MarineMax reports typical first quarter

CLEARWATER, Fla. – With Florida accounting for a little more than half of its annual revenues and 60 to 65 percent of its first quarter revenues, it’s no surprise that boat retail chain MarineMax, Inc. (NYSE: HZO) saw a slight decline during the first quarter.

After all, it took the company as long as four weeks to get some of its South Florida locations operational again after Hurricane Wilma, according to Bill McGill, MarineMax president, CEO and chairman.

In addition, the retailer saw a significant decline in sales at the Fort Lauderdale International Boat Show, which was postponed following the hurricane.

Another factor to consider, however, is that the 2005 first quarter “benefited from business that was pushed out of the September 2004 quarter as a result of hurricanes that hit in August and September,” said McGill. “In addition, last year’s December quarter had the benefit of a nationwide manufacturer promotion that contributed to improved sales. The promotion was not repeated this year.”

MarineMax has not typically produced positive earnings per share during the December quarter, he added during the company’s earnings conference call. This year’s first quarter is a return to a more realistic pattern for MarineMax.

Same store sales take hit

For the quarter ended Dec. 31, revenue was $181.2 million compared with $184.2 million for the comparable quarter last year. Same-store sales decreased 3.6 percent as a result of the lingering impact of Hurricane Wilma, which was magnified by the comparison against strong year-ago same-store sales growth of 16.5 percent, according to the company.

McGill pointed out in the conference call that if you take Florida out of the equation, however, same store sales growth was in the low double digits. MarineMax’s first quarter results are not an indication that its business is softening, he added.

“Premium dealers substantially outperform the rest of the industry,” he said in the call. “Our customer is more resilient and our customer has more discretionary dollars. For example, there was talk in the Brunswick release about the Midwest being down, but [the Port Arrowhead Group] wasn’t down last year.”

MarineMax’s net income was $664,000, or $0.04 per diluted share, compared with net income of $2.8 million, or $0.17 per diluted share, for the first quarter of fiscal 2005.

The December 2006 first quarter results include after-tax expenses of approximately $700,000, or $0.04 per diluted share, for direct costs associated with Hurricane Wilma. These costs exclude the indirect costs associated with inefficiencies, lost productivity and downtime also caused by the hurricane. Additionally, this quarter the company began expensing stock-based compensation as required by Statement of Financial Accounting Standards No. 123R, “Share-Based Payment.” The company recorded stock-based compensation expense of approximately $600,000 after-tax, or $0.03 per diluted share, in the December quarter.

“Given the challenges we faced, we are proud of our performance during the quarter,” said McGill in a company statement. He added that the company expects to “produce another year of market share gains and solid earnings growth.”

Based on current business conditions, retail trends and other factors, MarineMax is reiterating its fiscal 2006 earnings guidance of $1.89 to $2.01, which includes an estimated charge of $0.10 per diluted share, based on current assumptions, related to stock-based compensation expense as required by Statement of Financial Accounting Standards No. 123R, “Share-Based Payment.”

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