Consumers skimp, MarineMax revenues plunge
Hurt by weak economic conditions and continued market volatility, struggling Clearwater-based boat retailer MarineMax Inc. reported a wider-than-expected quarterly loss that missed Wall Street estimates. How bad was it? Revenue almost halved to $100.2 million from $215.3 million in the comparable quarter last year, reflecting a same-store sales fall of 52 percent in the quarter.
"While we have done our fair share of cost cutting, the industry will likely continue to be impacted by the soft economy," CEO William McGill Jr. said in a statement. (Photo of McGill by Jim Damaske of the St. Petersburg Times.)
The company, whose premium brands include Sea Ray (shown in photo, courtesy of MarineMax), Boston Whaler, Meridian, Cabo, and Bertram said net loss for the first quarter ending Dec. 31 was $14.3 million, or 78 cents a share, compared with a loss of $6.4 million, or 35 cents a share, in a year ago period. Included in the first-quarter net loss was 2 cents a share of costs related to the closing of five stores during the quarter.
McGill elaborated in a statement, and we'll update his remarks after the company conference call today with analysts:
"While the ongoing challenges in the consumer environment continued to impact our sales results during the first quarter, we made progress in managing the areas of our business that we can control. We continued to streamline our cost structure by reducing all major categories of expense and closing five additional stores. Our efforts to manage our inventory allowed us to achieve a significant reduction in our inventory levels, which dropped more than $90 million on a year-over-year basis.
"This reduction is more impressive considering our large drop in sales and the fact that December is generally our lowest sales quarter. We were able to maintain a healthy gross margin because our higher margin businesses, such as service and parts and accessories, grew as a percentage of our business. During the quarter, we also secured an amendment to our credit facility, which provides us with improved financial flexibility to operate and manage our business through these difficult market conditions.”
In mid-morning trading, MarineMax shares (ticker: HZO) were flat at $1.65.
UPDATE at 6PM: MarineMax shares closed at $1.57, down 4.2 percent. CEO McGill offered some additional insights in his conference call remarks to analysts. Here are the remarks in full. But we'll cut through the clutter and offer three highlights from McGill here:
* "In my 36 years in this industry, this is probably the worst environment we have seen. Thankfully, MarineMax has amassed substantial tangible net worth over the years, which provides us with the confidence and flexibility to weather this storm."
* "One of the things that is encouraging to us as we look at the industry is that the cost of owning a boat is about as low as it's been for over a decade. Interest rates are relatively low. Financing has tightened some but is still available to our customers at low rates. Fuel is more affordable, and slips are even less expenses... expensive and readily available."
* "In fact, reports in Florida were... this holiday season was the busiest on record, with our customers out boating. We are confident that customers have not lost their passion for boating, and they will continue to turn to MarineMax for our service, our brands, and our team."
-- Robert Trigaux, Times Business Columnist