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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended September 30, 2021
Commission File Number 1-14173
MarineMax, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Florida
(State of Incorporation)
59-3496957
(I.R.S. Employer Identification No.)
2600 McCormick Drive
Suite 200
Clearwater, Florida 33759
(727) 531-1700
(Address, including zip code, and telephone number, including area code, of principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, par value $.001 per share
Trading Symbol
HZO
Name of Each Exchange on Which Registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required 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 ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☑
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.
7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
The aggregate market value of common stock held by non-affiliates of the registrant (21,629,303 shares) based on the closing price of the
registrant’s common stock as reported on the New York Stock Exchange on March 31, 2021, which was the last business day of the registrant’s
most recently completed second fiscal quarter, was $1,067,622,396. For purposes of this computation, all officers and directors of the registrant
are deemed to be affiliates. Such determination should not be deemed to be an admission that such officers and directors are, in fact, affiliates of
the registrant.
☑
As of November 15, 2021, there were outstanding 21,864,914 shares of the registrant’s common stock, par value $.001 per share.
Documents Incorporated by Reference
Portions of the registrant’s definitive proxy statement for the 2022 Annual Meeting of Shareholders are incorporated by reference into Part III
of this report.
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MARINEMAX, INC.
ANNUAL REPORT ON FORM 10-K
Fiscal Year Ended September 30, 2021
TABLE OF CONTENTS
PART I
PART II
Business
Item 1
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Item 3
Item 4
Properties
Legal Proceedings
Mine Safety Disclosures
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 5
Item 6
Item 7
Item 7A Quantitative and Qualitative Disclosures about Market Risk
Item 8
Item 9
Item 9A Controls and Procedures
Item 9B Other Information
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accountant Fees and Services
PART III
Item 15 Exhibits, Financial Statement Schedules
PART IV
1
16
28
29
33
33
33
35
36
43
43
43
43
47
47
47
47
47
47
47
Statement Regarding Forward-Looking Information
The statements contained in this report on Form 10-K that are not purely historical are forward-looking statements within the meaning of
applicable securities laws. Forward-looking statements include statements regarding our “expectations,” “anticipations,” “intentions,” “plans,”
“beliefs,” or “strategies” regarding the future. Forward-looking statements also include statements regarding revenue, margins, expenses, and
earnings for fiscal 2022 and thereafter; our belief that our practices enhance our ability to attract more customers, foster an overall enjoyable
boating experience, and offer boat manufacturers stable and professional retail distribution and a broad geographic presence; our assessment of
our competitive advantages, including our hassle-free sales approach, prime retail locations, premium product offerings, extensive facilities,
strong management and team members, and emphasis on customer service and satisfaction before and after a boat sale; our belief that our core
values of customer service and satisfaction and our strategies for growth and enhancing our business, including without limitation, our
acquisition strategies and pursuit of contract manufacturing and vertical integration, will enable us to achieve success and long-term growth as
economic conditions continue to recover; our belief that our retailing strategies are aligned with the desires of consumers; and the scope and
duration of the COVID-19 pandemic and its impact on global economic systems, our employees, sites, operations, customers, suppliers and
supply chain, managing growth effectively. All forward-looking statements included in this report are based on information available to us as of
the filing date of this report, and we assume no obligation to update any such forward-looking statements. Our actual results could differ
materially from the forward-looking statements. Among the factors that could cause actual results to differ materially are the factors discussed
under Item 1A, “Risk Factors.”
Unless expressly indicated or the context requires otherwise, the terms “MarineMax,” “Company,” “we,” “us,” and “our” in this document refer
to MarineMax, Inc. and its subsidiaries.
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Item 1.
Business
Our Company
PART I
Introduction
We believe we are the largest recreational boat and yacht retailer and superyacht services company in the world. Through our current 79
retail locations in 21 states, we sell new and used recreational boats and related marine products, including engines, trailers, parts, and
accessories. We also arrange related boat financing, insurance, and extended service contracts; provide boat repair and maintenance services;
offer yacht and boat brokerage sales; and, where available, offer slip and storage accommodations. In the British Virgin Islands we offer the
charter of power catamarans, through MarineMax Vacations. We also own Fraser Yachts Group and Northrop & Johnson, leading superyacht
brokerage and luxury yacht services companies, with operations in multiple countries. We also own Cruisers Yachts, a manufacturer of sport
yacht and yachts with sales through our select retail dealership locations and through independent dealers, and is recognized as one of the
world’s premier manufacturers of premium sport yacht and yachts.
Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed
management’s reporting structure and operating activities. We now report our operations through two new reportable segments: Retail
Operations and Product Manufacturing.
As of September 30, 2021, the Retail Operations segment includes the activity of 77 retail locations in Alabama, California, Connecticut,
Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma,
Rhode Island, South Carolina, Texas, Washington and Wisconsin, where we sell new and used recreational boats, including pleasure and fishing
boats, with a focus on premium brands in each segment. We also sell related marine products, including engines, trailers, parts, and accessories.
In addition, we provide repair, maintenance, and slip and storage services; we arrange related boat financing, insurance, and extended service
contracts; we offer boat and yacht brokerage sales; yacht charter services. In the British Virgin Islands we offer the charter of power catamarans,
through MarineMax Vacations. Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services
companies with operations in multiple countries, are also included in this segment.
As of September 30, 2021, the Product Manufacturing segment includes activity of Cruisers Yachts, a wholly-owned MarineMax
subsidiary, manufacturing sport yacht and yachts with sales through our select retail dealership locations and through independent dealers.
Cruisers Yachts is recognized as one of the world’s premier manufacturers of premium sport yacht and yachts, producing models from 33’ to 60’
feet.
In November 2021, we acquired Intrepid Powerboats (“Intrepid”), a premier manufacturer of powerboats, and Texas MasterCraft, a
premier watersports dealer in Northern Texas. Intrepid is recognized as a world class producer of customized boats, carefully reflecting the
unique desires of each individual owner. Texas Mastercraft specializes in ski and wakeboard boats. The activity of Intrepid will be included in
our Product Manufacturing segment. The activity of Texas MasterCraft will be included in our Retail Operations segment.
We are the largest retailer of Sea Ray and Boston Whaler recreational boats which are manufactured by Brunswick Corporation
(“Brunswick”). Sales of new Brunswick boats accounted for approximately 27% of our revenue in fiscal 2021. Sales of new Sea Ray and Boston
Whaler boats, both divisions of Brunswick, accounted for approximately 11% and 13%, respectively, of our revenue in fiscal 2021. Brunswick is
a world leading manufacturer of marine products and marine engines. We have agreements with Brunswick covering Sea Ray products and
Boston Whaler products and are the exclusive dealer of Sea Ray and Boston Whaler boats in almost all of our geographic markets. Additionally,
we are the exclusive dealer for Harris aluminum boats, a division of Brunswick, in many of our geographic markets. We also are the exclusive
dealer for Italy-based Azimut-Benetti Group, or Azimut, for Azimut and Benetti mega-yachts, yachts, and other recreational boats for the United
States. Sales of new Azimut boats and yachts accounted for approximately 10% of our revenue in fiscal 2021. Additionally, we are the exclusive
dealer for certain other premium brands that serve certain industry segments in our markets as shown by the table on page three.
We also are involved in other boating-related activities. We sell used boats at our retail locations, online, and at various third-party
marinas and other offsite locations; we sell marine engines and propellers, primarily to our retail customers as replacements for their existing
engines and propellers; we sell a broad variety of parts and accessories at our retail locations and at various offsite locations, and through our
print catalog; we offer maintenance, repair, and slip and storage services at most of our retail locations; we offer finance and insurance products
at most of our retail locations and at various offsite locations and to our customers and independent boat dealers and brokers; we offer boat and
yacht brokerage sales at most of our retail locations and at various offsite locations; and we conduct a charter business, which is based in the
British Virgin Islands, in which we offer customers the opportunity to charter third-party and Company owned power catamarans.
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From March 2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government
or health officials as a result of the COVID-19 pandemic. We are following guidelines to ensure we are safely operating as recommended. As the
COVID-19 pandemic is complex and evolving rapidly with many unknowns, the Company will continue to monitor ongoing developments and
respond accordingly. Management expects its business, across all of its geographies, will be impacted to some degree, but the significance of the
impact of the COVID-19 pandemic on the Company’s business and the duration for which it may have an impact cannot be determined at this
time.
MarineMax commenced operations as a result of the March 1, 1998 acquisition of five previously independent recreational boat dealers.
Since that time, we have acquired 32 additional previously independent recreational boat dealers, multiple marinas, four boat brokerage
operations, two superyacht service companies, two full-service yacht repair operations, and two boat and yacht manufacturers. We attempt to
capitalize on the experience and success of the acquired companies in order to establish a high standard of customer service and responsiveness
in the highly fragmented retail boating industry. As a result of our emphasis on premium brand boats, our average selling price for a new boat in
fiscal 2021 was approximately $227,000, a slight increase from approximately $215,000 in fiscal 2020, compared with the industry average
selling price for calendar 2020 of approximately $60,000 based on industry data published by the National Marine Manufacturers Association.
We consider a store to be one or more retail locations that are adjacent or operate as one entity or a superyacht services region. Our same-store
sales increased 1% in fiscal 2019, increased 25% in fiscal 2020 and increased 13% in fiscal 2021.
The U.S. recreational boating industry generated approximately $49.4 billion in retail sales in calendar 2020, which is above the former
peak of $43.1 billion in calendar 2019. Total powerboats sold in calendar 2020 were approximately 230,450 units as compared to 201,400 units
sold in calendar 2019. The retail sales include sales of new and used boats; marine products, such as engines, trailers, equipment, and
accessories; and related expenditures, such as fuel, insurance, docking, storage, and repairs. Retail sales of new and used boats, engines, trailers,
and accessories accounted for approximately $40.0 billion of these sales in 2020 based on industry data from the National Marine Manufacturers
Association. The highly-fragmented retail boating industry generally consists of small dealers that operate in a single market and provide
varying degrees of merchandising, professional management, and customer service. We believe that many small dealers find it increasingly
difficult to make the managerial and capital commitments necessary to achieve higher customer service levels and upgrade systems and facilities
as required by boat manufacturers and often demanded by customers. We also believe that many dealers lack an exit strategy for their owners.
We believe these factors contribute to our opportunity to gain a competitive advantage in current and future markets, through market expansions
and acquisitions.
Material Updates to Our Strategy
Since the last discussion of our strategy in our Form 10-K for our fiscal year ended September 30, 2020, our primary goal remains to
enhance our position as the leading recreational boat and yacht retailer. In addition, we have broadened our strategy, including through our recent
acquisitions of Fraser Yachts Group, Northrop & Johnson, Skipper Marine Holdings, Inc. and certain affiliates (collectively, "SkipperBud’s"),
KCS International Holdings, Inc. and certain affiliates ("Cruisers Yachts"), Intrepid, and Texas MasterCraft. Our acquisition of Fraser Yachts
Group, Northrop & Johnson and SkipperBud’s, increases our superyacht brokerage and luxury yacht services and marina/storage services. Our
acquisition of Cruisers Yachts provides us a premium, American built sport yacht and yachts for our product portfolio. Prior to the acquisition,
we were a dealer for Cruiser Yachts. Cruisers Yachts also operates through independent dealers and is recognized as one of the world’s premier
manufacturers of premium sport yacht and yachts. Our goal is that this broadening of our strategy will potentially increase our margins while
providing better services to our customers.
In addition, we continue to broaden and strengthen our digital initiatives. Our digital services are always available and offer our full
selection of boats, yachts and charters, as well as our expert team to answer customers’ questions and help them find a boat virtually.
Additionally, our Boatyard digital platform allows marine businesses effective and customized digital solutions delivering great customer
experiences by enabling customers to interact through a personalized experience tailored to their needs.
Development of the Company; Expansion of Business
Since our initial acquisitions in March 1998, we have acquired 32 additional previously independent recreational boat dealers, multiple
marinas, four boat brokerage operations, two superyacht service companies, two full-service yacht repair operations, and two boat and yacht
manufacturers. Acquired dealers operate under the MarineMax name.
We continually attempt to enhance our business by providing a full range of services, offering extensive and high-quality product lines,
maintaining prime retail locations, pursuing the MarineMax One Price hassle-free sales approach, and emphasizing a high level of customer
service and satisfaction.
We also from time to time evaluate opportunities to expand our operations by potentially acquiring recreational boat dealers to expand our
geographic scope, expanding our product lines, opening new retail locations within or outside our existing territories, and offering new products
and services for our customers and by potentially acquiring companies to pursue contract manufacturing or vertical integration strategies.
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Apart from acquisitions and our superyacht service locations, we have opened 35 new retail locations in existing territories, excluding
those opened on a temporary basis for a specific purpose. We also monitor the performance of our retail locations and close retail locations that
do not meet our expectations. Based on these factors and previous depressed economic conditions, we have closed 75 retail locations since
March 1998 which includes the 2008 financial crisis, excluding those opened on a temporary basis for a specific purpose and including 10
during the last three fiscal years.
The following table sets forth information regarding the businesses that we have acquired and their geographic regions since fiscal year
2011.
Acquired Companies
Treasure Island Marina, LLC
Bassett Marine, LLC
Parker Boat Company
Ocean Alexander Yachts
Bahia Mar Marina
Russo Marine
Hall Marine Group
Island Marine Center
Tera Miranda
Bay Pointe Marina
Sail & Ski Center
Fraser Yachts Group
Boatyard, Inc.
Northrop & Johnson
Private Insurance Services
SkipperBud’s & Silver Seas Yachts
Cruisers Yachts
Nisswa Marine
Intrepid
Texas MasterCraft
Acquisition Date
Geographic Region
Florida Panhandle
Central Florida
Eastern United States
Florida Panhandle
Eastern Massachusetts and Rhode Island
North Carolina, South Carolina and Georgia
New Jersey
Oklahoma
February 2011
September 2012 Connecticut, Rhode Island and Western Massachusetts
March 2013
April 2014
January 2016
April 2016
January 2017
January 2018
April 2018
September 2018 Massachusetts
April 2019
July 2019
February 2020
July 2020
July 2020
October 2020
May 2021
July 2021
November 2021
November 2021
Texas
Worldwide
Worldwide
Worldwide
Worldwide
Great Lakes region and West Coast United States
Worldwide
Minnesota
Worldwide
Texas
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In addition to acquiring recreational boat dealers, superyacht service companies, boat manufacturers, and opening new retail locations, we
also add new product lines to expand our operations. The following table sets forth certain of our current product lines that we have added to our
existing locations during the years indicated.
Product Line
Boston Whaler
Grady-White
Boston Whaler
Azimut
Grady-White
Azimut
Boston Whaler
Harris
Nautique by Correct Craft
Harris
Crest
Azimut
Scout
Sailfish
Ocean Alexander Yachts
Scout
Aquila
Galeon
Grady-White
Yamaha Jet Boats
Bennington
Mastercraft
NauticStar
Tigé
Benetti
Aviara
MJM Yachts
ATX Surf Boats
Barletta
Four Winns
Harris
Sea Ray
Starcraft
Sylvan
Tiara
Princess
Cruisers Yachts (1)
Intrepid (1)
Mastercraft
Fiscal Year
1998
2002
2004-2005
2006
2006-2010
2008
2009-2012
2010
2010
2011-2012
2011-2018
2012
2012
2013
2014
2014
2014
2015
2016
2017
2017
2018-2021
2018
2018-2019
2019
2019
2019
2020
2021
2021
2021
2021
2021
2021
2021
2021
2021
2022
2022
Current Geographic Regions
West Central Florida, Stuart, Florida, and Dallas, Texas
Houston, Texas
North and South Carolina (2004), Houston, Texas (2005)
Northeast United States from Maryland to Maine
Pensacola, Florida (2006), Jacksonville, Florida (2010)
Florida
Southwest Florida (2009), Pompano Beach, Florida (2012)
Missouri, Minnesota, and New Jersey
West Central Florida and Minnesota
West Central Florida (2011), Alabama (2012), North and
Southwest Florida (2012), and Texas (2012)
Georgia (2011), Oklahoma (2012), North Carolina and South
Carolina (2012), New Jersey (2015), Florida (2018)
United States other than where previously held
Southeast Florida, Maryland, and New Jersey
Connecticut, New Jersey, North Carolina, Ohio, and Rhode
Island
Eastern United States
Texas, New York
Worldwide, excluding China
North America, Central America, and South America
Miami, Florida
Georgia, North Carolina, and South Carolina
South Carolina
South Carolina (2018), Wisconsin and Illinois (2021)
Panama City, Florida, Oklahoma, Missouri, Minnesota, North
Carolina and South Carolina
Orlando, Florida, Oklahoma, Georgia, and North Carolina
United States and Canada
United States
Florida
Orlando, Florida, Oklahoma, Georgia, and North Carolina
Wisconsin, Illinois, Detroit, and Michigan
Wisconsin, Illinois, Ohio and Detroit, Michigan
Wisconsin, Illinois, Grand Rapids, Michigan and Ohio
Wisconsin, Illinois, Michigan, and Ohio
Wisconsin, Illinois & Michigan
Wisconsin, Illinois, & Eastern Michigan
Wisconsin, Illinois, Michigan, California & Ohio
California and Seattle, Washington
Worldwide
Worldwide
North Texas
(1)
Product line owned by MarineMax
We add brands with the intent to either offer a migration path for our existing customer base or fill a gap in our product offerings. As a
result, we believe that new brands we offer are generally complementary and do not negatively impact the business generated from our other
prominent brands. We also discontinue offering product lines from time to time, primarily based upon customer preferences.
We strive to maintain our core values of high customer service and satisfaction and plan to continue to pursue strategies that we believe
will enable us to achieve long-term success and growth. We believe our expanded product offerings have strengthened our
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same-store sales growth. We plan to further expand our business through both acquisitions in new territories and new store openings in existing
territories. In addition, we plan to continue to expand our other traditional services, including conducting used boat sales at our retail locations,
at offsite locations, and digitally; selling related marine products, including engines, trailers, parts, and accessories at our retail locations and at
various offsite locations; providing maintenance, repair, and storage services at most of our retail locations; offering our customers the ability to
finance new or used boat purchases and to purchase extended service contracts and arrange insurance coverage, including boat property,
disability, undercoating, gel sealant, fabric protection, and casualty insurance coverage; offering boat and yacht brokerage sales at most of our
retail locations and at various offsite locations; offering boat storage; conducting our yacht charter business; and manufacturing sport yacht and
yachts. Our expansion plans will depend, in large part, upon economic and industry conditions.
U.S. Recreational Boating Industry
The U.S. recreational boating industry generated approximately $49.4 billion in retail sales in calendar 2020, which is above the former
peak of $43.1 billion in calendar 2019. The retail sales include sales of new and used recreational boats; marine products, such as engines,
trailers, parts, and accessories; and related boating expenditures, such as fuel, insurance, docking, storage, and repairs. Retail sales of new and
used boats, engines, trailers, equipment, and accessories accounted for approximately $40.0 billion of such sales in calendar 2020. Total
powerboats sold in calendar 2020 were approximately 230,450 units as compared to 201,400 units sold in calendar 2019. To provide historical
perspective, annual retail recreational boating sales were $17.9 billion in 1988, but declined to a low of $10.3 billion in 1992 based on industry
data published by the National Marine Manufacturers Association. We believe this decline was attributable to several factors, including a
recession, the Gulf War, and the imposition throughout 1991 and 1992 of a luxury tax on boats sold at prices in excess of $100,000. The luxury
tax was repealed in 1993, and retail boating sales increased each year thereafter except for 1998, 2003, and 2007 through 2010. We believe
recreational boating has a natural appeal to consumers, along with other outdoor activities, and will continue to grow in favorable economic
conditions absent any unusual industry headwinds (see Risk Factors).
The recreational boat retail market remains highly fragmented with little consolidation having occurred to date and consists of numerous
boat retailers, most of which are small companies owned by individuals that operate in a single market and provide varying degrees of
merchandising, professional management, and customer service. We believe that many boat retailers are encountering increased pressure from
boat manufacturers to improve their levels of service and systems, increased competition from larger national retailers in certain product lines,
and, in certain cases, business succession issues.
Products and Services
We offer new and used recreational boats and related marine products, including engines, trailers, parts, and accessories. While we sell a
broad range of new and used boats, we focus on premium brand products. In addition, we assist in arranging related boat financing, insurance,
and extended service contracts; provide boat maintenance and repair services; offer slip and storage accommodations; provide boat and yacht
brokerage sales; and conduct a yacht charter business.
New Boat Sales
We primarily sell recreational boats, including pleasure boats and fishing boats. A number of the products we offer are manufactured by
Brunswick, a leading worldwide manufacturer of recreational boats and yachts, including Sea Ray pleasure boats, Boston Whaler fishing boats,
and Harris aluminum boats. Sales of new Brunswick boats accounted for approximately 27% of our revenue in fiscal 2021. Sales of new Sea
Ray and Boston Whaler boats accounted for approximately 11% and 13%, respectively, of our revenue in fiscal 2021. Certain of our dealerships
also sell luxury yachts, fishing boats, and pontoon boats provided by other manufacturers, including Italy-based Azimut. Sales of new Azimut
boats and yachts accounted for approximately 10% of our revenue in fiscal 2021. Cruisers Yachts, a wholly-owned MarineMax subsidiary,
manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers. During fiscal
2021, new boat sales including sales of Cruisers Yachts accounted for approximately 70.5% or $1.455 billion of our revenue.
We offer recreational boats in most market segments, but have a particular focus on premium quality pleasure boats and yachts as
reflected by our fiscal 2021 average new boat sales price of approximately $227,000 a slight increase from approximately $215,000 in fiscal
2020, compared with an estimated industry average selling price for calendar 2020 of approximately $60,000 based on industry data published
by the National Marine Manufacturers Association. Given our locations in some of the more affluent, offshore-oriented boating areas in the
United States and emphasis on high levels of customer service, we sell a relatively higher percentage of large recreational boats, such as mega-
yachts, yachts, and sport cruisers. We believe that the product lines we offer are among the highest quality within their respective market
segments, with well-established trade-name recognition and reputations for quality, performance, and style.
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The following table is illustrative of the range and approximate manufacturer suggested retail price range of new boats that we currently
offer, but is not all inclusive.
Product Line and Trade Name
Overall Length
Manufacturer Suggested
Retail Price Range
Motor Yachts
Azimut
Ocean Alexander Yachts
Benetti
Princess
Pleasure Boats
Sea Ray
Aquila
Galeon
NauticStar
MJM Yachts
Aviara
Cruisers Yachts (1)
Tiara
Four Winns
Intrepid (1)
Pontoon Boats
Harris
Crest
Bennington
Barletta
Starcraft
Sylvan
Fishing Boats
Boston Whaler
Grady White
Scout
Sailfish
Ski Boats
Nautique by Correct Craft
Tigé
ATX Surf Boats
Mastercraft
Jet Boats
Yamaha Jet Boats
40’ to 120’+
45’ to 155’+
30M to 145M
35' to 95'
$800,000 to $16,000,000+
1,500,000 to 35,000,000+
12,000,000 to 24,000,000+
700,000 to 10,000,000
19’ to 40’
32’ to 48’
40’ to 80’
19’ to 32’
35’ to 50’+
32’ to 40’
33’ to 60’
34' to 53'
19' to 35'
25' to 48'
18’ to 27’
20’ to 27’
17’ to 25’
20' to 28'
18' to 25'
18' to 25'
11’ to 42’
18’ to 45’
17’ to 53’
19’ to 36’
20’ to 25’
20’ to 25’
20’ to 24’
20’ to 26’
19’ to 24’
30,000 to 800,000+
400,000 to 1,200,000
750,000 to 6,000,000+
30,000 to 300,000
800,000 to 2,000,000+
400,000 to 800,000+
300,000 to 2,500,000+
400,000 to 2,500,000
45,000 to 550,000
200,000 to 1,500,000
25,000 to 250,000
40,000 to 175,000
20,000 to 250,000
60,000 to 250,000
25,000 to 100,000
25,000 to 100,000
12,000 to 1,200,000
40,000 to 1,200,000
20,000 to 2,700,000
35,000 to 500,000
80,000 to 325,000
80,000 to 180,000
70,000 to 150,000
70,000 to 250,000
30,000 to 80,000
(1)
Product line owned by MarineMax
Motor Yachts. Ocean Alexander Yachts, Azimut, Benetti, and Princess are four of the world’s premier yacht builders. The motor yacht
product lines typically include state-of-the-art designs with live-aboard luxuries. Azimut yachts are known for their Americanized open layout
with Italian design and powerful performance. The luxurious interiors of Azimut yachts are accented by windows and multiple accommodations
that have been designed for comfort. Ocean Alexander Yachts are known for their excellent engineering, performance, and functionality
combined with luxuries typically found on larger mega yachts. Benetti yachts and mega yachts are known for maintaining the highest quality
standards with excellent aesthetic and functional results as well as combining the finest Italian tradition and craftsmanship with the latest
technology. Princess yachts are a leading British luxury yacht manufacturer with meticulous attention to detail, design, and exhilarating
performance.
Pleasure Boats. Sea Ray pleasure boats target both the luxury and the family recreational boating markets and come in a variety of
configurations to suit each customer’s particular recreational boating style. Sea Ray pleasure boats feature custom instrumentation that may
include an electronics package; various hull, deck, and cockpit designs that can include a swim platform; bow pulpit and raised bridge; and
various amenities, such as swivel bucket helm seats, lounge seats, sun pads, wet bars, built-in ice chests, and refreshment centers. Most Sea Ray
pleasure boats feature Mercury or MerCruiser engines. Galeon specializes in luxury yacht and
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motorboats with over thirty years of experience. Galeon is one of Europe’s leading and premier boat manufacturers. We believe Galeon yachts
combine the latest technology, hand crafted excellence, excellent attention to detail, superb performance, and great innovative designs with
modern styling and convenience. Aquila power catamarans provide form, function, and offer practicality and comfort with trend setting
innovation. We believe NauticStar provides sport deck boats that combine comfort, features, economy, and versatility that make NauticStar a
popular choice among experienced boaters. MJM Yachts combine speed, performance, greater stability, innovative designs and layouts, along
with comforts and space for entertaining in addition to a patent protected MJM signature look. Aviara is the newest brand manufactured by
MasterCraft focused on the production of vessels 30-feet and over with the goal of creating an elevated open water experience by fusing
progressive style, effortless comfort, and modern luxury. Cruisers Yachts is owned by MarineMax and is continuously building world-class,
innovative, quality, hand-crafted, American made sport yacht and yachts with the stylish and luxurious Cantius series of boats as well as sleek
and powerful outboard models. Tiara Yachts manufactures handcrafted, American-made luxury yachts designed for performance and comfort.
Four Winns manufactures quality runabouts, bowriders, yachts and tow sport boats. Intrepid uses advanced composite construction to make each
boat unique to its owner as well as stronger, faster and more fuel-efficient to deliver a safe, smooth, dry ride on the water.
Pontoon Boats. Harris is a pontoon industry leader and offers a variety of some of the most innovative, luxurious, and premium pontoon
models to fit boaters’ needs. Harris is known for exceptional performance combined with a stable and safe platform. Crest provides a variety of
pontoon models that are designed to provide extreme levels of quality, safety, style and comfort to meet family recreational needs. Bennington
offers what we believe to be industry leading design, meticulous craftsmanship, and a quiet, smooth, ride. Barletta offers quality construction,
simple yet refined models, and customer focused amenities. Starcraft is a leading boat manufacturer with a long history of continuous
improvements to fiberglass hull design and a dedication to providing exciting pontoon, runabouts, and deck boat models for families and
watersport enthusiasts. Sylvan builds quality, innovative, high performance pontoon boats. With a variety of designs and options, the pontoon
boats we offer appeal to a broad audience of pontoon boat enthusiasts and existing customers.
Fishing Boats. The fishing boats we offer, such as Boston Whaler, Grady-White, Scout, and Sailfish, range from entry level models to
advanced models designed for fishing and water sports in lakes, bays, and off-shore waters, with cabins with limited live-aboard capability. The
fishing boats typically feature livewells, in-deck fishboxes, rodholders, rigging stations, cockpit coaming pads, and fresh and saltwater
washdowns.
Ski Boats. The ski boats we offer are Nautique by Correct Craft, Tigé, ATX Surf Boats, and Mastercraft, which range from entry level
models to advanced models and all of which are designed to achieve an ultimate wake for increased skiing, surfing, and wakeboarding
performance and safety. With a variety of designs and options, Nautique, Tigé, ATX Surf Boats, and Mastercraft ski boats appeal to the
competitive and recreational user alike.
Jet Boats. Yamaha jet boats are designed to offer a reliable, high performing, internal propulsion system with superior handling. Yamaha
is a worldwide leader in jet boats. With a variety of designs and options, the jet boats we offer appeal to a broad audience of jet boat enthusiasts
and existing customers.
Used Boat Sales
We sell used versions of the new makes and models we offer and, to a lesser extent, used boats of other makes and models generally taken
as trade-ins. During fiscal 2021, used boat sales accounted for 10.9% or approximately $224.9 million of our revenue, and 29.0% of the used
boats we sold were Brunswick models.
Our used boat sales depend on our ability to source a supply of high-quality used boats at attractive prices. We acquire substantially all of
our used boat inventory through customer trade-ins. We strive to increase our used boat business through the availability of quality used boat
trade-ins generated from our new boat sales efforts, which are well-maintained through our service initiatives. Additionally, substantially all of
our used boat inventory is posted on our digital properties, which expands the awareness and availability of our products to a large audience of
boating enthusiasts. We also sell used boats at various marinas and other offsite locations throughout the country.
To further enhance our used boat sales, we offer extended warranty plans generally available for used boats less than nine years old. The
extended warranty plans apply to each qualifying used boat, which has passed a 48-point inspection, and provides protection against failure of
most mechanical parts for up to three years. We believe this type of program enhances our sales of used boats by motivating purchasers of used
boats to complete their purchases through our dealerships.
Marine Engines, Related Marine Equipment, and Boating Parts and Accessories
We offer marine engines and equipment, predominantly manufactured by Mercury Marine, a division of Brunswick, and Yamaha. We sell
marine engines and propellers primarily to retail customers as replacements for their existing engines or propellers. Mercury Marine and Yamaha
have introduced various new engine models that are designed to reduce engine emissions to comply with current United States Environmental
Protection Agency (“EPA”) requirements. See “Business — Governmental Regulations, including Environmental Regulations.” Industry leaders,
Mercury Marine and Yamaha, specialize in state-of-the-art marine propulsion
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systems and accessories. Many of our dealerships have been recognized by Mercury Marine as “Premier Service Dealers”. This designation is
generally awarded based on meeting certain standards and qualifications.
We also sell a broad variety of marine parts and accessories at our retail locations, at various offsite locations, and through our print
catalog. These marine parts and accessories include marine electronics; dock and anchoring products, such as boat fenders, lines, and anchors;
boat covers; trailer parts; water sport accessories, such as tubes, lines, wakeboards, and skis; engine parts; oils; lubricants; steering and control
systems; corrosion control products and service products; high-performance accessories, such as propellers and instruments; and a complete line
of boating accessories, including life jackets, inflatables, and water sports equipment. We also offer novelty items, such as shirts, caps, and
license plates bearing the manufacturer’s or dealer’s logos. In all of our parts and accessories business, we utilize our industry knowledge and
experience to offer boating enthusiasts high-quality products with which we have experience.
The sale of marine engines, related marine equipment, and boating parts and accessories, which are all tangible products, accounted for
approximately 3.2% or $66.8 million of our fiscal 2021 revenue.
Maintenance, Repair, and Storage Services
Providing customers with professional, prompt maintenance and repair services is critical to our sales efforts and contributes to our
success. We provide maintenance and repair services at most of our retail locations, with extended service hours at certain of our locations. In
addition, in many of our markets, we provide mobile maintenance and repair services at the location of the customer’s boat. We believe that this
service commitment is a competitive advantage in the markets in which we compete and is critical to our efforts to provide a trouble-free boating
experience. To further this commitment, in certain of our markets, we have opened stand-alone maintenance and repair facilities in locations that
are more convenient for our customers and that increase the availability of such services. We also believe that our maintenance and repair
services contribute to strong customer relationships and that our emphasis on preventative maintenance and quality service increases the
potential supply of well-maintained boats for our used boat sales.
We perform both warranty and non-warranty repair services, with the cost of warranty work reimbursed by the manufacturer in
accordance with the manufacturer’s warranty reimbursement program. For warranty work, most manufacturers, including Brunswick, reimburse
a percentage of the dealer’s posted service labor rates, with the percentage varying depending on the dealer’s customer satisfaction index rating
and attendance at service training courses. We derive the majority of our warranty revenue from Brunswick products, as Brunswick products
comprise the largest percentage of our products sold. Certain other manufacturers reimburse warranty work at a fixed amount per repair. Because
boat manufacturers permit warranty work to be performed only at authorized dealerships, we receive substantially all of the warranted
maintenance and repair work required for the new boats we sell. The third-party extended warranty contracts we offer also result in an ongoing
demand for our maintenance and repair services for the duration of the term of the extended warranty contract.
Our maintenance and repair services are performed by manufacturer-trained and certified service technicians. In charging for our
mechanics’ labor, many of our dealerships use a variable rate structure designed to reflect the difficulty and sophistication of different types of
repairs. The percentage markups on parts are similarly based on manufacturer suggested prices and market conditions for different parts.
At many of our locations, we offer boat storage services, including in-water slip storage and inside and outside land storage. These storage
services are offered at competitive market rates and include both in-season and out-of-season storage.
Maintenance, repair, and storage services accounted for approximately 5.6% or $114.6 million of our revenue during fiscal 2021 of which,
approximately 3.3% or $67.5 million related to repair services, approximately 0.8% or $15.5 million related to parts and accessories for repairs,
and approximately 1.5% or $31.6 million related to income from storage service rentals. This includes warranty and non-warranty services.
F&I Products
At each of our retail locations and at various offsite locations where applicable, we offer our customers the ability to finance new or used
boat purchases and to purchase extended service contracts and arrange insurance coverage, including boat property, disability, undercoating, gel
sealant, fabric protection, and casualty insurance coverage (collectively, “F&I”). We have relationships with various national marine product
lenders under which the lenders purchase retail installment contracts evidencing retail sales of boats and other marine products that are
originated by us in accordance with existing pre-sale agreements between us and the lenders. These arrangements permit us to receive a portion
of the finance charges expected to be earned on the retail installment contract based on a variety of factors, including the credit standing of the
buyer, the annual percentage rate of the contract charged to the buyer, and the lender’s then current minimum required annual percentage rate
charged to the buyer on the contract. This participation is subject to repayment by us if the buyer prepays the contract or defaults within a
designated time period, usually 0 to 180 days. To the extent required by applicable state law, our dealerships are licensed to originate and sell
retail installment contracts financing the sale of boats and other marine products.
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We also offer third-party extended service contracts under which, for a predetermined price, we provide all designated services pursuant to
the service contract guidelines during the contract term at no additional charge to the customer above a deductible. While we sell all new boats
with the boat manufacturer’s standard hull and engine warranty, extended service contracts provide additional coverage beyond the time frame or
scope of the manufacturer’s warranty. Purchasers of used boats generally are able to purchase an extended service contract, even if the selected
boat is no longer covered by the manufacturer’s warranty. Generally, we receive a fee for arranging an extended service contract. Most required
services under the contracts are provided by us and paid for by the third-party contract holder. Beginning in fiscal 2021, we have partnered with
a third-party F&I product provider to offer prepaid maintenance plans for select, new models.
We also are able to assist our customers with obtaining property and casualty insurance which covers loss or damage to the vessel. Our
specialty yacht insurance agency, Private Insurance Services, provides worldwide yacht insurance programs for brokerage houses, yacht
management groups, and maritime attorneys. Private Insurance Services utilizes expertise in complex underwriting, including understanding the
exposure of an owner, captain, crew, guests, tenders and navigation to provide clients with uniquely designed protection so customers can cruise
confidently.
During fiscal 2021, fee income generated from F&I products accounted for approximately 2.7% or $55.6 million of our revenue. We
believe that our customers’ ability to obtain competitive financing quickly and easily at our dealerships complements our ability to sell new and
used boats. We also believe our ability to provide customer-tailored financing on a “same-day” basis gives us an advantage over many of our
competitors, particularly smaller competitors that lack the resources to arrange boat financing at their dealerships or that do not generate
sufficient volume to attract the diversity of financing sources that are available to us.
Brokerage Sales
Through employees or subcontractors that are licensed boat or yacht brokers where applicable, we offer boat or yacht brokerage sales at
most of our retail locations. For a commission, we offer for sale brokered boats or yachts, listing them digitally on various sites, advising our
other retail locations of their availability through our integrated computer system, and posting them on our website, www.MarineMax.com. Often
sales are co-brokered, with the commission split between the buying and selling brokers. We believe that our access to potential used boat
customers and methods of listing and advertising customers’ brokered boats or yachts is more extensive than is typical among brokers. In
addition to generating revenue from brokerage commissions, our brokerage sales also enable us to offer a broad array of used boats or yachts
without increasing related inventory costs. Also, through Fraser Yachts Group and Northrop & Johnson we offer yacht and superyacht
brokerage. During fiscal 2021, brokerage sales commissions accounted for approximately 5.6% or $116.6 million of our revenue.
Our brokerage customers generally receive the same high level of customer service as our new and used boat customers. Our waterfront
retail locations enable in-water demonstrations of an on-site brokered boat. Our maintenance and repair services, including mobile service, also
are generally available to our brokerage customers. Generally, the purchaser of a boat brokered through us also can take advantage of
MarineMax Getaways!® weekend and day trips and other rendezvous gatherings and in-water events, as well as boat operation and safety
seminars. We believe that the array of services we offer are unique in the brokerage business.
Yacht Charter
In 2011 we launched a yacht charter business in which we offer customers the opportunity to charter catamarans in exotic destinations,
starting with our initial location in the British Virgin Islands. In this business, we sell specifically designed yachts to third parties for inclusion in
our yacht charter fleet; enter into yacht management agreements under which yacht owners enable us to put their yachts in our yacht charter
program for a period of several years for a fixed monthly fee payable by us; provide our services in storing, insuring, and maintaining their
yachts; and charter these yachts to vacation customers at agreed fees payable to us. The yacht owners will be able to utilize the yachts for
personal use for a designated number of weeks during the terms of the management agreement and take possession of their yachts following the
expiration of the yacht management agreements.
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In addition to the specific business we launched in the British Virgin Islands, we also offer yacht charter services. For a fee, we assist
yacht owners in the charter of their vessel by third-parties. Additionally, through Fraser Yachts Group and Northrop & Johnson we offer yacht
and superyacht chartering, charter management, yacht management, crew placement, new boat build oversight services and other luxury yacht
services. During fiscal 2021, the income from rentals of chartering power yachts, yacht charter fees, and other charter services accounted for
approximately 1.5% or $29.7 million of our revenue. Our facilities in the British Virgin Islands and yacht charter fleet suffered damage from
Hurricane Irma in September of 2017. We maintain insurance for inventory damage, subject to deductibles. The yacht charter fleet resumed
charters during fiscal 2019 on a limited basis as damage was repaired and returned to full operations in 2020. Beginning in March 2020, we
temporarily closed our facilities in the British Virgin Islands and yacht charters based on guidance from local government and health officials as
a result of the COVID-19 pandemic. Yacht charters resumed during fiscal 2021, but the impact of the COVID-19 pandemic and the duration for
which it may have an impact cannot be determined at this time.
Offsite Sales
We sell used boats, offer F&I products, and sell parts and accessories at various third-party offsite locations, including marinas.
Product Manufacturing
Cruisers Yachts, a wholly-owned MarineMax subsidiary, manufactures sport yacht and yachts with sales through our select retail
dealership locations and through independent dealers. Cruisers Yachts is recognized as one of the world’s premier manufacturers of premium
sport yacht and yachts, producing models from 33’ to 60’ feet. In November 2021, we acquired Intrepid, a premier manufacturer of powerboats.
Intrepid is recognized as a world class producer of customized boats, carefully reflecting the unique desires of each individual owner.
Retail Locations
We sell our recreational boats and other marine products and offer our related boat services through 79 retail locations in Alabama,
California, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North
Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Washington and Wisconsin. Each retail location generally includes an indoor
showroom (including some of the industry’s largest indoor boat showrooms) and an outside area for displaying boat inventories, a business
office to assist customers in arranging financing and insurance, maintenance and repair facilities, and at certain retail locations boat storage
services, including in-water slip storage and inside and outside land storage.
Many of our retail locations are waterfront properties on some of the nation’s most popular boating locations, including the Norwalk
Harbor and Westbrook Harbor in Connecticut; multiple locations on the Intracoastal Waterway, the Atlantic Ocean, Boca Ciega Bay,
Caloosahatchee River, Naples Bay, Tampa Bay, Pensacola Bay, and the Saint Andrews Bay in Florida; Lake Lanier and Wilmington River in
Georgia; Chesapeake Bay in Maryland; Lake Minnetonka and the St. Croix River in Minnesota; Lake of the Ozarks in Missouri; Barnegat Bay,
Lake Hopatcong, Little Egg Harbor Bay, and the Manasquan River in New Jersey; Huntington Harbor in New York; Town River in
Massachusetts; Masonboro Inlet in North Carolina; Lake Wylie in South Carolina; Lake Erie in Ohio; Grand Lake in Oklahoma; Newport Bay,
San Diego Bay, and Richardson Bay in California; Saginaw River, Lake St. Clair, Cass Lake, Spring Lake, and Lake Fenton in Michigan; Lake
Union in Washington; Sturgeon Bay, Lake Mendota, Kinnickinnic River, and Lake Butte Des Mortes in Wisconsin; Lake Michigan and Lake
Marie in Illinois; Newport Harbor in Rhode Island; and Clear Lake and Lake Lewisville in Texas. Our waterfront retail locations, most of which
include marina-type facilities and docks at which we display our yachts and boats, are easily accessible to the boating populace, serve as in-
water showrooms, and enable the sales force to give customers immediate in-water demonstrations of various boat models. Most of our other
locations are in close proximity to water.
Operations
Dealership Operations and Management
We have adopted a generally decentralized approach to the operational management of our dealerships. While certain administrative
functions are centralized at the corporate level, local management is primarily responsible for the day-to-day operations of the retail locations.
Each retail location is managed by a general manager, who oversees the day-to-day operations, personnel, and financial performance of the
individual store, subject to the direction of a regional president or district president, who generally has responsibility for the retail locations
within a specified geographic region. Typically, each retail location also has a staff consisting of an F&I manager, a parts manager, a service
manager, sales representatives, maintenance and repair technicians, and various support personnel.
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Sales and Marketing
Our sales philosophy focuses on selling the pleasures of the boating lifestyle and creating memories of a lifetime with family and friends.
We believe that the critical elements of our sales philosophy include our appealing retail locations, no-hassle sales approach, highly trained sales
representatives, high level of customer service, emphasis on educating the customer and the customer’s family on boating, and providing our
customers with opportunities for boating through our MarineMax Getaways!®. We strive to provide exceptional customer experiences through
the best services, products, and technology before, during, and after the sale. Our team and customers are United by Water®.
Each retail location offers the customer the opportunity to evaluate a variety of new and used boats in a comfortable and convenient
setting. Our full-service retail locations facilitate a turn-key purchasing process that includes attractive lender financing packages, extended
service agreements, and insurance. Many of our retail locations are located on waterfronts and marinas, which attract boating enthusiasts and
enable customers to operate various boats prior to making a purchase decision.
The brands we offer are diverse in size and use and are spread across our customer activities of leisure, fishing, watersports, luxury, and
vacations. We believe the transformative qualities of the water should be shared by everyone, so we created our boat lineup accordingly. Our
promise gives our brands meaning and reason to exist next to one another on our showroom floor.
We sell our boats at posted MarineMax “One Price” that generally represent a discount from the manufacturer’s suggested retail price.
Our sales approach focuses on the customer experience by minimizing customer anxiety associated with price negotiation.
As a part of our sales and marketing efforts, our digital marketing capabilities are a competitive advantage, with the majority of leads
originating through our digital properties, including MarineMax.com. Social media is a growing venue for customer engagement and
communication and has become a strong medium for connecting with new customers. Additionally, we hold online experience events including
immersive boat tours that allow participants to explore boats and yachts from multiple manufactures, segments, and models from nearly any
electronic device including their phone, tablet, or computer.
We participate in boat shows and in-the-water sales events at area boating locations, typically held in January, February, March, and
toward the end of the boating season, in each of our markets. Boat shows and other offsite promotions are an important venue for generating
customer engagement. The boat shows also generate a significant amount of interest in our products resulting in boat sales after the show. Online
we are always available and can offer our full selection of boats, yachts and charters, as well as our expert team to answer customers’ questions
and help them find a boat virtually.
We emphasize customer education through one-on-one education by our sales representatives and, at some locations, our delivery
captains, before and after a sale, and through in-house seminars for the entire family on boating safety, the use and operation of boats, and
product demonstrations. Typically, one of our delivery captains or the sales representative delivers the customer’s boat to an area boating
location and thoroughly instructs the customer about the operation of the boat, including hands-on instructions for docking and trailering the
boat. To enhance our customer relationships after the sale, we lead and sponsor MarineMax Getaways!® group boating trips to various
destinations, rendezvous gatherings, and on-the-water organized events that promote the boating lifestyle and memories of a lifetime. Each
Company-sponsored event, planned and led by a Company employee, also provides a favorable medium for acclimating new customers to
boating, sharing exciting boating destinations, creating friendships with other boaters, and enabling us to promote new product offerings to
boating enthusiasts.
As a result of our relative size, we believe we have a competitive advantage within the industry by being able to conduct an organized and
systematic advertising and marketing effort. Part of our marketing capabilities include a customer relationship management system that tracks all
customer engagements, evaluates the customers propensity to buy, automatically generates follow-up activities, and facilitates Company-wide
availability of a particular boat or other marine products and services desired by a customer.
Suppliers and Inventory Management
We purchase a substantial portion of our new boat inventory directly from manufacturers, which allocate new boats to dealerships based
on the amount of boats sold by the dealership and their market share. We manufacture a portion of our new boat inventory from our Product
Manufacturing segment. We also exchange new boats with other dealers to accommodate customer demand and to balance inventory.
In fiscal 2021, sales of new Brunswick and Azimut boats and yachts accounted for approximately 27% and 10% of our revenue,
respectively. Sales of new Sea Ray and Boston Whaler boats accounted for approximately 11% and 13%, respectively, of our revenue in fiscal
2021. No purchases of new boats and other marine related products from any other manufacturer accounted for more than 10% of our revenue in
fiscal 2021.
We have entered into multi-year agreements with Brunswick covering Sea Ray and Boston Whaler. We also have a multi-year agreement
with Azimut-Benetti Group for its Azimut product line. We typically deal with each of our manufacturers, other than Brunswick and Azimut-
Benetti Group, under an annually renewable, non-exclusive dealer agreement.
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The dealer agreements do not restrict our right to sell any product lines or competing products provided that we are in compliance with the
material obligations of our dealer agreements. The terms of each dealer agreement appoints a designated geographical territory for the dealer,
which is exclusive to the dealer provided that the dealer is able to meet the material obligations of its dealer agreement.
Manufacturers generally establish prices on an annual basis, but may change prices at their sole discretion. Manufacturers typically
discount the cost of inventory and offer inventory financing assistance during the manufacturers’ slow seasons, generally October through
March. To obtain lower cost of inventory, we strive to capitalize on these manufacturer incentives to take product delivery during the
manufacturers’ slow seasons. This permits us to gain pricing advantages and better product availability during the selling season. Arrangements
with certain other manufacturers may restrict our right to offer some product lines in certain markets.
We transfer individual boats among our retail locations to fill customer orders that otherwise might take substantially longer to fill from
the manufacturer. This reduces delays in delivery, helps us maximize inventory turnover, and assists in minimizing potential overstock or out-of-
stock situations. We actively monitor our inventory levels to maintain levels appropriate to meet current anticipated market demands. We are not
bound by contractual agreements governing the amount of inventory that we must purchase in any year from any manufacturer, but the failure to
purchase at agreed upon levels may result in the loss of certain manufacturer incentives or dealership rights.
Inventory Financing
Marine manufacturers customarily provide interest assistance programs to retailers. The interest assistance varies by manufacturer and
may include periods of free financing or reduced interest rate programs. The interest assistance may be paid directly to the retailer or the
financial institution depending on the arrangements the manufacturer has established. We believe that our financing arrangements with
manufacturers are standard within the industry.
We account for consideration received from our vendors in accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). ASC 606 requires us to classify interest
assistance received from manufacturers as a reduction of inventory cost and related cost of sales as opposed to netting the assistance against our
interest expense incurred with our lenders. Pursuant to ASC 606, amounts received by us under our co-op assistance programs from our
manufacturers are netted against related advertising expenses.
We are party to an Amended and Restated Loan and Security Agreement (the “Credit Facility”), with Wells Fargo Commercial
Distribution Finance LLC, M&T Bank, Bank of the West, and Truist Bank. The Credit Facility provides the Company a line of credit with asset
based borrowing availability of up to $500.0 million for working capital and inventory financing, with the amount permissible pursuant to a
borrowing base formula. The Credit Facility has a three-year term and expires in July 2024, subject to extension for two one-year periods, with
lender approval. The Credit Facility is further discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” section of this Annual Report on Form 10-K.
Technology Platform
We believe that our technology platform, which is utilized by each of our dealerships and has been developed over a number of years
through cooperative efforts with strategic partners, enhances our ability to integrate successfully the operations of our dealerships and future
acquisitions, facilitates the interchange of information, and enhances cross-selling opportunities throughout our company. The platform
integrates each level of operations on a Company-wide basis, including but not limited to inventory, financial reporting, budgeting, and sales
management. The platform enables us to monitor each dealership’s operations in order to identify quickly areas requiring additional focus and to
manage inventory. The platform also provides sales representatives with prospect and customer information that aids them in tracking
engagements insights, automatically generates follow-up activities, facilitates the availability of a particular boat Company-wide, locates boats
needed to satisfy a particular customer request, and monitors the maintenance and service needs of customers’ boats. Company representatives
also utilize the platform to assist in arranging financing and insurance packages. We mitigate cybersecurity risks by employing extensive
measures, including employee training, systems, monitoring and testing, and maintenance of protective systems and contingency plans.
Human Capital Resources
As of September 30, 2021, we had 2,666 employees, 2,067 (77%) of whom were in store-level operations, 467 (18%) of whom were in
the yacht manufacturing operations, and 132 (5%) of whom were in corporate administration and management. We are not a party to any
collective bargaining agreements. We consider our relations with our employees to be excellent.
In managing the business, we devote substantial efforts to recruit employees that we believe to be exceptionally well qualified for their
position. We also train our employees to understand our core retail philosophies, which focus on making the purchase of a boat and its
subsequent use as hassle-free and enjoyable as possible. Through our MarineMax University, or MMU, we teach our retail philosophies to
existing and new employees at various locations and online, through MMU-online. MMU is a modularized and
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instructor-led educational program that focuses on our retailing philosophies and provides instruction on such matters as the sales process,
customer service, F&I, accounting, leadership, and human resources. We also have a specialized service training center and program in
Clearwater, Florida where we train our service technicians in best practices.
Sales representatives receive compensation primarily on a commission basis. Each general manager is a salaried employee with incentive
bonuses based on the performance of the managed dealership. Maintenance and repair service managers receive compensation on a salary basis
with bonuses based on the performance of their departments. Our technology platform provides each store and department manager with daily
financial and operational information, enabling them to monitor the performance of their personnel on a daily, weekly, and monthly basis. We
have a uniform, fully integrated technology platform serving each of our dealerships.
Our philosophy is to pay competitive base salaries to team members at levels that help us to attract, motivate, and retain highly qualified
team members and reduce turnover. Cash incentive bonuses are designed to reward individuals based on our Company’s financial results as well
as the achievement of personal and corporate objectives designed to contribute to our long-term success in building shareholder value. Grants of
stock-based awards under our 2011 Stock-Based Compensation Plan are intended to align compensation with the price performance of our
common stock. Total compensation levels reflect corporate positions, responsibilities, and achievement of goals. As a result of our performance-
based compensation philosophy, pay levels may vary significantly from year to year and among our various team members. Performance metrics
utilized by our cash compensation plans include pretax income performance bonus, aged inventory, district and regional financial performance
targets, and net promoter score (customer satisfaction).
Intellectual Property
We have registered tradenames and trademarks, including among other marks, “MarineMax” and “United by Water” in over 20 countries
and territories. Pursuant to agreements with manufacturers and subject to restrictions in those agreements, we have the right to use and display
the trademarks and logos of our manufacturer’s brands at our retail stores as well as in our advertising and promotional materials. The current
registrations of our tradenames and trademarks are effective for varying periods of time, which we may renew periodically, provided that we
comply with all statutory maintenance requirements, including continued use of each trademark in each country.
Seasonality and Weather Conditions
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic
markets. Over the three-year period ended September 30, 2021, the average revenue for the quarters ended December 31, March 31, June 30 and
September 30 represented approximately 20%, 24%, 32%, and 24%, respectively, of our average annual revenues. With the exception of Florida,
we generally realize significantly lower sales and higher levels of inventories and related short-term borrowings, in the quarterly periods ending
December 31 and March 31. The onset of the public boat and recreation shows in January generally stimulates boat sales and typically allows us
to reduce our inventory levels and related short-term borrowings throughout the remainder of the fiscal year. Our expansion into boat storage
may act to reduce our seasonality and cyclicality.
Our business is also subject to weather patterns, which may adversely affect our results of operations. For example, prolonged winter
conditions, drought conditions (or merely reduced rainfall levels) or excessive rain, may limit access to area boating locations or render boating
dangerous or inconvenient, thereby curtailing customer demand for our products. In addition, unseasonably cool weather and prolonged winter
conditions may lead to a shorter selling season in certain locations. Hurricanes and other storms could result in disruptions of our operations or
damage to our boat inventories and facilities, as has been the case when Florida and other markets were affected by hurricanes, such as
Hurricanes Harvey and Irma in 2017. Although our geographic diversity is likely to reduce the overall impact to us of adverse weather
conditions in any one market area, these conditions will continue to represent potential, material adverse risks to us and our future financial
performance.
Governmental Regulations, including Environmental Regulations
Our operations are subject to extensive regulation, supervision, and licensing under various foreign, federal, state, and local statutes,
ordinances, and regulations. While we believe that we maintain all requisite licenses and permits and are in compliance with all applicable
federal, state, and local regulations, there can be no assurance that we will be able to maintain all requisite licenses and permits. The failure to
satisfy those and other regulatory requirements could have a material adverse effect on our business, financial condition, and results of
operations. The adoption of additional laws, rules, and regulations could also have a material adverse effect on our business. Various foreign,
federal, state, and local regulatory agencies, including the Occupational Safety and Health Administration (“OSHA”), the EPA, and similar
foreign, federal, state, and local agencies, have jurisdiction over the operation of our dealerships, repair facilities, and other operations with
respect to matters such as consumer protection and privacy, workers’ safety, and laws regarding protection of the environment, including air,
water, and soil.
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The EPA has various air emissions regulations for outboard marine engines that impose more strict emissions standards for two-cycle,
gasoline outboard marine engines. The majority of the outboard marine engines we sell are manufactured by Mercury Marine. Mercury Marine’s
product line of low-emission engines, including the Verado, SeaPro, Pro XS, and other four-stroke outboards, have achieved the EPA’s mandated
2006 emission levels. While we remain committed to supporting sustainable manufacturing and a sustainable environment for all boaters, any
increased costs of producing engines resulting from EPA standards, or the inability of our manufacturers to comply with EPA requirements,
could have a material adverse effect on our business.
Certain of our facilities own and operate underground storage tanks (“USTs”) and above ground storage tanks (“ASTs”) for the storage of
various petroleum products. The USTs and ASTs are generally subject to federal, state, and local laws and regulations that require testing and
upgrading of tanks and remediation of contaminated soils and groundwater resulting from leaking tanks. In addition, if leakage from Company-
owned or operated tanks migrates onto the property of others, we may be subject to civil liability to third parties for remediation costs or other
damages. Based on historical experience, we believe that our liabilities associated with tank testing, upgrades, and remediation are unlikely to
have a material adverse effect on our financial condition or operating results.
As with boat dealerships generally, and parts and service operations in particular, our business involves the use, handling, storage, and
contracting for recycling or disposal of hazardous or toxic substances or wastes, including environmentally sensitive materials, such as motor oil,
waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing
agents, gasoline, and diesel fuels. Accordingly, we are subject to regulation by federal, state, and local authorities establishing requirements for
the use, management, handling, and disposal of these materials and health and environmental quality standards, and liability related thereto, and
providing penalties for violations of those standards. We are also subject to laws, ordinances, and regulations governing investigation and
remediation of contamination at facilities we operate to which we send hazardous or toxic substances or wastes for treatment, recycling, or
disposal.
We do not believe we have any material environmental liabilities or that compliance with environmental laws, ordinances, and regulations
will, individually or in the aggregate, have a material adverse effect on our business, financial condition, or results of operations. However, soil
and groundwater contamination has been known to exist at certain properties owned or leased by us. We have also been required and may in the
future be required to remove USTs and ASTs containing hazardous substances or wastes. As to certain of our properties, specific releases of
petroleum have been or are in the process of being remedied in accordance with state and federal guidelines. We are monitoring the soil and
groundwater as required by applicable state and federal guidelines. In addition, the shareholders of certain of the acquired dealers have
indemnified us (and such indemnification is continuing) for specific environmental issues identified on environmental site assessments
performed by us as part of the acquisitions. We maintain insurance for pollutant cleanup and removal. The coverage pays for the expenses to
extract pollutants from land or water at the insured property, if the discharge, dispersal, seepage, migration, release, or escape of the pollutants is
caused by or results from a covered cause of loss. We also have additional storage tank liability insurance and Superfund coverage where
applicable. In addition, certain of our retail locations are located on waterways that are subject to federal or state laws regulating navigable
waters (including oil pollution prevention), fish and wildlife, and other matters.
Three of the properties we own were historically used as gasoline service stations. Remedial action with respect to prior historical site
activities on these properties has been completed in accordance with federal and state law. We do not believe that any of these environmental
issues will result in any material liabilities to us.
Additionally, certain states have required or are considering requiring a license in order to operate a recreational boat. While such
licensing requirements are not expected to be unduly restrictive, regulations may discourage potential first-time buyers, thereby limiting future
sales, which could adversely affect our business, financial condition, and results of operations.
Environmental Responsibility
We operate many retail locations near or on bodies of water that are acutely susceptible to the risks associated with climate change. Such
risks include those related to the physical impacts of climate change, such as possibly more frequent and severe weather events, rising sea levels,
and/or long term shifts in climate patterns, and risks related to the transition to a lower-carbon economy, such as reputational, market and/or
regulatory risks. Our commitment to environmental responsibility and initiatives to reduce our environmental footprint are outlined in our
“Environmental Policy.” Our Environmental Policy can be found on the Investor Relations section of our website at www.MarineMax.com under
Governance Documents. Our Environmental Policy and associated climate related risks and opportunities are reviewed by our Board of
Directors on an annual basis or more frequently as needed.
We have engaged in many efforts to mitigate and adapt to climate change. For example, we seek out, to the extent feasible, manufacturers
committed to the highest levels of sustainability, environmental stewardship, and low-emissions as demonstrated by Mercury Marine. Mercury
Marine’s commitment to sustainability and successes are detailed in its 2020 Sustainability Report. Mercury Marine’s accomplishments include
winning the 2019 Sustainable Process Award from the Wisconsin Sustainable Business Council for its sustainable use of aluminum, winning the
2018 Sustainable Product of the Year from the Wisconsin Sustainable Business Council for its Active Trim technology, and winning the 2018
Business Friend of the Environment Award for their new V6 and V8 outboard engines. For the 10th consecutive year, the Wisconsin Sustainable
Business Council awarded Mercury Marine a “Green Masters” designation, a program measuring a broad range of sustainability issues including
energy and water conservation,
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waste management, community outreach, and education. Additionally, Azimut Yachts was awarded ISO 14001 certification, for its consistent
and effective management system aimed at reducing the environmental impact of its operations. Also, to maximize the eco-compatible standards
of their yachts, Azimut Yachts adopted RINA (an organization specializing in classification, certification, testing, and inspection) principles to
achieve RINA Green Plus notation.
Further, while not our primary focus, as opportunities arise we have made targeted investments to support new technology, innovations,
and research in the marine industry to reduce emissions, provide environmental stewardship, and support a sustainable environment for all
boaters. The Fraser Yachts Group has become the first yacht company to sign the Pact for Energy Transition with the Monaco Government. The
energy transition pact was created by the Monaco government to improve energy efficiency and promote renewable energy sources, with the
target to reducing greenhouse gas emissions, by allowing residents, workers, businesses, institutions and associations to contribute to the energy
transition effort.
We take pride in maintaining our retail locations and marinas for the benefit of the local communities and boaters we serve. We strive to
execute a proactive strategy related to environmental, health, and safety laws and regulations, and environmental stewardship, which includes
investing significant resources in maintaining and developing our retail locations and marinas for the long term. Additionally, several of our
Florida locations have been designated Clean Marinas through the Florida Department of Environmental Protection Clean Marina Program. The
Clean Marina Program recognizes facilities engaging in environmental best practices and exceeding regulatory requirements in and around
Florida’s waterways.
Corporate Social Responsibility
Our commitment to social responsibility is outlined in our “Human Rights Policy.” Our Human Rights Policy can be found on the Investor
Relations section of our website at www.MarineMax.com under Governance Documents. Our Human Rights Policy is reviewed by our Board of
Directors on an annual basis or more frequently as needed. We strive to conduct our business in an ethical and socially responsible way, and are
sensitive to the needs of the environment, our customers, our shareholders, our team members and our communities. Our ethical and social
responsibility is guided by our MarineMax culture and values which are honesty, trust, loyalty, professionalism, consistency, always do what is
right, treat others as we want to be treated, and always consider the long term. Our culture, values, and mission are shared and reinforced with
our team members through daily stand up meetings, team events, and online communications. We pride ourselves in supporting our local
communities both on and off the water. One way in which our presence is felt within the local community is by providing our team members
time to volunteer and assist with Habitat for Humanity housing projects in addition to making charitable donations to Habitat for Humanity.
Additionally, we are proud to support the ocean cleanup company 4ocean and its mission to end the world’s plastic pollution crises. 4ocean is a
global company that actively removes trash from the ocean and coastlines, helps create sustainable economies around the world and inspires
individuals to work together for a cleaner ocean.
Product Liability
The products we sell or service may expose us to potential liabilities for personal injury or property damage claims relating to the use of
those products. Historically, the resolution of product liability claims has not materially affected our business. Manufacturers of the products we
sell generally maintain product liability insurance. We also maintain third-party product liability insurance that we believe to be adequate. We
may experience claims that are not covered by, or that are in excess of, our insurance coverage. The institution of any significant claims against
us could subject us to damages, result in higher insurance costs, and harm our business reputation with potential customers.
Executive Officers
The following table sets forth information concerning each of our executive officers as of November 15, 2021:
Name
William H. McGill Jr.
William Brett McGill
Michael H. McLamb
Charles A. Cashman
Anthony E. Cassella, Jr
Age
77
53
56
58
52
Position
Executive Chairman of the Board and Director
Chief Executive Officer, President and Director
Executive Vice President, Chief Financial Officer,
Secretary, and Director
Executive Vice President and Chief Revenue Officer
Vice President and Chief Accounting Officer
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William H. McGill Jr. has served as the Executive Chairman of the Board since October 2018. Mr. McGill served as Chief Executive
Officer of MarineMax from January 23, 1998 to September 30, 2018 and as the Chairman of the Board and as a Director of the Company since
March 6, 1998. Mr. McGill served as the President of the Company from January 23, 1988 until September 8, 2000 and re-assumed the position
from July 1, 2002 to October 1, 2017. Mr. McGill was the principal owner and president of Gulfwind USA, Inc., one of our operating
subsidiaries, from 1973 until its merger with us in 1998.
William Brett McGill has served as Chief Executive Officer since October 2018, as President since October 2017, and as a Director since
February 21, 2019. Mr. McGill served as President and Chief Operating Officer of MarineMax from October 2017 to October 2018. Mr. McGill
served as Executive Vice President and Chief Operating Officer from October 2016 to October 2017, Executive Vice President Operations of the
Company from October 2015 to September 2016, as Vice President of West Operations of the Company from May 2012 to September 2015, and
was appointed as an executive officer by our Board of Directors in November 2012. Mr. McGill served as one of our Regional Presidents from
March 2006 to May 2012, as Vice President of Information Technology, Service and Parts of the Company from October 2004 to March 2006,
and as Director of Information Services from March 1998. Mr. McGill began his professional career with a software development firm,
Integrated Dealer Systems, prior to joining MarineMax in 1996. William Brett McGill is the son of William H. McGill, Jr.
Michael H. McLamb has served as Executive Vice President of MarineMax since October 2002, as Chief Financial Officer since
January 23, 1998, as Secretary since April 5, 1998, and as a Director since November 1, 2003. Mr. McLamb served as Vice President and
Treasurer of the Company from January 23, 1998 until October 22, 2002. Mr. McLamb, a certified public accountant, was employed by Arthur
Andersen LLP from December 1987 to December 1997, serving most recently as a Senior Manager.
Charles A. Cashman has served as Executive Vice President and Chief Revenue Officer of MarineMax since October 2016. Mr. Cashman
served as Executive Vice President Sales, Marketing, and Manufacturer Relations of the Company from October 2015 to September 2016,
served as Vice President of East Operations from May 2012 to September 2015, and was appointed as an executive officer by our Board of
Directors in November 2012. Mr. Cashman served as Regional President of East Florida from October 2008 to May 2012, and as District
Manager of the East Coast of Florida from March 2007 to October 2008. Mr. Cashman served several other positions of increasing
responsibility, including Sales Consultant, Sales Manager, and General Manager, since joining MarineMax in 1992.
Anthony E. Cassella, Jr. has served as Vice President of MarineMax since February 2016, Chief Accounting Officer since October 2014,
and Vice President of Accounting and Shared Services since February 2011. Mr. Cassella served as Director of Shared Services from October
2007 until February 2011 and Regional Controller from March 1999 until October 2007. Mr. Cassella was the Controller of Merit Marine which
the Company acquired in March 1999. Mr. Cassella, a certified public accountant, worked in public accounting from June 1991 to February
1998, serving most recently as Manager.
Item 1A.
Risk Factors
Risks Related to Competition, Economic, and Industry Conditions
Our success depends to a significant extent on the well-being, as well as the continued popularity and reputation for quality of the boating
products, of our manufacturers, particularly Brunswick’s Sea Ray and Boston Whaler boat lines and Azimut-Benetti Group’s Azimut
products. The failure to obtain a high quality and desirable mix of competitively priced products that our customers demand could have a
material adverse effect on our business, financial condition, and results of operations.
Approximately 27% of our revenue in fiscal 2021 resulted from sales of new boats manufactured by Brunswick, including approximately
11% from Brunswick’s Sea Ray division, 13% from Brunswick’s Boston Whaler division, and approximately 3% from Brunswick’s other
divisions. Additionally, approximately 10% of our revenue in fiscal 2021 resulted from sales of new boats manufactured by Azimut-Benetti
Group. The remainder of our fiscal 2021 revenue from new boat sales resulted from sales of products from a limited number of other
manufacturers, none of which accounted for more than 10% of our revenue.
We depend on our manufacturers to provide us with products that compare favorably with competing products in terms of quality,
performance, safety, and advanced features, including the latest advances in propulsion and navigation systems. Any adverse change in the
production efficiency, product development efforts, technological advancement, expansion of manufacturing footprint, supply chain and third-
party suppliers, marketplace acceptance, marketing capabilities, ability to secure adequate access to capital, and financial condition of our
manufacturers, particularly Brunswick (including Mercury Marine, a division of Brunswick) and Azimut-Benetti Group, given our reliance on
Sea Ray, Boston Whaler, Mercury Marine engines, and Azimut, would have a substantial adverse impact on our business. Any difficulties
encountered by any of our manufacturers, particularly Brunswick and Azimut-Benetti Group, resulting from economic, financial, supply chain,
or other factors, such as the COVID-19 pandemic, could adversely affect the quality and amount of products that they are able to supply to us
and the services and support they provide to us.
Any interruption or discontinuance of the operations of Brunswick, Azimut-Benetti Group or other manufacturers could cause us to
experience shortfalls, disruptions or delays with respect to needed inventory. Although we believe in our brand, our product
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diversification and that adequate alternate sources would be available that could replace any manufacturer other than Brunswick and Azimut-
Benetti Group as a product source, those alternate sources may not be available at the time of any interruption, and alternative products may not
be available at comparable quality and price.
Boat manufacturers exercise substantial control over our business.
We depend on our dealer agreements. We have dealer agreements with Brunswick covering Sea Ray and Boston Whaler products. Most of
our retail locations have a multi-year dealer agreement which provides for the lowest product prices charged by the Sea Ray division of
Brunswick or Boston Whaler, as applicable, from time to time to other domestic Sea Ray or Boston Whaler dealers, as applicable. These terms
are subject to:
•
•
the dealer meeting all the requirements and conditions of the manufacturer’s applicable programs; and
the right of Brunswick in good faith to charge lesser prices to other dealers
•
•
•
to meet existing competitive circumstances;
for unusual and non-ordinary business circumstances; or
for limited duration promotional programs.
Each dealer agreement designates a specific geographical territory for the dealer, which is exclusive to the dealer provided that the dealer
is able to meet the material obligations of its dealer agreement.
We are the exclusive dealer for Azimut-Benetti Group’s Azimut product line for the United States. The Azimut dealer agreement provides
a geographic territory to promote the product line and to network with the appropriate clientele through various independent locations designated
for Azimut retail sales. Our dealer agreement is a multi-year term but requires us to be in compliance with its terms and conditions.
As is typical in the industry, we generally deal with manufacturers, other than Sea Ray, Boston Whaler, and Azimut, under renewable
annual dealer agreements. These agreements do not contain any contractual provisions concerning product pricing or required purchasing levels.
Pricing is generally established on a model year basis, but is subject to change in the manufacturer’s sole discretion. Any change or termination
of these arrangements for any reason could adversely affect product availability and cost and our financial performance.
Through these dealer agreements, boat manufacturers (particularly Brunswick and Azimut) exercise significant control over their dealers,
restrict them to specified locations, and retain approval rights over changes in management and ownership, among other things. Failure to meet
the customer satisfaction, market share goals, and other conditions set forth in any dealer agreement could have various consequences, including
the following:
•
•
•
•
•
•
•
the termination of the dealer agreement;
the imposition of additional conditions in subsequent dealer agreements;
limitations on boat inventory allocations;
reductions in reimbursement rates for warranty work performed by the dealer;
loss of certain manufacturer to dealer incentives;
denial of approval of future acquisitions; or
the loss of exclusive rights to sell in the geographic territory.
These events could have a material adverse effect on our competitive position and financial performance.
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic markets.
the
Over
three-year period ended September 30, 2021,
the quarterly periods ended
December 31, March 31, June 30 and September 30 represented approximately 20%, 24%, 32%, and 24%, respectively, of our average annual
revenue. With the exception of Florida, we generally realize significantly lower sales and higher levels of inventories and related short-term
borrowings in the quarterly periods ending December 31 and March 31. The onset of the public boat and recreation shows in January typically
stimulates boat sales and allows us to reduce our inventory levels and related short-term borrowings throughout the remainder of the fiscal year.
Our business could become substantially more seasonal if we acquire dealers that operate in colder regions of the United States, which are
generally closed or experience lower volume in the winter months.
the average
revenue
for
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The failure to receive rebates and other dealer incentives on inventory purchases or retail sales could substantially reduce our margins.
We rely on manufacturers’ programs that provide incentives for dealers to purchase and sell particular boat makes and models or for
consumers to buy particular boat makes or models. Any eliminations, reductions, limitations, or other changes relating to rebate or incentive
programs that have the effect of reducing the benefits we receive, whether relating to the ability of manufacturers to pay or our ability to qualify
for such incentive programs, could increase the effective cost of our boat purchases, reduce our margins and competitive position, and have a
material adverse effect on our financial performance.
Other recreational activities, poor industry perception, and potential health risks from environmental conditions can adversely affect the
levels of boat purchases.
Demand for our products can be adversely affected by competition from other activities that occupy consumers’ time, including other
forms of recreation as well as religious, cultural and community activities. In addition, real or perceived health risks from engaging in outdoor
activities and local environmental conditions in the areas in which we operate dealerships could adversely affect the levels of boat purchases.
Further, as a seller of high-end consumer products, we must compete for discretionary spending with a wide variety of other recreational
activities and consumer purchases. In addition, perceived hassles of boat ownership and customer service and lack of customer education
throughout the retail boat industry, which has traditionally been perceived to be relatively poor, represent impediments to boat purchases.
We face intense competition.
We operate in a highly competitive environment. In addition to facing competition generally from recreation businesses seeking to attract
consumers’ leisure time and discretionary spending dollars, the recreational boat industry itself is highly fragmented, resulting in intense
competition for customers, quality products, boat show space, and suitable retail locations. We rely to a certain extent on boat shows to generate
sales.
We compete primarily with single-location boat dealers and, with respect to sales of marine parts, accessories, and equipment, with
national specialty marine parts and accessories stores, online catalog retailers, sporting goods stores, and mass merchants. Competition among
boat dealers is based on the quality of available products, the price and value of the products, and attention to customer service. There is
significant competition both within markets we currently serve and in new markets that we may enter. We compete in each of our markets with
retailers of brands of boats and engines we do not sell in that market. In addition, several of our competitors, especially those selling marine
equipment and accessories, are large national or regional chains that have substantial financial, marketing and other resources. Private sales of
used boats represent an additional source of competition.
Due to various matters, including environmental concerns, permitting and zoning requirements, and competition for waterfront real estate,
some markets in the United States have experienced an increased waiting list for marina and storage availability. In general, the markets in which
we currently operate are not experiencing any unusual difficulties. However, marine retail activity could be adversely affected in markets that do
not have sufficient marine and storage availability to satisfy demand.
Timing of large boat and yacht sales and failure to adequately anticipate consumer preference and demand may have an adverse impact on
our business.
Forecasting optimal inventory levels is difficult to predict based on, among other things, changes in economic conditions, consumer
preferences, delivery of new models from manufacturers, and timing of large boat and yacht sales. Failure to adequately anticipate consumer
demand and preferences could negatively impact our inventory management strategies, inventory carrying costs, and our operating margins.
Economic conditions and consumer spending patterns can have a material adverse effect on our business, financial condition, and results of
operations.
General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional,
national, or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets
we serve and adversely affect our business. Economic conditions in areas in which we operate dealerships, such as corporate downsizing,
military base closings, and inclement weather such as hurricanes or other storms, environmental conditions, and specific events, such as the BP
oil spill in the Gulf of Mexico in 2010, or Hurricanes Harvey and Irma in 2017, also could adversely affect, and in certain instances have
adversely affected, our operations in certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large
reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels,
even if prevailing economic conditions are favorable. As a result, an economic downturn could impact us more than certain of our competitors
due to our strategic focus on a higher end of our market.
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Unfavorable economic conditions can cause us to reduce our acquisition program, delay new store openings, reduce our inventory
purchases, engage in inventory reduction efforts, close a number of our retail locations, reduce our headcount, and amend and replace our credit
facility, and could also interfere with our supply of certain brands by manufacturers, reduce marketing and other support by manufacturers,
decrease revenue, put additional pressures on margins, and result in our failure to satisfy covenants under our credit agreement.
More recently, inflation has increased in the United States and throughout the world. This has begun to affect the prices at which
manufacturers charge us, as well as the prices that we charge our customers. To the extent such inflation continues, increases, or both, it may
reduce our margins and have a material adverse effect on our financial performance.
COVID-19 pandemic may adversely affect our revenues, results of operations and financial condition.
Our business could be materially adversely affected by the widespread outbreak of contagious disease, including the recent COVID-19
pandemic. COVID-19 has spread in many of the geographic areas in which we operate. International, national, state and local governments in
affected regions have implemented and will continue to implement safety precautions, including quarantines, travel restrictions, business
closures, cancellations of public gatherings and other measures, for an indefinite time period. Other organizations and individuals are taking
additional steps to avoid or reduce infection, including limiting travel and staying home from work. These measures are disrupting normal
business operations both in and outside of affected areas and have had significant negative impacts on businesses and financial markets
worldwide.
We continue to monitor our operations and government recommendations and have made modifications to our normal operations,
including taking proactive steps to enhance financial flexibility including working to extract capital from our debt-free sizable real estate
holdings, taking action to monetize our unlevered inventory, and implementing operating cost savings plans. The onset of the COVID-19
pandemic caused a number of adverse impacts, including reductions in demand for our products, inefficiencies caused by team members
working remotely, and certain closed departments or locations based on guidance from each local government or health officials. Disruptions in
the capital markets as a result of the COVID-19 outbreak may also adversely affect us if these impacts continue for a prolonged period and we
need additional liquidity. Disruptions in our supply chain as a result of the COVID-19 outbreak has adversely affected, and could have an
increased adverse effect on, our business, financial condition, and results of operations. While it is not possible at this time to estimate the
entirety of the impact that COVID-19 will have on our business, customers, suppliers or other business partners, depending on the severity of the
COVID-19 pandemic the length of time of its impact and the applicable government actions in response to it, the effect of the adverse impacts
identified in this paragraph may increase and additional adverse impacts may arise.
Our sales may be adversely impacted by a material increase in interest rates and adverse changes in fiscal policy or credit market conditions.
Over the past several years, our economy has been positively impacted by historically unprecedented low interest rates. Such interest
rates, driven by the policies of the Federal Reserve, can be a political issue in the United States. Any change by the Federal Reserve to raise its
benchmark interest rate in the future or market expectations of such change may result in significantly higher long-term interest rates, which may
negatively impact our customers’ willingness or desire to purchase our products.
Risks Related to Our Strategies
Failure to implement strategies to enhance our performance or our strategies could have a material adverse effect on our business and
financial condition.
We are increasing our efforts to grow our financing and insurance, parts and accessories, service, yacht charter, brokerage, and boat
storage businesses to better serve our customers and thereby increase revenue and improve profitability as a result of these higher margin
businesses. In addition, we have implemented programs to increase the lead capture and digital sales of used boats, parts, accessories, and a wide
range of boating supplies and products. These efforts and programs are designed to increase our revenue and reduce our dependence on the sale
of new boats. We are also pursuing certain acquisitions as discussed in the immediately following Risk Factors. These business initiatives have
required, and will continue to require, us to add personnel, invest capital, enter businesses in which we do not have extensive experience, and
encounter substantial competition. As a result, our strategies to enhance our performance may not be successful and we may increase our
expenses or write off such investments if not successful.
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Our success depends, in part, on our ability to continue to make successful acquisitions at attractive or fair prices and to integrate the
operations of acquired dealers and each dealer we acquire in the future.
Since March 1, 1998, we have acquired 32 additional previously independent recreational boat dealers, multiple marinas, four boat
brokerage operations, two superyacht service companies, two full-service yacht repair operations, and two boat and yacht manufacturers. Each
acquired dealer and entity operated independently prior to its acquisition by us. Our success depends, in part, on our ability to continue to make
successful acquisitions at attractive or fair prices that align with our culture and focus on customer service and to integrate the operations of
acquired dealers, including centralizing certain functions to achieve cost savings and pursuing programs and processes that promote cooperation
and the sharing of opportunities and resources among our dealerships. We may not be able to oversee the combined entity efficiently, realize
anticipated synergies, or implement effectively our growth and operating strategies. To the extent that we successfully pursue our acquisition
strategy, our resulting growth will place significant additional demands on our management and infrastructure. Our failure to pursue successfully
our acquisition strategies or operate effectively the combined entity could have a material adverse effect on our rate of growth and operating
performance.
We may pursue acquisition strategies in new lines of business.
We have historically pursued strategic acquisitions to capitalize upon the consolidation opportunities in the highly fragmented recreational
boat dealer industry by acquiring additional dealers and related operations and improving their performance and profitability through the
implementation of our operating strategies. We have also recently pursued, and may continue to pursue, potential contract manufacturing,
vertical integration strategies, yacht charter and brokerage, marinas, boat storage, or other acquisitions as opportunities arise. To the extent we
are successful in pursuing one or more of these strategies, we will face certain risks in addition to those that exist with acquisitions more closely
related to our historical business, including potential inexperience in a line of business that is either new to us or that has become materially
more significant to us as a result of a transaction, the potential difficulty of presenting a unified corporate image, greater uncertainties in the
financial benefits and potential liabilities associated with this expanded base of acquisitions, different types of legal and operational risks, and
different types of applicable financial metrics and goals. Our failure to pursue successfully our acquisition strategies in new lines of business,
operate effectively the combined entity, and/or mitigate any potential new risks, could have a material adverse effect on our rate of growth and
operating performance.
Unforeseen expenses, difficulties, and delays frequently encountered in connection with expansion through acquisitions could inhibit our
growth and negatively impact our profitability.
The acquisition of additional recreational boat dealers, boat storage facilities, yacht brokerage operations, and marinas, which is one of
our growth strategies, and vertical integration strategies, all involve significant risks. This strategy entails reviewing and potentially reorganizing
acquired business operations, corporate infrastructure and systems, and financial controls. Unforeseen expenses, difficulties and delays
frequently encountered in connection with expansion through acquisitions could inhibit our growth and negatively impact our profitability. We
may be unable to identify suitable acquisition candidates or to complete the acquisitions of candidates that we identify. Increased competition for
acquisition candidates or increased asking prices by acquisition candidates may increase purchase prices for acquisitions to levels beyond our
financial capability or to levels that would not result in expected returns required by our acquisition criteria to be in the best interest of
shareholders. Acquisitions also may become more difficult or less attractive in the future as we acquire more of the most attractive dealers that
best align with our culture and focus on customer service. In addition, we may encounter difficulties in integrating the operations of acquired
dealers with our own operations, difficulties in retaining employees, potential risks of losing customers, suppliers, or other business
relationships, and difficulties in managing acquired dealers profitably without substantial costs, delays, or other operational or financial
problems.
Our ability to continue to grow through acquisitions depends upon various factors, including the following:
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the availability of suitable acquisition candidates at attractive purchase prices;
the ability to compete effectively for available acquisition opportunities;
the availability of cash on hand, borrowed funds or stock with a sufficient value to complete the acquisitions;
the ability to obtain any requisite manufacturer or governmental approvals;
the ability to obtain approval of our lenders under our current credit agreement; and
the absence of one or more manufacturers attempting to impose unsatisfactory restrictions on us in connection with their approval
of acquisitions.
If we finance future acquisitions in whole or in part through the issuance of common stock or securities convertible into or exercisable for
common stock, existing shareholders will experience dilution in the voting power of their common stock and earnings per share could be
negatively impacted. Any borrowings made to finance future acquisitions or for operations could make us more vulnerable to a downturn in our
operating results, a downturn in economic conditions, or increases in interest rates on borrowings that are subject to interest rate fluctuations.
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We may be required to obtain the consent of Brunswick and various other manufacturers prior to the acquisition of other dealers.
In determining whether to approve acquisitions, manufacturers may consider many factors, including our financial condition and
ownership structure. Manufacturers also may impose conditions on granting their approvals for acquisitions, including a limitation on the
number of their dealers that we may acquire. Our ability to meet manufacturers’ requirements for approving future acquisitions will have a direct
bearing on our ability to complete acquisitions and effect our growth strategy. There can be no assurance that a manufacturer will not terminate
its dealer agreement, refuse to renew its dealer agreement, refuse to approve future acquisitions, or take other action that could have a material
adverse effect on our acquisition program.
Our internal growth and operating strategies of opening new locations and offering new products involve risk.
In addition to pursuing growth by acquiring boat dealers, we intend to continue to pursue a strategy of growth through opening new retail
locations and offering new products in our existing and new territories. This strategy may entail obtaining additional distribution rights from our
existing and new manufacturers. We may not be able to secure additional distribution rights or obtain suitable alternative sources of supply if we
are unable to obtain such distribution rights. The inability to expand our product lines and geographic scope by obtaining additional distribution
rights could have a material adverse effect on the growth and profitability of our business.
Accomplishing these goals for expansion will depend upon a number of factors, including the following:
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our ability to identify new markets in which we can obtain distribution rights to sell our existing or additional product lines;
our ability to lease or construct suitable facilities at a reasonable cost in existing or new markets;
our ability to hire, train, and retain qualified personnel;
the timely and effective integration of new retail locations into existing operations;
our ability to achieve adequate market penetration at favorable operating margins without the acquisition of existing dealers; and
our financial resources.
Our dealer agreements with Brunswick require Brunswick’s consent to open, close, or change retail locations that sell Sea Ray or Boston
Whaler products as applicable, and other dealer agreements generally contain similar provisions. We may not be able to open and operate new
retail locations or introduce new product lines on a timely or profitable basis. Moreover, the costs associated with opening new retail locations or
introducing new product lines may adversely affect our profitability.
As a result of these growth strategies, we expect to continue to expend significant time and effort in opening and acquiring new retail
locations, improving existing retail locations in our current markets, and introducing new products. Our systems, procedures, controls, financial
resources, and management and staffing levels may not be adequate to support expanding operations. The inability to manage our growth
effectively could have a material adverse effect on our business, financial condition, and results of operations.
In addition to our traditional repeat and referral business in our physical locations, digital channels are increasingly significant in serving
our existing customer base and reaching new customers. Our continued expansion and success will be negatively impacted if we are not able
to fully exploit these channels.
Our digital channels are subject to a number of risks and uncertainties that are beyond our control, including the following:
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changes in technology;
cybersecurity risk;
changes in consumer willingness to conduct business electronically, including increasing concerns with consumer privacy and risk
and changing laws, rules, and regulations, such as the imposition of or increase in taxes;
technology or security impediments that may inhibit our ability to electronically market our products and services;
changes in applicable international, federal, state and commercial regulation;
failure of our service providers, suppliers or service partners to perform their services properly and in a timely and efficient manner;
failure to adequately respond to customers, process orders or deliver services;
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our failure to assess and evaluate our digital product and service offerings to ensure that our products and services are desired by
boating enthusiasts; and
the potential exposure to liability with respect to third-party information, including but not limited to copyright, trademark
infringement, or other wrongful acts of third parties; false or erroneous information provided by third parties; or illegal activities by
third parties, such as the sale of stolen boats or other goods.
Further, we may also be vulnerable to competitive pressures from the growing electronic commerce activity in our market, both as they
may impact our own on-line business, and as they may impact the operating results and investment values of our existing physical locations.
Various operations in multiple countries around the world expose us to international political, economic, foreign currency, and other risks.
Our operations involve certain international activities, including our sales of yachts produced by the Azimut-Benetti Group in Italy, yachts
produced by Galeon in Poland, and power catamarans for our charter fleet produced by Sino Eagle in China, as well as our Fraser Yachts Group
and Northrop & Johnson operations. These activities in multiple countries around the world expose us to international political, economic,
foreign currency, and other risks. Some of our sales and purchases of inventory are denominated in a currency other than the U.S. dollar.
Consequently, a strong or weak U.S. dollar may adversely affect reported revenues and our profitability. We may hedge certain foreign currency
exposures to lessen and delay, but not to completely eliminate, the effects of foreign currency fluctuations on our financial results. Our future
financial results could be significantly affected by the value of the U.S. dollar in relation to the foreign currencies in which we conduct business.
The degree to which our financial results are affected for any given time period will depend in part upon the success and extent of our hedging
activities.
Additionally, protectionist trade legislation in the United States, the European Union, Poland, or China, such as a change in current tariff
structures, export or import compliance laws, or other trade policies could adversely affect our ability to import yachts from these foreign
suppliers under economically favorable terms and conditions. There have been recent changes and additional changes may occur in the future, to
United States and foreign trade and tax policies, including heightened import restrictions, import and export licenses, new tariffs, trade
embargoes, government sanctions, and trade barriers. Any of these restrictions could prevent or make it difficult or more costly for us to import
yachts from foreign suppliers under economically favorable terms and conditions. Increased tariffs could require us to increase our prices which
likely could decrease demand for our products. In addition, other countries may limit their trade with the United States or retaliate through their
own restrictions and/or increased tariffs which would affect our ability to export products and therefore adversely affect our sales. Many of these
challenges, particularly tariffs, are present in commerce with China, a market from which we purchase products. While such tariffs may be
delayed or cancelled before coming into effect and we believe we have taken steps to mitigate their potential effects, such tariffs would likely
increase our costs for our Chinese suppliers.
Our international operations create a number of logistical and communications challenges. The economic, political and other risks we face
resulting from these operations include the following:
• compliance with U.S. and local laws and regulatory requirements, including labor, tax, and environmental, health and safety, as well
as changes in those laws and requirements;
• transportation delays or interruptions and other effects of less developed infrastructures;
• effects from the voter-approved exit of the United Kingdom from the European Union (often referred to as Brexit), including any
resulting deterioration in economic conditions, volatility in currency exchange rates, or adverse regulatory changes;
• limitations on imports and exports;
• adverse foreign exchange rate fluctuations;
• imposition of restrictions on currency conversion or the transfer of funds;
• withdrawal from or revision to international trade agreements;
• national and international conflicts, including foreign policy changes, political or economic instability, or terrorist acts;
• the effects of issued or threatened government sanctions, tariffs and duties, trade barriers or economic restrictions;
• maintenance of quality standards; and/or
• possible employee turnover or labor unrest.
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Risks Related to Our Operations
The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory and the ability and willingness
of our customers to finance boat purchases.
The availability and costs of borrowed funds can adversely affect our ability to obtain and maintain adequate boat inventory and the
holding costs of that inventory as well as the ability and willingness of our customers to finance boat purchases. We rely on the Credit Facility
led by Wells Fargo Commercial Distribution Finance LLC to purchase and maintain our inventory of boats. The Credit Facility provides a floor
plan financing commitment of up to $500.0 million. The collateral for the Credit Facility is all of our personal property with certain limited
exceptions. None of our real estate has been pledged for collateral for the Credit Facility. As of September 30, 2021, we were in compliance with
all of the covenants under the Credit Facility and our additional available borrowings under the Credit Facility was approximately $79.0 million
based upon the outstanding borrowing base availability.
Our ability to borrow under the Credit Facility depends on our ability to continue to satisfy our covenants and other obligations under the
Credit Facility and the ability for our manufacturers to be approved vendors under our Credit Facility. The variable interest rate under our Credit
Facility will fluctuate with changing market conditions and, accordingly, our interest expense will increase as interest rates rise. A significant
increase in interest rates could have a material adverse effect on our operating results. The aging of our inventory limits our borrowing capacity
as defined provisions in the Credit Facility reduce the allowable advance rate as our inventory ages. Depressed economic conditions, weak
consumer spending, turmoil in the credit markets, and lender difficulties, among other potential reasons, could interfere with our ability to
maintain compliance with our debt covenants and to utilize the Credit Facility to fund our operations. Any inability to utilize the Credit Facility
or the acceleration of amounts owed, resulting from a covenant violation, insufficient collateral, or lender difficulties, could require us to seek
other sources of funding to repay amounts outstanding under the Credit Facility or replace or supplement the Credit Facility, which may not be
possible at all or under commercially reasonable terms.
Similarly, decreases in the availability of credit and increases in the cost of credit adversely affect the ability of our customers to purchase
boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance and insurance activities.
Higher energy, costs and availability of raw materials, parts, components, and fuel costs along with adequate supply may adversely affect our
business.
All of the recreational boats we sell are powered by diesel or gasoline engines. Consequently, an interruption in the supply, or a significant
increase in the price or tax on the sale of fuel on a regional or national basis could have a material adverse effect on our sales and operating
results. Increases in fuel prices negatively impact boat sales. The supply of fuels may be interrupted, rationing may be imposed, or the price of or
tax on fuels may significantly increase in the future, adversely impacting our business. Also, increases in energy costs can adversely affect the
pricing and availability of petroleum-based raw materials such as resins and foam that are used in many of the marine products produced by boat
manufacturers, including Cruisers Yachts and Intrepid, increasing our cost of inventory. Additionally, higher fuel prices may also have an
adverse effect on demand for our parts and accessories business because higher fuel prices increase the cost of boat ownership and possibly
affect product use.
Boat manufacturers, including Cruisers Yachts and Intrepid, rely on third parties to supply raw materials used in the manufacturing
process, including oil, aluminum, copper, steel, and resins, as well as product parts and components. The prices for these raw materials, parts,
and components fluctuate depending on market conditions and, in some instances, commodity prices or trade policies, including tariffs.
Substantial increases in the prices of raw materials, parts, and components would increase our product and operating costs, and could reduce our
profitability if we are unable to recoup the increased costs through higher product prices or improved operating efficiencies. Similarly, if a
critical supplier were to close its operations, cease manufacturing, or otherwise fail to deliver an essential component necessary to our
manufacturing operations, that could detrimentally affect our ability to purchase or manufacture and sell products, resulting in an interruption in
business operations and/or a loss of sales.
In addition, some components used in the boat manufacturing processes, including certain engine components, furniture, upholstery, and
boat windshields, are available from a sole supplier or a limited number of suppliers. Operational and financial difficulties that these or other
suppliers may face in the future could adversely affect their ability to supply us with the parts and components we and our boat manufacturers
need, which could significantly disrupt our operations. It may be difficult to find a replacement supplier for a limited or sole source raw material,
part, or component without significant delay or on commercially reasonable terms. In addition, an uncorrected defect or supplier's variation in a
raw material, part, or component, either unknown to us or incompatible with our manufacturing process, could jeopardize our ability to
manufacture products.
Some additional supply risks that could disrupt our operations, impair our ability to deliver products to customers, and negatively affect
our financial results include:
• an outbreak of disease or facility closures due to the COVID-19 pandemic, or similar public health threat;
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• a deterioration of our relationships with suppliers;
• events such as natural disasters, power outages, or labor strikes;
• financial pressures on our suppliers due to a weakening economy or unfavorable conditions in other end markets;
• supplier manufacturing constraints and investment requirements; or
• disruption at major global ports and shipping hubs.
These risks are exacerbated in the case of single-source suppliers, and the exclusive supplier of a key component could potentially exert
significant bargaining power over price, quality, warranty claims, or other terms.
Substantially all of our products are powered with outboard engines from Mercury Marine, Yamaha, and inboard engines from Volvo, which
makes us reliant on these companies for the supply of engines.
The availability and cost of engines for our boats and yachts is critical. If we are required to replace Mercury Marine, Yamaha, or Volvo as
our engine suppliers for any reason, it could cause a decrease in products available for sale or an increase in our cost of sales, either of which
could adversely affect our business, financial condition and results of operations. If we experience an interruption to our engine supply, then this
could cause a decrease in products available for sale or an increase in our cost of sales, either of which could adversely affect our business,
financial condition and results of operations.
The availability of boat insurance is critical to our success.
The ability of our customers to secure reasonably affordable boat insurance that is satisfactory to lenders that finance our customers’
purchases is critical to our success. Any difficulty of customers to obtain affordable boat insurance could impede boat sales and adversely affect
our business.
Elements of our yacht charter and charter brokerage businesses expose us to certain risks.
Our yacht charter business entails the sale of specifically designed yachts to third parties for inclusion in our yacht charter fleet; a yacht
management agreement under which yacht owners enable us to put their yachts in our yacht charter program for a period of several years for a
fixed monthly fee payable by us; our services in storing, insuring, and maintaining their yachts; and the charter by us of these yachts to vacation
customers at agreed fees payable to us. Our failure to find purchasers for yachts intended for our charter fleet will increase our boat inventory
and related operating costs; lack of sales into our charter fleet may result in increased losses due to market adjustments of our yacht charter
inventory; and our failure to generate a sufficient number of vacation charter customers will require us to absorb all the costs of the monthly fees
to the yacht owners as well as other operating costs.
Customers consider safety and reliability a primary concern in selecting a yacht charter provider. The yacht charter business may present a
number of safety risks including, but not limited to, catastrophic disaster, adverse weather and marine conditions, such as Hurricane Irma in
2017, mechanical failure and collision, and health issues such as the COVID-19 pandemic. If we are unable to maintain acceptable records for
safety and reliability, our ability to retain current customers and attract new customers may be adversely affected. Additionally, any safety issue
encountered during a yacht charter may result in claims against us as well as negative publicity. Beginning in March 2020, we temporarily closed
our facilities in the British Virgin Islands and yacht charters based on guidance from local government and health officials as a result of the
COVID-19 pandemic. Additionally, our yacht charter brokerage business in Europe has slowed as a result of the COVID-19 pandemic. Yacht
charters resumed during fiscal 2021, but the impact of the COVID-19 pandemic and the duration for which it may have an impact cannot be
determined at this time. These events could have a material adverse effect on the competitive position and financial performance of both our
yacht charter business and our core retail sales business.
The yacht charter business is also highly fragmented, consisting primarily of local operators and franchisees. Competition among charter
operators is based on location, the type and size of yachts offered, charter rates, destinations serviced, and attention to customer service. Yacht
charters also face competition from other travel and leisure options, including, but not limited to, cruises, hotels, resorts, theme parks, organized
tours, land-based casino operators, and vacation ownership properties. We therefore risk losing business not only to other charter operators, but
also to vacation operators that provide such alternatives.
We depend on income from financing, insurance and extended service contracts.
A portion of our income results from referral fees derived from the placement or marketing of various finance and insurance products,
consisting of customer financing, insurance products, and extended service contracts, the most significant component of which is the
participation and other fees resulting from our sale of customer financing contracts.
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The availability of financing for our boat purchasers and the level of participation and other fees we receive in connection with such
financing depend on the particular agreement between us and the lender and the current rate environment. Lenders may impose terms in their
boat financing arrangements with us that may be unfavorable to us or our customers. Laws or regulations may be enacted nationally or locally
which could result in fees from lenders being eliminated or reduced, materially impacting our operating results. If customer financing becomes
more difficult to secure, it may adversely impact our business.
Changes, including the lengthening of manufacturer warranties, may reduce our ability to offer and sell extended service contracts which
may have a material adverse impact on our ability to sell F&I products.
The reduction of profit margins on sales of F&I products or the lack of demand for or the unavailability of these products could have a
material adverse effect on our operating margins.
Our continued success is dependent on positive perceptions of our MarineMax brand which, if impaired, could adversely affect our sales.
We believe that our MarineMax brand is one of the reasons our customers choose to come to us for their boating needs. To be successful,
we must preserve our reputation. Reputational value is based in large part on perceptions, and broad access to social media makes it easy for
anyone to provide public feedback that can influence perceptions of us. It may be difficult to control negative publicity, regardless of whether it
is accurate. While reputations may take decades to build, any negative incidents can quickly erode trust and confidence, particularly if they result
in significant negative mainstream and/or social media publicity, governmental investigations, or litigation. Additionally, an isolated business
incident at a single retail location could materially adversely affect our other stores, retail brands, reputation and sales channels, particularly if
such incident results in significant adverse publicity, governmental investigations or litigation. Negative incidents, such as quality and safety
concerns or incidents related to our manufacturers’ products, could lead to tangible adverse effects on our business, including lost sales or team
member retention and recruiting difficulties. In addition, vendors and others with whom we choose to do business may affect our reputation.
Our operations are dependent upon key personnel and team members.
Our success depends, in large part, upon our ability to attract, train and retain, qualified team members and executive officers, as well as
the continuing efforts and abilities of team members and executive officers. Although we have employment agreements with certain of our
executive officers and management succession plans, we cannot ensure that these or other executive personnel and team members will remain
with us, or that our succession planning will adequately mitigate the risk associated with key personnel transitions. As a result of our
decentralized operating strategy, we also rely on the management teams of our dealerships. In addition, we likely will depend on the senior
management of any significant businesses we acquire in the future.
The products we sell, or services we provide, may expose us to potential liabilities for personal injury or property damage claims relating to
the use of those products.
Manufacturers of the products we sell generally maintain product liability insurance. We also maintain third-party product liability
insurance that we believe to be adequate. We may experience claims that are not covered by, or that are in excess of, our insurance coverage. The
institution of any significant claims against us could subject us to damages, result in higher insurance costs, and harm our business reputation
with potential customers.
We manufacture and sell products that create exposure to potential claims and litigation.
Our manufacturing operations and the products we produce could result in product quality, warranty, personal injury, property damage,
and other issues, thereby increasing the risk of litigation and potential liability, as well as regulatory fines. Historically, the resolution of such
claims has not had a materially adverse effect on our business, and we maintain what we believe to be adequate insurance coverage to mitigate a
portion of these risks. However, we may experience material losses in the future, incur significant costs to defend claims or issue product recalls,
experience claims in excess of our insurance coverage or that are not covered by insurance, or be subjected to fines or penalties. Our reputation
may be adversely affected by such claims, whether or not successful, including potential negative publicity about our products. We record
accruals for known potential liabilities, but there is the possibility that actual losses may exceed these accruals and therefore negatively impact
earnings.
We have a fixed cost base that can affect our profitability if demand decreases.
The fixed cost levels of operating a boat and yacht manufacturer can put pressure on profit margins when sales and production decline.
Our profitability depends, in part, on our ability to spread fixed costs over a sufficiently large number of products sold and shipped, and if we
make a decision to reduce our rate of production, gross or net margins could be negatively affected. Consequently, decreased demand or the need
to reduce production can lower our ability to absorb fixed costs and materially impact our financial condition or results of operations.
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Adverse federal or state tax policies can have a negative effect on us.
Changes in federal and state tax laws, such as an imposition of luxury taxes on new boat purchases, increases in prevailing federal or state
tax rates, and removal of certain interest deductions, also influence consumers’ decisions to purchase products we offer and could have a
negative effect on our sales. For example, during 1991 and 1992, the federal government imposed a luxury tax on new recreational boats with
sales prices in excess of $100,000, which coincided with a sharp decline in boating industry sales from a high of more than $17.9 billion in 1988
to a low of $10.3 billion in 1992.
In addition, increases in the United States corporate income tax rates (as currently being contemplated by the legislative and federal
branches) would have an adverse effect on our financial performance and financial condition. Further, related increases in capital gains rates,
personal income tax rates or both could have an adverse effect on the buying power of potential customers and therefore an adverse effect on our
financial performance and financial condition.
Risks Related to the Environment and Geography
Weather and environmental conditions may adversely impact our business.
Weather and environmental conditions may adversely impact our operating results. For example, drought conditions, reduced rainfall
levels, excessive rain and environmental conditions, and hurricanes may force boating areas to close or render boating dangerous or
inconvenient, thereby curtailing customer demand for our products. While we traditionally maintain a full range of insurance coverage for any
such events, there can be no assurance that such insurance coverage is adequate to cover losses that we sustain as a result of such disasters. In
addition, unseasonably cool weather and prolonged winter conditions may lead to shorter selling seasons in certain locations. Many of our
dealerships sell boats to customers for use on reservoirs, thereby subjecting our business to the continued viability of these reservoirs for boating
use. Although our geographic diversity and any future geographic expansion should reduce the overall impact on us of adverse weather and
environmental conditions in any one market area, weather and environmental conditions will continue to represent potential material adverse
risks to us and our future operating performance. Additionally, to the extent unfavorable weather conditions are exacerbated by global climate
change, regardless of the cause, resulting in environmental changes including, but not limited to, severe weather, changing sea levels, poor water
conditions, or reduced access to water, which could disrupt or negatively affect our business.
Environmental and climate changes could affect our business.
We operate many retail locations near or on bodies of water that are acutely susceptible to the risks associated with climate change. Such
risks include those related to the physical impacts of climate change, such as more frequent and severe weather events, rising sea levels, and/or
long term shifts in climate patterns, and risks related to the transition to a lower-carbon economy, such as reputational, market and/or regulatory
risks. Climate change and climate events could result in social, cultural and economic disruptions in these areas, including supply chain
disruptions, the disruption of local infrastructure and transportation systems that could limit the ability of our team members and our customers
to access our retail locations. These events could also compound adverse economic conditions and impact consumer confidence and
discretionary spending.
A significant amount of our boat sales are from the State of Florida.
Economic conditions, weather and environmental conditions, competition, market conditions, and any other adverse conditions impacting
the State of Florida in which we generated approximately 54%, 54% and 50% of our revenue during fiscal 2019, 2020, and 2021, respectively,
could have a major impact on our operations.
Environmental and other regulatory issues may impact our operations.
Our operations are subject to extensive regulation, supervision, and licensing under various federal, state and local statutes, ordinances
and regulations, such as those relating to finance and insurance, consumer protection, consumer privacy, escheatment, anti-money laundering,
environmental, emissions, health or safety, U.S. trade sanctions, the U.S. Foreign Corrupt Practices Act and employment practices. With respect
to employment practices, we are subject to various laws and regulations, including complex federal, state and local wage and hour and anti-
discrimination laws. The failure to satisfy those and other regulatory requirements could have a material adverse effect on our business, financial
condition, and results of operations, as well as potentially the assessment of damages, the imposition of penalties, changes to our processes, or a
cessation of our operations, and/or damage to our image and reputation.
Various federal, state, and local regulatory agencies, including OSHA, EPA, and similar federal and local agencies, have jurisdiction over
the operation of our dealerships, repair facilities, and other operations, with respect to matters such as consumer protection, workers’ safety, and
laws regarding protection of the environment, including air, water, and soil. The EPA promulgated emissions regulations for outboard marine
engines that impose stricter emissions standards for two-cycle, gasoline outboard marine
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engines. It is possible that environmental regulatory bodies (including state regulatory bodies) may impose higher emissions standards in the
future for these and other marine engines. Any increased costs of producing engines resulting from current or potentially higher EPA or state
standards in the future could be passed on to our company, or could result in the inability or potential unforeseen delays of our manufacturers to
comply with current and future EPA or state requirements, and these potential consequences could have a material adverse effect on our
business.
Certain of our facilities own and operate USTs, and ASTs for the storage of various petroleum products. USTs and ASTs are generally
subject to federal, state and local laws and regulations that require testing and upgrading of tanks and remediation of contaminated soils and
groundwater resulting from leaking tanks. In addition, we may be subject to civil liability to third parties for remediation costs or other damages
if leakage from our owned or operated tanks migrates onto the property of others.
Our business involves the use, handling, storage, and contracting for recycling or disposal of hazardous or toxic substances or wastes,
including environmentally sensitive materials, such as motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon, waste paint and
lacquer thinner, batteries, solvents, lubricants, degreasing agents, gasoline and diesel fuels. Accordingly, we are subject to regulation by federal,
state and local authorities establishing investigation and health and environmental quality standards, and liability related thereto, and providing
penalties for violations of those standards.
Our Product Manufacturing segment is regulated by federal, state and local environmental laws governing our use, transport and disposal
of substances and control of emissions. While we are unaware of any failure to comply with these laws or any contamination at our facilities, the
costs of compliance, including remediations of any discovered issues and any changes to our operations mandated by new or amended laws, may
be significant, and any failures to comply could result in material expenses, delays or fines.
We also are subject to laws, ordinances, and regulations governing investigation and remediation of contamination at facilities we operate
or to which we send hazardous or toxic substances or wastes for treatment, recycling or disposal. In particular, the Comprehensive
Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”) imposes joint, strict, and several liability on:
•
•
•
owners or operators of facilities at, from, or to which a release of hazardous substances has occurred;
parties that generated hazardous substances that were released at such facilities; and
parties that transported or arranged for the transportation of hazardous substances to such facilities.
A majority of states have adopted Superfund statutes comparable to and, in some cases, more stringent than CERCLA. If we were to be
found to be a responsible party under CERCLA or a similar state statute, we could be held liable for all investigative and remedial costs
associated with addressing such contamination. In addition, claims alleging personal injury or property damage may be brought against us as a
result of alleged exposure to hazardous substances resulting from our operations. In addition, certain of our retail locations are located on
waterways that are subject to federal or state laws regulating navigable waters (including oil pollution prevention), fish and wildlife, and other
matters.
Soil and groundwater contamination has been known to exist at certain properties owned or leased by us. We have also been required and
may in the future be required to remove USTs and ASTs containing hazardous substances or wastes. As to certain of our properties, specific
releases of petroleum have been or are in the process of being remediated in accordance with state and federal guidelines. We are monitoring the
soil and groundwater as required by applicable state and federal guidelines. We also may have additional storage tank liability insurance and
Superfund coverage where applicable. Environmental laws and regulations are complex and subject to frequent change. Compliance with
amended, new or more stringent laws or regulations, more strict interpretations of existing laws, or the future discovery of environmental
conditions may require additional expenditures by us, and such expenditures may be material.
Additionally, certain states have required or are considering requiring a license in order to operate a recreational boat. These regulations
could discourage potential buyers, thereby limiting future sales and adversely affecting our business, financial condition, and results of
operations.
Risks Related to Cybersecurity
Increased cybersecurity requirements, vulnerabilities, threats and more sophisticated and targeted computer crime could pose a risk to our
systems, networks, data and our third-party service providers. Our business operations could be negatively impacted by an outage or breach
of our informational technology systems or a cybersecurity event.
Our business is dependent upon the efficient operation of our technology platform. The platform facilitates the interchange of information
and enhances cross-selling opportunities throughout our company. The platform integrates each level of operations on a Company-wide basis,
including but not limited to inventory, financial reporting, budgeting, marketing, sales management, as well as to prepare our consolidated
financial and operating data. The failure of our technology platform to perform as designed or the failure to maintain and enhance or protect the
integrity of our technology platform and those of our third-party service providers, could
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disrupt our business operations, impact sales and the results of operations, expose us to customer or third-party claims, or result in adverse
publicity.
Increased global cybersecurity vulnerabilities, threats and more sophisticated and targeted cyber-related attacks (including ransomware)
pose a risk to the security of our and our customers’, suppliers’ and third-party service providers’ products, systems and networks and the
confidentiality, availability and integrity of our data. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of
third parties with whom we do business, through fraud, trickery or other forms of deceiving our team members, contractors, vendors, and
temporary staff. While we attempt to mitigate these risks by employing extensive measures, including employee training, systems, monitoring
and testing, and maintenance of protective systems and contingency plans, we remain potentially vulnerable to additional known or unknown
threats.
We may also have access to sensitive, confidential or personal data or information that is subject to privacy, security laws, and regulations.
Despite our efforts to protect sensitive, confidential or personal data or information, we and our third-party service providers may be vulnerable
to security breaches, theft, misplaced or lost data, programming errors, employee errors and/or malfeasance that could potentially lead to the
compromising of sensitive, confidential or personal data or information, improper use of our systems, unauthorized access, use, disclosure,
modification or destruction of information, and operational disruptions.
It is possible that we or our third-party service providers might not be aware of a successful cyber-related attack on our systems until well
after the incident. In addition, a cyber-related attack could result in other negative consequences, including damage to our reputation or
competitiveness, remediation or increased protection costs, litigation or regulatory action, and could adversely affect our business, financial
condition, and results of operations. Depending on the nature of the information compromised, we may have obligations to notify customers
and/or employees about the incident, and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for
the individuals affected by the incident, which could result in material reputational damage to us. While we traditionally maintain a full range of
insurance coverage for any such events, there can be no assurance that such insurance coverage is adequate to cover losses that we sustain as a
result of an outage or breach of our informational technology systems or a cybersecurity event.
We are also subject to laws and regulations in the United States and other countries concerning the handling of personal information,
including laws that require us to notify governmental authorities and/or affected individuals of data breaches involving certain personal
information. These laws and regulations include, for example, the European General Data Protection Regulation, effective May 2018, and the
California Consumer Privacy Act, effective January 2020. Regulatory actions or litigation seeking to impose significant penalties could be
brought against us in the event of a data breach or alleged non-compliance with such laws and regulations.
Risks Related to Our Common Stock
The timing and amount of our share repurchases are subject to a number of uncertainties.
In March 2020, the Board of Directors approved a new stock repurchase plan authorizing the Company to purchase up to 10 million
shares of its commons stock through March 2022. There is no guarantee that our stock repurchase plans will be able to successfully mitigate the
dilutive effect of stock options and stock-based grants. The success of our stock repurchase plans is based upon a number of factors, including
the price and availability of the Company’s stock, general market conditions, the nature of other investment opportunities available to us from
time to time, and the availability of cash.
We do not pay cash dividends.
We have never paid cash dividends on our common stock and we have no current intention to do so for the foreseeable future.
If securities analysts do not publish research or reports about our company, or if they issue unfavorable commentary about us or our
industry or downgrade our common stock, the price of our common stock could decline.
The trading market for our common stock depends in part on the research and reports that third-party securities analysts publish about our
company and our industry. We may be unable or slow to attract research coverage and if one or more analysts cease coverage of our company,
we could lose visibility in the market. In addition, one or more of these analysts could downgrade our common stock or issue other negative
commentary about our company or our industry. As a result of one or more of these factors, the trading price of our common stock could decline.
Item 1B.
Unresolved Staff Comments
None.
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Item 2.
Properties
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The Retail Operations segment includes our leased corporate offices in Clearwater, Florida. We also lease 50 properties under leases in the
United States and British Virgin Islands, many of which contain multi-year renewal options and some of which grant us right of first refusal to
purchase the property at fair value. In most cases, we pay a fixed rent at negotiated rates. In substantially all of the leased locations, we are
responsible for taxes, utilities, insurance, and routine repairs and maintenance. We own 34 properties associated with the retail locations we
operate. Additionally, we own three retail locations that are currently closed as noted below. A store is considered one or more retail locations
that are adjacent or operate as one entity. Fraser Yachts Group and Northrop & Johnson lease offices in the United States and Europe.
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The following table reflects the status, approximate size, and facilities of the various retail locations in the United States and British Virgin
Islands we operate as of the date of this report.
Location
Location Type
Square
Footage(1)
Facilities at Property
Operated
Since(2)
Waterfront
Alabama
Gulf Shores
California
Newport Beach
San Diego
Sausalito
Connecticut
Norwalk
Westbrook
Florida
Cape Haze
Clearwater
Cocoa
Dania
Fort Walton Beach
Fort Myers
Jacksonville
Key Largo
Miami
Miami
Naples
North Palm Beach
Orlando
Panama City
Pensacola
Pompano Beach
Pompano Beach
Sarasota
St. Petersburg
Stuart
Venice
Georgia
Buford (Atlanta) (3)
Cumming (Atlanta)
Savannah
Illinois
Praire Harbor
Company owned
4,000 Retail and service
1998
—
Third-party lease
Third-party lease
Third-party lease
1,000 Retail only, 4 wet slips
1,400 Retail only, 12 wet slips
2,000 Retail and service; 6 wet slips
2020
2020
2020
Newport Bay
San Diego Bay
Richardson Bay
Third-party lease
Third-party lease
9,000 Retail and service; 56 wet slips
4,200 Retail and service
1994
1998
Norwalk Harbor
Westbrook Harbor
Company owned
Company owned
Company owned
Company owned
Third-party lease
Company owned
Third-party lease
Third-party lease
Company owned
Company owned
Company owned
Third-party lease
Third-party lease
Third-party lease
Company owned
Company owned
Company owned
Third-party lease
Company owned
Company owned
Company owned
18,000 Retail only, 8 wet slips
42,000 Retail and service; 20 wet slips
15,000 Retail and service
32,000 Repair and service; 16 wet slips
3,000 Repair and service; 83 wet slips
Retail, service, and storage; 64
wet slips
9,000 Retail and service
8,900 Retail and service; 6 wet slips
7,200 Retail and service; 15 wet slips
5,000 Service only; 11 wet slips
19,600 Retail and service; 14 wet slips
60,000
1,000 Retail only
18,400 Retail and service
10,500 Retail only; 8 wet slips
Retail, service, and storage; 60
wet slips
52,800
23,000 Retail and service; 16 wet slips
5,400 Retail and service; 24 wet slips
Retail, service, and storage; 15
wet slips
26,500
15,000 Retail and service; 20 wet slips
29,100 Retail and service; 66 wet slips
Retail, service, and storage; 90
wet slips
62,000
—
1973
1968
1991
2019
Intracoastal Waterway
Tampa Bay
—
Port Everglades
Choctawhatchee Bay
1983
2016
2002
1980
2005
1997
2016
1984
2011
2016
1990
2005
1972
2006
2002
Caloosahatchee River
Intracoastal Waterway
Card Sound
Little River
Little River
Naples Bay
Intracoastal Waterway
—
Saint Andrews Bay
Pensacola Bay
Intracoastal Waterway
Intracoastal Waterway
Sarasota Bay
Boca Ciega Bay
Intracoastal Waterway
1972
Intracoastal Waterway
Company owned
Third-party lease
13,500 Retail and service
13,000 Retail and service; 50 wet slips
2001
1981
—
Lake Lanier
Third-party lease
50,600
Retail, marina, service and
storage; 36 wet slips
2017
Wilmington River
Third-party lease
3,500 Marina, 140 wet slips
2020
Lake Michigan
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Winthrop Harbor
Maryland
Baltimore
Kent Island
Joppa (3)
Massachusetts
Danvers
Quincy
Michigan
Lake Fenton
Mac Ray Harbor
Minnesota
Bayport
Excelsior
Rogers
Nisswa
Missouri
Lake Ozark
Laurie (3)
Osage Beach
New Jersey
Brick
Lake Hopatcong
Ship Bottom
Somers Point
Ocean View
New York
Huntington
North Carolina
Lake Norman
Southport
Wrightsville Beach
Ohio
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Sequoit Harbor Antioch
Third-party lease
85,300
Third-party lease
319,100
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Retail, marina, service and
storage; 208 wet slips
Retail, marina, service and
storage; 53 wet slips
2020
Lake Marie
2020
Lake Michigan
Third-party lease
Third-party lease
7,600 Retail and service; 17 wet slips
30,500 Retail, service, and storage
2005
2021
Baltimore Inner Harbor
Kent Narrows
Company owned
28,400
Retail, service, and storage; 294
wet slips
1966
Gunpowder River
Third-party lease
32,000 Retail and service
2016
—
Company owned
14,700
Retail, service, and storage; 247
wet slips
2018
Town River
Bay City
Bele Mear Harbor
Third-party lease
Third-party lease
Cass Lake
Third-party lease
Grand Haven
Third-party lease
195,800
Retail, marina, service and
storage; 59 wet slips
8,500 Retail and service, 4 wet slips
31,600
32,000
Retail, marina, service and
storage; 124 wet slips
Retail, service, and storage; 6
wet slips
Retail, marina, service and
storage; 123 wet slips
300 Retail only, 4 wet slips
57,900
500 Retail only; 10 wet slips
2,500 Retail only; 14 wet slips
70,000 Retail, service, and storage
108,400 Retail, service, and storage
2020
2020
Saginaw River
Lake St. Clair
2020
Cass Lake
2020
Spring Lake
2020
2020
1996
2013
1991
2021
Lake Fenton
Lake St. Clair
St. Croix River
Lake Minnetonka
—
Nisswa Lake
Third-party lease
Third-party lease
Third-party lease
Third-party lease
Company owned
Company owned
Brant Beach
Company owned
3,800
Company owned
Company owned
Company owned
60,300
Retail, service, and storage; 300
wet slips
700 Retail and service
2,000 Retail and service
1987
—
1987
Lake of the Ozarks
—
—
Retail, service, and storage; 36
wet slips
Retail, service, and storage; 225
wet slips
20,000
4,600 Retail and service; 80 wet slips
19,300 Retail and service
Retail, service, and storage; 33
wet slips
31,000
13,800 Retail, service, and storage
Company owned
Company owned
Company owned
Company owned
Third-party lease
Third-party lease
1,200 Retail and service
1965
Barnegat Bay
1977
1998
1972
Manasquan River
Lake Hopatcong
—
1987
2018
Little Egg Harbor Bay
—
1995
Huntington Harbor and Long
Island Sound
Third-party lease
Third-party lease
Third-party lease
10,300 Retail only
1,600 Retail only
34,500 Retail, service, and storage
2017
2008
1996
—
Cape Fear River
Masonboro Inlet
Marina Del Isle
Third-party lease
163,800
Retail, marina, service and
storage; 189 wet slips
2020
Lake Erie
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Port Clinton
Oklahoma
Grand Lake
Rhode Island
Newport
South Carolina
Charleston
Greenville
Lake Wylie
Texas
Austin
San Antonio
Lakeway
Lewisville (Dallas)
Seabrook
Aubrey
Fort Worth
Washington
Seattle
Wisconsin
Harbor Club Marina
Company owned
80,000
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Retail, service and storage; 8 wet
slips
1997
Lake Erie
Company owned
3,500 Retail and service; 23 wet slips
2019
Grand Lake
Third-party lease
700 Retail only
2011
Newport Harbor
Third-party lease
Third-party lease
Third-party lease
14,800 Retail, service, and storage
24,500 Retail, service, and storage
Retail, marina, service and
storage; 82 wet slips
76,400
2017
2017
—
—
2017
Lake Wylie
Third-party lease
Third-party lease
Third-party lease
Company owned
Company owned
Company owned
Company owned
26,000 Retail and service
14,100 Retail and service
10,000 Retail only
22,000 Retail and service
32,000 Retail and service; 30 wet slips
15,000 Retail and service
30,000 Retail and service
2019
2019
2019
2002
2002
2021
2021
—
—
—
—
Clear Lake
—
—
Third-party lease
400 Retail only, 6 wet slips
2020
Lake Union
Third-party lease
1,000 Marina, 140 wet slips
2020
Sturgeon Bay
Lake Geneva
Third-party lease
114,900
Madison
Third-party lease
138,300
Milwaukee
Third-party lease
68,100
Retail, service and storage; 2 wet
slips
Retail, marina, service and
storage; 135 wet slips
Retail, service and storage; 11
wet slips
Retail, marina, service and
storage; 98 wet slips
2020
—
2020
Lake Mendota
2020
Kinnickinnic River
2020
2020
Lake Butte Des Mortes
—
2020
Sturgeon Bay
Third-party lease
Third-party lease
Third-party lease
98,300
157,200 Retail, service and storage;
Retail, marina, service and
storage; 260 wet slips
222,200
Oshkosh
Pewaukee
Sturgeon Bay
British Virgin
Islands
Tortola
Third-party lease
2,600 Vacation charters; 45 wet slips
2011
Caribbean Sea
(1)
(2)
(3)
Square footage is approximate and does not include outside sales space or dock or marina facilities.
Operated since date is the date the facility was opened by us or opened prior to its acquisition by us.
Owned location that is currently closed.
We have leased offices in the United States through the Fraser Yachts Group and Northrop & Johnson in Ft. Lauderdale, Florida and San
Diego, California as well as leased offices outside the United States in Monaco, France, Italy, Spain, and the United Kingdom.
The Product Manufacturing segment operates out of three owned manufacturing properties, two in in the Green Bay, Wisconsin
metropolitan area, and one in Largo, Florida. Additionally, we have one office that we own in the Green Bay, Wisconsin metropolitan area, and
one leased office in Dania, Florida.
We believe that our properties are suitable and adequate for our current needs. We believe that our manufacturing facilities have adequate
capacity to meet our current and anticipated demand. We believe that our properties are well maintained and in good operating condition.
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Item 3.
Legal Proceedings
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We are party to various legal actions arising in the ordinary course of business. While it is not feasible to determine the actual outcome of
these actions as of September 30, 2021, we do not believe that these matters will have a material adverse effect on our consolidated financial
condition, results of operations or cash flows.
Item 4.
Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information, Holders
Our common stock is listed on the New York Stock Exchange under the symbol “HZO”. The following table sets forth high and low sale
prices of the common stock for each calendar quarter indicated as reported on the New York Stock Exchange.
2019
Fourth quarter
2020
First quarter
Second quarter
Third quarter
Fourth quarter
2021
First quarter
Second quarter
Third quarter
Fourth quarter (through November 15, 2021)
High
Low
18.76 $
14.56
23.15 $
23.00 $
34.06 $
39.96 $
63.99 $
70.89 $
56.00 $
57.20 $
7.25
7.80
21.93
25.54
34.14
44.06
43.75
46.10
$
$
$
$
$
$
$
$
$
On November 15, 2021, the closing sale price of our common stock was $56.85 per share. On November 15, 2021, there were
approximately 50 record holders and approximately 23,000 beneficial owners of our common stock.
Dividends
We have never declared or paid cash dividends on our common stock. We currently plan to retain any earnings to finance the growth of
our business rather than to pay cash dividends. Payments of any cash dividends in the future will depend on our financial condition, results of
operations, statutory restrictions, loan covenants and capital requirements as well as other factors deemed relevant by our Board of Directors
(such as market expectations).
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Purchases of Equity Securities by the Issuer
The following table presents information with respect to our repurchases of our common stock during the three months ended September
30, 2021.
Period
July 1, 2021 to July 31, 2021
August 1, 2021 to August 31, 2021
September 1, 2021 to September 30, 2021
Total
Total
Number
of Shares
Purchased (1)(2)
Average
Price Paid
per Share
Total Number
of Shares
Purchased
as Part of
Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that may
be Purchased
Under the Plans
or Programs
163,673 $
46,504
59,075
269,252 $
47.56
49.12
48.52
48.04
163,673
46,504
—
210,177
9,466,268
9,419,764
9,419,764
9,419,764
(1)
(2)
Under the terms of the new share repurchase program announced on March 16, 2020, the Company is authorized to purchase up to 10
million shares of its common stock through March 31, 2022.
59,075 shares reported in September 2021 are attributable to shares tendered by employees for the payment of applicable withholding
taxes in connection with the vesting of restricted stock or restricted stock unit awards.
Performance Graph
The following line graph compares cumulative total shareholder returns for the five years ended September 30, 2021 for (i) our common
stock, (ii) the Russell 2000 Index, and (iii) the Nasdaq Retail Trade Index. The graph assumes an investment of $100 on September 30, 2016.
The calculations of cumulative shareholder return on the Russell 2000 Index and the Nasdaq Retail Trade Index include reinvestment of
dividends. The calculation of cumulative shareholder return on our common stock does not include reinvestment of dividends because we did
not pay any dividends during the measurement period. The historical performance shown is not necessarily indicative of future performance.
The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or Exchange Act, or otherwise subject to the liability of that section. The performance graph above will not be deemed incorporated by reference
into any filing of our company under the Exchange Act or the Securities Act of 1933, as amended.
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Item 6.
Selected Financial Data
Not applicable.
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Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with Part I, including the matters set forth in the “Risk Factors” section of this report, and our
consolidated financial statements and notes thereto included elsewhere in this report. This section of this Form 10-K generally discusses fiscal
2021 and 2020 items and year-to-year comparisons between fiscal 2021 and 2020. Discussions of fiscal 2019 items and year-to-year
comparisons between fiscal 2020 and 2019 that are not included in this Form 10-K can be found in the “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended
September 30, 2020.
Overview
In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health
Organization, and the outbreak is widespread throughout the United States (including Florida in which we generated approximately 54%, 54%,
and 50% of our revenue during fiscal 2019, 2020, and 2021, respectively), and in other countries in which we operate. As a result, from March
2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government or health officials.
Currently, all of our stores are fully operational, but the effects of COVID-19 (including the related international, federal, state, and local
governmental actions and regulations) remain unpredictable. We are following guidelines to ensure we are safely operating as recommended.
Where possible, we are offering private personal showings as well as virtual appointments. Our digital platform is serving as an effective
solution in this environment with robust online activity. Our experienced teams continue to engage with customers virtually and in our stores to
help customers select their boats and obtain appropriate services.
We believe we are the largest recreational boat and yacht retailer and superyacht services company in the world. Through our current 79
retail locations in 21 states (as of the filing of this Annual Report on Form 10-K), we sell new and used recreational boats and related marine
products, including engines, trailers, parts, and accessories. We also arrange related boat financing, insurance, and extended service contracts;
provide boat repair and maintenance services; offer yacht and boat brokerage sales; and, where available, offer slip and storage accommodations.
In the British Virgin Islands we offer the charter of catamarans, through MarineMax Vacations. We also own Fraser Yachts Group, a leading
superyacht brokerage and luxury yacht services company with operations in multiple countries. In July 2020, we acquired Northrop & Johnson,
another leading superyacht brokerage and services company with operations in multiple countries. In October 2020, we purchased all of the
outstanding equity of SkipperBud’s. SkipperBud’s is one of the largest boat sales, brokerage, service and marina/storage groups in the United
States. In May 2021, we purchased all of the outstanding equity of Cruisers Yachts. Cruisers Yachts, a wholly-owned MarineMax subsidiary,
manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers, and is recognized
as one of the world’s premier manufacturers of premium sport yacht and yachts. In July 2021, we acquired Nisswa Marine, a full-service dealer
located in Minnesota. In November 2021, we acquired Intrepid, a premier manufacturer of powerboats, and Texas MasterCraft, a premier
watersports dealer in Northern Texas.
MarineMax was incorporated in January 1998 (and reincorporated in Florida in March 2015). We commenced operations with the
acquisition of five independent recreational boat dealers on March 1, 1998. Since the initial acquisitions in March 1998, we have, as of the filing
of this Annual Report on Form 10-K, acquired 32 recreational boat dealers, four boat brokerage operations, two full-service yacht repair
operations, and two boat and yacht manufacturers. As a part of our acquisition strategy, we frequently engage in discussions with various
recreational boat dealers regarding their potential acquisition by us. Potential acquisition discussions frequently take place over a long period of
time and involve difficult business integration and other issues, including, in some cases, management succession and related matters. As a result
of these and other factors, a number of potential acquisitions that from time to time appear likely to occur do not result in binding legal
agreements and are not consummated. We completed two acquisitions in the fiscal year ended September 30, 2019, two acquisitions in the fiscal
year ended September 30, 2020, and three acquisitions in the fiscal year ending September 30, 2021.
General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional,
national or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets
we serve and adversely affect our business. Economic conditions in areas in which we operate dealerships, particularly Florida in which we
generated approximately 54%, 54%, and 50% of our revenue during fiscal 2019, 2020, and 2021, respectively, can have a major impact on our
operations. Local influences, such as corporate downsizing, military base closings, and inclement weather such as hurricanes and other storms,
environmental conditions, and specific events, such as the BP oil spill in the Gulf of Mexico in 2010, also could adversely affect, and in certain
instances have adversely affected, our operations in certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large
reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels,
even if prevailing economic conditions are favorable. As a result, an economic downturn could impact us more than certain of our competitors
due to our strategic focus on a higher end of our market. Although we have expanded our operations during
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periods of stagnant or modestly declining industry trends, the cyclical nature of the recreational boating industry or the lack of industry growth
may adversely affect our business, financial condition, and results of operations. Any period of adverse economic conditions or low consumer
confidence is likely to have a negative effect on our business.
Historically, in periods of lower consumer spending and depressed economic conditions, we have, among other things, substantially
reduced our acquisition program, delayed new store openings, reduced our inventory purchases, engaged in inventory reduction efforts, closed a
number of our retail locations, reduced our headcount, and amended and replaced our credit facility.
Although past economic conditions have adversely affected our operating results, we believe during and after such conditions we have
capitalized on our core strengths to substantially outperform the industry, resulting in market share gains. Our ability to capture such market
share supports the alignment of our retailing strategies with the desires of consumers. We believe the steps we have taken to address weak
market conditions in the past have yielded, and we believe will yield in the future, an increase in revenue. Acquisitions remain an important
strategy for us, and, subject to a number of conditions, including macro-economic conditions and finding attractive acquisition targets, we plan
to explore opportunities through this strategy. We expect our core strengths and retailing strategies including our digital platform, will position us
to capitalize on growth opportunities as they occur and will allow us to emerge with greater earnings potential.
Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed
management’s reporting structure and operating activities. We now report our operations through two new reportable segments: Retail
Operations and Product Manufacturing. See Note 21 of the Notes to Consolidated Financial Statements.
As of September 30, 2021, the Retail Operations segment includes the activity of 77 retail locations in Alabama, California, Connecticut,
Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma,
Rhode Island, South Carolina, Texas, Washington and Wisconsin, where we sell new and used recreational boats, including pleasure and fishing
boats, with a focus on premium brands in each segment. We also sell related marine products, including engines, trailers, parts, and accessories.
In addition, we provide repair, maintenance, and slip and storage services; we arrange related boat financing, insurance, and extended service
contracts; we offer boat and yacht brokerage sales; yacht charter services. In the British Virgin Islands we offer the charter of catamarans,
through MarineMax Vacations. Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and luxury yacht services
companies with operations in multiple countries, are also included in this segment.
As of September 30, 2021, the Product Manufacturing segment includes activity of Cruisers Yachts, a wholly-owned MarineMax
subsidiary, manufacturing sport yacht and yachts with sales through our select retail dealership locations and through independent dealers.
Cruisers Yachts is recognized as one of the world’s premier manufacturers of premium sport yacht and yachts, producing models from 33’ to 60’
feet.
Application of Critical Accounting Policies
We have identified the policies below as critical to our business operations and the understanding of our results of operations. The impact
and risks related to these policies on our business operations are discussed throughout “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” when such policies affect our reported and expected financial results.
In the ordinary course of business, we make a number of estimates and assumptions relating to the reporting of results of operations and
financial condition in the preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the
United States. We base our estimates on historical experiences and on various other assumptions (including future earnings) that we believe are
reasonable under the circumstances. The results of these assumptions form the basis for making judgments about the carrying values of assets
and liabilities, including contingent assets and liabilities such as contingent consideration liabilities from acquisitions, which are not readily
apparent from other sources. Actual results could differ significantly from those estimates under different assumptions and conditions. We
believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of
our financial condition and results of operations and require our most difficult, subjective, and complex judgments, often as a result of the need
to make estimates about the effect of matters that are inherently uncertain.
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Revenue Recognition
The majority of our revenue is from contracts with customers for the sale of boats, motors, and trailers. We recognize revenue from boat,
motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance of the boat,
motor, and trailer by the customer and the satisfaction of our performance obligations. The transaction price is determined with the customer at
the time of sale. Customers may trade in a used boat to apply toward the purchase of a new or used boat. The trade-in is a type of noncash
consideration measured at fair value, based on external and internal observable and unobservable market data and applied as payment to the
contract price for the purchased boat. At the time of acceptance, the customer is able to direct the use of, and obtain substantially all of the
benefits of the boat, motor, or trailer. We recognize commissions earned from a brokerage sale when the related brokerage transaction closes
upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance by the customer.
We do not directly finance our customers’ boat, motor, or trailer purchases. In many cases, we assist with third-party financing for boat,
motor, and trailer sales. We recognize commissions earned by us for placing notes with financial institutions in connection with customer boat
financing when we recognize the related boat sales. Pursuant to negotiated agreements with financial institutions, we are charged back for a
portion of these fees should the customer terminate or default on the related finance contract before it is outstanding for a stipulated minimum
period of time. We base the chargeback allowance, which was not material to the consolidated financial statements taken as a whole as of
September 30, 2020 and 2021, on our experience with repayments or defaults on the related finance contracts. We recognize variable
consideration from commissions earned on extended warranty service contracts sold on behalf of third-party insurance companies at generally
the later of customer acceptance of the service contract terms as evidenced by contract execution or recognition of the related boat sale. We also
recognize variable consideration from marketing fees earned on insurance products sold by third-party insurance companies at the later of
customer acceptance of the insurance product as evidenced by contract execution or when the related boat sale is recognized.
We recognize revenue from parts and service operations (boat maintenance and repairs) over time as services are performed. Each boat
maintenance and repair service is a single performance obligation that includes both the parts and labor associated with the service. Payment for
boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a short period of time
from contract inception. We satisfy our performance obligations, transfer control, and recognize revenue over time for parts and service
operations because we are creating a contract asset with no alternative use and we have an enforceable right to payment for performance
completed to date. Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated
with maintenance and repair services. We use an input method to recognize revenue and measure progress based on labor hours expended to
satisfy the performance obligation at average labor rates. We have determined labor hours expended to be the relevant measure of work
performed to complete the maintenance and repair service for the customer. As a practical expedient, because repair and maintenance service
contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue
expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period
or when we expect to recognize such revenue. Contract assets, recorded in prepaid expenses and other current assets, totaled approximately $2.6
million and $5.7 million as of September 30, 2020 and September 30, 2021, respectively.
We recognize revenue from the sale of our manufactured yachts when control of the yacht is transferred to the dealer, which is generally
upon acceptance by the dealer. At the time of acceptance, the dealer is able to direct the use of, and obtain substantially all of the benefits of the
yacht. We have elected to record shipping and handling activities that occur after the dealer has obtained control of the yacht as a fulfillment
activity.
Intersegment revenue represents yachts that were manufactured in our Product Manufacturing segment and were sold to our Retail
Operations segment. The Product Manufacturing segment supplies our Retail Operations segment along with various independent dealers.
Contract liabilities primarily consist of customer deposits. We recognize contract liabilities (customer deposits) as revenue at the time of
acceptance and the transfer of control to the customers. Total contract liabilities of approximately $24.3 million recorded as of September 30,
2019 were recognized in revenue during the fiscal year ended September 30, 2020. Total contract liabilities of approximately $31.8 million
recorded as of September 30, 2020 were recognized in revenue during the fiscal year ended September 30, 2021.
We recognize deferred revenue from service operations and slip and storage services over time on a straight-line basis over the term of the
contract as our performance obligations are met. We recognize income from the rentals of chartering power yachts over time on a straight-line
basis over the term of the contract as our performance obligations are met.
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Inventories
hzo-10k_20210930.htm
Inventories are stated at the lower of cost or net realizable value. The cost of inventories purchased from our vendors consist of the
amount paid to acquire the inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, and
transportation costs relating to acquiring inventory for sale. Trade-in used boats are initially recorded at fair value and adjusted for
reconditioning and other costs. The cost of inventories that are manufactured by the Company consist of material, labor, and manufacturing
overhead. Unallocated overhead and abnormal costs are expensed as incurred. New and used boats, motors, and trailers inventories are
accounted for on a specific identification basis. Raw materials and parts, accessories, and other inventories are accounted for on an average cost
basis. We utilize our historical experience, the aging of the inventories, and our consideration of current market trends as the basis for
determining a lower of cost or net realizable value. Our valuation allowance contains uncertainties because the calculation requires management
to make assumptions and to apply judgment regarding the amount at which the inventory will ultimately be sold which considers forecasted
market trends, model changes, and new product introductions. We do not believe there is a reasonable likelihood that there will be a change in
the future estimates or assumptions we use to calculate our valuation allowance which would result in a material effect on our operating results.
As of September 30, 2020 and 2021, our valuation allowance for new and used boat, motor and trailer inventories was $2.4 million and $0.4
million, respectively. If events occur and market conditions change, causing the fair value to fall below carrying value, the valuation allowance
could increase.
Goodwill
We account for acquisitions in accordance with FASB ASC 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with
ASC 350, “Intangibles — Goodwill and Other” (“ASC 350”). For business combinations, the excess of the purchase price over the estimated fair
value of net assets acquired in a business combination is recorded as goodwill. In accordance with ASC 350, we test goodwill for impairment at
least annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Our annual impairment
test is performed during the third fiscal quarter. If the carrying amount of a reporting unit’s goodwill exceeds its fair value we recognize an
impairment loss in accordance with ASC 350. Based upon our most recent analysis, we determined through our qualitative assessment that it is
not “more likely than not” that the fair values of our reporting units are less than their carrying values. As a result, we were not required to
perform a quantitative goodwill impairment test. The qualitative assessment requires us to make judgments and assumptions regarding
macroeconomic and industry conditions, our financial performance, and other factors. We do not believe there is a reasonable likelihood that
there will be a change in the judgments and assumptions used in our qualitative assessment which would result in a material effect on our
operating results.
Impairment of Long-Lived Assets
FASB ASC 360-10-40, “Property, Plant, and Equipment - Impairment or Disposal of Long-Lived Assets” (“ASC 360-10-40”), requires
that long-lived assets, such as property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset (or asset
group) is measured by comparison of its carrying amount to undiscounted future net cash flows the asset (or asset group) is expected to generate
over the remaining life of the asset (or asset group). If such assets are considered to be impaired, the impairment to be recognized is measured as
the amount by which the carrying amount of the asset (or asset group) exceeds its fair market value. Estimates of expected future cash flows
represent our best estimate based on currently available information and reasonable and supportable assumptions. Our impairment loss
calculations contain uncertainties because they require us to make assumptions and to apply judgment in order to estimate expected future cash
flows. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored. Based upon our most recent
analysis, we believe no impairment of long-lived assets existed as of September 30, 2021. We do not believe there is a reasonable likelihood that
there will be a change in the future estimates or assumptions used to test for recoverability which would result in a material effect on our
operating results.
Recent Accounting Pronouncements
See Note 3 of the Notes to Consolidated Financial Statements.
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Results of Operations
The following table sets forth certain financial data as a percentage of revenue for the periods indicated:
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Income before income taxes
Income tax provision
Net income
2019
$ 1,237,153
914,321
322,832
262,300
60,532
11,579
48,953
12,968
35,985
$
Fiscal Year Ended September 30,
2020
(Amounts in thousands)
2021
100.0% $ 1,509,713
73.9% 1,111,000
398,713
26.1%
291,998
21.2%
106,715
4.9%
9,275
0.9%
97,440
4.0%
22,806
1.0%
74,634
3.0% $
100.0% $ 2,063,257
73.6% 1,403,824
659,433
26.4%
449,974
19.3%
209,459
7.1%
3,665
0.6%
205,794
6.5%
1.5%
50,815
5.0% $ 154,979
100.0%
68.0%
32.0%
21.8%
10.2%
0.2%
10.0%
2.5%
7.5%
Fiscal Year Ended September 30, 2021, Compared with Fiscal Year Ended September 30, 2020
Revenue. Revenue increased $553.5 million, or 36.7%, to approximately $2.063 billion for the fiscal year ended September 30, 2021 from
$1.510 billion for the fiscal year ended September 30, 2020. Of this increase, $202.9 million was attributable to a 13.4% increase in comparable-
store sales and an approximate $350.6 million net increase was related to stores opened, including acquired, or closed that were not eligible for
inclusion in the comparable-store base. The increase in our comparable-store sales was primarily due to demand driven increases in new and
used boat revenue and our higher margin finance and insurance products, brokerage, parts, service, and storage services.
Gross Profit. Gross profit increased $260.7 million, or 65.4%, to $659.4 million for the fiscal year ended September 30, 2021 from $398.7
million for the fiscal year ended September 30, 2020. Gross profit as a percentage of revenue increased to 32.0% for the fiscal year ended
September 30, 2021 from 26.4% for the fiscal year ended September 30, 2020. The increase in gross profit as a percentage of revenue was
primarily the result of demand driven price increases resulting in greater new and used boat margins and increases in our higher margin
businesses, including our superyacht-services companies, as a percentage of sales. The increase in gross profit dollars was primarily attributable
to increased new and used boat sales.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $158.0 million, or 54.1%, to $450.0
million for the fiscal year ended September 30, 2021 from $292.0 million for the fiscal year ended September 30, 2020. Selling, general and
administrative expenses increased as a percentage of revenue to 21.8% for the fiscal year ended September 30, 2021 from 19.3% for the fiscal
year ended September 30, 2020. The increase in selling, general, and administrative expenses was driven by an increase in mix to our higher
margin businesses which typically carry a higher expense structure and acquisitions.
Interest Expense. Interest expense decreased $5.6 million, or 60.2%, to $3.7 million for the fiscal year ended September 30, 2021, from
$9.3 million for the fiscal year ended September 30, 2020. Interest expense as a percentage of revenue decreased to 0.2% for the fiscal year
ended September 30, 2021, from 0.6% for the fiscal year ended September 30, 2020. The decrease in interest expense was primarily the result of
decreased borrowings.
Income Taxes. Income tax expense increased $28.0 million, or 122.8%, to $50.8 million for the fiscal year ended September 30, 2021
from $22.8 million for the fiscal year ended September 30, 2020. Our effective income tax rate increased to 24.7% for fiscal year ended
September 30, 2021, from 23.4% for fiscal year ended September 30, 2020. The increase in the effective income tax rate was primarily attributed
to prior fiscal year state tax benefits and prior fiscal year tax benefits from stock-based compensation that did not occur for the fiscal year ended
September 30, 2021.
Quarterly Data and Seasonality
Our business, as well as the entire recreational boating industry, is highly seasonal, with seasonality varying in different geographic
markets. With the exception of Florida, we generally realize significantly lower sales and higher levels of inventories, and related short-term
borrowings, in the quarterly periods ending December 31 and March 31. The onset of the public boat and recreation shows in January generally
stimulates boat sales and typically allows us to reduce our inventory levels and related short-term borrowings throughout the remainder of the
fiscal year. Our business could become substantially more seasonal if we acquire additional dealers that operate in colder regions of the United
States or close retail locations in warm climates.
Our business is also subject to weather patterns, which may adversely affect our results of operations. For example, prolonged winter
conditions, drought conditions (or merely reduced rainfall levels) or excessive rain, may limit access to area boating locations
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or render boating dangerous or inconvenient, thereby curtailing customer demand for our products. In addition, unseasonably cool weather and
prolonged winter conditions may lead to a shorter selling season in certain locations. Hurricanes and other storms could result in disruptions of
our operations or damage to our boat inventories and facilities, as has been the case when Florida and other markets were affected by hurricanes,
such as Hurricanes Harvey and Irma in 2017. Although we believe our geographic diversity is likely to reduce the overall impact to us of adverse
weather conditions in any one market area, these conditions will continue to represent potential, material adverse risks to us and our future
financial performance.
Liquidity and Capital Resources
Our 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 acquisitions. Acquisitions remain an important strategy for us, and we plan to continue our growth through
this strategy in appropriate circumstances. However, we cannot predict the length of favorable economic or financial conditions. We regularly
monitor the aging of our inventories and current market trends to evaluate our current and future inventory needs. We also use this evaluation in
conjunction with our review of our current and expected operating performance and expected business levels to determine the adequacy of our
financing needs.
These cash needs historically have been financed with cash generated from operations and borrowings under the Credit Facility (described
below). Our ability to utilize the Credit Facility to fund operations depends upon the collateral levels and compliance with the covenants of the
Credit Facility. Any turmoil in the credit markets and weakness in the retail markets may interfere with our ability to remain in compliance with
the covenants of the Credit Facility and therefore our ability to utilize the Credit Facility to fund operations. As of September 30, 2021, we were
in compliance with all covenants under the Credit Facility. We currently depend upon dividends and other payments from our dealerships and the
Credit Facility to fund our current operations and meet our cash needs. As 100% owner of each of our dealerships, we determine the amounts of
such distributions subject to applicable law, and currently, no agreements exist that restrict this flow of funds from our dealerships.
For the fiscal years ended September 30, 2021 and 2020, cash provided by operating activities was approximately $373.9 million and
$304.7 million, respectively. For the fiscal year ended September 30, 2019, cash used in operating activities was approximately $12.4 million.
For the fiscal year ended September 30, 2021, cash provided by operating activities was primarily related to decreases in inventory, increases in
contract liabilities (customer deposits), accrued expenses and other liabilities, and our net income adjusted for non-cash expenses and gains such
as depreciation and amortization expense, deferred income tax provision, and stock-based compensation expense. For the fiscal year ended
September 30, 2020, cash provided by operating activities was primarily related to decreases in inventory, accounts receivable, increases in
accrued expenses and other liabilities, increases in accounts payable, and our net income adjusted for non-cash expenses and gains such as
depreciation and amortization expense, deferred income tax provision, stock-based compensation expense, and insurance proceeds received. For
the fiscal year ended September 30, 2019, cash used in operating activities was primarily related to increases in inventory, accounts receivable,
and prepaid expenses and other assets, partially offset by our net income adjusted for non-cash expenses and gains such as depreciation and
amortization expense, deferred income tax provision, stock-based compensation expense, insurance proceeds received, and increases in accounts
payable, contract liabilities, and accrued expenses and other long-term liabilities.
For the fiscal years ended September 30, 2021, 2020, and 2019, cash used in investing activities was approximately $161.1 million,
$30.1 million, and $56.3 million, respectively. For the fiscal year ended September 30, 2021, cash used in investing activities was primarily used
for acquisitions, to purchase property and equipment associated with improving existing retail facilities, and to purchase investments, partially
offset by proceeds from insurance settlements. For the fiscal year ended September 30, 2020, cash used in investing activities was primarily used
to purchase property and equipment associated with improving existing retail facilities and purchase property and equipment and other assets
associated with business acquisitions. For the fiscal year ended September 30, 2019, cash used in investing activities was primarily used to
purchase property and equipment associated with improving existing retail facilities and purchase property and equipment and other assets
associated with business acquisitions.
For the fiscal years ended September 30, 2021 and 2020, cash used in financing activities was approximately $145.7 million and $158.1
million, respectively. For the fiscal year ended September 30, 2019, cash provided by financing activities was approximately $58.6 million. For
the fiscal year ended September 30, 2021, cash used in financing activities was primarily attributable to net payments for short-term borrowings,
purchase of treasury stock, payments on tax withholdings for equity awards, payments for long-term debt, and contingent acquisition
consideration payments, partially offset by proceeds from long-term debt and net proceeds from issuance of common stock under incentive
compensation and employee purchase plans. For the fiscal year ended September 30, 2020, cash used in financing activities was primarily
attributable to a decrease in net short-term borrowings as a result of decreased inventory levels, repurchase of common stock under the share
repurchase program, payments on tax withholdings for equity awards, partially offset by proceeds from the issuance of common stock from our
stock-based compensation plans and proceeds from long- term debt. For the fiscal year ended September 30, 2019, cash provided by financing
activities was primarily attributable to net short-term borrowings as a result of increased inventory levels and proceeds from the issuance of
common stock from our stock-based compensation plans, partially offset by the repurchase of common stock under the share repurchase
program and payments on tax withholdings for equity awards.
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In July 2021, we entered into an Amended and Restated Loan and Security Agreement, with Wells Fargo Commercial Distribution
Finance LLC, M&T Bank, Bank of the West, and Truist Bank. The Credit Facility provides the Company a line of credit with asset based
borrowing availability of up to $500.0 million for working capital and inventory financing, with the amount permissible pursuant to a borrowing
base formula. The Credit Facility has a three-year term and expires in July 2024, subject to extension for two one-year periods, with lender
approval.
The Credit Facility has certain financial covenants as specified in the agreement. The covenants include provisions that our leverage ratio
must not exceed 2.75 to 1.0 and that our current ratio must be greater than 1.2 to 1.0. The interest rate for amounts outstanding under the Credit
Facility is 345 basis points plus the greater of 75 basis points or the one-month LIBOR. There is an unused line fee of ten basis points on the
unused portion of the Credit Facility. In October 2021, we amended the Credit Facility to allow for the transition of the benchmark interest rate
used from LIBOR to the Secured Overnight Finance Rate (SOFR).
Advances under the Credit Facility are initiated by the acquisition of eligible new and used inventory or are re-advances against eligible
new and used inventory that have been partially paid-off. Advances on new inventory will generally mature 1,080 days from the original invoice
date. Advances on used inventory will mature 361 days from the date we acquire the used inventory. Each advance is subject to a curtailment
schedule, which requires that we pay down the balance of each advance on a periodic basis starting after six months. The curtailment schedule
varies based on the type and value of the inventory. The collateral for the Credit Facility is primarily the Company’s inventory that is financed
through the Credit Facility and related accounts receivable. None of our real estate has been pledged for collateral for the Credit Facility.
As of September 30, 2021, our indebtedness associated with our short-term borrowings and our long-term debt totaled approximately
$24.1 million and $51.7 million, respectively. As of September 30, 2021, short-term borrowings and long-term debt recorded on the
Consolidated Balance Sheets included unamortized debt issuance costs of approximately $0.2 million and $0.6 million, respectively. Refer to
Note 11 of the Notes to Consolidated Financial Statements for disclosure of borrowing availability, interest rates, and terms of our short-term
borrowings and long-term debt.
Except as specified in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the attached
consolidated financial statements, we have no material commitments for capital for the next 12 months. Based on the information currently
available to us, the COVID-19 pandemic’s impact on consumer demand is uncertain, however, we believe that the cash generated from sales and
our existing capital resources will be adequate to meet our liquidity and capital requirements for at least the next 12 months, except for possible
significant acquisitions.
Commitments and Commercial Commitments
The following table sets forth a summary of our material contractual obligations and commercial commitments as of September 30, 2021:
Payments Due by Period Ending September 30,
Short-term borrowings (1)
Long-term debt (2)
Other liabilities (3)
Operating leases (4)
Total
$
24,136 $
51,680
13,618
152,159
$ 241,593 $
Total
Less Than 1
Year (2022)
1-3 Years
(2023 and
2024)
(Amounts in thousands)
— $
7,174
7,603
27,627
42,404 $
24,136 $
3,587
6,015
16,080
49,818 $
3-5 Years
(2025 and
2026)
More Than 5
Years (2027
and
thereafter)
—
— $
33,745
7,174
—
—
20,262
88,190
27,436 $ 121,935
(1)
(2)
(3)
(4)
Estimates of future interest payments for short-term borrowings have been excluded in the tabular presentation. Amounts due are
contingent upon the outstanding balances and the variable interest rates. Refer to Note 11 of the Notes to Consolidated Financial
Statements for disclosure of borrowing availability, interest rates, and terms of our short-term borrowings.
The amounts included in long-term debt refers to future cash principal payments. Refer to Note 11 of the Notes to Consolidated Financial
Statements for disclosure of borrowing availability, interest rates, and terms of our long-term debt.
The amounts included in other liabilities consist primarily of our estimated liability for claims on certain workers’ compensation insurance
policies and estimated future contingent consideration payments.
Amounts for operating lease commitments do not include certain operating expenses such as maintenance, insurance, and real estate taxes.
These amounts are not a material component of operating expenses.
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Item 7A.
Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
We are exposed to risk from changes in interest rates on our outstanding indebtedness. Changes in the underlying interest rates on our
variable interest rate short-term borrowings and long-term debt could affect our earnings. For example, a hypothetical 100 basis point increase in
the interest rate would result in an increase of approximately $0.6 million in annual pre-tax interest expense. This estimated increase is based
upon the outstanding balance of our short-term borrowings and long-term debt as of September 30, 2021 and assumes no mitigating changes by
us to reduce the outstanding balances and no additional interest assistance that could be received from vendors due to the interest rate increase.
Foreign Currency Exchange Rate Risk
Products purchased from European-based and Chinese-based manufacturers are transacted in U.S. dollars. Fluctuations in the U.S. dollar
exchange rate may impact the retail price at which we can sell foreign products. Accordingly, fluctuations in the value of other currencies
compared with the U.S. dollar may impact the price points at which we can profitably sell such foreign products, and such price points may not
be competitive with other products in the United States. Thus, such fluctuations in exchange rates ultimately may impact the amount of revenue,
cost of goods sold, cash flows and earnings we recognize for such foreign products. We cannot predict the effects of exchange rate fluctuations
on our operating results. In certain cases, we may enter into foreign currency cash flow hedges to reduce the variability of cash flows associated
with forecasted purchases of boats and yachts from European-based and Chinese-based manufacturers. We are not currently engaged in foreign
currency exchange hedging transactions to manage our foreign currency exposure. If and when we do engage in foreign currency exchange
hedging transactions, there can be no assurance that our strategies will adequately protect our operating results from the effects of exchange rate
fluctuations.
Additionally, the Fraser Yachts Group and Northrop & Johnson have transactions and balances denominated in currencies other than the
U.S dollar. Most of the transactions or balances for Fraser Yachts Group are denominated in euros. Net revenues recognized whose functional
currency was not the U.S. dollar were less than 2% of our total revenues in fiscal 2021.
Item 8.
Financial Statements and Supplementary Data
Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this report, which
financial statements, notes, and report are incorporated herein by reference.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed by us in
Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure.
Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period
covered by this report. Based on such evaluation, such officers have concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Controls
During the quarter ended September 30, 2021, there were no changes in our internal control over financial reporting that materially
affected, or were reasonably likely to materially affect, our internal control over financial reporting, except as described in the following
sentence. On October 1, 2020 and May 2, 2021, we acquired SkipperBud’s and Cruisers Yachts, respectively. As we proceed with integration,
we are implementing various accounting processes and internal controls over financial reporting for these reporting subsidiaries.
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Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and
procedures and internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Although
our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives, because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and
that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in
part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of
compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements
due to error or fraud may occur and not be detected.
CEO and CFO Certifications
Exhibits 31.1 and 31.2 are the Certifications of the Chief Executive Officer and Chief Financial Officer, respectively. The Certifications
are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section 302 Certifications”). This Item of this report,
which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information
should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Rule 13a-15(f) of the Securities Exchange Act of 1934. Under the supervision and with the participation of our management, including our Chief
Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2021 as required by the Securities Exchange Act of 1934 Rule 13a-15(c). In making this assessment, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework
(2013). Based on its evaluation, our management concluded that its internal control over financial reporting was effective as of September 30,
2021. The Company acquired Skipper Marine Holdings, Inc., and certain affiliates (SkipperBud’s) and KCS International Holdings, Inc., and
certain affiliates (Cruisers Yachts), during fiscal 2021. Management excluded from its assessment of the effectiveness of the Company’s internal
control over financial reporting as of September 30, 2021 SkipperBud’s and Cruisers Yachts internal control over financial reporting, which
together represent approximately 12% of total assets and 16% of total revenues included in the Company’s consolidated financial statements as
of and for the year ended September 30, 2021.
Our internal control over financial reporting as of September 30, 2021, has been audited by KPMG LLP, an independent registered public
accounting firm, as stated in their report which appears herein.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
MarineMax, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited MarineMax, Inc. and subsidiaries' (the Company) internal control over financial reporting as of
September 30, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of September 30, 2021, based on criteria established in Internal Control – Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of September 30, 2021 and 2020, and the related consolidated
statements of operations, comprehensive income, shareholders’ equity, and cash flows for each of the years in the three-year
period ended September 30, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated
November 19, 2021 expressed an unqualified opinion on those consolidated financial statements.
The Company acquired Skipper Marine Holdings, Inc., and certain affiliates (SkipperBud’s) and KCS International Holdings, Inc.,
and certain affiliates (Cruisers Yachts) during 2021. Management excluded from its assessment of the effectiveness of the
Company’s internal control over financial reporting as of September 30, 2021, SkipperBud’s and Cruisers Yachts’ internal control
over financial reporting associated with 12% of total assets and 16% of total revenues included in the consolidated financial
statements of the Company as of and for the year ended September 30, 2021. Our audit of internal control over financial reporting
also excluded an evaluation of the internal control over financial reporting of SkipperBud’s and Cruisers Yachts.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment
of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material
respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
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Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Tampa, Florida
November 19, 2021
/s/ KPMG LLP
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Item 9B.
Other Information
None.
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PART III
Item 10.
Directors, Executive Officers and Corporate Governance
The information required by this Item relating to our directors and corporate governance is incorporated herein by reference to the
definitive Proxy Statement (particularly under the caption “Corporate Governance”) to be filed pursuant to Regulation 14A of the Exchange Act
for our 2021 Annual Meeting of Shareholders (the “2022 Proxy Statement”). The information required by this Item relating to our executive
officers is included in “Business — Executive Officers.”
We have adopted a code of ethics that applies to our principal executive officer, principal financial officer, and other senior accounting
personnel. The “Code of Ethics for the CEO and Senior Financial Officers” is located on our website at www.MarineMax.com in the Investor
Relations section under Corporate Governance.
We intend to satisfy the disclosure requirement under Item 5.05(c) of Form 8-K regarding any amendment to, or waiver from, a provision
of this code of ethics by posting such information on our website, at the address and location specified above.
Item 11.
Executive Compensation
The information required by this Item is incorporated herein by reference to the 2022 Proxy Statement (particularly under the caption
“Executive Compensation”).
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item is incorporated herein by reference to the 2022 Proxy Statement (particularly under the caption
“Security Ownership of Principal Shareholders, Directors, and Officers”).
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item is incorporated herein by reference to the 2022 Proxy Statement (particularly under the caption
“Certain Relationships and Related Transactions”).
Item 14.
Principal Accountant Fees and Services
The information required by this Item is incorporated herein by reference to the 2022 Proxy Statement (particularly under the caption
“Ratification of Appointment of Independent Auditor”).
PART IV
Item 15.
Exhibits, Financial Statement Schedules
(a)
(1)
(2)
(3)
Financial Statements and Financial Statement Schedules
Financial Statements. Financial Statements are listed in the Index to Consolidated Financial Statements on page F-1 of this report.
Financial Statement Schedules. No financial statement schedules are included because such schedules are not applicable, are not
required, or because required information is included in the consolidated financial statements or notes thereto.
Exhibits. See Item 15(b) below.
(b)
Exhibits
Exhibit
Number
2.1
3.1
3.2
4.1
Exhibit
Agreement and Plan of Merger, dated February 25, 2015, by and between MarineMax, Inc. and MarineMax Reincorporation, Inc.
(1)
Articles of Incorporation of the Registrant. (2)
Bylaws of the Registrant. (2)
Specimen of Common Stock Certificate. (2)
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Exhibit
Exhibit
Number
4.2
10.1*
10.1(b)*
10.1(c)*
10.1(d)*
10.1(e)*
10.2*
10.3*
10.3(a)*
10.3(b)*
10.4
10.5
10.6
10.6(a)
10.6(b)
10.6(c)†
10.6(d)†
10.6(e)†
10.6(f)†
10.6(g)†
10.6(h)†
10.7 †
10.7(a) †
10.7(b) †
10.7(c) †
10.8
10.9*
10.10†
10.10(a)
10.10(b)
10.10(c)
10.11†
10.11(a)
10.11(b)
10.11(c)
10.11(d)
Description of Securities.
Employment Agreement, dated November 29, 2018, between Registrant and William H. McGill Jr., as amended. (3)
Employment Agreement, dated November 29, 2018, between Registrant and Michael H. McLamb, as amended. (3)
Employment Agreement, dated November 29, 2018, between Registrant and William Brett McGill. (3)
Key Executive Retention Agreement, dated February 25, 2021, by and between MarineMax, Inc. and Anthony Cassella. (4)
Key Executive Retention Agreement, dated February 25, 2021, by and between MarineMax, Inc. and Charles Cashman. (4)
Amended 2008 Employee Stock Purchase Plan. (5)
2011 Stock-Based Compensation Plan. (6)
Form Stock Option Agreement for 2011 Stock-Based Compensation Plan. (7)
Form Restricted Stock Unit Award Agreement for 2011 Stock-Based Compensation Plan. (8)
Sales and Service Agreement, dated October 30, 2020, between Registrant and Boston Whaler, Inc. (15)
Sales and Service Agreement, dated October 30, 2020, between Registrant and Sea Ray Division of Brunswick Corporation. (15)
Agreement Relating to Acquisitions between Registrant and Brunswick Corporation, dated December 7, 2005. (9)
Amendment, executed October 17, 2014, to Agreement Relating to Acquisitions between Registrant and Brunswick Corporation,
dated December 7, 2005. (10)
Sea Ray Sales and Service Agreement. (8)
Sea Ray Sales and Service Agreement, executed October 17, 2014, by and between MarineMax East, Inc. and Sea Ray, a Division
of Brunswick Corporation. (9)
Sea Ray Sales and Service Agreement, executed October 17, 2014, by and between MarineMax Northeast, LLC, and Sea Ray, a
Division of Brunswick Corporation. (9)
Sea Ray Sales and Service Agreement, executed October 17, 2014, by and between MarineMax, Inc. and Sea Ray, a Division of
Brunswick Corporation. (9)
Boston Whaler Sales and Service Agreement, executed December 5, 2014, by and between MarineMax East, Inc. and Boston
Whaler, a Division of Brunswick Corporation. (10)
Boston Whaler Sales and Service Agreement, executed December 5, 2014, by and between MarineMax Northeast, LLC, and
Boston Whaler, a Division of Brunswick Corporation. (10)
Boston Whaler Sales and Service Agreement, executed December 5, 2014, by and between MarineMax, Inc. and Boston Whaler, a
Division of Brunswick Corporation. (10)
Loan and Security Agreement, dated May 20, 2020, by and among MarineMax, Inc. and its subsidiaries, Wells Fargo Commercial
Distribution Finance, LLC, M&T Bank, Bank of the West, and Truist Bank. (11)
Amended and Restated Loan and Security Agreement, dated July 9, 2021, by and among MarineMax, Inc. and its subsidiaries,
Wells Fargo Commercial Distribution Finance, LLC, M&T Bank, Bank of the West, and Truist Bank.
Sixth Amended and Restated Program Terms Letter, dated May 20, 2020, by and among MarineMax, Inc. and its subsidiaries, as
Borrowers, and Wells Fargo Commercial Distribution Finance, LLC. (11)
Seventh Amended and Restated Program Terms Letter, dated July 9, 2021, by and among MarineMax, Inc. and its subsidiaries, as
Borrowers, and Wells Fargo Commercial Distribution Finance, LLC.
Director Fee Share Purchase Program. (12)
Severance Policy for Key Executives. (13)
Dealership Agreement dated September 1, 2008 by and between MarineMax Northeast, LLC and Azimut Benetti S.p.A. (14)
First Amendment dated June 22, 2010 to Dealership Agreement dated September 1, 2008, by and between MarineMax Northeast,
LLC and Azimut Benetti S.p.A. (14)
Second Amendment dated February 29, 2012 to Dealership Agreement dated September 1, 2008, by and between MarineMax
Northeast, LLC and Azimut Benetti S.p.A. (14)
Third Amendment dated July 21, 2012 to Dealership Agreement dated September 1, 2008, by and between MarineMax Northeast,
LLC and Azimut Benetti S.p.A. (14)
Dealership Agreement dated September 1, 2008 by and between MarineMax East, LLC and Azimut Benetti S.p.A. (14)
First Amendment dated June 22, 2010 to Dealership Agreement dated September 1, 2008, by and between MarineMax East, Inc.
and Azimut Benetti S.p.A. (14)
Second Amendment dated February 29, 2012 to Dealership Agreement dated September 1, 2008, by and between MarineMax East,
Inc. and Azimut Benetti S.p.A. (14)
Third Amendment dated July 21, 2012 to Dealership Agreement dated September 1, 2008, by and between MarineMax East, Inc.
and Azimut Benetti S.p.A. (14)
Fourth Amendment dated August 21, 2013 to Dealership Agreement dated September 1, 2008, by and between MarineMax East,
Inc. and Azimut Benetti S.p.A. (14)
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Exhibit
Number
10.12 †
10.13 †
21
23.1
31.1
31.2
32.1
32.2
101.INS
Exhibit
Equity Purchase Agreement dated October 1, 2020, by and among Skipper Marine Holdings, Inc., SSY Holdings, Inc., Michael J.
Pretasky, Sr., Michael John Pretasky, Jr. 2014 Trust, Mark Ellerbrock, and Robert Ross Tefft, Jr., Michael J. Pretasky, Jr., and
MarineMax, Inc. (15)
Stock Purchase Agreement, dated May 2, 2021, by and between Kenneth C. Stock, Georgia Stock and the Kenneth C. Stock and
Georgia Stock 2020 Trust; Kenneth C. Stock, as the representative of the Sellers; and MarineMax Products, Inc. (16)
List of Subsidiaries.
Consent of KPMG LLP.
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities
Exchange Act of 1934, as amended.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a), promulgated under the Securities Exchange
Act of 1934, as amended.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are
embedded within the inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
104
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (embedded within the Inline XBRL document).
†
Certain information in this exhibit has been omitted and filed separately with the Securities and Exchange Commission. Confidential
treatment has been requested with respect to the omitted portions where applicable.
Management contract or compensatory plan or arrangement.
*
Incorporated by reference to Registrant’s Form 8-K as filed February 26, 2015.
(1)
Incorporated by reference to Registrant’s Form 8-K as filed March 20, 2015.
(2)
Incorporated by reference to Registrant’s Form 10-K for the year ended September 30, 2019, as filed on November 29, 2018.
(3)
Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended March 31, 2021, as filed on April 27, 2021.
(4)
Incorporated by reference to Registrant’s Form S-8 (File No. 333-236618) as filed February 25, 2020.
(5)
Incorporated by reference to Registrant’s Form S-8 (File No. 333-236617) as filed February 25, 2020.
(6)
(7)
Incorporated by reference to Registrant’s Form 8-K as filed on January 25, 2011.
(8) Incorporated by reference to Registrant’s Form 8-K as filed on December 9, 2005.
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
Incorporated by reference to Registrant’s Form 10-K for the year ended September 30, 2014, as filed on December 11, 2014.
Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended December 31, 2014, as filed on February 5, 2015.
Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended June 30, 2020, as filed on July 28, 2020.
Incorporated by reference to Registrant’s Form S-8 (File No. 333-141657) as filed March 29, 2007.
Incorporated by reference to Registrant’s Form 8-K as filed on November 27, 2012.
Incorporated by reference to Registrant’s Form 10-K for the year ended September 30, 2013, as filed on December 6, 2013.
Incorporated by reference to Registrant’s Form 10-K for the year ended September 30, 2020, as filed on December 2, 2020.
Incorporated by reference to Registrant’s Form 10-Q for the quarterly period ended June 30, 2021, as filed on July 27, 2021.
(c)
(1)
Financial Statements Schedules
See Item 15(a) above.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
MARINEMAX, INC.
/s/ W. Brett McGill
W. Brett McGill
Chief Executive Officer and President
Date: November 19, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Signature
/s/ W. Brett McGill
W. Brett McGill
/s/ Michael H. McLamb
Michael H. McLamb
Capacity
Chief Executive Officer and President
(Principal Executive Officer)
Executive Vice President, Chief
Financial Officer, Secretary and Director
(Principal Accounting and
Financial Officer)
Date
November 19, 2021
November 19, 2021
/s/ William H. McGill Jr.
William H. McGill Jr.
Executive Chairman of the Board,
Director
November 19, 2021
/s/ Clint Moore
Clint Moore
/s/ George E. Borst
George E. Borst
/s/ Hilliard M. Eure III
Hilliard M. Eure III
/s/ Evelyn Follit
Evelyn Follit
/s/ Adam M. Johnson
Adam M. Johnson
/s/ Charles R. Oglesby
Charles R. Oglesby
/s/ Joseph A. Watters
Joseph A. Watters
/s/ Rebecca White
Rebecca White
Lead Independent Director
November 19, 2021
November 19, 2021
November 19, 2021
November 19, 2021
November 19, 2021
November 19, 2021
November 19, 2021
November 19, 2021
Director
Director
Director
Director
Director
Director
Director
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MARINEMAX, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
F-2
F-4
F-5
F-6
F-7
F-8
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Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
MarineMax, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of MarineMax, Inc. and subsidiaries (the Company) as of
September 30, 2021 and 2020, the related consolidated statements of operations, comprehensive income, shareholders’ equity,
and cash flows for each of the years in the three-year period ended September 30, 2021, and the related notes (collectively, the
consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company as of September 30, 2021 and 2020, and the results of its operations and its cash flows for each
of the years in the three-year period ended September 30, 2021, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of September 30, 2021, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated November 19, 2021 expressed an unqualified opinion on the effectiveness of the Company’s
internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for Leases as
of October 1, 2019 due to the adoption of Accounting Standards Update (ASU) 2016-02, Leases, and several related amendments,
as issued by the Financial Accounting Standards Board (FASB).
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
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Critical Audit Matter
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The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
Fair Value of Trade-in Used Boats
As discussed in Note 2 to the consolidated financial statements, trade-in used boat inventory is initially measured at fair value and
represents a form of noncash consideration applied to the contract price of a purchased boat. At period-end, trade-in used boats
that remain in inventory are presented at the lower of cost or net realizable value. Net realizable value is equal to the initial
estimated fair value at trade-in less a valuation allowance. Management estimates the initial fair value of the trade-in used boat
considering publicly available and internal transactional and market participant data for comparable boats.
We identified the assessment of the fair value of the trade-in used boats as a critical audit matter because a high degree of
subjective auditor judgment was required to evaluate the significant inputs used in the estimation of the fair value. The significant
inputs are based on limited publicly available and internal transactional and market participant data.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the
operating effectiveness of certain internal controls related to the Company’s measurement of the fair value of trade-in used boats,
including controls over the determination of the appropriate external and internal market data for comparable used boat sales. We
involved valuation professionals with specialized skills and knowledge, who assisted us in assessing management’s fair value
estimation process, including our evaluation of the relevance and reliability of the publicly available and internal transactional and
market participant data. We also performed an analysis of subsequent sales proceeds and margins from the third-party sale of the
trade-in used boats.
We have served as the Company’s auditor since 2013.
Tampa, Florida
November 19, 2021
/s/ KPMG LLP
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MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share and per share data)
ASSETS
September 30, 2020
September 30, 2021
CURRENT ASSETS:
Cash and cash equivalents
Accounts receivable, net
Inventories, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets, net
Goodwill and other intangible assets, net
Other long-term assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
Contract liabilities (customer deposits)
Accrued expenses
Short-term borrowings
Current maturities on long-term debt
Current operating lease liabilities
Total current liabilities
Long-term debt, net of current maturities
Noncurrent operating lease liabilities
Deferred tax liabilities, net
Other long-term liabilities
Total liabilities
COMMITMENTS AND CONTINGENCIES (Note 19)
SHAREHOLDERS’ EQUITY:
Preferred stock, $.001 par value, 1,000,000 shares authorized,
none issued or outstanding as of September 30, 2020 and 2021
Common stock, $.001 par value; 40,000,000 shares authorized, 28,130,312
and 28,588,863 shares issued and 21,863,291 and 21,821,842 shares
outstanding as of September 30, 2020 and 2021, respectively
Additional paid-in capital
Accumulated other comprehensive income
Retained earnings
Treasury stock, at cost, 6,267,021 and 6,767,021 shares held as of
September 30, 2020 and 2021, respectively
Total shareholders’ equity
Total liabilities and shareholders’ equity
$
$
$
$
155,493 $
40,195
298,002
9,637
503,327
141,934
37,991
84,293
7,774
775,319 $
37,343 $
31,821
51,616
144,393
507
6,854
272,534
7,343
33,473
4,509
2,063
319,922
222,192
47,651
230,984
16,692
517,519
175,463
104,901
201,122
8,818
1,007,823
25,739
100,660
86,594
23,943
3,587
10,570
251,093
47,498
96,956
9,268
8,116
412,931
—
—
28
280,436
829
277,699
(103,595)
455,397
775,319 $
29
288,901
648
432,678
(127,364)
594,892
1,007,823
See accompanying notes to consolidated financial statements.
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MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except share and per share data)
Revenue
Cost of sales
Gross profit
Selling, general and administrative expenses
Income from operations
Interest expense
Income before income tax provision
Income tax provision
Net income
Basic net income per common share
Diluted net income per common share
Weighted average number of common shares used
in computing net income per common share:
Basic
Diluted
2019
1,237,153 $
914,321
322,832
262,300
60,532
11,579
48,953
12,968
35,985 $
For the Year Ended September 30,
2020
1,509,713 $
1,111,000
398,713
291,998
106,715
9,275
97,440
22,806
74,634 $
1.61 $
1.57 $
3.46 $
3.37 $
2021
2,063,257
1,403,824
659,433
449,974
209,459
3,665
205,794
50,815
154,979
7.04
6.78
$
$
$
$
22,294,114
22,881,147
21,547,665
22,125,338
22,010,130
22,859,498
See accompanying notes to consolidated financial statements.
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MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands)
Net income
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments
Interest rate swap contract
Total other comprehensive (loss) income, net of tax
2019
For the Year Ended September 30,
2020
2021
$
35,985 $
74,634 $
154,979
(669)
—
(669)
1,498
—
1,498
(300)
119
(181)
Comprehensive income
$
35,316 $
76,132 $
154,798
See accompanying notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands except share data)
BALANCE, September 30, 2018
27,141,267 $
BALANCE, September 30, 2019
27,508,473 $
Net income
Purchase of treasury stock
Shares issued pursuant to employee stock
purchase plan
Shares issued upon vesting of equity awards,
net of minimum tax withholding
Shares issued upon exercise of stock options
Stock-based compensation
Other comprehensive loss
Cumulative effect of change in accounting
principle - revenue recognition, net of tax
Net income
Purchase of treasury stock
Shares issued pursuant to employee stock
purchase plan
Shares issued upon vesting of equity awards,
net of minimum tax withholding
Shares issued upon exercise of stock options
Stock-based compensation
Other comprehensive income
Cumulative effect of change in accounting
principle - leases, net of tax
BALANCE, September 30, 2020
Net income
Purchase of treasury stock
Shares issued pursuant to employee stock
purchase plan
Shares issued upon vesting of equity awards,
net of minimum tax withholding
Shares issued upon exercise of stock options
Stock-based compensation
Other comprehensive income
BALANCE, September 30, 2021
Common Stock Issued
Additional
Paid-in
Amount Capital
Shares
— —
— —
27 $ 262,250 $
—
—
Accumulated
Other
Total
Comprehensive Retained Treasury Shareholders’
(Loss) Income Earnings
Stock
— $ 166,071 $ (75,256) $ 353,092
35,985
— 35,985
(27,708)
—
—
—
(27,708)
Equity
62,287 —
1,022
—
—
—
1,022
174,606 —
119,275
1
11,038 —
— —
(1,216)
1,389
6,524
—
—
—
—
(669)
—
—
—
—
—
—
—
—
(1,216)
1,390
6,524
(669)
— —
—
28 $ 269,969 $
—
—
— —
— —
—
—
399
399
(669) $ 202,455 $ (102,964) $ 368,819
74,634
(631)
— 74,634
—
—
—
(631)
94,741 —
1,004
—
—
—
1,004
228,304 —
286,702 —
12,092 —
— —
(1,659)
3,625
7,497
—
—
—
—
1,498
—
—
—
—
—
—
—
—
(1,659)
3,625
7,497
1,498
28,130,312 $
— —
—
28 $ 280,436 $
—
—
— —
— —
—
610
—
610
829 $ 277,699 $ (103,595) $ 455,397
154,979
— 154,979
(23,769)
—
—
—
(23,769)
121,984 —
1,578
—
—
—
1,578
254,521
1
77,079 —
4,967 —
— —
(3,910)
1,048
9,749
—
29 $ 288,901 $
28,588,863 $
(3,909)
—
1,048
—
9,749
—
(181)
(181)
648 $ 432,678 $ (127,364) $ 594,892
—
—
—
—
—
—
—
—
See accompanying notes to consolidated financial statements.
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MARINEMAX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization
Deferred income tax provision
Loss on sale of property and equipment
Proceeds from insurance settlements
Stock-based compensation expense
(Increase) decrease in, net of effects of acquisitions —
Accounts receivable, net
Inventories, net
Prepaid expenses and other assets
(Decrease) increase in, net of effects of acquisitions —
Accounts payable
Contract liabilities (customer deposits)
Accrued expenses and other liabilities
Net cash (used in) provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Proceeds from insurance settlements
Cash used in acquisition of businesses, net of cash acquired
Purchases of investments
Proceeds from sale of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on short-term borrowings
Proceeds from long-term debt
Payments for long-term debt
Payments for debt issuance costs
Net proceeds from issuance of common stock under incentive
compensation, and employee purchase plans
Contingent acquisition consideration payments
Payments on tax withholdings for equity awards
Purchase of treasury stock
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS:
CASH AND CASH EQUIVALENTS, beginning of year
CASH AND CASH EQUIVALENTS, end of year
Supplemental disclosures of cash flow information:
Cash paid for:
Interest
Income taxes
Non-cash items:
Initial operating lease right-of-use assets for adoption of ASU 2016-02
Initial current and noncurrent operating lease liabilities for adoption of
ASU 2016-02
Accrued tax withholdings upon vesting of equity awards
Contingent consideration liabilities from acquisitions
Accrued acquisition of property and equipment
For the Year Ended September 30,
2020
2021
2019
$
35,985 $
74,634 $
154,979
11,597
4,384
956
475
6,524
(5,071)
(84,330)
(3,182)
8,701
6,804
4,731
(12,426)
(17,061)
461
(40,713)
—
979
(56,334)
85,580
—
—
—
2,412
(129)
(1,525)
(27,708)
58,630
(181)
(10,311)
48,822
38,511 $
12,772
3,157
366
703
7,497
2,584
179,466
101
2,887
7,411
13,097
304,675
(12,807)
—
(19,766)
—
2,464
(30,109)
(167,672)
7,437
(41)
—
4,629
(148)
(1,703)
(631)
(158,129)
545
116,982
38,511
155,493 $
13,669 $
9,152
13,082 $
18,930
—
42,070
—
1,198
640
995
43,953
1,153
2,270
491
15,606
4,759
—
941
9,749
(627)
139,833
(1,862)
(16,128)
60,960
5,671
373,881
(26,125)
1,099
(134,205)
(2,250)
350
(161,131)
(162,655)
46,375
(2,404)
(1,081)
2,626
(2,640)
(2,196)
(23,769)
(145,744)
(307)
66,699
155,493
222,192
4,452
53,356
—
—
2,866
10,640
—
$
$
See accompanying notes to consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. COMPANY BACKGROUND AND BASIS OF PRESENTATION:
We believe we are the largest recreational boat and yacht retailer and superyacht services company in the world. We engage primarily in
the retail sale, brokerage, and service of new and used boats, motors, trailers, marine parts and accessories and offer slip and storage
accommodations in certain locations. In addition, we arrange related boat financing, insurance, and extended service contracts. We also offer the
charter of power yachts in the British Virgin Islands. As of September 30, 2021, we operated through 77 retail locations in 21 states, consisting
of Alabama, California, Connecticut, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New
York, North Carolina, Ohio, Oklahoma, Rhode Island, South Carolina, Texas, Washington, and Wisconsin. Our MarineMax Vacations operation
maintains a facility in Tortola, British Virgin Islands. We also own Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage
and luxury yacht services companies with operations in multiple countries. Cruisers Yachts, a wholly-owned MarineMax subsidiary,
manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers.
We are the largest retailer of Sea Ray and Boston Whaler recreational boats which are manufactured by Brunswick Corporation
(“Brunswick”). Sales of new Brunswick boats accounted for approximately 27% of our revenue in fiscal 2021. Sales of new Sea Ray and Boston
Whaler boats, both divisions of Brunswick, accounted for approximately 11% and 13%, respectively, of our revenue in fiscal 2021. Brunswick is
a world leading manufacturer of marine products and marine engines.
We have dealership agreements with Sea Ray, Boston Whaler, Harris, and Mercury Marine, all subsidiaries or divisions of Brunswick. We
also have dealer agreements with Italy-based Azimut-Benetti Group’s product line for Azimut and Benetti yachts and mega yachts. These
agreements allow us to purchase, stock, sell, and service these manufacturers’ boats and products. These agreements also allow us to use these
manufacturers’ names, trade symbols, and intellectual properties in our operations. The agreements for Sea Ray and Boston Whaler products,
respectively, appoint us as the exclusive dealer of Sea Ray and Boston Whaler boats, respectively, in our geographic markets. In addition, we are
the exclusive dealer for Azimut Yachts for the entire United States. Sales of new Azimut yachts accounted for approximately 10% of our revenue
in fiscal 2021. We believe non-Brunswick brands offer a migration for our existing customer base or fill a void in our product offerings, and
accordingly, do not compete with the business generated from our other prominent brands.
From March 2020 through June 2020, we temporarily closed certain departments or locations based on guidance from local government
or health officials as a result of the COVID-19 pandemic. We are following guidelines to ensure we are safely operating as recommended. As the
COVID-19 pandemic is complex and evolving rapidly with many unknowns, the Company will continue to monitor ongoing developments and
respond accordingly. Management expects its business, across all of its geographies, will be impacted to some degree, but the significance of the
impact of the COVID-19 pandemic on the Company’s business and the duration for which it may have an impact cannot be determined at this
time.
As is typical in the industry, we deal with most of our manufacturers, other than Sea Ray, Boston Whaler, and Azimut Yachts, under
renewable annual dealer agreements, each of which gives us the right to sell various makes and models of boats within a given geographic
region. Any change or termination of these agreements, or the agreements discussed above, for any reason, or changes in competitive, regulatory
or marketing practices, including rebate or incentive programs, could adversely affect our results of operations. Although there are a limited
number of manufacturers of the type of boats and products that we sell, we believe that adequate alternative sources would be available to
replace any manufacturer other than Sea Ray, Boston Whaler, and Azimut as a product source. These alternative sources may not be available at
the time of any interruption, and alternative products may not be available at comparable terms, which could affect operating results adversely.
General economic conditions and consumer spending patterns can negatively impact our operating results. Unfavorable local, regional,
national, or global economic developments or uncertainties regarding future economic prospects could reduce consumer spending in the markets
we serve and adversely affect our business. Economic conditions in areas in which we operate dealerships, particularly Florida in which we
generated approximately 54%, 54% and 50% of our revenue during fiscal 2019, 2020, and 2021, respectively, can have a major impact on our
operations. Local influences, such as corporate downsizing, military base closings, inclement weather such as Hurricane Sandy in 2012 or
Hurricanes Harvey and Irma in 2017, environmental conditions, and specific events, such as the BP oil spill in the Gulf of Mexico in 2010, also
could adversely affect, and in certain instances have adversely affected, our operations in certain markets.
In an economic downturn, consumer discretionary spending levels generally decline, at times resulting in disproportionately large
reductions in the sale of luxury goods. Consumer spending on luxury goods also may decline as a result of lower consumer confidence levels,
even if prevailing economic conditions are favorable. As a result, an economic downturn would likely impact us more than certain of our
competitors due to our strategic focus on a higher end of our market. Although we have expanded our operations during periods of stagnant or
modestly declining industry trends, the cyclical nature of the recreational boating industry or the lack of industry growth may adversely affect
our business, financial condition, and results of operations. Any period of adverse economic conditions or low consumer confidence is likely to
have a negative effect on our business.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Historically, in periods of lower consumer spending and depressed economic conditions, we have, among other things, substantially
reduced our acquisition program, delayed new store openings, reduced our inventory purchases, engaged in inventory reduction efforts, closed a
number of our retail locations, reduced our headcount, and amended and replaced our credit facility. Acquisitions remain an important strategy
for us, and, subject to a number of conditions, including macro-economic conditions and finding attractive acquisition targets, we plan to
continue to explore opportunities through this strategy.
In order to provide comparability between periods presented, certain amounts have been reclassified from the previously reported
consolidated financial statements to conform to the consolidated financial statement presentation of the current period.
2. SIGNIFICANT ACCOUNTING POLICIES:
Cash and Cash Equivalents
We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Vendor Consideration Received
We classify interest assistance received from manufacturers as a reduction of inventory cost and related cost of sales. Amounts received
by us under our co-op assistance programs from our manufacturers are netted against related advertising expenses. Our consideration received
from our vendors contains uncertainties because the calculation requires management to make assumptions and to apply judgment regarding a
number of factors, including our ability to collect amounts due from vendors and the ability to meet certain criteria stipulated by our vendors. We
do not believe there is a reasonable likelihood that there will be a change in the future estimates or assumptions we use to calculate our vendor
considerations which would result in a material effect on our operating results.
Inventories
Inventories are stated at the lower of cost or net realizable value. The cost of inventories purchased from our vendors consist of the
amount paid to acquire the inventory, net of vendor consideration and purchase discounts, the cost of equipment added, reconditioning costs, and
transportation costs relating to acquiring inventory for sale. Trade-in used boats are initially recorded at fair value and adjusted for
reconditioning and other costs. The cost of inventories that are manufactured by the Company consist of material, labor, and manufacturing
overhead. Unallocated overhead and abnormal costs are expensed as incurred. New and used boats, motors, and trailers inventories are
accounted for on a specific identification basis. Raw materials and parts, accessories, and other inventories are accounted for on an average cost
basis. We utilize our historical experience, the aging of the inventories, and our consideration of current market trends as the basis for
determining a lower of cost or net realizable value. We do not believe there is a reasonable likelihood that there will be a change in the future
estimates or assumptions we use to calculate our valuation allowance which would result in a material effect on our operating results. As of
September 30, 2020 and 2021, our valuation allowance for new and used boat, motor and trailer inventories was $2.4 million and $0.4 million,
respectively. If events occur and market conditions change, causing the fair value to fall below carrying value, the valuation allowance could
increase.
Property and Equipment
We record property and equipment at cost, net of accumulated depreciation, and depreciate property and equipment over their estimated
useful lives using the straight-line method. We capitalize and amortize leasehold improvements over the lesser of the life of the lease or the
estimated useful life of the asset. Useful lives for purposes of computing depreciation are as follows:
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Years
5-40
3-10
5-10
3-5
We remove the cost of property and equipment sold or retired and the related accumulated depreciation from the accounts at the time of
disposition and include any resulting gain or loss in the accompanying Consolidated Statements of Operations. We charge maintenance, repairs,
and minor replacements to operations as incurred, and we capitalize and amortize major replacements and improvements over their useful lives.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill
We account for acquisitions in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) 805, “Business Combinations” (“ASC 805”), and goodwill in accordance with ASC 350, “Intangibles — Goodwill and Other” (“ASC
350”). For business combinations, the excess of the purchase price over the estimated fair value of net assets acquired in a business combination
is recorded as goodwill. In accordance with ASC 350, we test goodwill for impairment at least annually and whenever events or changes in
circumstances indicate that the carrying value may not be recoverable. Our annual impairment test is performed during the third fiscal quarter. If
the carrying amount of a reporting unit’s goodwill exceeds its fair value we recognize an impairment loss in accordance with ASC 350. Based
upon our most recent analysis, we determined through our qualitative assessment that it is not “more likely than not” that the fair values of our
reporting units are less than their carrying values. As a result, we were not required to perform a quantitative goodwill impairment test.
Impairment of Long-Lived Assets
FASB ASC 360-10-40, “Property, Plant, and Equipment — Impairment or Disposal of Long-Lived Assets” (“ASC 360-10-40”), requires
that long-lived assets, such as property and equipment and purchased intangibles subject to amortization, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset (or asset
group) is measured by comparison of its carrying amount to undiscounted future net cash flows the asset (or asset group) is expected to generate
over the remaining life of the asset (or asset group). If such assets are considered to be impaired, the impairment to be recognized is measured as
the amount by which the carrying amount of the asset (or asset group) exceeds its fair market value. Estimates of expected future cash flows
represent our best estimate based on currently available information and reasonable and supportable assumptions. Our impairment loss
calculations contain uncertainties because they require us to make assumptions and to apply judgment in order to estimate expected future cash
flows. Any impairment recognized in accordance with ASC 360-10-40 is permanent and may not be restored. Based upon our most recent
analysis, we believe no impairment of long-lived assets existed as of September 30, 2021.
Insurance
We retain varying levels of risk relating to the insurance policies we maintain, most significantly, workers’ compensation insurance and
employee medical benefits. We are responsible for the claims and losses incurred under these programs, limited by per occurrence deductibles
and paid claims or losses up to pre-determined maximum exposure limits. Our third-party insurance carriers pay any losses above the pre-
determined exposure limits. We estimate our liability for incurred but not reported losses using our historical loss experience, our judgment, and
industry information.
Revenue Recognition
The majority of our revenue is from contracts with customers for the sale of boats, motors, and trailers. We recognize revenue from boat,
motor, and trailer sales upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance of the boat,
motor, and trailer by the customer and the satisfaction of our performance obligations. The transaction price is determined with the customer at
the time of sale. Customers may trade in a used boat to apply toward the purchase of a new or used boat. The trade-in is a type of noncash
consideration measured at fair value, based on external and internal observable and unobservable market data and applied as payment to the
contract price for the purchased boat. At the time of acceptance, the customer is able to direct the use of, and obtain substantially all of the
benefits of the boat, motor, or trailer. We recognize commissions earned from a brokerage sale when the related brokerage transaction closes
upon transfer of control of the boat, motor, or trailer to the customer, which is generally upon acceptance by the customer.
We do not directly finance our customers’ boat, motor, or trailer purchases. In many cases, we assist with third-party financing for boat,
motor, and trailer sales. We recognize commissions earned by us for placing notes with financial institutions in connection with customer boat
financing when we recognize the related boat sales. Pursuant to negotiated agreements with financial institutions, we are charged back for a
portion of these fees should the customer terminate or default on the related finance contract before it is outstanding for a stipulated minimum
period of time. We base the chargeback allowance, which was not material to the consolidated financial statements taken as a whole as of
September 30, 2020 and 2021, on our experience with repayments or defaults on the related finance contracts. We recognize variable
consideration from commissions earned on extended warranty service contracts sold on behalf of third-party insurance companies at generally
the later of customer acceptance of the service contract terms as evidenced by contract execution or recognition of the related boat sale. We also
recognize variable consideration from marketing fees earned on insurance products sold by third-party insurance companies at the later of
customer acceptance of the insurance product as evidenced by contract execution or when the related boat sale is recognized.
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We recognize revenue from parts and service operations (boat maintenance and repairs) over time as services are performed. Each boat
maintenance and repair service is a single performance obligation that includes both the parts and labor associated with the service. Payment for
boat maintenance and repairs is typically due upon the completion of the service, which is generally completed within a short period of time
from contract inception. We satisfy our performance obligations, transfer control, and recognize revenue over time for parts and service
operations because we are creating a contract asset with no alternative use and we have an enforceable right to payment for performance
completed to date. Contract assets primarily relate to our right to consideration for work in process not yet billed at the reporting date associated
with maintenance and repair services. We use an input method to recognize revenue and measure progress based on labor hours expended to
satisfy the performance obligation at average labor rates. We have determined labor hours expended to be the relevant measure of work
performed to complete the maintenance and repair service for the customer. As a practical expedient, because repair and maintenance service
contracts have an original duration of one year or less, we do not consider the time value of money, and we do not disclose estimated revenue
expected to be recognized in the future for performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period
or when we expect to recognize such revenue. Contract assets, recorded in prepaid expenses and other current assets, totaled approximately $2.6
million and $5.7 million as of September 30, 2020 and September 30, 2021, respectively.
We recognize revenue from the sale of our manufactured yachts when control of the yacht is transferred to the dealer, which is generally
upon acceptance by the dealer. At the time of acceptance, the dealer is able to direct the use of, and obtain substantially all of the benefits of the
yacht. We have elected to record shipping and handling activities that occur after the dealer has obtained control of the yacht as a fulfillment
activity.
Contract liabilities primarily consist of customer deposits. We recognize contract liabilities (customer deposits) as revenue at the time of
acceptance and the transfer of control to the customers. Total contract liabilities of approximately $24.3 million recorded as of September 30,
2019 were recognized in revenue during the fiscal year ended September 30, 2020. Total contract liabilities of approximately $31.8 million
recorded as of September 30, 2020 were recognized in revenue during the fiscal year ended September 30, 2021.
We recognize deferred revenue from service operations and slip and storage services over time on a straight-line basis over the term of the
contract as our performance obligations are met. We recognize income from the rentals of chartering power yachts over time on a straight-line
basis over the term of the contract as our performance obligations are met.
The following table sets forth percentages on the timing of revenue recognition by reportable segment for the fiscal years ended
September 30,
Goods and services transferred at a point in time
Goods and services transferred over time
90.8%
9.2%
92.7%
7.3%
91.6%
8.4%
Revenue
100.0%
100.0%
100.0%
—
—
—
—
—
—
2019
Retail Operations
2020
2021
Product Manufacturing
2020
2019
2021
100.0%
—
100.0%
The following tables set forth our revenue disaggregated into categories that depict the nature, amount, timing, and uncertainty of revenue
and cash flows affected by economic factors for the fiscal years ended September 30,
New boat sales
Used boat sales
Maintenance, repair, storage, and charter services
Finance and insurance products
Parts and accessories
Brokerage sales
Revenue
Retail Operations
2021
Product Manufacturing
Total
70.3%
11.0%
7.1%
2.7%
3.2%
5.7%
100.0%
100.0%
—
—
—
—
—
100.0%
70.5%
10.9%
7.1%
2.7%
3.2%
5.6%
100.0%
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New boat sales
Used boat sales
Maintenance, repair, storage, and charter services
Finance and insurance products
Parts and accessories
Brokerage sales
Revenue
New boat sales
Used boat sales
Maintenance, repair, storage, and charter services
Finance and insurance products
Parts and accessories
Brokerage sales
Revenue
Retail Operations
2020
Product Manufacturing
Total
70.2%
15.1%
6.4%
2.7%
3.0%
2.6%
100.0%
—
—
—
—
—
—
—
Retail Operations
2019
Product Manufacturing
Total
70.1%
14.9%
6.9%
2.6%
3.6%
1.9%
100.0%
—
—
—
—
—
—
—
70.2%
15.1%
6.4%
2.7%
3.0%
2.6%
100.0%
70.1%
14.9%
6.9%
2.6%
3.6%
1.9%
100.0%
Stock-Based Compensation
We account for our stock-based compensation plans following the provisions of FASB ASC 718, “Compensation — Stock
Compensation” (“ASC 718”). In accordance with ASC 718, we use the Black-Scholes valuation model for estimating the fair value of stock
option grants and shares purchased under our Employee Stock Purchase Plan. We measure compensation for restricted stock awards and
restricted stock units at fair value on the grant date based on the number of shares expected to vest and the quoted market price of our common
stock on the grant date. We recognize compensation cost for all awards in operations, net of estimated forfeitures, on a straight-line basis over
the requisite service period for each separately vesting portion of the award.
Foreign Currency Transactions
For the Company’s foreign subsidiaries that use a currency other than the U.S. dollar as their functional currency, the assets and liabilities
are translated at exchange rates in effect at the balance sheet date, and revenues and expenses are translated at the weighted average exchange
rate for the period. The effects of these translation adjustments are reported in accumulated other comprehensive income. Gains and losses
arising from transactions denominated in a currency other than the functional currency of the entity involved are included in operating income.
No amounts were reclassified out of accumulated other comprehensive income in fiscal 2021.
Advertising and Promotional Cost
We expense advertising and promotional costs as incurred and include them in selling, general and administrative expenses in the
accompanying Consolidated Statements of Operations. We net amounts received by us under our co-op assistance programs from our
manufacturers against the related advertising expenses. Total advertising and promotional expenses approximated $18.8 million, $14.0 million
and $14.8 million, net of related co-op assistance, which was not material to the consolidated financial statements, for the fiscal years ended
September 30, 2019, 2020, and 2021, respectively.
Income Taxes
We account for income taxes in accordance with FASB ASC 740, “Income Taxes” (“ASC 740”). Under ASC 740, we recognize deferred
tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using enacted tax rates expected to
apply to taxable income in the years in which we expect those temporary differences to be recovered or
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settled. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized by considering all available
positive and negative evidence.
Concentrations of Credit Risk
Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents and
accounts receivable. Concentrations of credit risk with respect to our cash and cash equivalents are limited primarily to amounts held with
financial institutions. Concentrations of credit risk arising from our receivables are limited primarily to amounts due from manufacturers and
financial institutions.
Use of Estimates and Assumptions
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.
Significant estimates made by us in the accompanying consolidated financial statements include valuation allowances, valuation of goodwill and
intangible assets, valuation of long-lived assets, valuation of contingent consideration liabilities, and valuation of accruals. Actual results could
differ materially from those estimates.
Segment Reporting
Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed
management’s reporting structure and operating activities. We now report our operations through two new reportable segments: Retail
Operations and Product Manufacturing. The change in reportable segments had no impact on the Company’s previously reported historical
consolidated financial statements. Where applicable, all prior periods presented have been revised to conform to the change in reportable
segments. See Note 21.
3. NEW ACCOUNTING PRONOUNCEMENTS:
Accounting for Leases
We adopted Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) effective October 1, 2019 the first
day of fiscal 2020. We elected the package of practical expedients available under the transition guidance within the new standard, which among
other things, allowed us to carry forward the historical lease classification of our existing leases. Consequently, on adoption, we recognized
additional operating lease liabilities of $44.0 million and right-of-use (“ROU”) assets of $42.1 million. The new standard also provides practical
expedients for an entity’s ongoing accounting. We elected the short-term lease recognition exemption for all leases that qualify. As a result, for
those leases that qualify, we will not recognize ROU assets or lease liabilities, and we did not recognize ROU assets or lease liabilities for
existing short-term leases of those assets in transition. We also elected the practical expedient to not separate lease and non-lease components.
We recognized a net after-tax cumulative effect adjustment to retained earnings of $0.6 million as of the date of adoption. See Note 8 for
additional information on our leases.
Other New Pronouncements
In August 2018, the FASB issued ASU 2018-15, “Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s
Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”), which aligns
the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract with the guidance on capitalizing
costs associated with developing or obtaining internal-use software. The guidance amends ASC 350 to include in its scope implementation costs
of a cloud computing arrangement that is a service contract and clarifies that a customer should apply ASC 350 to determine which
implementation costs should be capitalized in such a cloud computing arrangement. This guidance is effective for fiscal years and interim
periods within those fiscal years beginning after December 15, 2019. We adopted ASU 2018-05 effective October 1, 2020 the first day of fiscal
2021. The adoption of this standard had no impact on our consolidated financial statements.
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In June 2016, the FASB issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments” (“ASU 2016-13”). ASU 2016-13 requires entities to report “expected” credit losses on financial instruments and other
commitments to extend credit rather than the current “incurred loss” model. These expected credit losses for financial assets held at the reporting
date are to be based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU will also require enhanced
disclosures relating to significant estimates and judgments used in estimating credit losses, as well as the credit quality. This guidance is
effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. We adopted ASU 2016-13 effective
October 1, 2020 the first day of fiscal 2021. The adoption of this standard had no impact on our consolidated financial statements.
4. FAIR VALUE MEASUREMENTS:
The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the
extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in
the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair
value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement
date.
Level 2 - Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for
substantially the full term of the asset or liability.
Level 3 - Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available,
thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
The following tables summarize the Company’s financial assets and liabilities measured at fair value in the accompanying Consolidated
Balance Sheets as of September 30,
Assets:
Interest rate swap contract
Liabilities:
Contingent consideration liabilities
Level 1
Level 2
Level 3
Total
(Amounts in thousands)
2021
$
$
— $
150 $
— $
150
— $
— $
12,364 $
12,364
Level 1
Level 2
Level 3
Total
(Amounts in thousands)
2020
Liabilities:
Contingent consideration liabilities
$
— $
— $
2,960 $
2,960
There were no transfers between the valuation hierarchy Levels 1, 2, and 3 for the fiscal years ended September 30, 2020, and 2021.
The fair value of the Company’s interest rate swap contract is calculated as the present value of expected future cash flows, determined on
the basis of forward interest rates and present value factors. The inputs to the fair value measurements reflect Level 2 inputs. The interest rate
swap contract balance is included in other long-term assets in the accompanying Consolidated Balance Sheets. The interest rate swap contract is
designated as a cash flow hedge with changes in fair value reported in other comprehensive income in the accompanying Consolidated
Statements of Comprehensive Income.
We estimate the fair value of our contingent consideration liabilities using a probability-weighted discounted cash flow model. The
contingent consideration liabilities are estimated based on forecasted pre-tax earnings as a base scenario (among other assumptions) subject to a
Monte Carlo simulation. The fair value of the contingent consideration liabilities, which reflect Level 3 inputs, is reassessed on a quarterly basis.
The contingent consideration liabilities balance is included in accrued expenses and other long-term liabilities in the accompanying Consolidated
Balance Sheets. Changes in fair value and net present value of the contingent consideration liabilities are included in selling, general and
administrative expenses in the accompanying Consolidated Statements of Operations.
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The following table sets forth the changes in fair value of our contingent consideration liabilities, which reflect Level 3 inputs, for the
fiscal the years ended September 30, 2020 and 2021:
Balance as of September 30, 2019
Additions from business acquisitions
Settlement of contingent consideration liabilities
Change in fair value and net present value of contingency
Balance as of September 30, 2020
Additions from business acquisitions
Settlement of contingent consideration liabilities
Change in fair value and net present value of contingency
Balance as of September 30, 2021
Contingent Consideration
Liabilities
(Amounts in thousands)
845
2,270
(148)
(7)
2,960
10,640
(3,000)
1,764
12,364
$
$
$
We determined the carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, short-term
borrowings, and the revolving mortgage facility approximate their fair values because of the nature of their terms and current market rates of
these instruments. The fair value of our mortgage facilities, which are not carried at fair value in the accompanying Consolidated Balance
Sheets, was determined using Level 2 inputs based on the discounted cash flow method. We estimate the fair value of our mortgage facilities
using a present value technique based on current market interest rates for similar types of financial instruments that reflect Level 2 inputs. The
following table summarizes the carrying value and fair value of our mortgage facilities as of September 30,
Mortgage facility payable to Flagship Bank
Mortgage facility payable to Seacoast National Bank
Mortgage facility payable to Hancock Whitney Bank
5. ACCOUNTS RECEIVABLE:
$
Fair Value
2020
Carrying Value
Fair Value
2021
Carrying Value
7,396 $
—
—
(Amounts in thousands)
7,396 $
—
—
6,872 $
17,529
27,089
6,899
17,675
27,106
Trade receivables consist primarily of receivables from financial institutions, which provide funding for customer boat financing and
amounts due from financial institutions earned from arranging financing with our customers. We normally collect these receivables within
30 days of the sale. Trade receivables also include amounts due from customers on the sale of boats, parts, service, and storage. Amounts due
from manufacturers represent receivables for various manufacturer programs and parts and service work performed pursuant to the
manufacturers’ warranties.
Accounts receivable are presented net of an allowance for expected credit losses. The allowance for expected credit losses, which was not
material to the consolidated financial statements as of September 30, 2020 or 2021, was based on our consideration of past collection experience,
current information, and reasonable and supportable forecasts.
Accounts receivable, net consisted of the following as of September 30,
Trade receivables, net
Amounts due from manufacturers
Other receivables
Accounts receivable, net
2020
2021
(Amounts in thousands)
$
$
31,289 $
7,575
1,331
40,195 $
38,953
7,344
1,354
47,651
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6. INVENTORIES:
Inventories, net consisted of the following as of September 30,
New and used boats, motors, and trailers
Parts, accessories, and other
Work-in-process
Raw materials
Inventories, net
7. PROPERTY AND EQUIPMENT:
Property and equipment, net consisted of the following as of September 30,
Land
Buildings and improvements
Machinery and equipment
Furniture and fixtures
Vehicles
Gross property and equipment
Less: accumulated depreciation and amortization
Property and equipment, net
2020
2021
(Amounts in thousands)
289,291 $
8,711
—
—
298,002 $
193,888
13,779
11,358
11,959
230,984
$
$
2020
2021
(Amounts in thousands)
$
$
55,549 $
115,394
39,416
5,233
12,612
228,204
(86,270)
141,934 $
57,330
137,271
54,510
5,897
18,269
273,277
(97,814)
175,463
Depreciation and amortization expense on property and equipment totaled approximately $11.6 million, $12.8 million, and $13.9 million,
for the fiscal years ended September 30, 2019, 2020, and 2021, respectively.
8. LEASES:
Substantially all of the leases that we enter into are real estate leases. We lease numerous facilities relating to our operations, including
showrooms, display lots, marinas, service facilities, slips, offices, equipment and our corporate headquarters. Leases for real property have
terms, including renewal options, ranging from one to in excess of twenty-five years. In addition, we lease certain charter boats for our yacht
charter business. As of September 30, 2021, the weighted-average remaining lease term for our leases was approximately 12 years. All of our
leases are classified as operating leases, which are included as ROU assets and operating lease liabilities in the accompanying Consolidated
Balance Sheets. For the fiscal years ended September 30, 2019, 2020, and 2021, operating lease expenses recorded in selling, general, and
administrative expenses were approximately $12.8 million, $13.9 million, and $24.1 million, of which approximately $0.4 million, $0.5 million,
and $0.7 million, related to variable lease expenses, respectively. Our lease agreements do not contain any material residual value guarantees or
material restrictive covenants. We do not have any significant leases that have not yet commenced but that create significant rights and
obligations for us. We have elected the practical expedient under ASC 842 to not separate lease and nonlease components.
Our real estate and equipment leases often require that we pay maintenance in addition to rent. Additionally, our real estate leases
generally require payment of real estate taxes and insurance. Maintenance, real estate taxes, and insurance payments are generally variable and
based on actual costs incurred by the lessor. Therefore, these amounts are not included in the consideration of the contract when determining the
ROU asset and lease liability, but are reflected as variable lease expenses.
Substantially all of our lease agreements include fixed rental payments. Certain of our lease agreements include fixed rental payments that
are adjusted periodically by a fixed rate or changes in an index. The fixed payments, including the effects of changes in the fixed rate or amount,
and renewal options reasonably certain to be exercised, are included in the measurement of the related lease liability. Most of our real estate
leases include one or more options to renew, with renewal terms that can extend the lease term from
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one to five years or more. The exercise of lease renewal options is at our sole discretion. If it is reasonably certain that we will exercise such
options, the periods covered by such options are included in the lease term and are recognized as part of our right of use assets and lease
liabilities. The depreciable life of assets and leasehold improvements are limited by the expected lease term, which includes renewal options
reasonably certain to be exercised.
For our incremental borrowing rate, we generally use a portfolio approach to determine the discount rate for leases with similar
characteristics. We determine discount rates based upon our hypothetical credit rating, taking into consideration our short-term borrowing rates,
and then adjusting as necessary for the appropriate lease term. As of September 30, 2021, the weighted-average discount rate used was
approximately 5.6%.
As of September 30, 2021, maturities of lease liabilities by fiscal year are summarized as follows:
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: interest
Present value of lease liabilities
$
$
(Amounts in thousands)
16,080
14,913
12,714
10,315
9,947
88,190
152,159
(44,633)
107,526
The following table sets forth supplemental cash flow information related to leases for the fiscal years ended September 30,
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for lease
obligations:
Operating leases
$
$
2019
2020
(Amounts in thousands)
2021
—
$
10,209
$
16,917
—
$
3,811
$
74,097
The Company reports the amortization of ROU assets and the change in operating lease liabilities on a net basis in accrued expenses and
other liabilities in the accompanying Consolidated Statements of Cash Flows.
9. GOODWILL, INTANGIBLE ASSETS, AND OTHER LONG-TERM ASSETS:
In July 2021 we purchased Nisswa Marine, Inc. a full-service dealer located in Nisswa, Minnesota. Goodwill and other intangible assets
associated with the Nisswa Marine acquisition was approximately $15.3 million.
In May 2021, we purchased all of the outstanding equity of KCS International Holdings, Inc., and certain affiliates (“Cruisers Yachts”) for
an aggregate purchase price of $62.7 million, subject to certain customary closing and post-closing adjustments, and net working capital
adjustments including certain holdbacks. The former owners of Cruisers Yachts are subject to certain customary post-closing covenants and
indemnities.
The following table summarizes the consideration paid for Cruisers Yachts and the allocation of the purchase consideration to the
estimated fair value of the assets acquired and liabilities assumed at the acquisition date.
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Consideration:
Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed:
Current assets, net of cash acquired of $5,993
Property and equipment
Intangible assets
Current liabilities
Total identifiable net assets acquired:
Goodwill
Total
(Amounts in thousands)
$
$
$
$
61,448
29,869
12,126
4,602
(25,283)
21,314
40,134
61,448
The fair value of current assets acquired includes accounts receivable and inventory of approximately $3.1 million and $26.2 million,
respectively. The fair value of current liabilities assumed includes short-term borrowings of approximately $11.7 million, accrued expenses of
approximately $10.3 million, and accounts payable of approximately $3.0 million. The intangible assets acquired include the trade name and
customer relationships. The goodwill represents the assembled workforce, acquired capabilities, and future economic benefits resulting from the
acquisition. The majority of the goodwill is expected to be deductible for tax purposes. The customer relationships have a weighted average
useful life of approximately 2.0 years. The tradename has an indefinite life. Our results for fiscal 2021 include results from Cruisers Yachts
between May 2, 2021 and September 30, 2021. Refer to Note 21 for disclosure of the revenues and income from operations. We have not
disclosed the pro forma effect of Cruisers Yachts’ financial information for fiscal 2020 and prior to acquisition on May 2, 2021, because it is not
practical to obtain for comparative purposes and as such is not presented because Cruisers Yachts’ historical monthly internal accounting and
reporting processes and practices would not provide complete information sufficient for the purposes of this pro forma disclosure.
In October 2020, we purchased all of the outstanding equity of Skipper Marine Holdings, Inc., and certain affiliates (“SkipperBud’s”) for
an aggregate purchase price of $55.0 million, subject to certain customary closing and post-closing adjustments, and net working capital
adjustments including certain holdbacks. In addition, the former equity owners of SkipperBud’s (“Skippers Sellers”), have the opportunity to
earn additional consideration as part of an contingent consideration liability subject to the achievement of certain pre-tax earnings levels. The
maximum amount of consideration that can be paid under the contingent consideration liability is approximately $9.3 million. The fair value of
$8.2 million of the contingent consideration liability arrangement was estimated by a third party valuation expert by applying an income
valuation approach. The contingent consideration liability was estimated based on forecasted pre-tax earnings as a base scenario (among other
assumptions) subject to a Monte Carlo simulation. The Skippers Sellers are subject to certain customary post-closing covenants and indemnities.
The acquisition of SkipperBud’s enhances our sales, brokerage, service and marina/storage presence in the Great Lakes region and West Coast of
the Unites States.
The following table summarizes the consideration paid for SkipperBud’s and the allocation of the purchase consideration to the estimated
fair value of the assets acquired and liabilities assumed at the acquisition date.
(Amounts in thousands)
Consideration:
Cash purchase price and net working capital adjustments, net of cash acquired of $30,615
Contingent consideration liability
Fair value of total consideration transferred
Recognized amounts of identifiable assets acquired and liabilities assumed:
Current assets, net of cash acquired of $30,615
Property and equipment
Intangible assets
Current liabilities
Total identifiable net assets acquired:
Goodwill
Total
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$
$
$
$
$
50,261
8,200
58,461
50,688
4,859
1,978
(55,427)
2,098
56,363
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The fair value of current assets acquired includes accounts receivable and inventory of approximately $5.4 million and $42.3 million,
respectively. The fair value of current liabilities assumed includes short-term borrowings of approximately $30.5 million, accrued expenses of
approximately $14.6 million, and customer deposits of approximately $7.5 million. We recorded approximately $56.4 million in goodwill and
approximately $2.0 million of other identifiable intangibles (trade name and customer relationships) in connection with the SkipperBud’s
acquisition. The goodwill represents our enhanced geographic reach and brand infrastructure in the Great Lakes region and West Coast of the
Unites States. The majority of the goodwill is expected to be deductible for tax purposes. The intangible assets have a weighted average useful
life of approximately 3.3 years. For fiscal 2021, SkipperBud’s revenue was approximately $302.6 million and income before taxes was
approximately $31.3 million. We have not disclosed the pro forma effect of SkipperBud’s financial information for fiscal 2020 because it is not
practical to obtain for comparative purposes and as such is not presented because SkipperBud’s historical monthly internal accounting and
reporting processes and practices would not provide complete information sufficient for the purposes of this pro forma disclosure.
In July 2020, we purchased Northrop & Johnson, a leading superyacht brokerage and services company. In March 2020, we purchased
Boatyard, a digital platform with an expansive range of on-demand services to streamline the boating experience by qualified service providers
from a smartphone.
Goodwill and other intangible assets increased, primarily due to acquisitions, by $20.2 million and $116.8 million, for the fiscal years
ended September 30, 2020 and 2021, respectively. These acquisitions have resulted in the recording of goodwill for tax purposes of $16.8
million and $110.8 million, for the fiscal years ended September 30, 2020 and 2021, respectively. In total, current and previous acquisitions have
resulted in the recording of $84.3 million and $201.1 million in goodwill and other intangible assets as of September 30, 2020 and 2021,
respectively.
Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed
management’s reporting structure and operating activities. We now report our operations through two new reportable segments: Retail
Operations and Product Manufacturing. As a result, the Company allocated goodwill to its reporting units within the Company’s two reportable
segments.
The following table sets forth the changes in carrying amount of goodwill by reportable segment for the fiscal years ended September 30,
2020 and 2021:
Balance as of September 30, 2019
Goodwill acquired
Foreign currency translation
Balance as of September 30, 2020
Goodwill acquired
Foreign currency translation
Balance as of September 30, 2021
Retail Operations
Manufacturing
Total
Product
$
$
$
64,006
19,614
620
84,240
71,306
(117)
155,429
$
(Amounts in thousands)
—
—
—
—
$
40,134
—
40,134
$
$
$
$
64,006
19,614
620
84,240
111,440
(117)
195,563
Other long-term assets as of September 30, 2020 and 2021 of $7.8 million and $8.8 million, respectively, are primarily long-term deposits
and other long-term investments.
10. ACCRUED EXPENSES:
Accrued expenses consisted of the following as of September 30,
Payroll accruals
Customer and storage accruals
Sales and other taxes payable
Other accruals
Accrued expenses
2020
2021
(Amounts in thousands)
$
$
23,142 $
11,381
5,829
11,264
51,616 $
42,138
17,390
8,462
18,604
86,594
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11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT:
Short-term Borrowings
In May 2020, we entered into a Loan and Security Agreement (the “Credit Facility”), with Wells Fargo Commercial Distribution Finance
LLC, M&T Bank, Bank of the West, and Truist Bank. In July 2021, the Company amended its Credit Facility to increase the borrowing
availability to $500.0 million, extend the term to expire by one year to July 2024, with two one-year options to renew, subject to lender approval,
and modify certain provisions to provide additional liquidity to the Company. The Credit Facility provides the Company a line of credit with
asset based borrowing availability of up to $500.0 million for working capital and inventory financing, with the amount permissible pursuant to a
borrowing base formula. The Credit Facility expires in July 2024, subject to extension for two one-year periods, with lender approval.
The Credit Facility has certain financial covenants as specified in the agreement. The covenants include provisions that our leverage ratio
must not exceed 2.75 to 1.0 and that our current ratio must be greater than 1.2 to 1.0. The interest rate for amounts outstanding under the Credit
Facility is 345 basis points plus the greater of 75 basis points or the one-month LIBOR. There is an unused line fee of ten basis points on the
unused portion of the Credit Facility. In October 2021, we amended the Credit Facility to allow for the transition of the benchmark interest rate
used from LIBOR to the Secured Overnight Finance Rate (SOFR).
As of September 30, 2021, we were in compliance with all covenants under the Credit Facility.
New inventory borrowing eligibility will generally mature 1,080 days from the original invoice date. Used inventory borrowing eligibility
will generally mature 361 days from the date we acquire the used inventory. The collateral for the Credit Facility is all of our personal property
with certain limited exceptions. None of our real estate has been pledged for collateral for the Credit Facility.
As of September 30, 2021, our indebtedness associated with financing our inventory and working capital needs totaled approximately
$24.1 million, and included unamortized debt issuance costs of approximately $0.2 million. As of September 30, 2020 and 2021, the interest rate
on the outstanding short-term borrowings was approximately 4.20%. As of September 30, 2021, our additional available borrowings under our
Credit Facility were approximately $79.0 million based upon the outstanding borrowing base availability.
As is common in our industry, we receive interest assistance directly from boat manufacturers, including Brunswick. The interest
assistance programs vary by manufacturer, but generally include periods of free financing or reduced interest rate programs. The interest
assistance may be paid directly to us or our lender depending on the arrangements the manufacturer has established. We classify interest
assistance received from manufacturers as a reduction of inventory cost and related cost of sales.
The availability and costs of borrowed funds can adversely affect our ability to obtain adequate boat inventory and the holding costs of
that inventory as well as the ability and willingness of our customers to finance boat purchases. However, we rely on our Credit Facility to
purchase our inventory of boats. The aging of our inventory limits our borrowing capacity as defined curtailments reduce the allowable advance
rate as our inventory ages. Our access to funds under our Credit Facility also depends upon the ability of our lenders to meet their funding
commitments, particularly if they experience shortages of capital or experience excessive volumes of borrowing requests from others during a
short period of time. Unfavorable economic conditions, weak consumer spending, turmoil in the credit markets, and lender difficulties, among
other potential reasons, could interfere with our ability to utilize our Credit Facility to fund our operations. Any inability to utilize our Credit
Facility could require us to seek other sources of funding to repay amounts outstanding under the credit agreements or replace or supplement our
credit agreements, which may not be possible at all or under commercially reasonable terms.
Similarly, decreases in the availability of credit and increases in the cost of credit adversely affect the ability of our customers to purchase
boats from us and thereby adversely affect our ability to sell our products and impact the profitability of our finance and insurance activities.
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Long-term Debt
The below table summarizes the Company's long-term debt.
Mortgage facility payable to Flagship Bank bearing interest at 2.25% (prime minus 100 basis points with a
floor of 2.00%). Requires monthly principal and interest payments with a balloon payment of
approximately $4.0 million due August 2027.
Mortgage facility payable to Seacoast National Bank bearing interest at 3.00% (greater of 3.00% or prime
minus 62.5 basis points). Requires monthly interest payments for the first year and then monthly principal
and interest payments with a balloon payment of approximately $6.0 million due September 2031.
Mortgage facility payable to Hancock Whitney Bank bearing interest at 2.63% (prime minus 62.5 basis
points with a floor of 2.25%). Requires monthly principal and interest payments with a balloon
payment of approximately $15.5 million due November 2027. 50% of the outstanding borrowings
are hedged with an interest rate swap contract with a fixed rate of 3.20%.
Revolving mortgage facility with FineMark National Bank & Trust bearing interest at 3.00% (prime minus
25 basis points with a floor of 3.00%). Facility matures in October 2027. Current available borrowings
under the facility were approximately $26.1 million at September 30, 2021.
Total long-term debt
Less: current portion
Less: unamortized portion of debt issuance costs
Long-term debt, net current portion and unamortized debt issuance costs
$
As of September 30, 2020, we had approximately $7.4 million under the mortgage facility payable to Flagship Bank.
As of September 30, 2021, the aggregate maturities of long-term debt by fiscal year are summarized as follows:
2022
2023
2024
2025
2026
Thereafter
Total long-term debt
12. INCOME TAXES:
(Amounts in thousands)
$
$
Income before income tax provision consisted of the following components for the fiscal years ended September 30,
2019
2020
(Amounts in thousands)
2021
Income before income tax provision:
United States
Other
Total
F-22
$ 46,986 $ 94,854 $ 202,643
3,151
$ 48,953 $ 97,440 $ 205,794
2,586
1,967
September 30, 2021
(Amounts in thousands)
$
6,899
17,675
27,106
—
51,680
(3,587)
(595)
47,498
3,587
3,587
3,587
3,587
3,587
33,745
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The components of our provision from income taxes consisted of the following for the fiscal years ended September 30,
Current provision:
Federal
Foreign
State
Total current provision
Deferred provision:
Federal
Foreign
State
Total deferred provision
Total income tax provision
2019
2020
(Amounts in thousands)
2021
$
$
$
$
7,933 $
516
135
8,584 $
2,285 $
—
2,099
4,384
12,968 $
17,654 $
654
1,365
19,673 $
2,262 $
—
871
3,133
22,806 $
38,028
1,516
6,527
46,071
4,201
—
543
4,744
50,815
Below is a reconciliation of the statutory federal income tax rate to our effective tax rate for the fiscal years ended September 30,
Federal tax provision
State taxes, net of federal benefit
Stock-based compensation
Valuation allowance
Foreign rate differential
Other
Effective tax rate
2019
2020
2021
21.0%
4.1%
—
(0.1)%
0.2%
1.3%
26.5%
21.0%
3.1%
(0.5)%
(0.2)%
0.1%
(0.1)%
23.4%
21.0%
3.7%
(0.7)%
—
0.1%
0.6%
24.7%
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial
reporting purposes and such amounts recognized for income tax purposes. The tax effects of these temporary differences representing the
components of deferred tax assets as of September 30,
Deferred tax assets:
Inventories
Operating lease liabilities
Accrued expenses
Stock-based compensation
Tax loss carryforwards
Other
Total long-term deferred tax assets
Deferred tax liabilities:
Depreciation and amortization
Operating lease right-of-use assets
Total long-term deferred tax liabilities
Net deferred tax liabilities
2021
2020
(Amounts in thousands)
808 $
9,926
640
2,170
810
268
14,622 $
(9,095)
(10,036)
(19,131) $
(4,509) $
771
25,924
1,225
2,810
667
852
32,249
(16,226)
(25,291)
(41,517)
(9,268)
$
$
$
$
Pursuant to ASC 740, we must consider all positive and negative evidence regarding the realization of deferred tax assets. ASC 740
provides four possible sources of taxable income to realize deferred tax assets: 1) taxable income in prior carryback years, 2) reversals of
existing deferred tax liabilities, 3) tax planning strategies and 4) projected future taxable income. As of September 30, 2021, we have no
available taxable income in prior carryback years, limited reversals of existing deferred tax liabilities or prudent and
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feasible tax planning strategies. Therefore, the recoverability of our deferred tax assets is dependent upon generating future taxable income.
As of September 30, 2017, we no longer had federal NOL carryforwards for federal income tax purposes. As of September 30, 2021, the
Company has state NOL carryforwards of approximately $11.4 million for state income tax purposes, which resulted in a deferred tax asset of
$0.7 million, and expire at various dates from 2029 through 2032.
Significant judgment is required in evaluating our uncertain tax positions. Although we believe our tax return positions are sustainable, we
recognize tax benefits from uncertain tax positions in the consolidated financial statements only when it is more likely than not that the positions
will not be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits and a
consideration of the relevant taxing authority’s administrative practices and precedents. To the extent that the final tax outcome of these matters
is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is
made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well
as the related net interest and penalties.
We are subject to tax by federal, state, and foreign taxing authorities. Until the respective statutes of limitations expire, we are subject to
income tax audits in the jurisdictions in which we operate. We are no longer subject to U.S. federal tax assessments for fiscal years prior to 2018,
we are not subject to assessments prior to the 2015 fiscal year for the majority of the State jurisdictions and we are not subject to assessments
prior to the 2016 calendar year for the majority of the foreign jurisdictions.
13. SHAREHOLDERS’ EQUITY:
In March 2020, our Board of Directors approved a new share repurchase plan allowing the Company to repurchase up to 10 million shares
of our common stock through March 2022. Under the plan, we may buy back common stock from time to time in the open market or in privately
negotiated blocks, dependent upon various factors, including price and availability of the shares, and general market conditions. Through
September 30, 2021 we had purchased an aggregate of 6,767,021 shares of common stock under the current and historical share repurchase plans
for an aggregate purchase price of approximately $127.4 million. As of September 30, 2021, approximately 9.4 million shares remained
available for future purchases under the share repurchase program.
14. STOCK-BASED COMPENSATION:
We account for our stock-based compensation plans following the provisions of FASB ASC 718, “Compensation — Stock
Compensation” (“ASC 718”). In accordance with ASC 718, we use the Black-Scholes valuation model for valuing all options granted (Note 16)
and shares purchased under our Amended 2008 Employee Stock Purchase Plan (“Stock Purchase Plan”). We measure compensation for
restricted stock awards and restricted stock units (Note 17) at fair value on the grant date based on the number of shares expected to vest and the
quoted market price of our common stock. We recognize compensation cost for all awards in operations on a straight-line basis over the requisite
service period for each separately vesting portion of the award.
Stock-based compensation expense recorded in selling, general, and administrative expenses was approximately $6.5 million, $7.5
million, and $9.7 million, for the fiscal years ended September 30, 2019, 2020, and 2021, respectively.
Cash received from option exercises under all share-based compensation arrangements for the fiscal years ended September 30, 2019,
2020 and 2021 was approximately $2.4 million, $4.6 million, and $2.6 million, respectively. We currently expect to satisfy share-based awards
with registered shares available to be issued from the Stock Purchase Plan.
15. THE INCENTIVE STOCK PLANS:
In February 2020, our shareholders approved a proposal to amend the 2011 Stock-Based Compensation Plan (“2011 Plan”) to increase the
3,200,456 share threshold by 1,000,000 shares to 4,200,456 shares. In January 2011, our shareholders approved a proposal to authorize our 2011
Plan, which replaced our 2007 Incentive Compensation Plan (“2007 Plan”). Our 2011 Plan provides for the grant of stock options, stock
appreciation rights, restricted stock, stock units, bonus stock, dividend equivalents, other stock related awards, and performance awards
(collectively “awards”), that may be settled in cash, stock, or other property. Our 2011 Plan is designed to attract, motivate, retain, and reward
our executives, employees, officers, directors, and independent contractors by providing such persons with annual and long-term performance
incentives to expend their maximum efforts in the creation of shareholder value. Subsequent to the February 2020 amendment described above,
the total number of shares of our common stock that may be subject to awards under the 2011 Plan is equal to 4,000,000 shares, plus: (i) any
shares available for issuance and not subject to an award under the 2007 Plan, which was 200,456 shares at the time of approval of the 2011
Plan; (ii) the number of shares with respect to which awards granted under the 2011 Plan and the 2007 Plan terminate without the issuance of the
shares or where the
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shares are forfeited or repurchased; (iii) with respect to awards granted under the 2011 Plan and the 2007 Plan, the number of shares that are not
issued as a result of the award being settled for cash or otherwise not issued in connection with the exercise or payment of the award; and (iv) the
number of shares that are surrendered or withheld in payment of the exercise price of any award or any tax withholding requirements in
connection with any award granted under the 2011 Plan or the 2007 Plan. The 2011 Plan terminates in February 2030, and awards may be
granted at any time during the life of the 2011 Plan. The dates on which awards vest are determined by the Board of Directors or the Plan
Administrator. The Board of Directors has appointed the Compensation Committee as the Plan Administrator. The exercise prices of options are
determined by the Board of Directors or the Plan Administrator and are at least equal to the fair market value of shares of common stock on the
date of grant. The term of options under the 2011 Plan may not exceed ten years. The options granted have varying vesting periods. To date, we
have not settled or been under any obligation to settle any awards in cash.
The following table summarizes activity from our incentive stock plans from September 30, 2020 through September 30, 2021:
Balance as of September 30, 2020
Options granted
Options cancelled/forfeited/expired
Options exercised
Restricted stock awards granted
Restricted stock awards forfeited
Additional shares of stock issued
Balance as of September 30, 2021
Exercisable as of September 30, 2021
Shares
Available
for Grant
1,275,415
(5,000)
10,000
—
(344,616)
6,325
(24,063)
918,061
Aggregate
Intrinsic
Value
(Amounts in
thousands)
Weighted
Average
Exercise
Price
Options
Outstanding
196,329 $
5,000
(10,000)
(76,079)
—
—
—
115,250 $
110,916 $
2,636 $
4,085 $
4,044 $
12.12
48.52
7.54
13.68
—
—
—
13.08
12.06
Weighted
Average
Remaining
Contractual
Life
2.5
1.9
2.0
No options were granted during the fiscal years ended September 30, 2019, and 2020. The weighted-average grant date fair value of
options granted during the fiscal year ended September 30, 2021 was $25.29. The total intrinsic value of options exercised during the fiscal years
ended September 30, 2019, 2020 and 2021 was approximately $1.4 million, $3.8 million, and $1.8 million, respectively.
As of September 30, 2021, there was approximately $0.1 million of unrecognized compensation costs related to non-vested options that
are expected to be recognized over a weighted average period of 2.0 years.
We used the Black-Scholes model to estimate the fair value of options granted. The expected term of options granted is estimated based
on historical experience. Volatility is based on the historical volatility of our common stock. The risk-free rate for periods within the contractual
term of the options is based on the U.S. Treasury yield curve in effect at the time of grant.
16. EMPLOYEE STOCK PURCHASE PLAN:
In February 2019, our shareholders approved a proposal to amend our Stock Purchase Plan to increase the number of shares available
under that plan by 500,000 shares. The Stock Purchase Plan as amended provides for up to 1,500,000 shares of common stock to be available for
purchase by our regular employees who have completed at least one year of continuous service. In addition, there were 52,837 shares of
common stock available under our 1998 Employee Stock Purchase Plan, which have been made available for issuance under our Stock Purchase
Plan. The Stock Purchase Plan provides for implementation of annual offerings beginning on the first day of October in each of the years 2008
through 2027, with each offering terminating on September 30 of the following year. Each annual offering may be divided into two six-month
offerings. For each offering, the purchase price per share will be the lower of: (i) 85% of the closing price of the common stock on the first day
of the offering or (ii) 85% of the closing price of the common stock on the last day of the offering. The purchase price is paid through periodic
payroll deductions not to exceed 10% of the participant’s earnings during each offering period. However, no participant may purchase more than
$25,000 worth of common stock annually.
We used the Black-Scholes model to estimate the fair value of options granted to purchase shares issued pursuant to the Stock Purchase
Plan. Volatility is based on the historical volatility of our common stock. The risk-free rate for periods within the contractual term of the options
is based on the U.S. Treasury yield curve in effect at the time of grant.
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The following are the weighted-average assumptions used for the fiscal years ended September 30,
Dividend yield
Risk-free interest rate
Volatility
Expected life
2019
0.0%
2.4%
48.3%
2020
0.0%
0.8%
69.7%
2021
0.0%
0.1%
69.6%
Six months Six months Six months
As of September 30, 2021, we had issued 1,139,547 shares of common stock under our Stock Purchase Plan.
17. RESTRICTED STOCK AWARDS:
We have granted non-vested (restricted) stock awards (“restricted stock”) and restricted stock units (“RSUs”) to employees, directors, and
officers pursuant to the 2011 Plan and the 2007 Plan. The restricted stock awards and RSUs have varying vesting periods, but generally become
fully vested between two and four years after the grant date, depending on the specific award, performance targets met for performance-based
awards granted to officers, and vesting period for time-based awards. Officer performance-based awards are granted at the target amount of
shares that may be earned and the actual amount of the award earned generally could range from 0% to 175% of the target number of shares
based on the actual specified performance target met. We accounted for the restricted stock awards granted using the measurement and
recognition provisions of ASC 718. Accordingly, the fair value of the restricted stock awards, including performance-based awards, is measured
on the grant date and recognized in earnings over the requisite service period for each separately vesting portion of the award.
The following table summarizes restricted stock award activity from September 30, 2020 through September 30, 2021:
Non-vested balance as of September 30, 2020
Changes during the period:
Awards granted
Awards vested
Awards forfeited
Non-vested balance as of September 30, 2021
Shares/
Units
902,631 $
344,616 $
(329,493) $
(6,325) $
911,429 $
Weighted
Average
Grant Date
Fair Value
18.08
30.54
19.32
19.82
22.33
As of September 30, 2021, we had approximately $11.1 million of total unrecognized compensation cost, assuming applicable
performance conditions are met, related to non-vested restricted stock awards. We expect to recognize that cost over a weighted-average period
of 2.1 years.
18. NET INCOME PER SHARE:
The following table presents shares used in the calculation of basic and diluted net income per share for the fiscal years ended September
30,
Weighted average common shares outstanding used in
calculating basic net income per share
Effect of dilutive options and non-vested restricted
stock awards
Weighted average common and common equivalent
shares used in calculating diluted net income per share
2019
2020
2021
22,294,114 21,547,665 22,010,130
587,033
577,673
849,368
22,881,147 22,125,338 22,859,498
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For the fiscal years ended September 30, 2019, 2020, and 2021 there were 10,988, 9,650, and 1,619 weighted average shares of options
outstanding, respectively, that were not included in the computation of diluted net income per share because the options’ exercise prices were
greater than the average market price of our common stock, and therefore, their effect would be anti-dilutive.
19. COMMITMENTS AND CONTINGENCIES:
We are party to various legal actions arising in the ordinary course of business. While it is not feasible to determine the actual outcome of
these actions as of September 30, 2021, we believe that these matters should not have a material adverse effect on our consolidated financial
condition, results of operations or cash flows.
During the fiscal years ended September 30, 2019, and 2020, we incurred costs associated with store closings and lease terminations of
approximately $3.1 million and $1.7 million, respectively. During the fiscal year ended September 30, 2021, we incurred no costs associated
with store closings and lease terminations. The store closing costs have been included in selling, general, and administrative expenses in the
accompanying Consolidated Statements of Operations.
In connection with certain of our workers’ compensation insurance policies, we maintain standby letters of credit for our insurance
carriers in the amount of $1.6 million relating primarily to retained risk on our workers compensation claims.
We are subject to federal and state environmental regulations, including rules relating to air and water pollution and the storage and
disposal of gasoline, oil, other chemicals and waste. We believe that we are in compliance with such regulations.
20. EMPLOYEE 401(k) PROFIT SHARING PLANS:
Employees are eligible to participate in our 401(k) Profit Sharing Plan (the “Plan”) following their 90-day introductory period starting
either April 1 or October 1, provided that they are 21 years of age. Under the Plan, we matched 50% of participants’ contributions, up to a
maximum of 5% of each participant’s compensation. We contributed, under the Plan, or pursuant to previous similar plans, approximately $2.3
million, $2.7 million, and $5.0 million for the fiscal years ended September 30, 2019, 2020 and 2021, respectively.
21. SEGMENT INFORMATION:
Change in Reportable Segments
Effective May 2, 2021, our reportable segments changed as a result of the Company’s acquisition of Cruisers Yachts, which changed
management’s reporting structure and operating activities. We now report our operations through two new reportable segments: Retail
Operations and Product Manufacturing.
Reportable Segments
The Company’s segments are defined by management’s reporting structure and operating activities. Our chief operating decision maker
(“CODM”) is our Chief Executive Officer. Our CODM reviews operational income statement information by segment for purposes of making
operating decisions, assessing financial performance, and allocating resources. The CODM is not provided asset information by segment. The
Company’s reportable segments are the following:
Retail Operations. As of September 30, 2021, the Retail Operations segment includes the sale of new and used recreational boats,
including pleasure and fishing boats, with a focus on premium brands in each segment. We also sell related marine products, including engines,
trailers, parts, and accessories. In addition, we provide repair, maintenance, and slip and storage services; we arrange related boat financing,
insurance, and extended service contracts; we offer boat and yacht brokerage sales; yacht charter services. In the British Virgin Islands we offer
the charter of catamarans, through MarineMax Vacations. Fraser Yachts Group and Northrop & Johnson, leading superyacht brokerage and
luxury yacht services companies with operations in multiple countries, are also included in this segment. The Retail Operations segment includes
the majority of all corporate costs.
Product Manufacturing. As of September 30, 2021, the Product Manufacturing segment includes activity of Cruisers Yachts, a wholly-
owned MarineMax subsidiary, manufacturing sport yacht and yachts with sales through our select retail dealership locations and through
independent dealers. Cruisers Yachts is recognized as one of the world’s premier manufacturers of premium sport yacht and yachts, producing
models from 33’ to 60’ feet.
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hzo-10k_20210930.htm
MARINEMAX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Intersegment revenue represents yachts that were manufactured in our Product Manufacturing segment and were sold to our Retail
Operations segment. The Product Manufacturing segment supplies our Retail Operations segment along with various independent dealers.
The following table sets forth depreciation and amortization for each of the Company’s reportable segments for the fiscal years ended
September 30,
Depreciation:
Retail Operations
Product Manufacturing
Depreciation
Amortization:
Retail Operations
Product Manufacturing
Amortization
2019
2020
2021
(Amounts in thousands)
$
$
$
$
11,583
—
11,583
14
—
14
$
$
$
$
12,756
—
12,756
16
—
16
$
$
$
$
13,821
32
13,853
1,429
324
1,753
The following table sets forth revenue and income from operations for each of the Company’s reportable segments for the fiscal years
ended September 30,
Revenue:
Retail Operations
Product Manufacturing
Elimination of intersegment revenue
Revenue
Income from operations:
Retail Operations
Product Manufacturing
Elimination of intersegment income from operations
Income from operations
F-28
2019
2020
2021
(Amounts in thousands)
$
$
$
$
1,237,153
—
—
1,237,153
60,532
—
—
60,532
$
$
$
$
1,509,713
—
—
1,509,713
106,715
—
—
106,715
$
$
$
$
2,043,613
44,000
(24,356)
2,063,257
207,034
6,940
(4,515)
209,459
https://www.sec.gov/Archives/edgar/data/0001057060/000156459021057762/hzo-10k_20210930.htm
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