MarineMax Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 27, 2023

There are 10 speakers on the call.

Operator

Good morning, and welcome to the Marina Max, Inc. Fiscal 2023 Second Quarter Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Carl Talaman of the company's Investor Relations firm, Charles Merrow. Please go ahead, sir.

Speaker 1

Thank you, and good morning, everyone. Thank you for joining us. Hosting today's call are Brett McGill, Chief Executive Officer and President of MarineMax and Mike McLamb, the company's Chief Financial Officer. Brett will discuss the company's operating highlights. Mike will take you through the financial results.

Speaker 1

Brett will make some concluding comments and then management will be happy to take your questions. By now, you should have received a copy of the earnings release issued today. If not, please e mail our IR team at hc0investorrelations.com and a copy will be e mailed to you. With that, I'll turn the call over to Mike McClain.

Speaker 2

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our Comments are forward looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations.

Speaker 2

These risks include, but are not limited to, the impact of seasonality and weather, global economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10 ks and other filings with the Also on today's call, we will make comments referring to non GAAP financial measures. We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. These metrics can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non GAAP basis. A reconciliation of non GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett.

Speaker 2

Thank you, Mike. Good morning, everyone, and thank you for joining us. Let me begin by thanking our exceptional team, more than 3,900 strong around the globe for consistently delivering on our mission to provide customers with the world's best pleasure boating experience. While the industry buying cycle is looking different Than it was over the past couple of years, what's abundantly clear is that the passion for being on the water has never been stronger than it is today. A little more on this later.

Speaker 2

Turning to our results, this morning we reported 2nd quarter revenue of 570,000,000 This was the 2nd best March quarter top line in our history, surpassed only by the record $610,000,000 achieved in last year's Fiscal Second Quarter. After the exceptionally strong results we saw in fiscal 2022, our revenue performance this past quarter reflects the boating industry's return to seasonality amid growing macroeconomic uncertainty fueled in part by the crisis that hit the U. S. Banking sector last month. Traditionally, March is the strongest month of the second quarter, often as big as January February combined.

Speaker 2

This year, however, despite March being a good month with positive same store sales growth, It was weaker than what was projected, leading to a larger decrease in same store sales for the quarter. Same store sales increases of 7% 45% in the prior 2 March quarters contributed to an especially challenging comp this year. Based on our performance to date And with the level of macroeconomic uncertainty worsening as the second quarter progress, we are bringing down earnings and adjusted EBITDA guidance for the full year. Mike will address our fiscal 2023 outlook in more detail in his remarks. Although our 2nd quarter performance was not what we had anticipated, it's important to keep the results in context.

Speaker 2

Fiscal 2022 was a record year for MarineMax and by and large for the industry as a whole, which benefited from a confluence of factors including supply chain shortages, reduced inventories, a low interest rate environment and robust Consumer Spending. By contrast, inventories are beginning to return to more normalized levels, Interest rates are up and consumers are exhibiting a bit more caution. While those factors create a tough comparison for this year, We continue to focus on delivering results for our stakeholders over the long term. And it is through that lens that our performance this This year demonstrates the changes we have made to position MarineMax for the future. From time to time, there may be some greater than variances in our performance based on what's going on at the macro level, but we are confident in the underlying strength of the business.

Speaker 2

That strength becomes evident when comparing the more dynamic business we are operating today with the company we were several years ago. As we noted in this morning's earnings release, compared with the 1st 6 months of fiscal 2019, Our revenue through the same period this year has nearly doubled to $1,100,000,000 Gross margin has climbed more than 1,000 basis points to 36% and diluted EPS has increased more than 5 fold to $2.23 The initiatives we have taken have enabled us to build scale in new and exciting areas of the market that over time have the ability to dramatically increase both our recurring revenue and our earnings power reducing our exposure to normal seasonal trends. IGY Marinas, which we acquired in October, continues to perform well. IGY has a global portfolio of Premium yachting destinations of 23 marinas in 12 countries. These properties serve as a resilient platform for expansion and profitable growth as do many of our other higher margin revenue streams, including superyacht brokerage and luxury yacht services.

Speaker 2

Bolstered by the addition of IGY, revenue from higher margin maintenance, repairs, storage, rental and parts and Accessories at our Marina locations has increased dramatically, and Mike will provide more color on this later. We're also pleased with the growth of our manufacturing segment comprised of Intrepid Powerboats and Cruisers Yacht, both of which we acquired in 2021. Intrepid, a premier manufacturer of powerboats recently launched Its new flagship model, the 51 Pantothea. This new model, which was on display at the Palm Beach Boat Show is selling very well. Cruisers, one of the world's premier manufacturers of premium yachts, offers innovative handcrafted yacht that fill a unique and growing demand in the market for American made sport yacht and yacht models.

Speaker 2

Now let me update you on the continued momentum of our Technology platform, which fueled customer engagement and created value added services to help achieve our business objectives. We continue to rapidly add boat dealers to the Boatson platform, our innovative online digital product for the boat and Marine Retail Marketplace. Boats On connects consumers who are looking for boats, finance, insurance and other products to a network of dealers across the country. We are very excited about the capability of the technology to propel the growth of our higher margin businesses as more and more dealers and boaters continue to leverage the product. Our technology portfolio Also includes Boatyard, a subscription based product that targets the service side of the market, enhancing the ownership experience.

Speaker 2

Boatyard is being well received by the dealer community, furthering our reputation for service excellence. Together, Boat Zone and Boat Yard are key components within our recently created NewWave Innovation Business. We expect NewWave to play an integral role as we leverage our technology, innovation and marketing capabilities to I started this call with a comment on the demand for the boating lifestyle. Based on our digital traffic, participation in our customer events, marina traffic and boat show traffic, The demand for the boating lifestyle remains very strong. Over the last few years, the industry added a meaningful layer of new boating participants that are enjoying their boat and many are already beginning to trade up.

Speaker 2

To sum up, We remain extremely confident in the underlying fundamentals of our business and our ability to outperform the market over the long term. We continue to focus on balancing prudent expense management with investments to generate sustained profitable growth. As we head into the traditionally strong summer selling season, our historically high backlog reflects the growing worldwide enthusiasm for boating as well as the demand for the high quality products and services we are delivering to this global market. And with that update, I'll ask Mike to provide more detailed comments on the quarter. Thank you, Brett, and good morning again, everyone.

Speaker 2

I'd also like to thank our team for their continued hard work during the quarter. For the quarter, revenue declined about 7% to $570,000,000 largely due to a 13% decrease in same store sales, partially offset by the addition of IGY, which we acquired October 1. As Brett noted, the decrease in same store sales reflected the boating industry's return to seasonality Amid what continues to be an uncertain economic climate, which contributed to a double digit decline in units in the quarter. While units were lower across most categories, our premium brands continue to meaningfully outperform the value segment of the market. Geographically, our locations in Florida and other coastal areas have performed ahead of those in the Midwest and other interior regions of the country, which tend to be more seasonal.

Speaker 2

Average unit selling price continues to grow with the relative strength in premium versus value and the migration to larger product. It's worth noting that same store sales were down in January, improved in February and they were positive in March. Gross profit dollars were down modestly to $201,000,000 While gross margin grew about 150 basis points to 35.2%, a new March quarter record. The increase was primarily driven by the acquisition of IGY as well as strong performance in many of our higher margin businesses. Excluding IGY, gross margin in the 2nd quarter was down slightly compared with the prior year, which does indicate that product margins We're relatively healthy.

Speaker 2

To provide more context on the performance of our higher margin businesses, Beginning with our Q2 10 Q, we are taking a step to increase disclosures around our Marina related business as well as our higher margin businesses in general. We will add tables that show the percentage of revenue by specific categories for both our retail operations and product manufacturing segments as well as all our revenue categories on a quarterly basis Like we have done annually in our 10 ks, we will also be providing revenue in aggregate from maintenance, Repairs, storage, rental and parts and accessories from our combined marina locations as opposed to our non Marina locations. Specific to the Marina sourced revenue, For the first half of fiscal twenty twenty three, we generated $126,000,000 in revenue from maintenance, repair, storage, rental And parts and accessories. That represents a 120% increase from the same period last year, largely due to IGY. Marina sourced revenue is considered stickier and those figures exclude all boat sales as well as brokerage and F and I.

Speaker 2

We hope this information is incrementally beneficial as you think about the performance of our higher margin businesses. Moving down the income statement, SG and A expenses rose $12,000,000 primarily attributable to the addition of IGY, partially offset by a decrease in commissions on lower sales volume. SG and A was also impacted by the timing of internal sales of cruiser yachts to our stores versus to retail buyers. This means that while internal sales are eliminated at the revenue and margin line Until they are retail sold, the SG and A is expensed currently. Like other companies in this environment, we are reviewing expenses for opportunities while staying focused on the long term.

Speaker 2

Additionally, consistent with the dealership model, A significant portion of our team is on performance or commission based pay plans, which rise and fall based on the company's performance. Interest expense increased by $12,600,000 reflecting higher interest rates as well as the increase in long term debt related to IGY Marine quarter primarily due to lower revenue and higher floor plan interest expense this year. On a year to date basis, Adjusted EBITDA was $110,000,000 compared with $135,000,000 last year with floorplan interest making up close to half On the bottom line, we generated GAAP net income of $30,000,000 or $1.35 per diluted share. On an adjusted net income basis, net income for the quarter was $27,400,000 or $1.23 per diluted share. These amounts reflect adjustments for the change in fair value of contingent consideration and intangible asset amortization.

Speaker 2

We also removed 2 gains in the quarter to arrive at the $1.23 per share. Moving on to the balance sheet, We ended the quarter with cash and cash equivalents of more than $204,000,000 down modestly from last year, primarily due to the acquisition of IGY. As Brett highlighted in his remarks, supply chain Our inventory at quarter end was up 116% from last year to $711,000,000 and up 17% from December, which is typical for historical seasonal patterns. But with plenty of inventory delays over the past few years, it is nice to be able to have product available to deliver as we head into the selling season. Having said that, same store unit inventories are still well below March 2019 levels.

Speaker 2

Looking at liabilities, our short term borrowings at March 31st rose $440,000,000 from last year, largely due to increased inventories. Although customer deposits have decreased year over year, Sequentially, they are close to flat to December levels and remain historically very high as we enter the summer selling season. Consistent with past calls, debt to EBITDA and net of cash was less than 1x at quarter end and we have additional liquidity in the form of unlevered inventory Plus available lines of credit that totaled $200,000,000 Turning to guidance based on our year to date results As well as recent trends including March industry results reflecting softer retail than we anticipated, We believe that it is prudent to lower our 2023 guidance. Admittedly, this has been a challenging year to forecast Given the industry's rapid return to seasonality, combined with the Fed driven macroeconomic uncertainty, The challenges we saw in March despite it being ahead of last year demonstrated to us that the macroeconomic environment May weigh more heavily on the industry than the strength of seasonality. As such, we are lowering our full year same store sales assumptions From a modest decline to a decline in the high single digit range.

Speaker 2

This would imply that industry units during our fiscal year will be down double digits. For our 1st 6 months, the industry is down something like 20% to 25% in units. As we have seen to date, our premium product concentration should continue to benefit us. We expect margins to be generally consistent with our We do expect product margin pressure to increase due to rising industry inventory, but such pressure should be offset by Igui. SG and A is expected to be elevated as a percentage of revenue given the same store sales decline.

Speaker 2

We are also assuming interest Expense is elevated due to higher than anticipated inventories given the revised sales outlook as well as rates. With declining U. S.-based pre tax income combined with generally consistent international trends And the addition of IGY, which is exceeding expectations, our tax rate will increase to around 28% due in part to higher international tax rates. Interestingly, floorplan interest and the tax rate change accounts for over $1.70 of the change from last year's earnings per share performance. On the bottom line, we now expect our full year 2023 adjusted earnings per share guidance to be in the range of $4.90 to 5.50 This assumes a share count of 22,400,000 shares.

Speaker 2

In addition, we are forecasting 2023 adjusted EBITDA to be in the range of $220,000,000 to $245,000,000 Looking at current trends, April same store sales are expected to be modestly down from last year's April, which was a good month. With that, I'll turn the call back over to Brett for closing comments. Thanks, Mike. We look ahead with enthusiasm as we advance into the second half of fiscal twenty twenty three and beyond. Strategic acquisitions such as IGY give our business model the resilience and diversification to address the opportunities and challenges of any economic cycle.

Speaker 2

New technology offerings such as Boats on and Boatyard are key differentiators that will help provide us with a competitive advantage and continue to grow market share. We are aligned with the best Partners across our retail location and are well positioned to achieve profitable growth over the long term. At MarineMax, the customer experience is at the center of everything we do. Our world class net promoter scores, which measure a customer's likelihood to recommend our products and services speaks both to the exceptional level of service our team delivers and to the strength of our customer relationship. And with that, operator, please open up the line for questions.

Operator

Thank you. We will now be conducting a question and answer session. And our first question comes from Joy Altobello with Raymond James.

Speaker 3

Thanks. Hey, guys. Good morning. Good morning. A couple of questions on the comp.

Speaker 3

I guess first, you mentioned obviously units down pretty significantly. Was pricing or average pricing up in the quarter?

Speaker 2

Yes, it was up high single digit in the Quarter and I think close to double digit year to date. But yes, reflecting the trend to premium and also the larger product, Joe.

Speaker 3

Okay. And I want to kind of go back to your comment, Mike, about comp trends throughout the quarter, because I'm not sure I heard you correctly, but it sounds like you did say March was up, but help us understand what happened in Jan instead

Speaker 2

leading into March? Yes. So thanks, Joe. So back when we did The quarterly call in January, we did say that January was expected to be down. So we expect it to be down.

Speaker 2

We had expectations for February, which were great not excuse me, which were fine. They weren't great. But then our expectations for March At the beginning of all this were even stronger than they ended up being, but you heard me right. March had positive comps. We just expected March to be even stronger than it turned out to be.

Speaker 3

Okay. So March comp positive, April is going to be down modestly, It sounds like, but it seems like it didn't reflect as much as you would have hoped.

Speaker 2

That's right. We expected March March is normally as big as January February combined. You've heard us say that before. And March was a good month in the whole scheme of things, better than last year, Not quite equal to January February combined. So, and we kind of felt that softness as we talked about as the month went on.

Speaker 3

Okay. And one last one. In terms of your guide, it looks like you're assuming trends kind of stay pretty consistent in the back half versus the first half

Speaker 2

That's correct. And if you think about the next two quarters, the June quarter in theory has an easier comp because it was negative last year and September would be tougher

Operator

Our next question comes from Fred Weidman with Wolfe Research.

Speaker 4

Hey, guys. I just wanted to follow-up on the March commentary again. I think Brett, in your prepared remarks, you made a comment about the banking impact in March Specifically, is that something that you saw impact either financing availability or approval rates or consumer skittishness? Like was that something that impacted you guys specifically?

Speaker 3

Yes,

Speaker 2

Fred. How are you doing? Yes, in fact, I think March started off really strong and it just Felt like it paused. I'd kind of go with your last comment about skittishness a little bit. It just kind of slowed down, created pause in the consumer Towards that second half of March, Mike.

Speaker 2

Yes. No, I just on your comments around financing though, Fred, we haven't felt any Structural fallout or any changes in how banks approach retail financing in terms of The creditworthiness, things of that nature, obviously rates are higher, although they haven't really raised a whole lot in a little while, but the rates are higher. But no real fallout from the banking crisis with the folks who buy the retail paper.

Speaker 4

Okay. That's fair. And then on the industry outlook, I think you guys said that you're expecting that to be down double digit now. I mean, that's a really Wide range, right, the double digits. So do you sort of think it's going to be better or worse sort of similar to the down 20%?

Speaker 4

Well, I guess that's kind of the calendar number, but Do you think things are going to get better or worse or stay the same from here?

Speaker 2

Yes. So it's really interesting. I know you know the industry real well. When you look at the month over month comparisons, We go into kind of a little tougher comparisons in the summertime and then easier comparisons right near the end of our Q4. So I think months are going to vary based on what they're going up against last year.

Speaker 2

If I remember April is Probably the toughest month between now through July. And then the industry months get easier, but if we think overall, so I think if you listen to what we're saying, if the industry is down 20%, 25% now and we're saying double digit, probably overall it's going to get better than down 20% to 25%, but it's still going to be down Double digit negatives.

Speaker 3

Okay, helpful. Thank you, guys.

Operator

Our next question comes from Gerald Crum with Stifel.

Speaker 5

Okay, thanks. Hey guys, good morning. Good morning. I know it's still early in the season, but are you seeing any change in usage behavior? And would you anticipate Specifically lower fuel costs relative to where they were a year ago driving any parts of your business tied to usage?

Speaker 2

Yes. I think that's one thing we look at Drew is what's everything from fuel sales at our marinas, people out on the water, Service trends and our getaways events that we have customers going on, they're still all sold out. We just had a big Galleon event that we have customers in Key West, so they're boating. And I'd say it's active as ever, maybe Not the frenzied weekends of the COVID weekends, but they're out there voting.

Speaker 5

Got it. Okay. And then you touched on the record gross margin for fiscal 2Q and addressed some of the puts and takes on that line. I think you're suggesting mid-30s range for the balance or for all of fiscal 2023. Any call outs or anything to note in the second half of fiscal twenty twenty three that would move that line?

Speaker 2

I'll comment, Brett can chime in if he wants to. We are expecting increased margin pressure on Products that we sell themselves just as inventory builds a little bit in the industry, we don't think it's going to be Real significant. We think margins will do will still remain healthy for MarineMax in particular with the addition of IGY this year, Which we did not have in the June or the September quarter. That's going to we believe it's going to offset all that and our full year margin should be In the mid-30s, our other businesses that we talk a lot about are higher margin businesses, finance and insurance service, our Marina business that we have, not Just IGY, but here in the States, all those businesses are doing well themselves and are helping also and as those businesses thrive, especially in a maybe a Tempered same store sales environment, it does help to support margins even greater as you can imagine.

Speaker 5

Got it. Okay. Thanks guys.

Speaker 2

Thanks Drew.

Operator

Our next Question comes from James Hardman with Citigroup.

Speaker 6

Hi, this This is Sean Wagner on for James. I'm wondering if you could give us maybe just trying to figure out the split between ASPs and units In that March growth and then the, I guess, modest decline expected for April and even the high single digit decline for The full year, how do ASPs and units compare in those numbers? Is the ASP growth Similar, and then the units is what's driving the March growth or I guess how should we

Speaker 2

get that? Yes. ASPs in the quarter, I think I commented we're up high single digits, which would tell you our units were down something like 20% Across the board. But yes, so in our forecast, we're expecting also ASPs to continue to be up probably in the mid to high single digit range with and how that's what reconciles to our unit commentary For the industry for the

Speaker 6

year. Okay. And so in March, the growth was driven by units and same for the April decline?

Speaker 2

So in March, the same store sales decline, you mean the month of March, if you were asking specifically for the month of March, actually don't have The REEP for the month of March, but I would tell you it'd be up for our same store sales growth.

Speaker 6

Okay. I guess do you know if units were down in March or up in March?

Speaker 2

I'm going to tell you units were down in March as they were for the industry, but ours we had several brands that did well in the month of March, meaning they were up themselves year over year. Okay.

Speaker 6

And I guess piggybacking off of that, are you seeing any differences in demand As far as like low end or high end product or income related differences among consumers or anything like that?

Speaker 2

One thing we've been consistent on is our we skew towards the very premium end with our average unit selling price Being close to $300,000 And so the premium product continues to do better in the industry than the value product And we see that within our own business as well. But I would add that the kind of the macroeconomic pressures Seem to have kind of moved up in that price scale more so than let's say 6 months ago when we start talking about Smaller cheaper boats being under pressure because of interest rates. It's creeping the pressures are creeping up, creating pause with consumers. They're taking longer to make decisions. I would say you could even call that they're getting back to kind of the older buying cycle.

Speaker 2

They're coming into the funnel earlier. They're excited about going boating. They either already have a boat and they're looking for a boat And they're actively shopping, but the last 2 years there was no active shopping. There was people walked in and they bought. So the volume is almost there.

Speaker 6

Okay. Thank you very much.

Speaker 2

Thanks, Sean.

Operator

Our next question comes from Eric Wold with B. Riley Securities.

Speaker 7

Thanks. A couple of follow-up questions. I guess, follow-up on the gross margin comments and questions. I know you talked about Having the higher margin businesses offset some of the pressures you may be seeing on Product sales as inventory comes back. Maybe take that a complete step further and talk about if you took margins on new and used boat sales completely back 2019 levels even a little bit more if it worsens, what does that look like right now What you see with IGY and everything else in terms of a pro form a gross margin, if you assume it got a lot worse?

Speaker 2

It's a good question, Eric. I actually have not done that exact math. What I've said on some of these calls is that the product margin benefit has been something like a third of the overall improvement Of margins prior to adding IGY. So if you look at 2022 versus 2019, I think we're up Roughly a 1,000 points or thereabouts. So call it 300 to 330 or something would be due to product margins.

Speaker 2

IGY would offset a lot of that if it actually fell all the way back to 2019 levels, which we don't think that's going to happen. But I don't have the exact math for you, but it's a good question. Healthy inventory, good models and stock I'll help with that pressure as well. The way the industry is trying to Handle inventory and I know we've talked a lot about rising inventory, but all of the manufacturing partners that we work with and Ourselves are all really trying to keep inventories at a healthier long term level With higher turns exactly where that lands will be determined. But I don't have the exact answer, Eric, but the IGY would offset a lot of the

Speaker 7

That's helpful, Mike. But just safe to assume that Maybe not an exact number, but you feel confident about keep margins above 30% and then kind of the low 30s even to return back on product?

Speaker 2

Yes, that's our objective obviously. And then the and adding companies like Igui really helps that and continuing to work on a higher margin Just to force that even further.

Speaker 7

Got it. And then on the inventory, You said you're still light on a same store sales basis. Maybe kind of talk about what areas are you light on heading into the selling season and kind of Is that a risk or you think you've got kind of other products that could be kind of replacements for buyers coming in?

Speaker 2

We're the latest on larger product and larger Center console type product, which is generally consistent in the industry also is where we're light. Yes. But I think going into this season, we don't we've got a lot of great models to sell. So it shouldn't put pressure on the ability if somebody is ready to purchase a We should have the right selection of product for them. Of course, coming soon, right?

Speaker 2

Yes.

Speaker 7

Got it. And then just final question, if I may. Know there's been some increasing discussions around your real estate portfolio and kind of how underappreciated that may be. And I know you guys have taken Some actions to take mortgages out, we take some capital out of that over the past couple of years. I know it may be difficult to comment, but Any thoughts on if there is additional thoughts on possibly looking around that real estate and most of the Board looking to do something So maybe realize that value or at least make it make that value realized out there?

Speaker 2

Yes. We have a great portfolio of real estate that is So highly strategic to our operations and very valuable to the revenue streams and the growth of those revenue streams. We like the properties. We're looking to leverage them as far as getting more revenue streams coming through those, but Nothing actively going on there. It's a question that comes up as cycles occur like this cycle and Often it's a defensive type and I'm not suggesting you're asking this, but it's often sometimes defensive about what if liquidity gets tight or something like that.

Speaker 2

And Yes. The company's cash and liquidity position is very strong right now and the our ability if we ever need To leverage the real estate, to use the cash for strategic reasons, acquisitions, whatever we need It still exists like we've done historically. Helpful. Thanks, Bernadette. Appreciate it.

Speaker 2

Yes. Thank you, Eric.

Operator

Our next question comes from John Hurley with Northcoast Research.

Speaker 8

Thank you. Just wanted to ask a big picture question. Obviously, this business is continuing to evolve in many different ways. So would Love to hear your thoughts just about the new disclosure and how we can think about maybe, I don't know, I would call it a recurring revenue or recurring EBITDA level of The business just associated with maybe the parts and service and the Marina businesses. Is there any way to think about that number that you guys have maybe come up with that Maybe a percentage of revenue or percentage of EBITDA, which is kind of not tied to retail in any given year.

Speaker 2

So it's a very good question, John. And I did comment that we are beginning to increase disclosures around The different businesses that we're in and the higher margin businesses and specific to marinas, the 10 Q is supposed to be filed today. It will get filed today And there'll be some new tables in there, which will begin to shed light on how much revenue is coming from our Marina properties, both The international and here in the state. So that's the $126,000,000 I mentioned in the 1st 6 months of the year, which is obviously considered stickier. We haven't gotten to an EBITDA calculation yet on the property.

Speaker 2

It's something that we are still exploring and It's really the just how integrated a lot of our marinas are with our retail operations and how we got to break apart P and L is to get an EBITDA down to that level. We'll start with revenue and there are a number of obviously REITs that now own marinas that investors could look at to get an idea of what typically flows from a marina. So you could look at some of that data and apply it to our revenue to try to come up with some ideas of what the EBITDA may be. That's one thought process that has been suggested to us. Absent us providing our own EBITDA number, Which is going to take us a little bit of time to kind of work through that on our end, but it's a good question.

Speaker 2

It's something that we're working towards.

Speaker 8

Okay. And just one follow-up question, one housekeeping Question. You mentioned the REIT structure or the REIT comparables. Is that ever something that you guys have kind of spent time evaluating if you could structure company and a property company. And does it maybe make sense to think about that?

Speaker 8

And then secondly, the gain on the equity investment in Quarter. Where did you guys have that kind of net against? Is that in SG and A or COGS?

Speaker 2

I'll start with the second one. It's in SG and A. It's netted down in SG and A. And I can

Speaker 6

Yes. And as

Speaker 2

far as REIT structures, we Just closed on the acquisition IGY, getting to know the team, the platform, it is amazing platform with some Revenue streams in addition to just renting boat slips and we're just trying to maximize all that and get our arms around it And find ways to grow that platform. There are already ways to grow. We're just trying to maximize that. So that's our main focus right now. Understood.

Speaker 2

Thanks guys. Thank you, John.

Operator

Our next question comes from Brandon Holly with D. A. Davidson.

Speaker 9

Good morning. Thank you for taking my questions. First, just on what you're In the market right now, it seemed to be a little more cautious than one of your major suppliers that reported this morning. They indicated You're seeing a resilient consumer and not seeing a slowdown. Do you feel like you guys are underperforming the broader market or what would Change their view on the market versus yours?

Speaker 9

Thanks.

Speaker 2

I could comment and Brett could chime in. I apologize. My chuckle was only in we've been doing this this company has been around public for 25 years and in 25 years we have Outperformed the industry every single quarter. There are certainly times every now and again where There's data disconnects between us and some of our partners. Over time, the data always converges.

Speaker 2

And so I suspect that both companies are right. I think that's probably possible based on the data they're seeing. And I think over time there'll be a convergence of the data for both organizations too.

Speaker 9

Okay, great. And then just a quick question on the used market. Guess what are you seeing there in terms of used inventory availability and also maybe the used versus new pricing spread now that inventories have normalized on the new side?

Speaker 2

Yes, the used boat market is still strong and we're getting inventory on used boats in stock now, a little bit more Inventory available for the customer, but nothing dramatic, used products holding strong. Obviously, from a year or 2 ago, the pricing has kind of made Some adjustments, more normalized, but nothing else than out of the ordinary. Used is healthy and new is healthy, just a different backdrop Out there right now. Okay, great. Thank you.

Speaker 2

Thanks, Brandon.

Operator

Our next question comes from David MacGregor with Longbow Research.

Speaker 1

Hey, good morning. This is Joe Nolan on for David.

Speaker 2

Hey, Joe.

Speaker 1

Hi. I just had one quick Just kind of on promotional environment, just wondering what you're seeing in terms of promotions in the quarter and how you see that evolving through the year?

Speaker 2

There's been commentary out there on boat shows. It was higher than the last few years. There's more promotional activity On product and we're seeing it and we're working with our manufacturers to create promotions To move inventory and but nothing's out of the nothing's extreme right now. It seems to be kind of the appropriate level of Promotion to get consumers to kind of create a little bit of urgency, but not hurt the credibility of the pricing of the product.

Speaker 1

Got it. And just a follow-up on that, how would you compare it to pre pandemic levels at this point?

Speaker 2

The promotional level is, yes, meaningfully lower than pre pandemic level. Okay, got it. Thanks. That's all I got.

Operator

Since there are no further questions at this time, I would like to turn the floor back over to Mr. McGill for closing comments. Please go ahead.

Speaker 2

Well, thank you for joining the call today and thank you for all the great questions and we'll look forward to updating you on our next report.

Speaker 3

Have a good day.

Operator

This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

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Earnings Conference Call
MarineMax Q2 2023
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