MarineMax results underwhelm as margins shrink

MarineMax owns Fraser Yachts and Northrop & Johnson in its superyacht division.

MarineMax reported earnings per share (EPS) of $0.19 for the first quarter of 2024 compared with $1.24 from a year ago,  lower than expectations.

The company’s shares went into a freefall following the announcement, shedding nearly $5 per share to $28.37 as per the latest close.

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As part of its superyacht division, MarineMax owns brokerages and yacht services companies Fraser Yachts and Northrop & Johnson as well as global marina business IGY Marinas.

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The company’s top line in the first quarter rose to $527.3m from $507.9m last year driven largely by higher new and used boat sales, contributing to a 4% increase in same-store sales. Despite this top line growth, the company’s gross profit decreased 6.1% to $175.5m from $186.9m in the prior-year period.

However, gross profit margin of 33.3%, while historically high, decreased 350 basis points from 36.8% in the fiscal 2023 first quarter, primarily as the result of a more aggressive promotional environment in response to retail environment challenges during the 2024 first quarter.

“I’m proud of our team’s ability to drive a strong close to the December quarter, generating the highest first quarter revenue in our history. This growth came despite a challenging retail environment which required us to take more aggressive pricing actions than expected,” said Brett McGill, CEO, MarineMax while warning of the challenging macro environment.

“Our pricing actions did result in lower gross margins and profitability. This was primarily due to increased discounting on certain boat models in response to the softer retail environment, as well as a greater mix of larger boats, which historically carry a lower gross margin than other product categories.” 

Other line items on the income statement showed the company’s SGA expenses totalled $156.5m (29.7% of revenue) in the first quarter, compared with $150.4m (29.6% of revenue), for the same period last year.

The increase was driven primarily by acquisitions completed during the year, as well as inflation and other specific cost increases.

On the other hand, the company booked an interest expense of $18.4m compared to $9.5m in the last year reflecting higher interest rates and increased inventory in the fiscal 2024 period.