MARINEMAX INC (HZO)·Q2 2024 Earnings Summary

Executive Summary

• Revenue grew 2% year over year to $582.9M on 2% same‑store sales (SSS) growth; gross margin fell 250 bps to 32.7% on heavier promotions; GAAP EPS was $0.07 and adjusted EPS was $0.18 .
• Management cut FY24 guidance to adjusted EPS $2.20–$3.20 (from $3.20–$3.70) and adjusted EBITDA $155M–$190M (from $190M–$215M), citing a tougher retail environment, lower boat margins, and higher interest expense; they expect consolidated gross margins to remain in the low 30s% and seasonality to help 2H results .
• Key headwinds: OEM and dealer promotions pressuring product margins, inflationary SG&A, higher floorplan interest ($19.4M in Q2 vs $13.3M LY), and some revenue slipping out of March into April; management believes boat margins have “found their bottom” near historical levels .
• Non-operational events in the quarter included: (i) an 8‑K on an unlawful takeover of IGY’s Cabo San Lucas marina (immaterial: <4% of assets, <1% of revenue FY23), and (ii) a cybersecurity incident that did not have a material impact; both remain under resolution/monitoring .

What Went Well and What Went Wrong

• What Went Well

  • Top line resilience despite weaker industry registrations: revenue +2% YoY to $582.9M; SSS +2%; management highlighted contributions from higher‑margin businesses supporting consolidated margins above pre‑COVID levels .
  • Strategy execution: continued shift to higher‑margin, less cyclical businesses; completed the acquisition of Williams Tenders USA to secure U.S./Caribbean distribution exclusivity in rigid inflatable jet tenders .
  • Management tone on margin floor: “margins are back at historical levels,” and expect consolidated gross margins to stay in the low 30s% for FY24 .

• What Went Wrong

  • Margin compression: gross margin down 250 bps to 32.7% due to heavier promotions to drive retail in a soft market; adjusted EBITDA fell to $29.6M from $57.4M LY .
  • Cost pressure: SG&A rose 16% YoY to $169.0M (29.0% of revenue) driven by compensation, marketing, insurance, and other inflationary items; management is pursuing broader cost actions .
  • Financing costs: interest expense rose to $19.4M, driven by higher rates and elevated inventory; floorplan interest was ~ $12M vs ~$6.5M LY, weighing on EPS and prompting FY24 guidance cuts .

Financial Results

• Income statement snapshot

• Segment breakdown

• Balance sheet / KPIs

Note: No consensus estimate comparisons included here; see “Estimates Context” below.

Guidance Changes

Management now assumes low‑30s gross margins, elevated SG&A vs FY23 but moderating in 2H with cost actions, and interest expense roughly consistent with 1H run‑rate; tax ~27% and share count ~23.1M in assumptions .

Earnings Call Themes & Trends

Management Commentary

• “Although we continue to operate in a challenging market environment…we drove an increase in sales…Our gross margin also remains strong as a direct result of the strategic growth in our higher‑margin businesses.” — Brett McGill, CEO .
• “Demand was weaker than we had anticipated…nearly 16% decline in fiberglass boat registrations…Gross profit margin declined to 32.7%…final results were lower than expected given the discounting needed to drive sales.” — Michael McLamb, CFO .
• “We are taking additional steps to reduce expenses…to better align our cost structure with the current environment.” — Brett McGill .
• “Margins are back at historical levels…this quarter we are saying low 30s [gross margin]” — Management Q&A .
• “Cabo Marina accounted for less than 4% of assets and 1% of revenue in fiscal 2023.” — Management on 8‑K FD .

Q&A Highlights

• Guidance range dynamics: Wider EPS vs EBITDA gap reflects non‑cash items (D&A, SBC) holding relatively steady as GAAP earnings trend lower .
• Promotions/OEM support: Expect continued, possibly increased OEM incentives into summer; promotional intensity likely persists to ensure healthy dealer inventories ahead of MY25 .
• Gross margin outlook: Management believes boat margins have found a bottom near historical levels; consolidated GM expected in low‑30s% for FY24 .
• Inventory/turns: Current turns ~2.4–2.5x with goal >3x over time; inventories somewhat elevated due to revenue that did not close in March, but April trends improved .
• Macro/regulatory watch: NOAA speed rulemaking under evaluation; final rules not out; impact uncertain; interest rate path remains a demand variable .

Estimates Context

• We attempted to retrieve S&P Global consensus for revenue, EPS, and EBITDA to show beats/misses; however, the S&P Global API limit prevented retrieval during this session. Consensus comparisons are therefore unavailable in this recap. Values would normally be sourced from S&P Global consensus data.

Key Takeaways for Investors

• FY24 reset: Management cut FY24 adjusted EPS/EBITDA guidance meaningfully, reflecting sustained promotional pressure, higher interest costs, and a tougher retail backdrop; near‑term narrative hinges on execution of cost reductions and 2H seasonality uplift .
• Margin floor: Product margins appear to have normalized to historical levels; consolidated gross margins expected in the low‑30s%, supported by higher‑margin marina/superyacht/services mix .
• Balance sheet/liquidity: Cash remained strong ($217M) with ample liquidity; inventory dollars elevated sequentially and floorplan up, keeping interest expense in focus for EPS trajectory .
• OEM behavior is a swing factor: Manufacturer incentives likely increase into the summer selling season; effectiveness of promotions and OEM support will influence margin cadence and inventory turns .
• Event risks appear contained: Cabo marina situation is immaterial to consolidated financials and being addressed; cybersecurity incident did not materially impact operations .
• Near‑term catalysts: Any signs of improving retail trends into peak selling months, visibility on SG&A savings on the Q3 call, and stabilization in floorplan interest (inventory normalization) could drive stock reaction .