Good morning, and welcome to the Marine Max Incorporated Fiscal 2025 Third Quarter Conference Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. I would now like to turn the call over to Scott Solomon of the company's investor relations firm, Sharon Merrill Advisors.

Please go ahead, sir. Good morning, and thank you for joining us. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President, and Mike McLam, the company's Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance and recent highlights. Mike will review the financial results. Brett will make some concluding comments, and then management will be happy to take your questions. The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinmax.com. With that, I'll turn the call over to Mike. Mike?

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, global economic conditions, and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share, and numerous other factors identified in our

Form 10-K and other filings with the Securities and Exchange Commission.

Also on today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non-GAAP basis. The reconciliation to non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett.

Thank you, Mike, and good morning, everyone, and thank you for joining us today to discuss our Q3 results. Let me begin by recognizing and thanking our team for their commitment to our customers during what was a challenging quarter. Though the numbers reflect a tough environment, their dedication to a world-class customer experience has never wavered. Our consistently strong net promoter scores, commitment to the customer experience, and business diversification reinforces my confidence that we will successfully navigate this period and emerge even stronger. As noted in this morning's earning release, a combination of ongoing economic uncertainty, evolving trade policies, and heightened geopolitical tensions contributed to soft retail demand across the recreational industry in Q3. While these headwinds have existed to a degree throughout the fiscal year, we saw a noticeable increase in consumer cautions since the start of April. While enthusiasm for the boating lifestyle remains high, the uncertainty is prompting buyers to delay purchases until the economic outlook is clearer. The premium boat segment has generally shown more resilience than other parts of the retail boat market, though it still faced significant unit declines this quarter due to broader economic concerns. Despite these challenges, our teams remain focused on executing our strategic priorities, managing costs, and maintaining operational discipline. We continue to invest in digital tools and customer experience enhancements to position MarineMax for long-term success. Reflecting the challenging retail environment, third quarter revenue came in less than our expectations at $657 million, with same-store sales down high single digits. With new boat margins hovering near historic lows, gross profit margin decreased from the prior year. However, thanks to the continued strong performance of our higher margin businesses, including finance and insurance, super yacht services, storage and marina operations, including IGY, we maintained a gross margin above 30%. This resilience demonstrates our effective business mix and operational discipline, which enabled us to deliver solid results even in a challenging environment. On the expense line, we are seeing the continued benefits of cost-cutting initiatives implemented during the fiscal year. That being said, inflation persists, so we continue to look for opportunities to improve our cost structure. Despite the inflation, adjusted SG&A was down nearly $11 million on a year-to-date basis. Regarding tariffs, tariff-related uncertainty has remained a headwind for the broader consumer environment. That said, we've continued to manage the evolving landscape effectively, thanks in part to solid coordination with our premium manufacturing partners and proactive inventory planning earlier in the year. The degree to which that stability continues will be dependent upon subsequent trade policy decisions and tariff agreements. While we are optimistic that together with our manufacturing partners, we will continue to find solutions, tariff-related volatility impacting consumer confidence is likely to further influence retail activity. Looking ahead, we are encouraged by early signs that the environment may be stabilizing. Manufacturers in the industry are being appropriately promotional and adjusting production to help align inventory with the retail environment. Lenders are forecasting that industry inventory may drop in the coming quarters to realign with past averages. This will provide some relief to the margin pressure that exists today. Our focus remains on disciplined execution, investing in higher margin businesses, and positioning MarineMax to accelerate sales and increase profitability when the market stabilizes. Turning to recent highlights, during the quarter, IGY celebrated the opening of the IGY Savannah Harbor Marina, a new 100-berth marina in the heart of downtown Savannah. Additionally, the state-of-the-art marina features a large dock specifically engineered to accommodate super yachts. Earlier this month, IGY also announced that they have been selected as the marina manager for the Wynn Almarjan Island Marina in Ras Al Kama, UAE. IGY will advise wind resorts on marina design and development, then oversee marina management and marketing once the marina is operational. Trepid and Cruisers will both be launching a record number of new models within the next 12 months, of which several will debut in the coming months. Additionally, New Coast Financial, our finance and insurance operation, continues to see growth through the use of technology and expanded partnerships. We also recently completed the development of a marina adjacent to our retail operation in Stewart, Florida. It is a profit-winning strategy when you can combine a well-run dealership with a state-of-the-art marina, especially in a growing market like Stewart. And so with that update, let me turn the call over to Mike for the financial review. Mike?

Thank you, Brett. Brett, I also want to express my appreciation to our team for their dedication and resilience in the face of a challenging market environment. Turning to our results, total revenue decreased in the quarter to $657 million, which, as Brett noted, was primarily a function of lower new boat sales, resulting from increased consumer caution. Same-store sales were down 9%. Depending on this segment, our unit volume for the quarter was down similar to our same-store sales decline or greater, although better than the industry as a whole, but reflecting the broad retail softness. As expected, margins remained under pressure in Q3 as we intensified our promotional activity in an effort to drive sales. Gross margins on boats are about as low as we've seen outside the financial crisis. Fortunately, our focus to expand our higher margin businesses again enabled our consolidated gross margin to remain above 30%. On the expense side, adjusted selling, general and administrative expenses for the quarter decreased about 4%. Our cost reduction initiatives, which have included closing over 10 locations since last year, have helped reduce expenses. However, we continue to face rising costs in several areas, offsetting a portion of the savings. We are actively reviewing all opportunities to improve efficiency and reduce expenses. Interest expense decreased primarily due to lower rates. As noted in our earnings release, our gap net loss for the quarter included a non-cash goodwill impairment charge of just over $69 million associated with our manufacturing segment. This charge is a required accounting adjustment that primarily reflects the effect of the current macroeconomic uncertainty on our market capitalization in combination with the tougher environment. It does not reflect any change in our long-term outlook for the manufacturing business. Adjusted net income, which excludes the goodwill impairment, as well as other discrete expenses identified in our earnings release, was $11 million or 49 cents per diluted share for the quarter, compared with $34.8 million or $1.51 per diluted share last year. Third quarter adjusted EBITDA was $35.5 million versus $70.4 million last year. Turning to the balance sheet, cash and cash equivalents was $151 million at quarter end. Inventories increased year-over-year by approximately $26 million, primarily due to the softer-than-expected June quarter. Customer deposits decreased as a result of timing of large yacht orders and deliveries and more readily available product as well as the softer retail environment. Our net debt to adjusted EBITDA was under two times at quarter end. Turning to capital allocation during the quarter, we bought back additional shares of our stock under our share repurchase plan. Through the fiscal year, we have repurchased roughly 6% of our outstanding stock. We also continue to invest in growth initiatives such as the IGY Savannah Harbor and our Stewart Marina expansion, as well as improvements in our operations. And we remain committed to maintaining a healthy balance sheet. Turning to guidance, given our results through the first nine months of fiscal 2025 and the heightened level of macroeconomic uncertainty, which hit the seasonally critical June quarter especially hard, we are revising our full-year guidance. We now expect fiscal year 2025 adjusted net income in the range of $0.45 to $0.95 per diluted share and fiscal year 2025 adjusted EBITDA in the range of $105 million to $120 million. These expectations did not consider or give effect for, among other things, material acquisitions that we may complete or other unforeseen events, including changes in global economic conditions. As a reminder, EPS gets impacted greater than adjusted EBITDA given the size and nature of depreciation and amortization and stock-based compensation. Our outlook assumes that the September quarter will face challenges similar to the June quarter with higher-than-expected inventory levels across the industry continuing to pressure

margins.

We'll remain aggressive on pricing to drive sales and reduce inventory through the quarter. Before I turn the call over to Brett, I will comment on July trends. With our aggressive actions, July is expected to finish ahead of last year's July, which certainly is a nice turn from a rather challenging June. Now, let me turn the call over to Brett for closing comments. Brett?

Thank you, Mike. While our near-term outlook is cautious due to the ongoing economic uncertainty, we are confident that our overarching strategy centered on expanding our higher margin businesses will drive operational resilience. Our management team has successfully guided the company through many challenging economic cycles. As the recovery takes hold, we believe that our earnings power is significantly enhanced by the strategic expansion of our higher margin businesses and the resilient consumer demand for the boating lifestyle. With that, Mike and I will be happy to take your questions. So, operator, please open up the line for the Q&A. Thank you. We will now be conducting

a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 to remove yourself from the queue. We ask that you limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from James Hardiman with Citi.

Please go ahead. Hey, good morning. Thanks for taking my call. So I was all, I was ready to ask the question about why, you know, you guys talk a lot about, you saw the drop-off in April surrounding all the trade issues. Obviously, the stock market has rebounded pretty nicely. Consumer confidence, maybe a little better, not dramatically so. But, you know, certain segments of the economy appeared to have bounced off of those April lows. I was going to ask why you're not really seeing any improvement, certainly if it's a trade issue. But then, Mike, you mentioned that things are now expected to be up in July. So I guess I'll start there. What do you think is different about sort of the various factors impacting the consumer as we think about July high quality sales, i.e. like are there are promotions higher in July and maybe it's it's sort of maybe not as impressive of a turnaround as it sounds. um obviously weather was a big factor um earlier in the quarter don't really know how to think about that in the context of your business but you know basically walk us through sort of how you think about where the consumer is and if this july improvement is is the start of something or

maybe just an outline it's i'll take a stab it's the 64 question if you will or 164 question as to what's caused the consumer to pause in post-Liberation Day, but clearly they did. Obviously, consumer confidence dropped a lot after that, as did some of the economic outlooks for the country. That's all published data. It's better now, to your point. Consumer confidence is coming back up. You think about the big buckets of uncertainty, and again, this is stuff that's been published. You had all the tariff headlines. You had the global tensions that were pretty high in the June quarter, especially in the Middle East. You had a lot of discussion around the tax law. Was it going to be passed? What was going to be in it? What's not going to be in it? Tax law is now passed, which is good. That was July 4th, if I remember right. You can argue that maybe the global tensions are a little bit less now. People would argue either way on that. You could also, for sure, you mentioned weather, and we're probably less susceptible to weather than some people in the industry, but it does seem like weather did begin to improve later than normal for, you know, much of our markets in the Midwest and Northeast. So, it's kind of a combination of all that. I mean, clearly, there's a lot of wealth right now. So, people have the money to buy what they want to buy, but not just boats. It's a lot of other more expensive discretionary items have been impacted right now.

So, and James, I would add that, you know, April, when you go back to that quarter, you kind of say, well, what's the difference? So July looks like it's going to be up. April was dramatically down. I mean, the Liberation Day, it was a cliff. It was down, just kept, you couldn't get, couldn't get the month back. May actually had a little bit of, you know, had a little bit of good signs in there. And then June, you know, good signs, you couldn't make up what you lost in April. and then June just never really got going, you know, ended up down. So not only did you not make up what you lost in April. So the difference here is, you know, July starts off, you know, there's signals out there in the economy. There's tariff announcements every day that can kind of be positive, but there's not this cliff effect that we kind of had in April. So that's encouraging that you're not trying to dig out of a massive hole created in almost two weeks. That's a good point.

All great points. And then as we think about moving forward, I don't know, can the July, I mean, how should we be thinking about same-store sales for the fourth quarter? Could they possibly be up? And then, I don't know, as we think about, you know, next year, given all the uncertainty of this year, I almost hesitate to ask a question about next year. But any sort of early thoughts? There's some things, hopefully, that you can control, maybe SG&A, how to think about that. But as we think about fiscal 26, any initial guideposts?

I'll comment first on the first part of that question, which was really about Q4. And I think in my preparedness marks, what I was alluding to was we're expecting the September quarter to be challenging, similar to the June quarter. Maybe not quite as soft, perhaps, because we are up against the negative comp in the September quarter, you know, because of the hurricanes last year. You asked, you know, is it possible that same-store sales will be positive? I can tell you our team is working like heck to make it positive. And so, yes, it's possible, but that's not what we factored into our guidance. We think it's prudent to think it probably will be down.

And the setup for 2026, you know, if we can get a little bit of favorable wins is good. You know, when you think about our ability to drive margin up, if we get the inventory, you know, leveled down. And, yeah, so there's some good setup for what 26 could look like. But your guess is good of mine on what's really going to happen in the macro.

The expectation, at least obviously those who are in the industry have this expectation, but even folks who watch the industry are that industry inventory levels will bottom. It was supposed to happen as of June 30th, but because of the weak June quarter, that's now going to be pushed out a quarter or maybe two quarters or sometime into the fall. Once that bottoms to Brett's point, you have some margin relief for the industry, obviously for us and also for the industry. and then once the industry bottoms in theory you start having some growth levels coming off of that with the wealth that's being created out there and the one thing I want to I don't want to lose sight of is the demand for the boating lifestyle Brett said it I probably said it I boat whenever I can and you see the people out there there's a ton of folks enjoying their boats there's a ton of people at our events our our you know gallons sold at our marinas are up there's a lot of data that says people are enjoying it and they want to be in it, they're just pausing the purchase decision right now. So that's a big important point, is that it's a healthy environment, meaning it's a healthy lifestyle. People want to be part of it, which is something I don't want to say.

That's all really good color. Good luck, guys. Thank you, James.

Next question, Joe Altabello with Raymond James.

Thanks. I want to follow up on July in terms of the promotional environment. I mean, obviously, it sounds like things got a little bit better here this month. How much of that was promotion-driven? How much of that was deals on leftover Model Year 25s, for example?

Pretty promotional, but we were pretty promotional. So it may be a sign that perhaps the consumer may be feeling a little bit, I don't know, Brett, it doesn't seem like we're doing a whole lot different right now in July other And then we're working hard and maybe maybe the consumers feel a little bit better.

Yeah, it's not a, you know, obviously we work hard to pull any lever we can in the business to drive sales. And we are. But I don't I wouldn't I wouldn't put anything on any extra promotion that was material enough to tell you that made a difference in July.

Yeah. Got it. OK. And just to follow up on that, I mean, given the promotional environment and I think you mentioned that it's it's as bad as it's been since the financial crisis. What has to change for that to get better? I mean, obviously, demand improvement would help. But, like, is that being driven by just excess inventories or are there other factors involved?

Inventories, you know, being up drives it makes it a little bit more of a buyer's market. But just the uncertainty out there, people, you know, whether they're a plumbing company, a construction company that has, you know, workers that are affected by the immigration issues going on out there to tariff uncertainty for them. They're just sitting, the promotional activity is the only thing that can kind of get them off the couch to say, okay, I guess maybe I should buy now instead of waiting until there's some settle, you know, things settle down in my business.

Got it. Okay. Thank you.

Thank you, Jill.

Next question, Eric Wold with Texas Capital. Please go ahead.

Hey, thanks. Good morning. Good morning. I kind of dropped off a bit to James' question at the beginning. I'm not sure how you addressed this, but you mentioned that you're encouraged by kind of the OEMs, you know, adjusting production to retail activity. I know we've kind of heard that kind of almost repeatedly for a number of quarters. Is that kind of just a continual adjustment or are you seeing them kind of make any kind of extra moves to really kind of try to get ahead of what's happening now to really drive inventories lower and kind of maybe take an extra step to kind of get ahead of where consumers are and kind of really cut inventories lower to maybe get ahead of where we are, kind of eliminate the move to promote extra heavy kind of ahead of next year's voting tune?

I think the industry is very responsible, and they really – the builders don't want too much inventory in the channel obviously the dealers don't want too much inventory the banks who finance the industry don't want too much inventory everybody has the same goal in mind what's what's so tough is the june quarter is so critical to the industry i mean for some people it's 60 70 of their sales um it's so important that when the june quarter falls you know 16 in fiberglass sales in april and 20 in may and june's not out yet but it's going to be in that same range is what we're what we believe people weren't forecasting on that big of a decline in the june quarter so you have to level set and reset your thoughts for 2026 which is what the manufacturers are doing and you got to bring down production accordingly and you got to step it down um which the industry is is working to do but i think the important thing is is i think everybody has the right goal in mind, which is to keep inventories in check, not overbilled, which will help with the promotional environment. It will help with margins. It's just people didn't expect this big of a drop in the most important quarter seasonally

in the industry. Just a quick follow-up. Any update on what you're seeing out of the Florida market a couple quarters past the hurricanes or that market coming back maybe relative to the other markets in the country.

Yeah, Eric, great question. It was something I was talking, we've been talking about here this quarter more than probably certain areas within Florida are still not recovered from the hurricane and probably more so than maybe we kind of realize, you know, as you get around and you visit places, heck, our Sarasota store is still operating out of a mobile trailer and, you know, we're doing what we can and so many people's homes haven't been rebuilt. So it's actually gone on longer. Here we are coming up on hurricane season for this year, and we're still not recovered from that. It's probably had more of an impact than I think everyone thought.

The issue, and Brett alluded to it, but it's the amount of docks that are still damaged. You see them when you boat or when you drive around, And the docks aren't repaired because the people are still waiting on something on their home. Or if they were ready for their dock, there are just not that many dock builders out there. So it's lasted longer because of the amount of flooding that happened here.

Got it. Thank you both. Thank you, Eric.

Next question, Anna Glaston with B-Riley. Please go ahead.

Hey, good morning, guys. I'd like to ask a bigger picture question. You know, you spoke to maybe inventory recalibration maybe being pushed out a quarter or two. But as you think about the broader recovery in boat retail, has your view shifted in light of the uncertainty over the past few months?

No, I don't think our broader view has shifted at all. I mentioned a minute ago about the strength of the demand for the boating lifestyle and the interest in it. So that's real positive. I think we're in a tough period. We were in a tough period prior to Liberation Day. I mean, it was tough. We were doing fantastic in a tough environment. And then the uncertainty came with Liberation Day. That doesn't change our long term.

And I think, you know, speaking to the inventory recalibration, you know, us working really closely with our manufacturers early on in our fiscal year to get things aligned. You know, we had a good plan. and then the June quarter is as soft as it was for our industry, and so there's going to be a continued recalibration there to get it in line with the best forecast we can give. It doesn't change our entire broader aspect of things, but that June quarter being down is going to take adjustments on manufacturers and us to move through it.

Got it. And then just to follow up on July, I know it's still pretty early, but anything interesting you're hearing from those consumers that are responsible for that pickup, you know, are they more responsive to promotions, just kind of over the headlines about tariffs and just looking to get on the water? Any help there would be great.

Yeah, there's nothing material in the promotional activity that's, you know, helped us there. I mean, there is something, I'm sure, that effort and focus, you know, driving out some aged product, of course, helps. And I'll comment, too. you know new models that manufacturers we sometimes get stuck in all these other metrics but when people see a new model from a brand come out with new innovation uh that's that continues to sell and so that's that's probably a little bit of it there uh but it's just you know like i said when the june quarter never really recovered from those first couple weeks of april um you know probably helping that July doesn't have that cliff effect in there.

Great. Thanks, guys.

Thanks, Anna.

Next question, Mike Albanese with the Benchmark Company. Please proceed.

Yeah, hey, guys. Thanks for taking my question. I just wanted to ask, I guess I'm looking for some historical context in a sense, but you mentioned, you know, I guess strong engagement, lifestyle, putting activity, all, you know, fairly resilient. Have you seen such a divergence in the past between kind of stable boating activity and just the lack of new boat sales? You know, I imagine, obviously I wasn't covering the industry in 08-09, that boating activity declined along with sales. So I'm just curious if you can comment on that.

That's a great point. Mike can comment, but, you know, you're right. People still went boating, but it was a lot less and closer to home and not spending as much money on fuel back in the financial crisis, that is. But this is definitely a divergence. I mean, people are out there. They're using their boats. So, yeah, that's a little new to us. Probably seen a little bit of it before.

I mean, the financial crisis is so much different than what this is. Financial crisis, you remember how many people got laid off, they had to sell their boats, all that kind of stuff. That's not what this environment is. This is just a fair amount of uncertainty being thrown at the potential buyers and potential people who are going to trade up the customers that they're delaying. So I don't know if we've really seen it before.

It looks like it is now. The inflationary pressures over the years, too, are clearly having an impact. The average price of a boat now versus pre-COVID, we'll call it. Those are dramatic differences that clearly – put a gap between when somebody bought a boat and when they're ready to buy their next boat.

So I guess the thought being there that, you know, the typical, I don't know, upgrade replacement cycle has kind of been pushed out or elongated. I mean, how do you think about there being pent up demand? If the consumer gets unlocked, you know, maybe we were looking out into 2026 or, you know, 2027 at this point. But I mean, How are you thinking about pent-up demand forming given that divergence?

It's real because, you know, yes, it does.

When we talk to customers at boat shows or in our showroom, just interactions personally with people I know in the market that are boaters and want new boats, there's just some delay. And they're saying, hey, I'm going to do that next year. It's there. They're just waiting to see how things play out. So there is a pent-up demand. I'd be careful how strong I say that. But it's there. There is a pause in the buyers. And, you know, the excuses range from, yeah, that boat's so much more, you know, and some of us just, hey, I want to wait and see what happens in my business, see what happens with tariffs in my business. It's not so much tariffs and the cost of your boat. How does it affect what I'm doing in my world?

That's a great caller. I appreciate it, guys. Thank you, Mike.

Thank you. I will now turn the call back to Mr. McGill for closing comments.

Well, thank you, everybody, for joining us today. Some really great questions. Thanks for your interest in MarineMax, and we'll update you on our next call.

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.