Marinemax Inc Q4 FY2020 Earnings Call

Good morning, and welcome to the MarineMax, Inc. 2020 Fiscal Fourth Quarter and Year-End 2020 Conference Call. Today's conference call is being recorded. At this time, I would like to turn the call over to Dawn Francfort of ICR, Investor Relations for MarineMax. Please go ahead, Dawn.

Thank you, operator. Good morning, everyone, and thank you for joining this discussion of MarineMax's Fiscal Fourth Quarter and Year-End 2020 Conference Call. I'm sure that you've all received a copy of the press release that went out this morning. But if not, please call Linda Cameron at 727-531-1712, and she will e-mail one to you right away. I would now like to introduce the management team of MarineMax. Mr. Brett McGill, President and Chief Executive Officer; and Mr. Mike McLamb, Chief Financial Officer of the company. Management will make a few comments about the quarter and then be available for your questions. And with that, let me turn the call over to Mike. Mike?

Thank you, Dawn. Good morning, everyone, and thank you for joining this call. Before I turn the call over to Brett, I'd like to tell you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission. With that in mind, I'd like to turn the call over to Brett. Brett?

Thank you, Mike, and good morning, everyone. And before I start, I want to say, wow, what a powerful quarter and year for MarineMax. And to that point, I want to thank the entire MarineMax team for their hard work and persistence, which enabled us to finish fiscal 2020 with the highest revenue and the highest earnings in the company's history. To generate this record annual revenue, which was driven by 25% same-store sales growth, and to record adjusted earnings of $3.42 per share for the fiscal year, required our team to truly think differently in how we operated our business. With the onset of COVID, we took swift action addressing health and safety concerns while standing by our commitment to provide our customers and their families the best possible boating experience. Our goal is to emerge from this crisis as a stronger company, and our fiscal year results support this ongoing objective. This year, we recognized the first responders within the families of our MarineMax team; I would once again like to thank them and all of the first responders in all of our communities across the country. We sincerely appreciate all that you do for us. As we entered the September quarter, we anticipated that the strong trends that played out in the June quarter would continue, and they certainly did. Boating proved to be a great way to escape the stresses of everyday life and strengthen the bonds of family and friends while avoiding crowds. Despite the various challenges, we closed our fiscal 2020 with over $1.5 billion in revenue, nearly doubled our earnings and strengthened our already strong balance sheet, positioning us well for the future. Specifically, we drove a staggering 33% same-store sales growth in the fourth quarter. Our trusted brands and digital capabilities made it easy for our customers to conduct business quickly and remotely. We capitalized on the dramatic lifestyle change of consumers wanting safe recreational activity. We once again experienced strong performance in all key categories and across most lines of business. Our digital platform continues to be a competitive advantage as we leverage our fully integrated CRM system and analytics platform, creating a seamless experience for our customers. The marine industry has also experienced significant acceleration in new customers. The growth in 2020 is adding a new foundational layer of customers to the boating lifestyle, comprising a combination of new first-time buyers and people who decided to get back into boating, which should support future growth as they migrate to larger or different types of products in the coming years. It is exciting to see this shift in demand. From MarineMax's perspective, given our scale, we are significantly benefiting from this resurgence. We were also able to utilize the benefits from the strategic investments we have made over the past few years in new brands, new technology, the global expansion of our superyacht services business, expansion of our marinas, and growing our higher-margin businesses. During the quarter and year, our consolidated gross margins improved due to healthy product margins in new and used boats as well as growth in our higher-margin businesses. We remain committed to expanding our margins over time. Beyond our higher-margin businesses in finance and insurance, and parts and service, we have added new brands and asset-light acquisitions while expanding our geographic reach. To that point, we had a positive contribution from the Northrop & Johnson acquisition in early July, which, together with Fraser Yachts, further diversifies MarineMax into higher margin, digitally-focused businesses. The integration has been smooth, and we are glad to have them as part of the MarineMax family. In the quarter, with the combination of increasing gross margins and focused expense management, we generated considerable leverage, driving significant flow through to earnings, resulting in a record adjusted $1.19 of EPS for the quarter. Turning to inventory, given the robust sales, we created significant revenue by increasing turns. We have good visibility into our manufacturing partners' build rate and have been able to leverage our company-wide strategy of sharing inventory to meet consumer demand. Seasonally, we anticipate increasing inventory levels as we move through the coming months and head into the prime boating season that typically begins in March. Moving back to growth, we are pleased to add SkipperBud's and its affiliate, Silver Seas Yachts, to our family. We have been very close to the organization for years, and we share a similar culture and operating philosophy. We completed the merger on October 1, and it is our largest acquisition in the company's history. We added 20 locations, including 11 marina and storage operations. The acquisition significantly grew our presence in the Great Lakes region and the West Coast. We are very pleased to have their leadership and team on board and believe the merger will add significant combined value in the coming years. As I touched on previously, we believe that in fiscal 2020, the industry experienced a foundational shift. Specifically for MarineMax, it resulted in a greatly expanded customer base, which continues to evolve as they embrace and enjoy the boating lifestyle. This should provide sustainable growth for years to come as many of our customers will most likely upgrade to larger boats and need additional services. Our customer experience strategy of 'teach me,' 'service me,' and the very important 'show me how to have fun,' will continue to provide boating activities that have a proven path for repeat business. Looking ahead, our business outlook remains promising, and our team continues to focus on managing the controllables. Our balance sheet is very well capitalized, allowing us to continue to pursue strategically accretive acquisitions to further enhance our digital capabilities, to extend our marina portfolio, and to further grow our higher-margin businesses. The surge in new customers to boating supports continued growth, which gives us confidence in fiscal 2021 and beyond. And with that update, I'll ask Mike to provide more detailed comments on the quarter. Mike?

Thank you, Brett, and good morning again, everyone. Let me start by also thanking our team for their tremendous efforts in fiscal 2020 and for the record results in the September quarter and the year. For the quarter, revenue grew to a record level that approached $400 million. The growth was driven by an impressive increase of 33% in same-store sales. This growth was driven by double-digit unit growth and a mix to larger products, which increased our ASP. We saw strength in all categories of products and across all geographic regions, but Florida did lead the charge. We experienced some challenges getting product early in the quarter as manufacturers were coming back from their shutdown. However, as the months have progressed, our manufacturers are tracking much closer to our expectations in terms of shipments to our stores. Based on industry data, we believe we continue to gain share in most of our markets for the brands and segments we carry. Our gross profit dollars increased to over $116 million for the quarter, while our gross margin rose 80 basis points. The increase in margin was primarily due to improving margins for new and used boat sales, and continued strength in our higher-margin businesses. Additionally, our superyacht services organization, which includes Northrop & Johnson and Fraser Yachts, contributed to the margin gains. There is no question those businesses were pressured due to travel bans across the globe, but we were pleased to see consolidated margins stand strong and actually grow. Especially with such rapid growth from boat sales, which tend to carry the lowest margin of all products we sell. We achieved considerable leverage in the quarter with SG&A as a percentage of sales improving dramatically. Absent the July 1 merger with Northrop & Johnson and the increase in commissions due to increased sales, our overall SG&A was actually down. The eight stores we closed at the end of last year and our team's increased focus on expenses have yielded substantial benefits. Interest expense dropped dramatically in the fourth quarter as a result of lower interest rates and decreases in short-term borrowings. Our operating leverage in the quarter was over 24%, which drove strong earnings growth, setting another quarterly record with adjusted pretax earnings of over $33.8 million. Our record September quarter saw both net income and earnings per share almost tripling with adjusted EPS hitting $1.19. For a few highlights from our record fiscal year, revenue exceeded $1.5 billion. Same-store sales growth was a strong 25%. Gross margins expanded, operating leverage was in the high teens, adjusted EBITDA grew substantially to approximately $120 million, and adjusted EPS was a record $3.42, a very impressive year indeed. Moving on to our balance sheet. We continue to build cash with over $155 million at quarter end, providing us with significant financial capacity and the ability to quickly close on SkipperBud's. Of course, we have much more liquidity in our attractive real estate portfolio, most of which is on the water, including several marinas. Given the attractive interest rate environment, we have explored securing mortgages on some of our real estate to further position us to capitalize on opportunities as well as for any uncertainties. As of year-end, we have mortgaged one property, with more likely in the future. Our inventory at quarter end was $298 million, which is about flat to the June quarter balance despite the 33% increase in same-store sales. This should alleviate some concerns about inventory availability versus the strong demand. As we indicated last quarter, we are in a better position than most because of our deep manufacturer relationships and how material we are to them. Also, most of our stores carry the same brands, allowing us to share inventory regardless of where the customer is. Looking at our liabilities, our short-term borrowings decreased to $168 million due largely to a reduction in inventories and an increase in cash generation. Customer deposits, while not the best predictor of near-term sales because they can be lumpy due to the size of deposits and whether a trade is involved or not, increased 31%. But looking back a year ago, deposits jumped 43% as we began to see the industry stabilize. As such, the two-year increase is very substantial. Our current ratio stands at 1.85, and our total liabilities to tangible net worth ratio is 0.86. Both of these are very strong balance sheet metrics. Our tangible net worth was $371 million, or about $16.42 per share. Our balance sheet has always been a formidable strategic advantage, and today, more than ever, it continues to protect us in uncertain times. Let's now look ahead to fiscal 2021 in our annual guidance. Trends for the industry remain strong. Industry insiders are expecting unit sales to be up in the low to mid-single digits. Given this assumption and our history of typically outperforming the industry, plus some inflationary growth, yields an expectation of same-store sales growth in the range of mid- to high-single digits. Using our historical operating leverage and adding in the October 1 acquisition of SkipperBud's, produces solid EBITDA growth of approximately $120 million to over $140 million in 2021. Using a prudent modeling tax rate of 26% and an estimated increase in shares to $22.8 million yields an expected EPS range of $3.70 to $3.90. I would add that as you model the business, SkipperBud's is more seasonal than MarineMax overall, given its northern exposure. Let me provide some additional context for 2021 based on current trends. Keep in mind, the December quarter last year was very strong, with 24% same-store sales growth, driven almost entirely by units. Today, our backlog is higher than last year, and October should finish with positive same-store sales driven by units. So as noted earlier, industry trends generally look good. With those comments, I'll turn the call back over to Brett for some closing comments. Brett?

Thank you, Mike. Looking forward through fiscal 2021, we will continue to create exceptional customer experiences through the best services, products, and technology. We are committed to keeping our team, customers, and communities safe during these unprecedented times. We remain focused on emerging from these challenging times even stronger as we capitalize on the foundational layer of new buyers, which will drive growth over the long term. We have a seasoned team that is cycle-tested and a strong balance sheet that we believe will continue to differentiate MarineMax and continue to result in additional long-term value for our shareholders. The surge in new customers to boating supports continued growth, which gives us confidence in fiscal 2021 and beyond. And with that, operator, let's open up the call for questions.

Our first question today is from Greg Badishkanian of Wolfe Research.

It's actually Fred Wightman on for Greg. You mentioned a few different times in your prepared remarks, Mike, that the industry trends seem to be holding up. I'm wondering if you could just expand on that a little bit. Are you seeing signs of an extended retail season in some of those northern markets? What are you seeing in some of the warmer markets down South? Just a bit more there would be helpful.

Yes. We're seeing all of what you just said, Fred. The season tends to be extended in northern markets. Buying patterns are stronger than in northern markets. People are out enjoying their boats more in northern markets, and the same is true in southern markets. Our commentary around our customer deposit line is one thing you can see in terms of our financial metrics, in terms of the selling trends and so forth. But generally, trends in the industry. I think the quote in the press release was seasonally accelerated activity. So it continues to be a good market, and people are continuing to enjoy and understand the benefits that boating can bring, especially in these uncertain times.

And then maybe if you could just touch on inventory availability. I mean, totally get that retail is strong, but inventory is down a bit more year-over-year than what you saw last quarter. So it sounds like you're not that worried about these replenishing a bit ahead of March, but anything that you could sort of add there in terms of line of sight from OEMs would be helpful.

Yes. Some of the OEMs struggled when the quarter started kind of leaving their shutdowns in May and June. We track what we are getting each month relative to what we expected to get from each manufacturer and there were some shortages early on in June and July, nothing too dramatic, but we noticed it. Some in August, but better than July. And then here in September, there's still some, but we also have other manufacturers that are making up for the lost ground in June, July, and August. So generally, it looks like the manufacturing ramp-up is happening. And it also looks like, at least with the manufacturers that we work with, they are all doing everything they can to keep their workforce safe and to try to avoid any other issues and to reduce absenteeism. So again, we had 33% same-store sales growth with heavy unit growth in the September quarter. Inventory dollars were flat basically from June to September. That should at least let people know we think we have enough inventory to meet the demand that we're seeing out there. Does someone wait a little longer than they would like to? Sure. In this environment, that's a given. But I think we can still get the product we need to hit the sales expectations that are out there.

The next question is from Joe Altobello of Raymond James.

I guess, first question, quickly for you, Mike, a quick housekeeping question. You mentioned unit growth was double digits. Could you give us what that number was?

Yes. We normally say around the same-store sales of 33%. We normally say what percentage is ASP versus units; it's close to 50-50, not quite, meaning the ASP is a little higher than 50%. Again, some of the unit struggles we had from manufacturers early on in the quarter are catching up now, which is leading to the unit growth also that we continue to see here in September, but strong overall unit growth, strong mix from larger product sales.

Got it. And that sort of leads me to my next question, which is how do we square the influx of new and lapsed motors that you're seeing with the mix to larger product? I would think that new boaters would tend to skew towards smaller, less expensive boats, but it doesn't seem like that's been your experience. So maybe help us out on what's going on there.

Yes, Joe, it's Brett. I can provide some insights on that. When we discuss this new foundational layer, we’re referring to new customers, many of whom are entirely new to boating. Typically, you might expect these individuals to purchase smaller, more entry-level boats. However, we’re noticing this trend in our business as well as among other dealers. Additionally, we have many customers who are returning to boating after being away for five or ten years for various reasons. These customers tend to be more experienced and are often jumping straight into larger boats, like a 35-footer. Interestingly, our business model is also attracting new boaters who are considering larger sizes, sometimes even up to 45 feet or more. In summary, we’re seeing two main groups: those returning to boating and those who are brand new to it.

Got it. Just one last one, if I could. What are you guys baking in, in terms of the SkipperBud's accretion in that $3.70 to $3.90 EPS number?

Yes. If you recall the press release from 2019, the amount was $220 million. Their pretax earnings are lower than ours, which were higher in 2019. When you consider the purchase price of $55 million upfront, along with the interest impact, you can estimate an accretion of around $0.20 to $0.25 for SkipperBud's, possibly reaching $0.30. While they are seeing growth, it hasn't matched ours, and during the first year of any merger, it’s wise to be cautious regarding earnings projections. We believe our expectations for SkipperBud's in fiscal 2021 are reasonable.

The next question is from Eric Wold of B. Riley FBR.

Two questions. I guess, one follow-up question on the inventory. Obviously, you've done a great job offering through some inventory tightness and ability of some OEMs to ramp up fast enough, that clearly has an impact in what you've delivered. Does that change the way you think about the amount of inventory you actually need to hold as you move into next year and then kind of a normal environment if you can actually operate efficiently with a lower level?

Yes, that's a great question. For many years, we've been trying to figure out how to achieve quicker inventory turnover and a just-in-time approach, which is an excellent business model. However, the seasonality of the business presents challenges. Manufacturers usually produce boats consistently throughout the year. Our ability to strategically time inventory at our Northern and Southern stores helps us manage this. We believe that having less inventory but ensuring it arrives at the right locations and at the right time remains the ideal approach. The challenge lies in finding the right balance between us and the manufacturers.

Got it. And then second question, now with the SkipperBud's acquisition, the marinas they bring in, however you want to define it, can you give a sense of kind of where your recurring revenue streams are on a pro forma basis as if you want to include marinas, maybe an average service in P&A kind of level or however you want to define that? And where would you like that to be going forward as you look at other acquisition opportunities?

Yes, I can address the first part. We are focused on increasing our recurring business. Our marina revenue has risen significantly, now exceeding $20 million, primarily driven by SkipperBud's. Currently, our service parts and marina business account for around 16% to 17% of our total revenue. We are sharing our roadshows today, which illustrate our growth through 2020. While we still see most of our revenue coming from new and used boat sales, the proportion of recurring revenue is consistently improving. The cash flow and margin enhancement from our marinas provide numerous advantages, including customer loyalty. We are committed to developing this sector of our business and enhancing our overall higher-margin offerings, similar to what we've achieved with Fraser and Northrop & Johnson over the past 15 months.

The next question is from Mike Swartz of Truist.

Just in terms of, I guess, with a bunch of these new acquisitions coming on board, Fraser, Northrop and now SkipperBud's. Maybe give us a sense for how you think about your incremental leverage going forward. Should we still think about it in that historical range or something structurally changed now where it could be above that?

Yes. Great. I'll comment, then Brett can comment. I think it's a great question. I think today, we would tell you, as you're modeling the business to use our historical leverage, which is 12% to 17% to the bottom line for every dollar of revenue growth. We think with the businesses that we merged with, there's probably some additional upside to that, even including SkipperBud's, even though I said historically, they've operated at a lower pretax percentage. We think that as we merge and spend time together, there'll be some upside coming there. In all of our guidance, Mike, we've actually modeled in the very low side of that just until we get out there and get through the year and start proving otherwise and hopefully give us a chance to update our guidance throughout fiscal 2021 as well. But good question.

I want to follow up on that. You mentioned that SkipperBud's pretax margins were lower than your corporate average for 2019. Is it possible to align SkipperBud's pretax margins with your legacy business over the next few years? Is that a goal for you?

It's actually another great question. Historically, we've done mergers now for 22 years. With every merger, the profitability of the merged companies increases over time with various ways, whether it's perhaps some F&I opportunities, some strategies around expenses, bringing little things like maybe our interest expense is less than theirs under line of credit. Maybe our health insurance is a little bit less. Maybe our property insurance is less. There's a bunch of little things that add up that we tend to get additional leverage out of the business over time.

That's right.

Okay. And maybe one last question for me. Just with the kind of the world of boat shows, a lot of uncertainty right there. I know Fort Lauderdale is going on this week. But maybe give us some sense of how you're thinking about boat shows this year and maybe the timing of revenue relative to years prior?

Yes, Mike, boat shows are going to be a challenge this year. There's no question about it. Lauderdale starts right away. It's going to be lesser crowds, high restrictions getting in and out. I think it will be a fine show. We have a lot of digital approaches and online methods going on simultaneously. Those are already working. We're seeing the data from that. If you look through the summer, although those aren't the high-focus shows that we all talk about, we managed without those just fine, including a Palm Beach show early on and then a few other small shows. These winter shows that are always so big and so talked about, whether they happen in a big way, a very small way because of restrictions, or they don't happen at all, I don't think the timing of things changes too much because you gotta keep in mind, a lot of people might say, 'I'll buy my boat at the boat show,' but we're already engaged with those customers through our prior relationships and we're inviting them to the show. So shows are important, but with today's world, it's not as much. So back to the bottom line on this, the timing of sales, I don't think is going to have an effect. In fact, you could talk about somebody that might say in December, 'Hey, I'll wait until the January Boat Show.' They won't wait for that as an event. They might just go ahead and buy a boat, especially knowing that inventory availability for the springtime could be a challenge for them.

Does that help?

Yes, no, that's great.

Next question is from Scott Stember of CL King.

I would like to ask about the election and your perspective on how it's affecting things. You've mentioned before that it typically doesn’t significantly impact your business. Could you provide more insight into that? Additionally, regarding your guidance for next year, indicating low to mid-single-digit industry growth, what is the current environment like?

Yes. I'll let Mike comment. I think our guidance was talking about the trends that we see and the data we're looking at, we didn't have a scenario A or B depending on an election result. We studied a lot of history on this of how we've done. Other than the noise in the media and the uncertainty going on right now, we're pretty confident with how the marine and the boating lifestyle and what people are looking for will continue into next year and beyond.

We didn't bake in any real material policy changes that may or may not impact, one way or another, someone's propensity to want to buy above. What we looked at was just how the word-of-mouth and how the demand for the boating lifestyle, how strong it's gotten and how it's still feeding upon itself. These people who have been out boating this past summer and this past month, they are telling their friends; their friends are wanting to get into the boating lifestyle. We're seeing it in our stores. We're seeing it online. I hear it when I go to the gym in the morning, I mean people are wanting to get into boating. I don't think that's going to change for the foreseeable future. I think this foundational layer, the shift that we've seen is going to be more powerful than whatever comes out of the White House in the near term anyhow. It's a pretty phenomenal trend that's happening right now. You're seeing it certainly in marine, you're seeing it in other recreational spaces too.

Got it. And last question on the non-boat sales, whether it's brokerage, parts and service or marina. Can you just talk about how those trends are going, particularly with more people buying boats online without actually going to a dealership? How are the attachment rates? And just give us an indication on that.

Yes. The other higher-margin businesses of our company are doing very well. Those trends look very good. When you have such an increase in new and used boat sales, it's hard for those to actually keep up pace with what's going on because of the high dollars of new and used. But when you peel it back, those all those businesses continue to grow for us.

The next question is from James Hardiman of Wedbush Securities.

Congratulations on a strong finish to the year. I have a couple of quick clarification points regarding the guidance. Can you share what the revenue growth assumption is when we consider the same-store sales growth in the mid- to high single digits along with the acquisitions?

So SkipperBud's in our press release, we said was $220 million; you could probably add something reasonably safe to that in the neighborhood of 10% to 15%, something like that. Just given that was a 2019 number. Then 2020 has been pretty strong and then just apply our same-store sales growth to the rest of MarineMax. It gets you upwards of $1.8 billion or something like that in that range, give or take. So hopefully, that helps.

It does. And just to clarify, when you compare what you were saying industry insiders expecting unit sales low to mid-single digits versus your mid- to high, the industry numbers are for calendar '21, correct, which looking at your fiscal year should maybe be a little bit better just given the momentum that we're seeing?

So our commentary is really around model year 2021, which is basically our fiscal year. In discussions that we've had, the industry is mid- let's say, low to mid-single-digit and then I convert that to revenue, so our mid- to high single-digit is revenue versus the industry's units. We typically outperform the industry and then we typically have some benefit from average unit selling price increasing, which is how you get up there and hopefully, throughout the year, we'll be able to update that and have some positive updates throughout the year. But I think given today and where we're at, that's the prudent way to think about the industry for next year.

Makes sense. And then working our way down the income statement here. Firstly, just if I do the quick math, I mean, you did $3.42 in 2020. SkipperBud's, it sounds like is going to add $0.20 to $0.30. Basically, I'm already at the lower end of your guidance for 2021. What am I missing there? At the low end of your guidance, are you assuming not much leverage or that margins come down? Or am I doing the math wrong there?

No, actually, I hope everyone is paying attention to James' question because it’s very important. For this fiscal year and 2020, our tax rate is 23.5%, but we are projecting a tax rate of 26%. This is due to some excess benefits from equity compensation we had this year, as well as some income taxed at lower rates, which may occur again in the future but isn’t something we are currently modeling. We believe it’s not sensible to factor that into our projections. Therefore, we are using a tax rate of 26%, which will obviously impact our net income. Additionally, we expect the number of shares to rise from about 22.2 million to 22.8 million. If everything else remains the same and you follow my assumptions, you would be projecting over $4 a share, contrary to what you just calculated, James. The difference lies in the tax rate and share count. We are going to work hard on both aspects; our tax team is focused on keeping the tax rate low. When modeling taxes, it’s wise to base it on current knowledge, which leads to an increased rate. Ideally, we may see some excess equity compensation benefits and generate more income from lower tax rates. We also hope to reduce our share count, but those two factors are currently having a negative impact on EPS for 2021.

Perfect. That's kind of what I thought. And what's the interest number that you're assuming in that guide? I'm assuming that picks up as well.

I'm sorry, James, I lost you on that.

The interest number built in to that?

No, I don't have that right in front of me. It's going to be comparable to maybe up slightly to what it is today. It's going to go up, yes. It will go up because of the acquisition, you're right. I can take that back. I'm looking at my guidance figures right now.

The next question is from Brandon Rolle of Northcoast Research.

Congrats on a strong quarter.

Thank you.

Thanks, Ram.

A couple of questions for me. First, with the acquisition of SkipperBud's, what do you estimate your market share now is in the U.S. industry? And as a second question, have you had to start promoting at all to drive any extra retail demand? Or are you still seeing strong demand without having to promote?

Yes. I think I'll mention that Mike might have more insights on the overall market share. When we consider an acquisition like SkipperBud's, which is one of the best-managed companies, they embrace the boating lifestyle and share the same culture, and they hold a leading market position in their areas. I'm not sure about the overall market share. Mike, do you have any information?

Yes. I think in terms of the national market share for the marine industry, we would still be a relatively small percentage. In any given market, we are going to be a much higher percentage, obviously. The Skippers organization, Silver Seas organization, both do such a great job. On the West Coast of the United States and also in the Midwest, it gives us such a great footprint. I was talking to a couple of different people last week just about how well-known the organizations are. We have a real strong presence in the Great Lakes, which is great. But on a national basis, we still have a lot of opportunities for growth.

Okay. And then on the second question on promotions, just currently.

Yes, Brandon, I'm sorry about that. Yes, we haven't had any major promotional activity. Obviously, we're creating excitement and fun on the website through our marketing campaigns. On a select model by model basis, we're trying to create excitement, but no, there is no heavy promotional activity at all out there. The demand is very good.

There are no additional questions at this time. I would like to turn the call back over to Brett McGill for closing remarks.

Thank you for joining the call today. Both Mike and I will be available all day, so please reach out with any questions, and we look forward to updating you on our progress on our next call. Thank you very much.

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