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MARINEMAX INC (HZO)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 delivered 5% revenue growth to $757.7M and same-store sales +4%, with unit volumes held roughly flat despite industry powerboat registration declines; consolidated gross margin was 32.0% amid elevated promotions to drive retail activity .
  • Profitability compressed year over year: diluted EPS was $1.37 vs. $1.98 and adjusted diluted EPS $1.51 vs. $2.07; adjusted EBITDA was $70.4M vs. $83.5M, reflecting boat margin pressure and higher interest expense .
  • Management reaffirmed FY24 guidance (Adjusted EPS $2.20–$3.20; Adjusted EBITDA $155–$190M), with expectations of low-30s gross margins, low-to-mid single-digit same-store sales, tax rate just over 27%, and ~23.1M shares; SG&A to be elevated vs. FY23 but moderated by incremental cost actions .
  • Strategic initiatives: the new SuperYacht Division integrates multiple luxury services to enhance margin resilience and synergies; targeted cost reductions and select store closures aim to deliver ~$20–$25M run-rate savings over time, strengthening cash flow and operating leverage .
  • Key catalysts: continued OEM incentive support and cost savings execution; activism backdrop (Island Capital) and Cabo San Lucas marina situation introduce governance/legal overhang but management emphasizes focus on core operations and shareholder value .

What Went Well and What Went Wrong

What Went Well

  • Same-store sales +4% and revenue +5% despite a tough retail backdrop; Q3 unit sales held nearly flat as HZO gained share amid category declines, evidence of retail execution and promotional effectiveness .
  • Higher-margin strategy continues to support consolidated gross margin ≥30% across cycles; Q3 gross margin 32.0% reflects resilience from marinas, superyacht services and finance/insurance (management: “now consistently exceeding 30%”) .
  • Strategic portfolio moves: formation of SuperYacht Division to streamline operations and drive synergy across Fraser, Northrop & Johnson, Fairport Yacht Management, SuperYacht Management and AGY, with incremental linkage to IGY marinas .

What Went Wrong

  • Boat margin pressure reduced gross margin 180 bps YoY (33.8% → 32.0%) and compressed adjusted EBITDA ($83.5M → $70.4M); elevated promotions required to close demand gaps .
  • Interest expense remained elevated ($18.2M) on higher rates and inventory; floorplan financing balances increased vs. last year, pressuring net income vs. prior year .
  • SG&A increased to $181.1M (23.9% of revenue) and remains above FY23 levels; management launched further cost actions (including select store closures) to offset inflationary pressures and align expenses with current macro .

Financial Results

Multi-Quarter Summary (oldest → newest)

MetricQ1 2024Q2 2024Q3 2024
Revenue ($USD Millions)$527.3 $582.9 $757.7
Gross Margin %33.3% 32.7% 32.0%
Diluted EPS ($)$0.04 $0.07 $1.37
Adjusted Diluted EPS ($)$0.19 $0.18 $1.51
Adjusted EBITDA ($USD Millions)$26.6 $29.6 $70.4
Same-Store Sales Growth (%)+4% +2% +4%

Q3 YoY Comparison (June quarter)

MetricQ3 2023Q3 2024
Revenue ($USD Millions)$721.8 $757.7
Gross Margin %33.8% 32.0%
Diluted EPS ($)$1.98 $1.37
Adjusted Diluted EPS ($)$2.07 $1.51
Adjusted EBITDA ($USD Millions)$83.5 $70.4

Segment Revenue and Operating Income (Q1–Q3 FY24)

Segment Metric ($USD Thousands)Q1 2024Q2 2024Q3 2024
Retail Operations Revenue$524,085 $579,177 $752,171
Product Manufacturing Revenue$46,128 $40,182 $38,062
Intersegment Elims$(42,939) $(36,467) $(32,513)
Total Revenue$527,274 $582,892 $757,720
Retail Operations Income from Ops$14,806 $20,665 $58,733
Product Manufacturing Income from Ops$3,970 $(914) $(548)
Intersegment Adjustments$223 $1,650 $2,842
Total Income from Ops$18,999 $21,401 $61,027

KPIs and Balance Sheet Highlights

KPIQ1 2024Q2 2024Q3 2024
Gross Profit ($USD Millions)$175.5 $190.4 $242.1
SG&A ($USD Millions)$156.5 $169.0 $181.1
Interest Expense ($USD Millions)$18.4 $19.4 $18.2
Cash & Equivalents ($USD Millions, quarter-end)$210.3 $216.7 $242.4
Inventories ($USD Millions, quarter-end)$876.2 $932.6 $880.4
Customer Deposits ($USD Millions, quarter-end)$74.6 $79.1 $66.8
Short-term Borrowings ($USD Millions, quarter-end)$664.9 $736.7 $701.2

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Diluted EPSFY 2024$3.20–$3.70 $2.20–$3.20 Lowered
Adjusted Diluted EPSFY 2024 (Q3 reaffirm)$2.20–$3.20 $2.20–$3.20 Maintained
Adjusted EBITDA ($USD Millions)FY 2024$190–$215 $155–$190 Lowered
Adjusted EBITDA ($USD Millions)FY 2024 (Q3 reaffirm)$155–$190 $155–$190 Maintained
Same-Store Sales OutlookFY 2024Low-to-mid single-digit Low-to-mid single-digit Maintained
Gross Margin OutlookFY 2024Low-to-mid 30s Low-30s Lowered then Maintained
Tax Rate AssumptionFY 2024~27% Just over 27% Maintained
Share Count AssumptionFY 2024~23.1M ~23.1M Maintained
SG&AFY 2024No meaningful savings baked yet Elevated vs FY23, moderating with cost actions Raised then Moderating

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3)Trend
Promotional environment & boat marginsElevated promotions; margins back toward pre-pandemic; guidance lowered to low-30s GM Promotions continue; consolidated GM 32.0%; boat margins at/below pre-COVID Stable soft margins; resilience via mix
OEM incentives & supportOEMs stepping up; likely more aggressive into summer season Continued support to drive retail; normalized seasonal programs Sustained support
Cost reductions & store closuresBroad cost focus planned; SG&A inflation surprises Select closures; targeted savings of ~$20–$25M run-rate Actions accelerating
SuperYacht Division & higher-margin mixMargin resilience via marinas/superyacht; Williams Tenders acquisition SYD launched integrating Fraser/N&J/Fairport/SYD/AGY Integration & synergy focus
Inventory aging/turns & supplyTurns historically 2.5–3x targeted; industry elevated inventory Aging better than industry; inventories expected to rise seasonally by Sept Improvement vs industry; seasonal build
Cabo San Lucas marina situationDisclosed in Q2; pursuing remedies; <4% assets, ~1% revenue Operating since early May; no further comment due to process Controlled but unresolved
Governance/activismNoted in July statement; Board open to inputs Addressed on call; focus on results/strategy/guidance Background overhang persists
Seasonality patternsReturn to normal seasonality; northern markets impact July SSS trends positive; need strong finish Seasonal improvement
Health insurance/SG&A inflationUnusual healthcare spike; broader SG&A inflation SG&A elevated, offset by cost actions Mitigation underway

Management Commentary

  • “Despite persistent retail headwinds in the third quarter, our team executed well, delivering 5% top-line growth… expanding our high-margin, less cyclical revenue streams… strengthened our gross margin profile—now consistently exceeding 30%” — Brett McGill .
  • “The recent formation of our new SuperYacht Division (SYD)… integrates Fraser Yachts, Northrop & Johnson, Fairport Yacht Management, SuperYacht Management and AGY… streamlining back-office functions” — Brett McGill .
  • “We initiated strategic cost-cutting actions to better align our expense structure with the current operating environment… expect increasing cost savings during Q4 and into fiscal 2025” — Brett McGill .
  • “Adjusted net income was $34.8M, or $1.51 per diluted share… Adjusted EBITDA $70.4M… cash and cash equivalents over $242M… Debt to EBITDA net of cash a little over 1x” — Michael McLamb .
  • “We are reaffirming FY24 adjusted net income guidance $2.20–$3.20 and adjusted EBITDA $155–$190M… assumes annual expected tax rate just over 27% and share count of 23.1M” — Michael McLamb .

Q&A Highlights

  • Guidance philosophy: wide EPS range maintained given industry uncertainty; prudent to avoid narrowing with two months left in FY24 — management .
  • Cost savings: targeted ~$20–$25M run-rate reductions via store closures (mostly duplicative satellites), headcount and vendor spend; intended to bring SG&A back to FY23 levels — management .
  • Same-store dynamics: Q3 same-store +4% with units held flat YoY; growth driven by higher ASP; industry fiberglass registrations down sharply (e.g., June -23%) — management .
  • Margin sustainability: consolidated GM at 32% reflects higher-margin businesses; boat margins at/below pre-COVID; long-term upside as industry normalizes — management .
  • Inventory: aging better than peers; seasonal build likely into September depending on OEM shipments and retail trends — management .

Estimates Context

  • S&P Global consensus EPS and revenue estimates for Q3 2024 were unavailable via the tool at the time of analysis; as a result, we cannot formally assess beat/miss versus Street expectations [SPGI request failed].
  • Where relevant, management did not cite Street comparisons in the press release or call; focus remained on internal guidance, margin profile and cost actions .

Key Takeaways for Investors

  • Mix resilience continues to cushion margins: consolidated GM 32.0% despite boat margin pressure underscores the strategic value of marinas, superyacht services and F&I; expect margin stability in low-30s near term .
  • Retail execution remains strong: same-store sales +4% and units held flat in a sharply down industry month signal share gains; promotions and OEM incentives remain central to closing demand .
  • Cost discipline is a near-term EPS lever: targeted ~$20–$25M run-rate savings, plus store optimization, should moderate SG&A and support FY25 cash flow and operating leverage .
  • Balance sheet provides optionality: $242M cash, net leverage just over 1x, and ~$200M in available lines support strategic flexibility through the cycle .
  • FY24 guide reaffirmed: execution against Adjusted EPS $2.20–$3.20 and Adjusted EBITDA $155–$190M hinges on sustained OEM support, seasonal retail normalization and cost action follow-through .
  • Watch governance/legal overhangs: ongoing Cabo marina situation and activism backdrop warrant monitoring, though management remains focused on operations and shareholder value .
  • Trading setup: near-term narrative likely driven by cost savings visibility, margin stability at low-30s, and retail cadence into late summer; absence of Street estimate context in this analysis reduces immediate beat/miss catalysts .