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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 DECEMBER 31, 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)
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)
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 January
31, 2001 was 15,264,038.
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MARINEMAX, INC.
Table of Contents
Item No. Page
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PART I FINANCIAL INFORMATION
1. Financial Statements (unaudited):
Condensed Consolidated Results of Operations
For the Three-Month Period Ended
December 31, 1999 and December 31, 2000...........................................3
Condensed Consolidated Balance Sheets as of
September 30, 2000 and December 31, 2000......................................4
Condensed Consolidated Statements of Cash Flows
for the Three-Month Period Ended
December 31, 1999 and December 31, 2000...........................................5
Notes to Condensed Consolidated Financial Statements.................................6
2. Management's Discussion and Analysis of Results of Operations
and Financial Condition..............................................................8
PART II OTHER INFORMATION
1. Legal Proceedings.................................................................11
2. Changes in Securities and Use of Proceeds.........................................11
3. Defaults Upon Senior Securities...................................................11
4. Submission of Matters to Vote of Security Holders.................................11
5. Other Information.................................................................11
6. Exhibits and Reports on Form 8-K..................................................11
7. Signatures........................................................................12
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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)
For the Three-Month Period Ended
December 31,
-------------------------------------
1999 2000
----------- ------------
Revenue $ 93,517 $ 84,777
Cost of sales 72,775 64,440
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Gross profit 20,742 20,337
Selling, general and administrative
expenses 18,734 21,067
----------- ------------
Income (loss) from operations 2,008 (730)
Interest expense, net 1,180 289
----------- ------------
Income (loss) before income taxes 828 (1,019)
Income tax provision (benefit) 351 (371)
----------- ------------
Net income (loss) $ 477 $ (648)
=========== ============
Basic and diluted net income (loss) per
common share: $ 0.03 $ (0.04)
=========== ============
Shares used in computing basic and
diluted net income (loss) per common share: 15,180,211 15,250,026
=========== ============
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)
September 30, December 31,
2000 2000
------------- ------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 12,583 $ 6,577
Accounts receivable, net 18,845 10,403
Inventories 115,036 167,027
Prepaids and other current assets 2,464 3,353
-------- ---------
Total current assets 148,928 187,360
Property and equipment, net 42,207 42,541
Goodwill and other assets 40,195 40,343
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Total assets $231,330 $ 270,244
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,717 $ 4,361
Customer deposits 15,918 15,910
Accrued expenses 13,568 11,553
Short-term borrowings 72,100 115,328
Current maturities of long-term debt 521 519
Current deferred tax liability 251 249
-------- ---------
Total current liabilities 108,075 147,920
Long-term debt, net of current maturities 5,759 5,512
Other liabilities 3,798 3,522
Deferred tax liability 1,358 1,583
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,
15,221,780 and 15,264,038 shares issued including shares
held in treasury at September 30, 2000 and December 31,
2000, respectively 15 15
Additional paid-in capital 63,572 63,815
Treasury stock, at cost, 39,776 shares held at
December 31,2000 -- (228)
Retained earnings 48,753 48,105
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Total stockholders' equity 112,340 111,707
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Total liabilities and stockholders' equity $231,330 $ 270,244
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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 Three-Month Periods Ended
(amounts in thousands except share and per share data)
(Unaudited)
December 31, December 31,
1999 2000
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 477 $ (648)
Adjustments to reconcile net income
(loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 903 947
Deferred income tax provision (benefit) 1,746 223
Loss (gain) on sale of property and equipment (93) (6)
Other -- 15
Decrease (increase) in --
Accounts receivable, net 3,050 8,442
Inventories (23,656) (51,991)
Prepaids and other assets (1,994) (1,282)
Increase (decrease) in --
Accounts payable (10,628) (1,356)
Customer deposits (5,731) (8)
Accrued expenses and other liabilities (2,844) (2,291)
Short-term borrowings 37,869 43,228
-------- --------
Net cash provided by (used in)
operating activities (901) (4,727)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,269) (1,056)
Proceeds from sale of property and equipment 595 26
Cash acquired (used) in purchase of businesses (1,221) --
-------- --------
Net cash provided by (used in) investing activities (1,895) (1,030)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 368 228
Purchases of Treasury Stock -- (228)
Repayments on long-term debt (157) (249)
-------- --------
Net cash provided by (used in)
financing activities 211 (249)
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NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (2,585) (6,006)
CASH AND CASH EQUIVALENTS,
beginning of period 8,297 12,583
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,712 $ 6,577
======== ========
Supplemental Disclosures of Cash Flow Information:
Cash paid for
Interest $ 1,302 $ 392
Income taxes $ 1,871 $ 372
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 and is the largest boat retailer in the United States. MarineMax, Inc. and
subsidiaries (MarineMax or the Company) engage primarily in the retail sale,
brokerage and service of new and used boats, motors, trailers, marine parts and
accessories. The Company currently operates through 52 retail locations in 13
states, consisting of Arizona, California, Delaware, Florida, Georgia,
Minnesota, Nevada, New Jersey, North Carolina, Ohio, South Carolina, Texas and
Utah.
MarineMax is the nation's largest retailer of Sea Ray, Boston Whaler,
and Hatteras Yachts. Brunswick Corporation (Brunswick) is the world's largest
manufacturer of recreational boats, including Sea Ray and Boston Whaler. Sales
of new Brunswick boats accounted for 82% of the Company's new boat revenue in
fiscal 2000. The Company represents approximately 8% of all Brunswick marine
product sales during the same period. Each of the Company's applicable Operating
Subsidiaries is a party to a 10-year dealer agreement with Brunswick covering
Sea Ray products and is the exclusive dealer of Sea Ray boats in its geographic
market.
In October 1998, the Company formed a new subsidiary, MarineMax Motor
Yachts, Inc. (Motor Yachts), and entered into a Dealership Agreement with
Hatteras Yachts, a division of Genmar Industries, Inc. The agreement gives the
Company the right to sell Hatteras Yachts throughout the state of Florida
(excluding the Florida Panhandle) and the U.S. distribution rights for Hatteras
products over 82 feet.
The Company is party to dealer agreements with other manufacturers,
each of which gives the Company the right to sell various makes and models of
boats within a given geographic region.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
consolidated 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. 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 weighted
average interest rate of LIBOR plus 143 basis points. Borrowings under the
Facilities are pursuant to a borrowing base formula and are used primarily for
working capital and financing the Company's inventories. The Facilities require
the company to maintain certain financial covenants, including a tangible net
worth ratio, among other restrictions. As of December 31, 2000, the Company was
in compliance with the financial covenants. The Facilities have similar terms
and mature on various dates ranging from March 2001 through July 2002.
3. SHAREHOLDERS' EQUITY
In November 2000, the Company's Board of Directors approved a share
repurchase plan allowing the Company to repurchase up to 300,000 shares of its
common stock. Under the plan, the Company may buy back common stock from time to
time in the open market or in privately negotiated blocks, dependant upon
various factors, including price and availability of the shares, and general
market conditions. As of December 31, 2000, an aggregate of 39,776 shares of
Common Stock has been repurchased under the plan, for an aggregate purchase
price of $228,484.
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MARINEMAX, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
4. SUBSEQUENT EVENTS
On January 8, 2001, the Company acquired the net assets of Associated
Marine Technologies, Inc. (Associated), including the assumption of certain
liabilities and related property and buildings for approximately $5.6 million in
cash. Associated operates a full service yacht repair facility near Ft.
Lauderdale, Florida. The acquisition has been accounted for under the purchase
method of accounting, which resulted in the recognition of approximately $2.3
million in goodwill. The Company has entered into a commitment with a lending
institution to finance the property and buildings acquired.
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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 (Registration number 1-14173) as filed with the SEC on December 27,
2000. 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
We are the largest recreational boat retailer in the United States with
fiscal 2000 revenue exceeding $550 million. Through 52 retail locations in 13
states, we sell new and used recreational boats and related marine products,
including engines, boats, trailers, parts, and accessories. We also arrange
related boat financing, insurance and extended warranty contracts; provide boat
repair and maintenance services; and offer boat 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. As of December 31, 2000, we have
acquired nine additional boat retailers, two boat brokerage operations, and
companies owning real estate used in the operations of certain of our
subsidiaries (collectively, the "Purchased Companies"). In connection with the
Purchased Companies, we 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 $40.2 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 our financial
statements subsequent to their respective acquisition dates. Each of the
Purchased Companies is continuing its operations as a wholly owned subsidiary of
our 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 our company. The
following discussion compares the three months ended December 31, 2000 to the
three months ended December 31, 1999, and should be read in conjunction with our
consolidated financial statements, including the related notes thereto,
appearing elsewhere in this Report.
CONSOLIDATED RESULTS FROM OPERATIONS
Three-Month Period Ended December 31, 2000 Compared to Three-Month Period Ended
December 31, 1999:
Revenue. Revenue decreased $8.7 million, or 9.3%, to $84.8 million for
the three-month period ended December 31, 2000 from $93.5 million for the
three-month period ended December 31, 1999. Of this decrease, $5.7 million was
attributable to a 12% decline in same store sales offset by $3.0 million
attributable to stores not eligible for inclusion in the comparable store base.
The decrease in comparable
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store sales for the three-month period ended December 31, 2000, resulted from
the delay in closing certain yacht sales, the unusually harsh winter and the
slowing economic environment.
Gross Profit. Gross profit decreased $0.4 million, or 2.0%, to $20.3
million for the three-month period ended December 31, 2000 from $20.7 million
for the three-month period ended December 31, 1999. Gross profit margin as a
percentage of revenue increased to 24.0% in 2000 from 22.2% in 1999. The
increase was due to improved margins being realized as a result of better
inventory management, which led to less discounting. Additionally, certain
manufacturer promotions were in place during the December 2000 quarter that were
not in place during the December 1999 quarter.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses increased approximately $2.3 million, or 12.4%, to $21.0
million for the three-month period ended December 31, 2000 from $18.7 million
for the three-month period ended December 31, 1999. Selling, general, and
administrative expenses as a percentage of revenue increased to 24.9% from 20.0%
in 1999. The increase in selling, general and administrative expenses as a
percentage of revenue is attributable to a weaker leveraging of the operating
expense structure, due to the sales decrease and as the Company acquires dealers
that operate in colder regions of the United States, the business becomes more
seasonal.
Interest Expense, Net. Interest expense, net decreased approximately
$0.9 million or 75.5%, to approximately $0.3 million for the three-month period
ended December 31, 2000 from approximately $1.2 million for the three-month
period ended December 31, 1999. Interest expense, net as a percentage of revenue
decreased to 0.3% in 2000 from 1.3% in 1999. The decrease in total interest
charges was the result of reduced borrowings and changes in the company's
product mix.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash needs are primarily for working capital to support
operations, including new and used boats and related parts inventories,
off-season liquidity, growth through acquisitions and new store openings. These
cash needs have historically been financed with cash 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. Currently, no agreements exist that restrict this flow of funds.
At December 31, 2000, the Company's indebtedness totaled approximately
$121.4 million, of which approximately $6.1 million was associated with the
Company's real estate holdings and the remaining $115.3 million was associated
with financing the Company's current inventory level and working capital needs.
The Company maintains 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 143 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 July 2002.
From March 1, 1998 through December 31, 2000, the Company has acquired
eleven additional boat dealers, two yacht brokerage operations, and companies
owning real estate used in the operations of certain subsidiaries of the
Company. In connection with these acquisitions, the Company issued an aggregate
of 2,764,578 shares of its common stock and paid an aggregate of approximately
$22.2 million in cash, resulting in the recognition of an aggregate of $40.2
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
Financial Condition, and Results of Operations " 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.
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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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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
Not applicable
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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.
Date: February 5, 2001 By: /s/ Michael H. McLamb
--------------------------------
Michael H. McLamb
Chief Financial Officer, Vice
President, Secretary and Treasurer
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