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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________
Commission File No. 1-14173
MARINEMAX, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 59-3496957
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
Number)
18167 U.S. 19 NORTH, SUITE 499
Clearwater, Florida 33764
(Address of principal executive offices) (ZIP Code)
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727-531-1700
(Registrant's telephone number, including area code)
Indicate by check whether the registrant: (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
The number of outstanding shares of the registrant's Common Stock on July 31,
2000 was 15,218,620.
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MARINEMAX, INC.
Table of Contents
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Item No. Page
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PART I FINANCIAL INFORMATION
1. Financial Statements (unaudited):
Condensed Consolidated Results of Operations
For the Three-Month and Nine-Month Periods Ended
June 30, 1999 and June 30, 2000................................... 3
Condensed Consolidated Balance Sheets as of
September 30, 1999 and June 30, 2000.............................. 4
Condensed Consolidated Statements of Cash Flows
for the Nine-Month Periods Ended
June 30, 1999 and June 30, 2000................................... 5
Notes to Condensed Consolidated Financial Statements ............... 7
2. Management's Discussion and Analysis of Results of Operations
and Financial Condition........................................... 8
PART II OTHER INFORMATION
1. Legal Proceedings................................................... 12
2. Changes in Securities and Use of Proceeds........................... 12
3. Defaults Upon Senior Securities..................................... 12
4. Submission of Matters to a Vote of Security Holders................. 12
5. Other Information................................................... 12
6. Exhibits and Reports on Form 8-K.................................... 12
7. Signatures.......................................................... 13
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ITEM 1. FINANCIAL STATEMENTS
MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Results of Operations
(amounts in thousands except share and per share data)
(Unaudited)
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For the Three-Month For the Nine-Month
Period Ended June 30, Period Ended June 30,
----------------------------- -----------------------------
1999 2000 1999 2000
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Revenue $ 161,629 $ 174,546 $ 324,376 $ 423,303
Cost of sales 123,692 131,924 247,311 327,160
----------- ----------- ----------- -----------
Gross profit 37,937 42,622 77,065 96,143
Selling, general, and
administrative expenses 23,316 24,946 56,993 69,093
----------- ----------- ----------- -----------
Income from operations 14,621 17,676 20,072 27,050
Interest expense, net 598 1,019 1,364 3,576
----------- ----------- ----------- -----------
Income before income taxes 14,023 16,657 18,708 23,474
Income tax provision 5,529 6,350 7,465 9,068
----------- ----------- ----------- -----------
Net income $ 8,494 10,307 $ 11,243 14,406
=========== =========== =========== ===========
Basic and diluted net income
per common share : $ 0.56 $ 0.68 $ 0.76 $ 0.95
=========== =========== =========== ===========
Shares used in computing net income
per common share:
Basic 15,228,587 15,218,620 14,866,850 15,192,967
=========== =========== =========== ===========
Diluted 15,238,110 15,218,620 14,873,280 15,197,141
=========== =========== =========== ===========
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See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(amounts in thousands except share and per share data)
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September 30, June 30,
1999 2000
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(unaudited)
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ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,297 $ 14,370
Accounts receivable, net 14,842 26,378
Inventories 137,786 133,552
Prepaids and other current assets 2,705 3,062
Current Deferred tax asset 234 257
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Total current assets 163,864 177,619
Property and equipment, net 37,780 39,154
Goodwill and other assets 34,107 39,799
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Total assets $235,751 $256,572
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,802 $ 11,774
Customer deposits 10,574 13,397
Accrued expenses 10,775 17,230
Short-term borrowings 98,150 96,989
Current maturities of long-term debt 1,210 544
-------- --------
Total current liabilities 135,511 139,934
Long-term debt, net of current maturities 6,310 6,017
Deferred tax liability 1,600 1,893
Other liabilities 2,096 3,411
Commitments and contingencies
-------- --------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
5,000,000 shares authorized, none
issued or outstanding -- --
Common stock, $.001 par value; 40,000,000
shares authorized, 15,136,966 and
15,218,620 shares issued and
outstanding at September 30, 1999 and
June 30, 2000, respectively 15 15
Additional paid-in capital 62,859 63,537
Retained earnings 27,360 41,765
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Total stockholders' equity 90,234 105,317
-------- --------
Total liabilities and stockholders' equity $235,751 $256,572
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See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended
(amounts in thousands except share and per share data)
(Unaudited)
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June 30, June 30,
1999 2000
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 11,243 $ 14,406
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 2,774 2,363
Deferred income tax provision (benefit) (1,144) 270
Loss (gain) on sale of property and
equipment 36 (64)
Stock Compensation 85 --
Decrease (increase) in --
Accounts receivable, net 2,384 (11,536)
Inventories (36,879) 11,616
Prepaids and other assets (4,622) (1,428)
Increase (decrease) in --
Accounts payable 19,486 (3,043)
Customer deposits (1,398) 2,525
Accrued expenses and other liabilities 12,051 7,067
Short-term borrowings 36,256 (8,452)
Settlement payable (15,000) --
-------- --------
Net cash provided by (used in)
operating activities 25,272 13,724
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,887) (3,429)
Proceeds from sale of property and equipment 29 610
Cash used in purchase of businesses (4,138) (4,544)
-------- --------
Net cash provided by (used in)
investing activities (11,996) (7,363)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock under
employee benefit plans 238 678
Repayments on long-term debt (234) (966)
-------- --------
Net cash provided by (used in)
financing activities 4 (288)
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 13,280 6,073
CASH AND CASH EQUIVALENTS,
beginning of period 7,861 8,297
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 21,141 $ 14,370
======== ========
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See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the Nine-Month Periods Ended
(amounts in thousands except share and per share data)
(Unaudited)
(Continued)
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June 30, June 30,
1999 2000
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Supplemental Disclosures of Cash Flow
Information:
Cash paid for
Interest $ 1,867 $4,041
Income taxes $ 837 $3,281
Supplemental Disclosures of Non-Cash Investing
and Financing Activities:
Issuance of Common Stock and Warrants in
exchange for property and equipment
and businesses acquired $19,479 --
Assumption of debt (primarily inventory
financing) in conjunction with the
acquisition of property and equipment
and businesses acquired $ 6,404 --
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See Notes to Condensed Consolidated Financial Statements
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MARINEMAX, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
1. COMPANY BACKGROUND AND BASIS OF PRESENTATION
MarineMax, Inc., a Delaware corporation, was incorporated in January 1998.
MarineMax, Inc. and subsidiaries (MarineMax or the Company) engage primarily in
the retail sale and service of new and used boats, motors, trailers, marine
parts and accessories. The Company currently operates through 53 retail
locations in 14 states, consisting of Arizona, California, Delaware, Florida,
Georgia, Minnesota, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania,
South Carolina, Texas and Utah.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements to conform with the financial statement presentation of the
current period. The consolidated financial statements include the accounts of
the Company and its subsidiaries, all of which are wholly owned. All significant
intercompany transactions and accounts have been eliminated.
2. ACQUISITIONS
On December 31, 1999, the Company acquired the net assets of Duce Marine,
Inc. (Duce) for approximately $1.2 million of cash, including acquisition costs.
The Company assumed certain liabilities, including the outstanding floor plan
obligations related to boat inventories, which primarily finance Duce's Sea Ray
products. The acquisition has been accounted for under the purchase method of
accounting, which resulted in the recognition of approximately $975,000 in
goodwill.
On April 18, 2000, the Company acquired the net assets of Clark's Landing
at Greenbrook, Inc., Clark's Landing at Lake Hopatcong, Inc., and Clark's
Landing at Dredge Harbor, Inc. (collectively Clarks) for approximately $3.6
million in cash, including acquisition costs. The Company assumed or retired
certain liabilities, including the outstanding floor plan obligations related to
boat inventories, which primarily finance the acquired operations new boat
inventory. The acquisition has been accounted for under the purchase method of
accounting, which resulted in the recognition of approximately $4.4 million in
goodwill.
The acquisitions of Duce and Clarks have been reflected in the Company's
financial statements subsequent to their respective acquisition dates. The
goodwill associated with the acquisitions represent the excess of the purchase
price over the estimated fair value of the net assets acquired and is being
amortized over forty years on a straight-line basis. The acquisitions of Duce
and Clarks were not significant to the Company's consolidated results of
operations. Accordingly, pro forma results of operations, assuming the
acquisition had occurred at the beginning of the period, have been omitted.
3. SHORT-TERM BORROWINGS:
The Company has executed agreements for working capital borrowing
facilities (the "Facilities") with four separate financial institutions
providing for combined borrowing availability of $235 million at a weighed
average interest rate of LIBOR plus 147 basis points. Borrowings under the
Facilities are pursuant to a borrowing base formula and are used primarily for
working capital and inventory financing. The Facilities have similar terms and
mature on various dates ranging from March 2001 through December 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
This Management's Discussion and Analysis of Results of Operations and
Financial Condition contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
relate to future economic performance, plans and objectives of the Company for
future operations and projections of revenue and other financial items that are
based on the belief of the Company as well as assumptions made by, and
information currently available to, the Company. Actual results could differ
materially from those currently anticipated as a result of a number of factors,
including those listed in the "Risk Factors" of the Company's Annual Report on
Form 10-K as filed with the SEC on December 29, 1999. These risks include the
impact of seasonality and weather, general economic conditions and the level of
consumer spending, the Company's ability to integrate the acquisitions into
existing operations and numerous other factors identified in the Company's
filings with the Securities and Exchange Commission.
GENERAL
MarineMax is the largest recreational boat retailer in the United States
with fiscal 1999 revenue exceeding $450 million. Through 53 retail locations in
14 states, the Company sells new and used recreational boats and related marine
products, including engines, boats, trailers, parts, and accessories. The
Company also arranges related boat financing, insurance and extended warranty
contracts; provides boat repair and maintenance services; and offers yacht
brokerage services.
MarineMax was incorporated in January 1998. MarineMax has consummated a
series of business combinations since its formation. Certain business
combinations have been accounted for under the pooling-of-interests method of
accounting (collectively, the "Pooled Companies"). Accordingly, the financial
statements have been restated to reflect the operations as if the companies had
operated as one entity since inception. The last "pooling" occurred in July
1998. Additionally, the Company has acquired, through "purchase" transactions,
eleven boat retailers, two yacht brokerage operations, and companies owning real
estate used in the operations of certain subsidiaries (collectively, the
"Purchased Companies"). In connection with the Purchased Companies, the Company
issued an aggregate of 2,764,578 shares of common stock and paid an aggregate of
approximately $22.2 million in cash, resulting in the recognition of an
aggregate of $39.9 million in goodwill, which represents the excess of the
purchase price over the estimated fair value of the net assets acquired. The
Purchased Companies have been reflected in the Company's financial statements
subsequent to their respective acquisition dates. Each of the Purchased
Companies is continuing its operations as a wholly owned subsidiary of the
Company.
Each of the Pooled Companies and Purchased Companies historically operated
with a calendar year-end, but adopted the September 30 year-end of MarineMax on
or before the completion of its acquisition. The September 30 year-end more
closely conforms to the natural business cycle of the Company. The following
discussion compares the three months ended June 30, 2000 to the three months
ended June 30, 1999, and the nine months ended June 30, 2000 to the nine months
ended June 30, 1999 and should be read in conjunction with the Condensed
Consolidated Financial Statements, including the related notes thereto,
appearing elsewhere in this Report.
CONSOLIDATED RESULTS FROM OPERATIONS
Three-Month Period Ended June 30, 2000 Compared to Three-Month Period Ended June
30, 1999:
Revenue. Revenue increased $12.9 million, or 8.0%, to $174.5 million for
the three-month period ended June 30, 2000 from $161.6 million for the
three-month period ended June 30, 1999. Of this increase, $4.6 million was
attributable to 3% growth in comparable-store sales and $8.3 million was
attributable to stores not eligible for inclusion in the comparable-store base.
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Gross Profit. Gross profit increased $4.7 million, or 12.3%, to $42.6
million for the three-month period ended June 30, 2000 from $37.9 million for
the three-month period ended June 30, 1999. Gross profit as a percentage of
revenue increased to 24.4% in 2000 from 23.4% in 1999. The increase in gross
profit margin was attributable to the implementation of the Company's
experience-based retailing strategies and increased sales of products, such as
finance and insurance contracts, that historically result in higher gross
profits.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $1.6 million, or 7.0%, to $24.9
million for the three-month period ended June 30, 2000 from $23.3 million for
the three-month period ended June 30, 1999. Selling, general, and administrative
expenses as a percentage of revenue decreased to 14.3% in 2000 from 14.4% in
1999. The decrease in selling, general, and administrative expenses as a
percentage of revenue is attributable to the Company's ability to better
leverage its infrastructure.
Interest Expense, Net. Interest expense, net increased approximately
$421,000 or 70.4%, to approximately $1.0 million in 2000 from approximately
$598,000 in 1999. Interest expense, net as a percentage of revenue increased to
0.6% in 2000 from 0.4% in 1999. The increase resulted primarily from generally
higher interest rates in fiscal 2000 and an increased level of debt associated
with the Company's current inventory and working capital needs.
Nine-Month Period Ended June 30, 2000 Compared to Nine-Month Period Ended June
30,1999:
Revenue. Revenue increased $98.9 million, or 30.5%, to $423.3 million for
the nine-month period ended June 30, 2000 from $324.4 million for the nine-month
period ended June 30, 1999. Of this increase, $88.5 million was attributable to
28% growth in comparable-store sales and $10.4 million was attributable to
stores not eligible for inclusion in the comparable-store base. A significant
portion of the increase in comparable-store sales for the nine-month period
ended June 30, 2000 resulted from the October 1998 addition of the Hatteras
product line in certain stores, which has resulted in higher revenue in
comparable stores. Excluding the Hatteras product line, the Company's
comparable-store sales increase approximated 16% for the nine-month period ended
June 30, 2000. This increase resulted primarily from the Company's retailing
strategies, which focus on customer service, more effective utilization of the
prospective customer tracking feature of the integrated computer system, and
increased access to all MarineMax store inventories, which assists the Company's
retail locations in offering the products that customers desire.
Gross Profit. Gross profit increased $19.1 million, or 24.8%, to $96.1
million for the nine-month period ended June 30, 2000 from $77.0 million for the
nine-month period ended June 30, 1999. Gross profit margin as a percentage of
revenue decreased to 22.7% in 2000 from 23.8% in 1999. The decrease in gross
profit margin was attributable to an increase in sales of sport yachts and
yachts, including Hatteras products, which historically yield lower gross
profits per unit.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $12.1 million, or 21.2%, to
$69.1 million for the nine-month period ended June 30, 2000 from $57.0 million
for the nine-month period ended June 30, 1999. Selling, general, and
administrative expenses as a percentage of revenue decreased to 16.3% in 2000
from 17.6% in 1999. The decrease in selling, general, and administrative
expenses as a percentage of revenue is attributable to the Company's ability to
better leverage its infrastructure, including leverage associated with an
increase in its Hatteras business.
Interest Expense, Net. Interest expense, net increased approximately $2.2
million, or 162.2%, to $3.6 million in 2000 from $1.4 million in 1999. Interest
expense, net as a percentage of revenue increased to 0.8% in 2000 from 0.4% in
1999. The increase resulted primarily from generally higher interest rates in
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fiscal 2000 and an increased level of debt associated with the Company's current
inventory and working capital needs.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support
operations, including new and used boat and related parts inventories,
off-season liquidity, and growth through new retail openings and acquisitions.
These cash needs have historically been financed from operations and borrowings
under credit facilities. The Company depends upon dividends and other payments
from its operating subsidiaries to fund its obligations and meet its cash needs.
No agreements exist that restrict this flow of funds.
At June 30, 2000, the Company's indebtedness totaled approximately $103.6
million, of which approximately $6.6 million was associated with the Company's
real estate holdings and the remaining $97.0 million was associated with
financing the Company's inventory and working capital needs.
The Company has agreements for working capital borrowing facilities (the
"Facilities") with four separate financial institutions providing for combined
borrowing availability of $235 million at a weighed average interest rate of
LIBOR plus 147 basis points. Borrowings under the Facilities are pursuant to a
borrowing base formula and are used primarily for working capital and inventory
financing. The Facilities have similar terms and mature on various dates ranging
from March 2001 through December 2002.
During the nine-month period ended June 30, 2000, the Company acquired two
recreational boat dealers. In connection with these acquisitions, the Company
paid an aggregate of approximately $4.8 million in cash, resulting in the
recognition of an aggregate of $5.4 million in goodwill, which represents the
excess of the purchase price over the estimated fair value of the net assets
acquired.
Except as specified in this "Management's Discussion and Analysis of
Results of Operations and Financial Condition" and in the attached condensed
consolidated financial statements, the Company has no material commitments for
capital for the next 12 months. The Company believes that its existing capital
resources will be sufficient to finance the Company's operations for at least
the next 12 months, except for possible significant acquisitions.
IMPACT OF SEASONALITY AND WEATHER ON OPERATIONS
The Company's business, as well as the entire recreational boating
industry, is highly seasonal, with seasonality varying in different geographic
markets. With the exception of Florida, the Company generally realizes
significantly lower sales in the quarterly period ending December 31 with boat
sales generally improving in January with the onset of the public boat and
recreation shows. The Company's current operations and its business could become
substantially more seasonal as it acquires retailers that operate in colder
regions of the United States.
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YEAR 2000 COMPLIANCE
The year 2000 issue results from computer programs and hardware being
written with two digits rather than four digits to define the applicable year.
As a result, there is a risk that date sensitive software may recognize a date
using "00" as the year 1900, rather than the year 2000. This potentially could
result in system failure or miscalculations causing disruptions of operations,
including a temporary inability to process transactions or engage in normal
business activities.
The Company has experienced no year 2000 adverse effects on its internal
systems and is not aware of any involved in its supply chain, including
purchasing, distribution, sales, and accounting. Also, no errors were found
related to date processing before or after January 1, 2000. The Company will
continue to evaluate year 2000 related exposures at its suppliers and customers
over the next several months. The Company will also continue to monitor its
hardware, software, and imbedded systems as they are added or modified to ensure
that latent defects do not manifest themselves over the next few months.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
12
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MARINEMAX, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARINEMAX INC.
August 3, 2000 By: /s/ Michael H. McLamb
---------------------------------
Michael H. McLamb
Chief Financial Officer, Vice
President, Secretary and
Treasurer
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EXHIBIT INDEX
27.1 Financial Data Schedule
