MarineMax revenues fall more than 9 percent

CLEARWATER, Fla. – MarineMax, Inc. (NYSE: HZO), reported yesterday that the company’s revenues dropped by 9.85 percent for the quarter ended June 30, 2007, proving that even the nation’s largest recreational boat retailer isn’t immune to current industry conditions.

As same-store sales fell 9 percent, or $36 million, and revenue from stores recently opened, acquired or closed that are not eligible for inclusion in the same-store sales base declined $5.5 million as total revenues fell to $379.8 million, compared with $421.3 million for the comparable quarter last year.

“The past 12 months has been a challenging period for our industry, with retail unit percentage declines in the mid-teens, based on industry reports,” said William H. McGill, Jr., MarineMax chairman, president and chief executive officer. “Obviously, we have not been immune to the challenges facing our industry, which had a major negative effect on our performance this quarter.”

The company’s balance sheet shows that inventory levels have increased 13 percent year over year, compared to a 6-percent increase last quarter. McGill says the company is focused on bolstering its balance sheet by reducing current and projected inventory levels, while industry analyst Edward M. Aaron of equity research firm RBC Capital Markets says that his company expects MarineMax’s inventory turns to approximate 2.0x, vs. a historical average of 2.5x.

“Management stated plans to reduce inventory by approximately 10 percent in fiscal 2008,” Aaron stated in a report yesterday. “Without an improvement in the sales environment, we believe management would need a more aggressive inventory reduction to improve inventory turns.”

The Battle for Share

In fact, it appears that the sales environment is getting worse. MarineMax also reported that its revenues for the nine months ending June 30, 2007, grew 5.7 percent (to $940.6 million vs. $889.9 last year) with less than a 1-percent decline in same-store sales, perhaps suggesting that the retail environment is softening even further.

But while the big numbers are dipping, McGill says the company is focused on gaining ground in the battle for market share, and that it will come out of this decline better positioned.

“We are using this difficult period to strengthen our Company for the long term by staying focused on exceeding the expectations of our customers,” he explains. “In this regard, we are pursuing a strategy of increasing our market share against competitors that do not enjoy our strong product portfolio or financial strength. This strategy is resulting in significant success and will position us to benefit from greater revenue and earnings growth when the industry recovers. The continued expansion of our higher margin businesses, such as service, parts and accessories and finance and insurance activities, is continuing to offset a portion of the product pricing pressure that we are experiencing.

“Our balance sheet strength continues to build with equity exceeding $370 million with little long-term debt. This financial strength will allow us to expand opportunistically as we have in the past. Our strategic positioning will enable us to emerge from this challenging industry cycle with greater revenue and earnings potential than the last down cycle and will allow us to drive long-term growth and increased shareholder value.”

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