functional currency accounted for approximately 3% of total revenues in fiscal 2023[155] ITEM 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2024, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024 - 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 March 31, 2024[157] Changes in Internal Controls No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2024 - There were no changes in internal control over financial reporting during the quarter ended March 31, 2024, that materially affected, or were reasonably likely to materially affect, internal control over financial reporting[158] Limitations on the Effectiveness of Controls Management acknowledges that control systems provide only reasonable assurance due to inherent limitations like faulty judgment or circumvention - Management acknowledges that control systems provide only reasonable, not absolute, assurance against errors and fraud due to inherent limitations such as faulty judgment, simple errors, circumvention by individuals or collusion, and management override[159][161] CEO and CFO Certifications Certifications from the CEO and CFO, as required by Sarbanes-Oxley Act Section 302, are filed as Exhibits 31.1 and 31.2 - Certifications of the Chief Executive Officer and Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002, are filed as Exhibits 31.1 and 31.2[162] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits ITEM 1. Legal Proceedings The company is involved in various legal actions but does not anticipate a material adverse effect on its financial condition or results - The company is party to various legal actions arising in the ordinary course of business, but does not believe these matters will have a material adverse effect on its unaudited condensed consolidated financial condition, results of operations, or cash flows[164] ITEM 1A. Risk Factors No new material risk factors are reported in this quarterly filing - No new material risk factors are reported in this filing[165] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report during the period - No unregistered sales of equity securities or use of proceeds to report[166] ITEM 3. Defaults Upon Senior Securities There were no defaults upon senior securities to report during the period - No defaults upon senior securities to report[167] ITEM 4. Mine Safety Disclosures This item is not applicable to the company's operations - Mine Safety Disclosures are not applicable[168] ITEM 5. Other Information No officers or directors adopted or terminated any Rule 10b5-1(c) trading arrangements during the three months ended March 31, 2024 - During the three months ended March 31, 2024, none of the company's officers or directors adopted or terminated any Rule 10b5-1(c) trading arrangements[169] ITEM 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including articles of incorporation, bylaws, credit agreement amendments, CEO/CFO certifications, and XBRL documents - Exhibits include Articles of Incorporation, Bylaws, Third Amendment to Credit Agreement, CEO/CFO Certifications (31.1, 31.2, 32.1, 32.2), and Inline XBRL documents[171] SIGNATURES The report was duly signed on April 25, 2024, by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director of MarineMax, Inc. SIGNATURES The report was duly signed on April 25, 2024, by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director of MarineMax, Inc. - The report was signed on April 25, 2024, by Michael H. McLamb, Executive Vice President, Chief Financial Officer, Secretary, and Director[173][175]