MarineMax results better than expected

CLEARWATER, Fla. – With fourth quarter sales down slightly and earnings down significantly, it’s hard to say that boat retail giant MarineMax, Inc. (NYSE: HZO) had a good quarter. And yet its results were certainly better than many expected.

RBC Capital Markets analyst Ed Aaron said the company’s fourth quarter earnings and 2008 guidance were “as good as one could possibly expect in the context of an industry that is contracting at a mid-teens rate against negative double-digit comparisons.”

Aaron noted that while indicators suggest the industry will have a weak first quarter, MarineMax’s results “might not be too bad.” The company has reported a 95-percent year-over-year increase in customer deposits and Fort Lauderdale show sales on par with last year, both of which bode well for early next year.

However, unless industry conditions improve unexpectedly, Aaron said RBC would need to see at least a 10-percent year over year decline in inventory by the end of 2008 “to become more comfortable with the company’s inventory position.” This level of reduction would equate to a turn rate of about 2.0, “which is toward the lower end of the historical range.”

4Q sales down, profits down further

MarineMax’s revenue was $318.2 million for the quarter ended Sept. 30, compared with $323.6 million for the comparable quarter last year, according to the company. Same-store sales declined approximately 1 percent, or $3.4 million, compared with a 14-percent increase in the comparable quarter last year. Revenue from stores recently opened or closed that were not eligible for inclusion in the same-store sales base declined $2.0 million. Net income was $6.6 million, compared with net income of $12.6 million for the fourth quarter of fiscal 2006.

Revenue grew 3.5 percent to $1.26 billion for the fiscal year ended Sept. 30, compared with $1.21 billion for fiscal 2006. Same-store sales declined less than 1 percent compared with a 7-percent increase for last fiscal year. Revenue from stores recently opened, acquired or closed that were not eligible for inclusion in the same-store sales base was $66.8 million. Net income for the fiscal year was $20.1 million, compared with net income of $39.4 million for last fiscal year.

"Fiscal 2007 has been a challenging year for the marine industry, with a widely reported double digit drop in retail unit sales,” commented William H. McGill, Jr., chairman, president and CEO. “While the softness has made it more difficult for us to maintain the profitability that we desire, we have capitalized on our strengths to substantially outperform the industry and deliver significant market share gains through an increase in unit sales. We believe the investments we have made to grow market share will yield an increase in future revenue as our customers trade into larger products, displaying their passion for boating. Our ability to deliver results that are far greater than the industry is proof that our retailing strategies are matched with the desires of the consumers."

McGill continued, "As expected, our gross margins decreased and our costs incurred to generate our sales volume have increased in a difficult environment. Our balance sheet continues to gain strength, which creates an additional competitive advantage in a soft, fragmented industry. Through a planned reduction in purchases and our retail sales efforts, our dollar level of inventory has decreased from the end of the June quarter as we anticipated. Looking forward, our visibility is limited but industry data suggests that retail sales have not improved. Our financial strength and retailing strategies position us to capitalize on growth opportunities as they occur and will allow us to emerge from this challenging environment with greater earnings potential."

The company concluded by forecasting a low single digit decline in same-store sales in its fiscal 2008.

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