FinanceLooker

Excrept from filing document 2024-09-30

The aggregate market value of common stock held by non affiliates of the registrant 21 441 854 shares based on the closing price of the registrant s common stock as reported on the New York Stock Exchange on March 31 2024 which was the last business day of the registrant s most recently completed second fiscal quarter was 713 156 064 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
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 2025 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 and expansion 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 like the utilization of our digital platform are aligned with the desires of consumers and will position us to capitalize on future opportunities our expectations regarding the growth of the boating market our ability to reduce the impact of weather conditions and seasonality on our business our ability to increase used boat sales through new boat sales efforts and our repair and maintenance services our plans for retained earnings the impact of our efforts to address weak market conditions on revenue our ability to meet our liquidity and capital requirements interest rate expectations and the expected impacts of legal proceedings environmental liabilities and changes in accounting assumptions on our business 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
We believe we are the world s largest recreational boat yacht and superyacht services company As of September 30 2024 we have over 120 locations worldwide including over 75 retail dealership locations some of which include marinas Collectively with the IGY acquisition as of September 30 2024 we own or operate 65 marina and storage locations worldwide Through Fraser Yachts and Northrop Johnson we believe we are the largest superyacht services provider operating locations across the globe Cruisers Yachts manufactures boats and yachts with sales through our select retail dealership locations and through independent dealers Intrepid Powerboats manufactures powerboats and sells through a direct to consumer model MarineMax provides finance and insurance services through wholly owned subsidiaries and operates MarineMax Vacations in Tortola British Virgin Islands The Company through a wholly owned subsidiary New Wave Innovations also owns Boatyard an industry leading customer experience digital product company and Boatzon a boat and marine digital retail platform Through Newcoast Financial Services we provide third party financing and insurance products for boats and yachts primarily for transactions not associated with our dealership locations
As of September 30 2024 the Retail Operations segment included the activity of over 75 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 rentals we arrange related boat financing insurance and extended service contracts we offer boat and yacht brokerage sales and 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 IGY Marinas is also included in this segment IGY Marinas maintains a network of strategically positioned luxury marinas situated in yachting and sport fishing destinations around the world IGY Marinas has created standards for service and quality in nautical tourism It offers a global network of marinas in the Americas the Caribbean Europe and Asia delivering year round accommodations IGY Marinas caters to a wide variety of luxury yachts while also being exclusive home ports for some of the world s largest megayachts
As of September 30 2024 the Product Manufacturing segment included 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 and Intrepid Powerboats 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 Intrepid Powerboats also a wholly owned MarineMax subsidiary is a producer of customized boats which incorporate the desires of each individual owner Intrepid Powerboats follows a direct to consumer distribution model and has received many awards and accolades for its innovations and high quality craftsmanship that create industry leading products in their categories
In October 2022 we completed the acquisition of IGY Marinas In December 2022 we acquired Midcoast Construction Enterprises LLC Midcoast Marine Group a leading full service marine construction company based on Central Florida s Gulf Coast In January 2023 we acquired Boatzon a boat and marine digital retail platform through our recently formed technology entity New Wave Innovations In June 2023 we acquired C C Boat Works a full service boat dealer in Crosslake Minnesota In October 2023 we acquired Atalanta Golden Yachts AGY a luxury charter management agency based in Athens Greece In March 2024 we acquired Williams Tenders USA Williams a premier distributor and retailer for UK based Williams Jet Tenders Ltd the world s leading manufacturer of rigid inflatable jet tenders for the luxury yacht market In March 2024 we also acquired Native Marine a boat dealer based in Islamorada Florida In October 2024 our Cruisers Yachts subsidiary assumed the rights to MasterCraft s Aviara brand of luxury dayboats
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 20 of our revenue in fiscal 2024 Sales of new Sea Ray and Boston Whaler boats both divisions of Brunswick accounted for approximately 9 and 9 respectively of our revenue in fiscal 2024 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
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 rentals 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
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 35 additional previously independent recreational boat dealers multiple marinas five boat brokerage operations six 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 2024 was approximately 327 000 an increase from approximately 306 000 in fiscal 2023 compared with the industry average selling price for calendar 2023 of approximately 90 000 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 Same store sales include all stores that were open and operated throughout both the current and comparative prior period Our same store sales increased 5 in fiscal 2022 decreased 2 in fiscal 2023 and increased 1 in fiscal 2024
The U S recreational boating industry generated approximately 57 7 billion in retail sales in calendar 2023 which is below the former peak of 59 3 billion in calendar 2022 These 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 45 4 billion of these sales in 2023 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
Our business strategy is focused on achieving sustainable profitable growth and improving operational efficiency through the development of strong customer relationships and an expanded global presence within the recreational marine market Established in 1988 as a U S based recreational boat and yacht dealership more recently starting in 2019 we have broadened our international footprint and diversified our asset portfolio through strategic acquisitions of higher margin businesses within the marine industry Our portfolio includes a wide array of marine services such as marina operations storage solutions finance and insurance services superyacht brokerage and chartering construction boat manufacturing and digital technology platforms IGY Marinas IGY which we believe to be the only global marina operator provides a network of marina locations across the Americas the Caribbean Europe and Asia Many of our revenue streams including IGY reinforce our vertically integrated model and allow us to support customers across the entire recreational marine value chain
We further advanced our growth strategy in fiscal 2024 acquiring a controlling interest in Atalanta Golden Yachts AGY a prominent yacht charter management company in Greece This acquisition complements our existing superyacht brokerage and luxury yacht offerings We also enhanced the operational efficiencies of our superyacht brands by establishing a SuperYacht Division which consolidates back office functions across AGY Fraser Yachts Northrop Johnson Fairport Yacht Management and SuperYacht Management creating a unified support infrastructure In addition we acquired Williams a leading distributor and retailer of rigid inflatable jet tenders for the luxury yacht market And in August 2024 we executed an asset exchange agreement with MasterCraft Boat Holdings Inc securing exclusive rights to the Aviara brand of luxury dayboats
Further in fiscal 2024 we continued to advance our digital technology initiatives Through platforms such as Boatzon and Boatyard which are proprietary customer experience solutions tailored for the marine industry and with the support of our technology focused entity New Wave Innovations we aim to enhance customer engagement and drive additional value across our portfolio
Since our initial acquisitions in March 1998 we have acquired 35 additional previously independent recreational boat dealers multiple marinas five boat brokerage operations six superyacht service companies two full service yacht repair operations and two boat and yacht manufacturers Acquired dealers operate under the MarineMax name
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
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 82 retail locations since March 1998 which includes the 2008 financial crisis excluding those opened on a temporary basis for a specific purpose and including 7 during the last three fiscal years
In addition to acquiring recreational boat dealers superyacht service companies boat manufacturers marinas 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
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 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 trailer tire and wheel 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
The U S recreational boating industry generated approximately 57 7 billion in retail sales in calendar 2023 which is below the former peak of 59 3 billion in calendar 2022 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 45 4 billion of such sales in calendar 2023 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 that the recreational boating market 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
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
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 20 of our revenue in fiscal 2024 Sales of new Sea Ray and Boston Whaler boats accounted for approximately 9 and 9 respectively of our revenue in fiscal 2024 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 8 of our revenue in fiscal 2024 Cruisers Yachts a wholly owned MarineMax subsidiary manufactures sport yacht and yachts with sales through our select retail dealership locations and through independent dealers Intrepid Powerboats a MarineMax company manufactures powerboats and sells through a direct to consumer model During fiscal 2024 new boat sales including sales of Cruisers Yachts and Intrepid Powerboats accounted for approximately 66 6 or 1 6198 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 2024 average new boat sales price of approximately 327 000 an increase from approximately 306 000 in fiscal 2023 compared with an estimated industry average selling price for calendar 2023 of approximately 90 000 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
Motor Yachts Ocean Alexander Yachts Azimut and Princess are three 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 Princess yachts are a leading British luxury yacht manufacturer with attention to detail design and performance
Yacht Tenders Williams Jet Tenders is the world s leading manufacturer of rigid inflatable jet tenders for the luxury yacht market We believe Williams Jet Tenders is a name synonymous with unparalleled luxury in the European and American yacht industry that blends quality style and service and is known for its safe versatile jet propulsion system
Pleasure Boats Sea Ray pleasure boats target both the luxury and the family recreational boating markets and come in a variety of configurations designed 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 Sea Ray is the world s leading creator of superior quality pleasure boats offering a variety of hulls with versatility in each model We believe Bayliner offers quality materials and features dedicated storage spaces optimal performance and efficiency engines and quality electronics ensuring accurate navigation Cobalt Boats an American manufacturer of recreational boats has found continued success through investments in innovation and manufacturing capability Chris Craft is an American boat manufacturer which primarily produces classic wooden boats built with high quality materials Each boat is crafted by highly experienced and detail oriented designers to achieve timeless beauty and passenger comfort Galeon specializes in luxury yacht and motorboats with over thirty years of experience and is one of Europe s leading and premier boat manufacturers We believe Galeon yachts combine the latest technology hand crafted excellence 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 innovation Saxdor Yachts is a Finnish premium boat producer whose philosophy can be described as a combination of Italian cutting edge design American functionality German quality French competitive pricing and the Scandinavian way of boating 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 focused on the production of vessels 30 feet and over with the goal of creating an elevated open water experience by fusing progressive style comfort and luxury Cruisers Yachts is continuously building 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 Powerboats 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 high levels of quality safety style and comfort to meet family recreational needs Bennington offers what we believe to be industry leading design craftsmanship and a quiet smooth ride Barletta offers quality construction simple yet refined models and customer focused amenities Premier designs and manufactures world class pontoons featuring luxury furniture creative seating configurations premium flooring and premium technology for navigational and recreational purposes Starcraft is a leading boat manufacturer with a long history of continuous improvements to fiberglass hull design and a dedication to providing 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 Bertram 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 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 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
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
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 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
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 In October 2022 we completed the acquisition of IGY Marinas IGY Marinas maintains a network of luxury marinas situated in yachting and sport fishing destinations around the world IGY Marinas has high standards for service and quality in nautical tourism It offers a global network of marinas in the Americas the Caribbean Europe and Asia delivering year round accommodations IGY Marinas caters to a wide variety of luxury yachts while also being exclusive home ports for some of the world s largest megayachts
Maintenance repair rent and storage services accounted for approximately 9 7 or 236 5 million of our revenue during fiscal 2024 of which approximately 3 0 or 72 3 million related to repair services approximately 1 3 or 31 9 million related to parts and accessories for repairs and approximately 5 4 or 132 3 million related to income from rent and storage service rentals
At each of our retail locations various offsite locations and through Newcoast Financial Services 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 trailer tire and wheel 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
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 Since 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 We provide worldwide yacht insurance programs for brokerage houses yacht management groups and maritime attorneys We utilize 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 2024 fee income generated from F I products accounted for approximately 3 1 or 74 5 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
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 2024 brokerage sales commissions accounted for approximately 4 7 or 114 0 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
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 or a variable monthly fee based on charter revenue payable by us or payable to us depending on revenue earned during the month 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 are 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
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 2024 the income from rentals of chartering power yachts yacht charter fees and other charter services accounted for approximately 1 7 or 41 2 million of our revenue
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 Additionally Cruisers Yachts has assumed the rights to MasterCraft s Aviara brand of luxury day boats Intrepid Powerboats also a wholly owned MarineMax subsidiary is recognized as a world class producer of customized boats reflecting the unique desires of each individual owner Intrepid Powerboats follows a direct to consumer distribution model
We sell our recreational boats and other marine products and offer our related boat services through over 75 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 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
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 district president or area manager 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
Our sales philosophy focuses on selling the pleasures of the boating and yachting 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 and marina 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 experiences 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
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 leading 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 manufacturers segments and models from anywhere using 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 engaging new customers The boat shows also generate a significant amount of interest in our company and products resulting in sales before and after the show Our products and services are always available online and through our online platform we offer our full selection of boats yachts charters and services Our expert team is also available to assist customers and provide a great customer experience
We emphasize customer education through one on one education from our team members including at many locations our delivery captains both 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 other team members 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 team member 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 ongoing investments in sales and marketing we believe we have a competitive advantage within the industry by leveraging our strategic marketing capabilities to connect customers to the boating lifestyle Part of our marketing capabilities include our customer relationships and data platforms that automatically manage customer engagements evaluate a customer s propensity to buy manage sales activities and facilitate Company wide availability of a particular boat or other marine products and services desired by a customer
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 2024 sales of new Brunswick and Azimut boats and yachts accounted for approximately 20 and 8 of our revenue respectively Sales of new Sea Ray and Boston Whaler boats accounted for approximately 9 and 9 respectively of our revenue in fiscal 2024 No purchases of new boats and other marine related products from any other manufacturer accounted for more than 10 of our revenue in fiscal 2024
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
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
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 a Credit Agreement with Manufacturers and Traders Trust Company as Administrative Agent Swingline Lender and Issuing Bank Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent and the lenders party thereto the Amended Credit Facility The Amended Credit Facility provides the Company a line of credit with asset based borrowing availability of up to 950 million and establishes a revolving credit facility in the maximum amount of 100 million including a 20 million swingline facility and a 20 million letter of credit sublimit a delayed draw term loan facility to finance the acquisition of IGY Marinas in the maximum amount of 400 million and a 100 million delayed draw mortgage loan facility The maturity of each of the facilities is August 2027 The Amended 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
We believe that our technology platform which is utilized by our companies and dealerships and that is continually developed with the latest capabilities strategically enhances our ability to successfully integrate the operations of our companies and future acquisitions facilitates secure 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 and sales management We manage each company s operations with the platform to execute at the highest level continually grow and deliver exceptional customers experiences Sales representatives use the platform to gain strategic competitive
insights automatically generate follow up activities facilitate the availability of Company wide products and services and monitor the maintenance and service needs of customers boats Company representatives also utilize the platform to provide access to financing and insurance products proactively schedule services and continually communicate with customers We mitigate cybersecurity risks by employing extensive measures including but not limited to employee training protective technologies monitoring and testing external assessment services and maintenance of protective systems and contingency plans While we have developed systems and processes to prevent or detect security breaches and protect the confidential information we receive store transmit and use we cannot assure that such measures will provide absolute security See Item 1C Cybersecurity included in this report for a discussion of our cybersecurity procedures and policies
As of September 30 2024 we had 4 050 employees 2 942 73 of whom were in store level operations 738 18 of whom were in manufacturing operations and 370 9 of whom were in corporate administration and operational management We are not a party to any collective bargaining agreements We consider our relations with our employees to be excellent and we earned certification as a Great Place To Work TM in 2024
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 or yacht and their subsequent use as hassle free and enjoyable as possible Through our MarineMax Academy we teach our retail philosophies to existing and new employees at various locations and through our online platform MarineMax Academy offers synchronous and asynchronous instruction options to meet the needs of all team members The learning modules kick off with a customized onboarding experience and then focus on our retailing philosophies including instruction on such matters as the sales process customer service F I accounting leadership safety compliance and human resources We also have a specialized service training center and program in Clearwater Florida where we offer apprenticeship programs and train our service technicians in best practices We have partnered with the State of Florida to expand our marine apprenticeship offerings across other locations throughout the state
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 2021 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
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
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 2024 the average revenue for the quarters ended December 31 March 31 June 30 and September 30 represented approximately 21 25 30 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 Hurricane Ian in 2022 and Hurricanes Helene and Milton in 2024 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
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
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 as defined below 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 or is being 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
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 for the avoidance of doubt our Environmental Policy and other information contained on or accessible through our website is not incorporated into and does not form a part of this Annual Report or any other report or document we file with the Securities and Exchange Commission the SEC 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 2021 Sustainability Report Mercury Marine s accomplishments include winning the 2020 Energy Efficiency Excellence Award from Wisconsin s Focus on Energy program 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 11th 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 waste management community outreach and education Mercury Marine has improved energy efficiency by implementing energy reducing projects promoting best practices in energy management and employing new energy technologies such as using the latest and most energy efficient HVAC systems LED lighting top rated insulation passive natural lighting weather stripping around windows and doors double door vestibules automatic and timer activated doors and plans to build roof mounted solar arrays where applicable
Additionally Azimut Yachts was awarded ISO 14001 certification for its consistent and effective management system aimed at reducing the environmental impact of its operations In addition 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 Azimut Benetti Group and alternative fuels company Eni Sustainable Mobility signed an agreement for the supply and use of HVOlution a biofuel derived from renewable raw materials illustrating a tangible step forward on the course charted to reduce CO2 emissions HVOlution is made of 100 hydrogenated vegetable oil and is produced at Eni Sustainable Mobility refineries in Venice and Gela Italy from waste raw materials and vegetable residues or oils generated from crops that do not compete with food production Also MasterCraft s manufacturing facilities operate in alignment with the ISO 14001 Environmental Management Systems Standard the ISO 9001 Quality Management Systems standard and the OHSAS 18001 International Occupational Health and Safety Management System standard MasterCraft s largest facility the MasterCraft brand facility is certified in all three standards MasterCraft believes it is the only boat manufacturer to achieve all three of these prestigious ISO certifications across production and product development systems
Further 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 of 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 marinas have been designated as Clean Marinas The Clean Marina Program recognizes facilities engaging in environmental best practices and exceeding regulatory requirements in and around waterways
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 for the avoidance of doubt our Human Rights Policy and other information contained on or accessible through our website is not incorporated into and does not form a part of this Annual Report or any other report or document we file with the SEC 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 on supporting our local communities both on and off the water Our stores support their communities through multiple activities including fill the boat toy and school supply drives working with local hospitals and non profits and participating in youth sports and civic organizations One significant 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 In addition we support humanitarian aid to locations in the United States and other countries through organizations such as the Red Cross We also partner with the American Cancer Society to support Breast Cancer Awareness Month and cancer screenings across all of our retail operations
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
Our internet address is www MarineMax com We make available free of charge through our website our annual report on Form 10 K quarterly reports on Form 10 Q current reports on Form 8 K and amendments to those reports filed or furnished pursuant to Section 13 a or 15 d of the Securities and Exchange Act of 1934 as amended as soon as reasonably practicable after we electronically file such material with or furnish it to the SEC For the avoidance of doubt information contained on or accessible through our website is not incorporated into and does not form a part of this Form 10 K or any other report or document we file with the SEC
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
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 in 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 Executive Vice President Finance of MarineMax since February 2023 Vice President since February 2016 Chief Accounting Officer as appointed by our Board of Directors in 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
Shawn Berg has served as Chief Digital Officer since April 2019 overseeing the Company s Technology Marketing and Digital Business operations Mr Berg was appointed as an executive officer of MarineMax by our Board of Directors in October 2022 Previously he served as Vice President of Technology after joining MarineMax in 2017 Mr Berg has over 30 years of experience including multiple officer level positions delivering strategic business growth to companies across the marine auto and retail industries In addition Mr Berg has extensive experience in finance insurance distribution servicing and supply chain operations
Kyle G Langbehn has served as President of Retail Operations since July 2020 responsible for MarineMax s retail operations Mr Langbehn was appointed as an executive officer of MarineMax by our Board of Directors in October 2022 Previously he served as Vice President of Operations beginning in October of 2018 Mr Langbehn has excelled in numerous positions of increasing responsibility including Sales Consultant Sales Manager General Sales Manager General Manager and Regional President since joining MarineMax in 2002
Manuel A Alvare has served as General Counsel since May 2024 after serving as the company s Vice President of Legal Affairs since October 2021 Mr Alvare was appointed as an executive officer of MarineMax by our Board of Directors in May 2024 Mr Alvare joined MarineMax as Corporate Counsel in 2018 after a distinguished career serving as in house counsel for several Florida companies in a wide range of industries During his tenure at MarineMax he has overseen legal work related to the Company s acquisitions brand expansions domestic and international growth and numerous other strategic initiatives
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 Azimut Benetti Group s Azimut products and Mercury Marine engines 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 20 of our revenue in fiscal 2024 resulted from sales of new boats manufactured by Brunswick including approximately 9 from Brunswick s Sea Ray division 9 from Brunswick s Boston Whaler division and approximately 2 from Brunswick s other divisions Additionally approximately 8 of our revenue in fiscal 2024 resulted from sales of new boats manufactured by Azimut Benetti Group The remainder of our fiscal 2024 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 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 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
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
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 restricting them to specified locations and retaining 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
Over the three year period ended September 30 2024 the average revenue for the quarterly periods ended December 31 March 31 June 30 and September 30 represented approximately 21 25 30 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
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 delayed payments 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
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 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
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
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 Helene and Milton in 2024 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
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 although it has slowly decreased since its peak in 2022 High inflation has affected the prices 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
Fiscal and monetary policy have had a material adverse impact on worldwide economic conditions the financial markets and availability of credit and consequently have negatively affected and may further negatively affect our industries businesses and overall financial condition Changes by the Federal Reserve to raise its benchmark interest rate beginning in 2022 have resulted in significantly higher long term interest rates which has negatively impacted and may further negatively impact our customers willingness or desire to purchase our products However the Federal Reserve recently cut interest rates in September 2024 and more interest rate cuts are expected While credit availability is currently adequate to support demand if credit conditions worsen and adversely affect the ability of customers to finance potential purchases at acceptable terms and interest rates it could result in a decrease in sales and materially impact our financial condition and results of operations
The market prices of certain materials and components used by us and our suppliers in manufacturing our products can be volatile Significant increases in inflation particularly those related to wages and increases in the cost of raw materials may have an adverse impact on the business financial condition and results of operations of us or our suppliers and our suppliers may in turn pass such increases along to us by raising the cost of our inventories In addition new boat buyers often finance their purchases Inflation along
with a rise in interest rates could translate into an increased cost of boat ownership Although inflation has decreased since its peak in 2022 if inflation continues to occur and if the Federal Reserve fails to cut interest rates further or raises interest rates again prospective consumers may choose to forego or delay their purchases or buy a less expensive boat in the event credit is not available to finance their boat purchases
The Financial Accounting Standards Board the SEC or other accounting organizations or governmental entities frequently issue new pronouncements or new interpretations of existing accounting standards Changes in accounting standards how the accounting standards are interpreted or the adoption of new accounting standards can have a significant effect on our reported results and could even retroactively affect previously reported transactions and may require that we make significant changes to our systems processes and controls Changes resulting from these new standards may result in materially different financial results and may require that we change how we process analyze and report financial information and that we change financial reporting controls Such changes in accounting standards may have an adverse effect on our business financial position and income which may negatively impact our financial results
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
Since March 1 1998 we have acquired 35 additional previously independent recreational boat dealers multiple marinas five boat brokerage operations six 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 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
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
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
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
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
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 operations involve certain international activities including our sales of yachts produced by the Azimut Benetti Group in Italy yachts produced by Galeon in Poland yachts produced by Ocean Alexander in Taiwan and power catamarans produced by Sino Eagle in China as well as our Fraser Yachts Group and Northrop Johnson operations in various countries 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
Furthermore the geopolitical and economic uncertainty and or instability that may result from changes in the relationship among the United States Taiwan and China may directly or indirectly materially harm our business financial condition and financial performance For example certain of our suppliers are dependent on products sourced from Taiwan Greater restrictions and or disruptions of our suppliers ability to operate facilities and or do business in and with Taiwan may increase the cost of certain materials and or limit the supply of products sourced from Taiwan This may result in deterioration of our profit margins a potential need to increase our pricing and in so doing may decrease demand for our products and thereby adversely impact our financial performance
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
As a result of the foregoing we cannot assure that the IGY Marinas acquisition will be accretive to us in the near term or at all Furthermore if we fail to realize the intended benefits of the IGY Marinas acquisition the market price of our common stock could decline to the extent that the market price reflects those benefits
The Ukraine and Middle East conflicts raise a host of potential threats and risk factors to our business Even though we do not conduct significant business directly in Ukraine or Russia IGY manages a marina in the Middle East Asia Sanctions brought against Russia will impact the import export sale and supply of goods and services with companies located in the U S and other regions Many companies have ceased all operations in Russia with significant expected short term and long term losses This has had will likely continue to have a negative impact on the global economy and has affected and will likely continue to affect economic and capital markets A downturn in the economy could adversely affect our financial performance
Geopolitical issues around the world can impact macroeconomic conditions and could have a material adverse impact on our financial results The ongoing conflict between Russia and Ukraine has impacted global energy markets particularly in Europe leading to high volatility and increasing prices for crude oil natural gas and other energy supplies The ultimate impact of the conflicts in Ukraine and the Middle East on fuel prices inflation the global supply chain and other macroeconomic conditions is unknown and could materially adversely affect global economic growth disrupting discretionary spending habits and generally decreasing demand for our products and services Higher energy costs result in increases in operating expenses at our manufacturing facilities in the expense of shipping raw materials to our facilities and in the expense of shipping products to our customers In addition increases in energy costs may adversely affect the pricing and availability of petroleum based raw materials such as resins and foams that are used in manufacturing
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 Amended Credit Agreement to purchase and maintain our inventory of boats The Amended Credit Agreement provides the Company a line of credit with asset based borrowing availability of up to 950 million and establishes a revolving credit facility in the maximum amount of 100 million a delayed draw term loan facility to finance the acquisition of IGY Marinas in the maximum amount of 400 million and a 100 million delayed draw mortgage loan facility None of our real estate has been pledged for collateral for the Amended Credit Agreement As of September 30 2024 we were in compliance with all of the covenants under the Amended Credit Agreement and our additional available borrowings under the Amended Credit Agreement was approximately 1 5 million based upon the outstanding borrowing base availability
Our ability to borrow under the Amended Credit Agreement depends on our ability to continue to satisfy our covenants and other obligations under the Amended Credit Agreement and the ability for our manufacturers to be approved vendors under our Amended Credit Agreement The variable interest rate under our Amended Credit Agreement will fluctuate with changing market conditions and accordingly our interest expense will increase as interest rates rise Although the Federal Reserve recently cut interest rates 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 Amended Credit Agreement 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 Amended Credit Agreement to fund our operations Any inability to utilize the Amended Credit Agreement 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 Amended Credit Agreement or replace or supplement the Amended Credit Agreement which may not be possible at all or under commercially reasonable terms
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 Powerboats 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 Powerboats 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
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
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 Hurricanes Helene and Milton in 2024 mechanical failure and collision and public health issues 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 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
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 coverage and extended service contracts the most significant component of which is the participation and other fees resulting from our sale of customer financing contracts
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
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 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 businesses In addition we likely will depend on the senior management of any significant businesses we acquire in the future
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
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
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
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 would have an adverse effect on our financial performance and financial condition Further related increases in capital gains rates taxes on unrealized capital gains or personal income tax rates could have an adverse effect on the buying power of potential customers and therefore an adverse effect on our financial performance and financial condition Additionally overly burdensome laws rules or policies governing the use of recreational boats or yachts in coastal areas and other waterways could adversely affect demand for our products and services
Marinas are specific use properties and may contain features or assets that have limited alternative uses These properties may also have distinct operational functions that involve specific procedures and training If the operations of any of our marinas become unprofitable due to industry competition operational execution or otherwise then it may not be feasible to operate the property for another use and the value of certain features or assets used at the property or the property itself may be impaired this would have a material adverse effect on our financial performance
Governmental bodies control much of the land located beneath and surrounding many of our marinas and lease such land to MarineMax and IGY Marinas under leases that typically range from five to 50 years As a result it is unlikely that we can obtain fee simple title to the land on or near these marinas If these governmental authorities terminate fail to renew or interpret in ways that are materially less favorable any of the permits licenses and approvals necessary for operation of these properties this would have a material adverse effect on our financial performance
Some marinas must be dredged from time to time to remove silt and mud that collect in harbor areas in order to assure that boat traffic can safely enter the harbor Dredging and disposing of the dredged material can be very costly and require permits from various governmental authorities If the permits necessary to dredge marinas or dispose of the dredged material cannot be timely obtained after the acquisition of a marina or if dredging is not practical or is exceedingly expensive this would have a material adverse effect on our financial performance
Our recent acquisitions included contingent consideration liabilities relating to payments based on the future performance of the operations acquired Under generally accepted accounting principles we are required to estimate the fair value of any contingent consideration Our estimates of fair value are based upon assumptions believed to be reasonable but which are uncertain and involve significant judgments Changes in business conditions or other events could materially change the projection of future earnings used in the fair value calculations of contingent consideration liabilities We reassess the fair value quarterly and increases or decreases based on the actual or expected future performance of the acquired operations will be recorded in our results of operations These quarterly adjustments could have a material effect on our results of operations
Our long lived assets such as property and equipment are required to be reviewed for impairment whenever events or changes in circumstance indicate that the carrying value of an asset may not be recoverable As of September 30 2024 we have approximately 533 million of property and equipment net of accumulated depreciation recorded on our consolidated balance sheet Recoverability of an asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate 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 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
Additionally our goodwill is recorded at fair value at the time of acquisition and is not amortized but reviewed for impairment at least annually or more frequently if impairment indicators arise In evaluating the potential for impairment of goodwill we make assumptions regarding industry conditions our future financial performance and other factors Uncertainties are inherent in evaluating and applying these factors to the assessment of goodwill While we do not believe there is a reasonable likelihood that there will be a change in the judgments and assumptions used in our assessments of goodwill and long lived assets which would result in a material effect on our operating results we cannot predict whether events or circumstances will change in the future that could result in non cash impairment charges that could adversely impact our financial results and net worth
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
Demand for wet slip storage increases during the summer months in our northern markets as customers contract for the summer boating season Demand for dry storage increases during the winter season as seasonal weather patterns in certain geographies require boat owners to store their vessels on dry docks and within covered racks Our results on a quarterly basis can fluctuate due to this cyclicality and seasonality
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 such conditions could disrupt or negatively 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
Economic conditions weather and environmental conditions competition market conditions and any other adverse conditions impacting the State of Florida in which we generated approximately 51 53 and 53 of our dealership revenue during fiscal 2022 2023 and 2024 respectively could have a major impact on 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 the environment 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 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
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
Increased cybersecurity requirements 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 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 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 social engineering 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 defensive systems proactive monitoring and testing and maintenance of protective systems and contingency plans we remain potentially vulnerable to additional known or unknown threats See Item 1C Cybersecurity included in this report for a discussion of our cybersecurity procedures and policies
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 As previously disclosed in a Current Report on Form 8 K filed with the SEC on March 12 2024 and a Current Report on Form 8 K A filed with the SEC on April 1 2024 we experienced a cybersecurity incident the Incident whereby a cybercrime organization accessed a limited portion of our information environment that included some personally identifiable information Although as of the date of this Annual Report on Form 10 K the incident has not resulted in material impacts to the Company s operations financial conditions or results of operations the
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 data 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 technology platform 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 the California Consumer Privacy Act effective January 2020 other similar state Consumer Privacy regulations and new SEC cybersecurity related disclosures adopted in July 2023 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
The Company maintains a stock repurchase plan authorizing the Company to purchase up to 100 million of its common stock through March 2026 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
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
We actively engage in discussions with our shareholders regarding further strengthening our Company and creating long term shareholder value This ongoing dialogue can include certain divisive activist tactics which can take many forms Some shareholder activism including potential proxy contests could result in substantial costs such as legal fees and expenses and divert management s and our Board s attention and resources from our business and strategic plans Additionally public shareholder activism could give rise to perceived uncertainties as to our future adversely affect our relationships with suppliers or customers make it more difficult to attract and retain qualified personnel and cause our stock price to fluctuate based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our businesses These risks could adversely affect our financial performance
Management of material risks from cybersecurity threats is integrated into the Company s overall risk management processes and is monitored as an enterprise risk The Company s Board of Directors the Board with the input of management oversees the Company s internal controls and processes including internal controls designed to assess identify and manage material risks from cybersecurity threats
Our comprehensive cybersecurity program includes but is not limited to standards and procedures for vulnerability management user training security assessments and testing business continuity planning encryption of sensitive data physical security user access controls vendor risk management teleworking user device management and proactive systems data and activity monitoring and incident response A limited scope of third party service providers are involved in supporting our business and where appropriate we have established standards and procedures to ensure commercial best practices audit risk management and strict contractual controls are in place and followed Comprehensive contingency recovery and continuity plans are in place to ensure the ongoing provision of services to customers in the event of a cybersecurity incident
Our Executive Vice President and Chief Digital Officer the CDO Shawn C Berg is responsible for managing the Company s cybersecurity risk and cybersecurity program Shawn Berg has served as Chief Digital Officer since April 2019 overseeing the Company s Technology Marketing and Digital Business operations Mr Berg was appointed as an executive officer of MarineMax by our Board in October 2022 Previously he served as Vice President of Technology after joining MarineMax in 2017 Mr Berg has over 30 years of experience including multiple officer level positions of invaluable experience in information technology and security
Our Technology Group monitors material risks over time and updates the Company s mitigation measures as appropriate The Technology Group also regularly reports to the CDO and other key executives as identified in the incident response plan on the status of material risks mitigation measures and incidents related to such risks
The CDO provides the Board with ongoing security updates which include notable changes to program plans changes to the risk environment information regarding material incidents that may have occurred reports on recent assessments of our security controls and details regarding forward looking plans and strategies to mitigate cyber risk
The Company has been subject to cybersecurity threats in the past including the Incident We believe the impacts of the Incident were not material to MarineMax s financial condition or results of operations In addition as of the date of this report the Company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company including its business strategy results of operations or financial condition
Notwithstanding our vigilant cybersecurity measures we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us For further discussion of the risks associated with cybersecurity incidents see the cybersecurity risk factor in Item 1A Risk Factor in this report titled Increased cybersecurity requirements 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
The Retail Operations segment includes our leased corporate offices in Clearwater Florida We also lease 46 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 38 properties associated with the retail locations we operate Additionally we have six retail locations that are currently leased to a third party or are held for sale 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
The Product Manufacturing segment operates out of four owned manufacturing properties three in the Green Bay Wisconsin metropolitan area and one in Largo Florida We also own a manufacturing property in Swansboro North Carolina that is currently being leased to third parties Additionally we have one leased office in Dania Florida
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 2024 we do not believe that these matters will have a material adverse effect on our consolidated financial condition results of operations or cash flows
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
The following line graph compares cumulative total shareholder returns for the five years ended September 30 2024 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 2019 The calculations of cumulative shareholder return on the Russell 2000 Index and the Dow Jones US Retail Total Stock Market Index include reinvestment of dividends The calculation of cumulative shareholder return on our common stock does not
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
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 2024 and 2023 items and year to year comparisons between fiscal 2024 and 2023 Discussions of fiscal 2022 items and year to year comparisons between fiscal 2023 and 2022 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 2023
We believe we are the largest recreational boat and yacht retailer and superyacht services company in the world Through our over 75 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 catamarans through MarineMax Vacations We also own Fraser Yachts Group a leading superyacht brokerage and luxury yacht services company with operations in multiple countries Northrop Johnson another leading superyacht brokerage and services company with operations in multiple countries SkipperBud s one of the largest boat sales brokerage service and marina storage groups in the United States and Cruisers Yachts a manufacturer of sport yacht and yachts with sales through our select retail dealership locations and through independent dealers
In April 2022 through Northrop Johnson we acquired Superyacht Management S A R L better known as SYM a superyacht management company based in Golfe Juan France In August 2022 we expanded our presence in Texas by acquiring Endeavour Marina in Seabrook In October 2022 we completed the acquisition of IGY Marinas IGY Marinas maintains a network of luxury marinas situated in yachting and sport fishing destinations around the world IGY Marinas has created standards for service and quality in nautical tourism It offers a global network of marinas in the Americas the Caribbean Europe and Asia delivering year round accommodations IGY Marinas caters to a wide variety of luxury yachts while also being exclusive home ports for some of the world s largest megayachts In December 2022 we acquired Midcoast Marine Group a leading full service marine construction company based on Central Florida s Gulf Coast In January 2023 we acquired Boatzon a boat and marine digital retail platform through our recently formed technology entity New Wave Innovations In June 2023 we acquired C C Boat Works a full service boat dealer in Crosslake Minnesota In October 2023 we acquired AGY a luxury charter management agency based in Athens Greece In March 2024 we acquired Williams a premier distributor and retailer for UK based Williams Jet Tenders Ltd the world s leading manufacturer of rigid inflatable jet tenders for the luxury yacht market In March 2024 we also acquired Native Marine a boat dealer based in Islamorada Florida In October 2024 our Cruisers Yachts subsidiary assumed the rights to MasterCraft s Aviara brand of luxury dayboats
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 35 recreational boat dealers five boat brokerage operations six superyacht service companies 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 four acquisitions in the fiscal year ended September 30 2022 four acquisitions in the fiscal year ended September 30 2023 and three acquisitions in the fiscal year ending September 30 2024
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 51 53 and 53 of our dealership revenue during fiscal 2022 2023 and 2024 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 Additionally the Federal Reserve s prior increases of its benchmark interest rate have resulted in significantly higher long term interest rates which may continue to negatively impact our customers willingness or desire to purchase our products As a result an economic downturn or inflation could impact us more than certain of our competitors due to our strategic focus on a higher end of our market However the Federal Reserve has recently cut interest rates and is expected to further cut interest rates Although we have expanded our operations during periods of stagnant or modestly declining industry trends
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 are likely to 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
As of September 30 2024 the Retail Operations segment includes the activity of over 75 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 rentals we arrange related boat financing insurance and extended service contracts and we offer boat and yacht brokerage sales and 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 Through IGY Marinas which is also included in this segment we maintain a network of strategically positioned luxury marinas situated in yachting and sport fishing destinations around the world The Retail Operations segment includes the majority of all corporate costs
As of September 30 2024 the Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid Powerboats 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 Intrepid Powerboats also a wholly owned MarineMax subsidiary is a producer of customized boats Intrepid Powerboats follows a direct to consumer distribution model and has received many awards and accolades for its innovations and high quality craftsmanship that create industry leading products in their categories
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
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
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 2023 and 2024 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 marketing fees earned on insurance products sold on behalf of 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 Contract assets recorded in prepaid expenses and other current assets totaled approximately 5 3 million and 5 7 million as of September 30 2023 and September 30 2024 respectively
We recognize lessor common area charges utility sales food and beverage sales and other ancillary goods and services Performance obligations include performing common area maintenance and providing utilities food and beverages and other ancillary goods and services when goods are transferred or services are performed Payment terms typically align with when the goods and services are provided
We recognize revenue from service operations and slip and storage rentals over time on a straight line basis over the term of the contract as our performance obligations are met We recognize revenue 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
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 inventory deposits 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 the lower of cost or net realizable value If events occur and market conditions change the net realizable value of our inventories could change
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 did not 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
Revenue Revenue increased 36 0 million or 1 5 to approximately 2 431 billion for the fiscal year ended September 30 2024 from 2 395 billion for the fiscal year ended September 30 2023 The increase is due to a 29 4 million or 1 increase in comparable store sales in addition to a 6 6 million net increase from acquisitions and new locations that are not eligible for inclusion in the comparable store base partially offset by a decrease in manufacturing revenue which is not included in comparable store sales The comparable store increase came primarily from increases in new and used boat revenue along with contributions from our other higher margin businesses
Gross Profit Gross profit decreased 34 1 million or 4 1 to 801 2 million for the fiscal year ended September 30 2024 from 835 3 million for the fiscal year ended September 30 2023 Gross profit as a percentage of revenue decreased to 33 0 for the twelve months ended September 30 2024 from 34 9 for the twelve months ended September 30 2023 The decrease in gross profit was primarily the result of lower new and used boat margins as we aggressively drove sales during a softer retail environment
Selling General and Administrative Expenses Selling general and administrative expenses increased 38 5 million or 6 1 to 673 0 million for the fiscal year ended September 30 2024 from 634 5 million for the fiscal year ended September 30 2023 The increase in selling general and administrative expenses was primarily the result of inflation and recent acquisitions
Interest Expense Interest expense increased 20 5 million to 73 9 million for the fiscal year ended September 30 2024 from 53 4 million for the fiscal year ended September 30 2023 as a result of increased inventory The increase in interest expense was primarily the result of increased borrowings due primarily to higher inventory levels
Income Taxes Income tax expense decreased 22 4 million or 58 9 to 15 6 million for the fiscal year ended September 30 2024 from 38 0 million for the fiscal year ended September 30 2023 Our effective income tax rate increased to 28 7 for the fiscal year ended September 30 2024 from 25 7 for fiscal year ended September 30 2023 The increase in the effective income tax rate was primarily a result of increased expenses from equity compensation from vested awards
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
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 Hurricane Ian in 2022 and Hurricanes Helene and Milton in 2024 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
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 We cannot predict the length of prevailing economic or financial conditions We regularly monitor the aging of our inventories and current market trends including supply chain issues 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 extent of our financing needs
These cash needs historically have been financed with cash generated from operations and borrowings under the Amended Credit Facility described below Our ability to utilize the Amended Credit Facility to fund operations depends upon the collateral levels and compliance with the covenants of the Amended 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 Amended Credit Facility and therefore affect our ability to utilize the Amended Credit Facility to fund operations As of September 30 2024 we were in compliance with all covenants under the Amended Credit Facility We currently depend upon dividends and other payments from our businesses and the Amended Credit Facility to fund our current operations and meet our cash needs As the majority owner of each of our businesses we determine the amounts of such distributions subject to applicable law and currently no agreements exist that restrict this flow of funds from our businesses
For the fiscal year ended September 30 2024 and 2023 cash used in operating activities was approximately 25 7 million and 222 2 million For the fiscal year ended September 30 2022 cash provided by operating activities was approximately 76 6 million For the fiscal year ended September 30 2024 cash used in operating activities was primarily related to increases in inventory increases in accounts receivable decreases in contract liabilities customer deposits and decreases in accounts payable partially offset by increases in accrued expenses and other liabilities 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 2023 cash used in operating activities was primarily related to increases in inventory increases in accounts receivable and decreases in contract liabilities customer deposits partially offset by increases in accounts payable and accrued expenses and other liabilities 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 2022 cash provided by operating activities was primarily related to increases in contract liabilities customer deposits accounts payable 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 partially offset by increases in inventory
For the fiscal years ended September 30 2024 2023 and 2022 cash used in investing activities was approximately 81 3 576 4 million and 140 5 million respectively For the fiscal year ended September 30 2024 cash used in investing activities was primarily used for business acquisitions and to purchase property and equipment associated with improving existing retail facilities partially offset by proceeds from the sale of property and equipment and insurance settlements For the fiscal year ended September 30 2023 cash used in investing activities was primarily used for the acquisition of IGY Marinas to purchase property and equipment associated with improving existing retail facilities and to purchase investments partially offset by proceeds from the sale of investments and property and equipment For the fiscal year ended September 30 2022 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 the sale of investments and property and equipment
For the fiscal years ended September 30 2024 2023 and 2022 cash provided by financing activities was approximately 128 5 million 770 4 million and 73 1 million respectively For the fiscal year ended September 30 2024 cash provided by financing activities was primarily attributable to increased short term borrowings which solely consisted of the Floor Plan as defined below and net proceeds from issuance of common stock under incentive compensation and employee purchase plans partially offset by payments on tax withholdings for equity awards payments for long term debt purchases of treasury stock and contingent acquisition consideration payments For the fiscal year ended September 30 2023 cash provided by financing activities was primarily attributable
to proceeds from long term debt increased short term borrowings which solely consisted of the Floor Plan and net proceeds from issuance of common stock under incentive compensation and employee purchase plans partially offset by payments on tax withholdings for equity awards payments for long term debt and contingent acquisition consideration payments For the fiscal year ended September 30 2022 cash provided by financing activities was primarily attributable to increased short term borrowings which solely consisted of the Floor Plan and net proceeds from issuance of common stock under incentive compensation and employee purchase plans partially offset by purchase of treasury stock payments on tax withholdings for equity awards payments for long term debt payments for debt issuance costs and contingent acquisition consideration payments
We are party to the Amended Credit Facility with Manufacturers and Traders Trust Company as Administrative Agent Swingline Lender and Issuing Bank Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent and the lenders party thereto The Amended Credit Facility provides the Company a line of credit with asset based borrowing availability the Floor Plan of up to 950 million and establishes a revolving credit facility in the maximum amount of 100 million including a 20 million swingline facility and a 20 million letter of credit sublimit a delayed draw term loan facility to finance the acquisition of IGY Marinas in the maximum amount of 400 million and a 100 million delayed draw mortgage loan facility The maturity of each of the facilities is August 2027
The interest rate is a for amounts outstanding under the Floor Plan 3 45 above the one month secured term rate as administered by the CME Group Benchmark Administration Limited CBA SOFR b for amounts outstanding under the revolving credit facility or the term loan facility a range of 1 50 to 2 0 depending on the total net leverage ratio above the one month three month or six month term SOFR rate and c for amounts outstanding under the mortgage loan facility 2 20 above the one month three month or six month term SOFR rate The alternate base rate with a margin is available for amounts outstanding under the revolving credit term and mortgage loan facilities and the Euro Interbank Offered Rate plus a margin is available for borrowings in Euro or other currencies other than dollars under the revolving credit facility
Advances under the Floor Plan are initiated by the acquisition of eligible new and used inventory or are re advanced 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 six months after receiving such advance The curtailment schedule varies based on the type and value of the inventory The collateral for the Amended Credit Agreement is primarily the Company s inventory that is financed through the Amended Credit Agreement and related accounts receivable None of our real estate has been pledged for collateral for the Amended Credit Agreement
As of September 30 2024 our indebtedness associated with our short term borrowings which solely consisted of the Floor Plan and our long term debt totaled approximately 709 0 million and 355 9 million respectively As of September 30 2024 short term borrowings which solely consisted of the Floor Plan and long term debt recorded on the Consolidated Balance Sheets included unamortized debt issuance costs of approximately 1 3 million and 1 5 million respectively Refer to Note 11 of the Notes to the Consolidated Financial Statements for disclosure of borrowing availability interest rates and terms of our short term borrowings Floor Plan 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 including the impacts on consumer demand of the current supply chain and inventory challenges inflation interest rates and potential recession all of which are uncertain 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 in the case of possible significant acquisitions
We are exposed to risk from changes in interest rates on our outstanding indebtedness Changes in the underlying interest rates on our short term borrowings and long term debt which have variable interest rates could affect our earnings For example a hypothetical 100 basis point 200 basis point or 300 basis point increase in the interest rate would result in an increase of approximately 10 6 million 21 1 million or 31 7 million respectively in annual pre tax interest expense These estimated increases are based upon the outstanding balance of our short term borrowings and long term debt as of September 30 2024 and assume 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
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 Northrop Johnson and IGY Marinas have transactions and balances denominated in currencies other than the U S dollar Most of the transactions not denominated in U S dollars are denominated in euros Net revenues recognized whose functional currency was not the U S dollar were approximately 4 of our total revenues in fiscal 2024
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
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
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 contains 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 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 2024 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 2024
We have audited MarineMax Inc and subsidiaries the Company internal control over financial reporting as of September 30 2024 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 2024 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 2024 and 2023 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 2024 and the related notes collectively the consolidated financial statements and our report dated November 14 2024 expressed an unqualified opinion on those consolidated financial statements
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
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
Insider trading arrangements and policies During the three months ended September 30 2024 none of the Company s officers or directors adopted or terminated any contract instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5 1 c or any non Rule 10b5 1 trading arrangement as defined in Item 408 c of Regulation S K
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 2025 Annual Meeting of Shareholders the 2025 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
The Company has adopted an insider trading policy governing the purchase sale and or other dispositions of the Company s securities that applies to its officers directors and employees as well as other covered persons The Company believes its insider trading policy and repurchase procedures are reasonably designed to promote compliance with insider trading laws rules and regulations and listing standards applicable to the Company A copy of the Company s insider trading policy is filed as Exhibit 19 to this Annual Report on Form 10 K
First Omnibus Amendment to Amended and Restated Loan and Security Agreement and Seventh Amended and Restated Program Terms Letter effective as of October 1 2021 by and among MarineMax Inc and its subsidiaries and Wells Fargo Commercial Distribution Finance LLC M T Bank Bank of the West Inc and Truist Bank 14
First Amendment and Consent to Credit Agreement dated June 15 2023 by and among MarineMax Inc the other loan parties thereto the lenders party thereto Manufacturers and Traders Trust Company as Administrative Agent Swingline Lender and Issuing Bank and Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent 22
Third Amendment to Credit Agreement dated March 27 2024 by and among MarineMax Inc the other loan parties thereto the lenders party thereto Manufacturers and Traders Trust Company as Administrative Agent Swingline Lender and Issuing Bank and Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent 24
We have audited the accompanying consolidated balance sheets of MarineMax Inc and subsidiaries the Company as of September 30 2024 and 2023 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 2024 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 2024 and 2023 and the results of its operations and its cash flows for each of the years in the three year period ended September 30 2024 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 2024 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 14 2024 expressed an unqualified opinion on the effectiveness of the Company s internal control over financial reporting
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
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
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 Management estimates the initial fair value of the trade in used boat considering industry data sources internal transactional data and other external market data for comparable boats
We identified the assessment of the initial fair value of the trade in used boat inventory as a critical audit matter because a high degree of subjective auditor judgment was required to evaluate the external market data and internal transactional data The external market data used in the estimation of the initial fair value is based on limited publicly available transactional and market 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 initial fair value of trade in used boats including controls over the determination of the appropriate external market data and internal transactional data for comparable used boat sales We compared publicly available external market data and internal transactional data to management s determination of the fair value of trade in used boats We assessed management s fair value estimation process by evaluating the relevance and reliability of the publicly available external market data and internal transactional data We also performed an analysis of subsequent sales proceeds and margins from the third party sale of the trade in used boats
We believe we are the world s largest recreational boat and yacht retailer selling new and used recreational boats yachts and related marine products and services As of September 30 2024 we have over 120 locations worldwide including over 75 retail dealership locations some of which include marinas Collectively with the IGY acquisition as of September 30 2024 we own or operate 65 marina and storage locations worldwide Through Fraser Yachts and Northrop Johnson we believe we are the largest superyacht services provider operating locations across the globe Cruisers Yachts manufactures boats and yachts with sales through our select retail dealership locations and through independent dealers Intrepid Powerboats manufactures powerboats and sells through a direct to consumer model MarineMax provides finance and insurance services through wholly owned subsidiaries and operates MarineMax Vacations in Tortola British Virgin Islands The Company through a wholly owned subsidiary New Wave Innovations also owns Boatyard an industry leading customer experience digital product company and Boatzon a boat and marine digital retail platform Through Newcoast Financial Services we provide third party financing and insurance products for boats and yachts primarily for transactions not associated with our dealership locations
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 20 of our revenue in fiscal 2024 Sales of new Sea Ray and Boston Whaler boats both divisions of Brunswick accounted for approximately 9 and 9 respectively of our revenue in fiscal 2024 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 8 of our revenue in fiscal 2024 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
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 51 53 and 53 of our dealership revenue during fiscal 2022 2023 and 2024 respectively can have a major impact on our operations Local influences such as corporate downsizing military base closings inclement weather such as Hurricanes Harvey and Irma in 2017 Hurricane Ian in 2022 and Hurricanes Helene and Milton in 2024 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
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
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 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 inventory deposits 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 the lower of cost or net realizable value If events occur and market conditions change the net realizable value of our inventories could change
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
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
We classify assets as held for sale when a plan for disposal is developed and approved the asset is available for immediate sale an active program to locate a buyer at a price reasonable in relation to current fair value is initiated and transfer of the asset is expected to be completed within one year We cease the depreciation and amortization of the assets when all of these criteria have been met and generally reflect balances within Prepaid expenses and other current assets on our Consolidated Balance Sheets We had approximately 12 0 million of assets classified as held for sale as of September 30 2024 and no assets classified as held for sale as of September 30 2023
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
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 2024
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
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 2023 and 2024 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 marketing fees earned on insurance products sold on behalf of 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 5 3 million and 5 7 million as of September 30 2023 and September 30 2024 respectively
We recognize revenue from the sale of our manufactured boats and yachts when control of the boat or yacht is transferred to the dealer or customer which is generally upon acceptance by the dealer or customer At the time of acceptance the dealer or customer is able to direct the use of and obtain substantially all of the benefits of the boat or yacht We have elected to record shipping and handling activities that occur after the dealer or customer has obtained control of the boat or yacht as a fulfillment activity
We recognize lessor common area charges utility sales food and beverage sales and other ancillary goods and services Performance obligations include performing common area maintenance and providing utilities food and beverages and other ancillary goods and services when goods are transferred or services are performed Payment terms typically align with when the goods and services are provided
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 126 1 million recorded as of September 30 2022 were recognized in revenue during the fiscal year ended September 30 2023 Total contract liabilities of approximately 74 4 million recorded as of September 30 2023 were recognized in revenue during the fiscal year ended September 30 2024
We recognize revenue from service operations and slip and storage rentals over time on a straight line basis over the term of the contract as our performance obligations are met We recognize revenue 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
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
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 2024
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 25 8 million 36 0 million and 37 2 million net of related co op assistance which was not material to the consolidated financial statements for the fiscal years ended September 30 2022 2023 and 2024 respectively
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 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
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
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 and valuation of contingent consideration liabilities Actual results could differ materially from those estimates
In September 2022 the Financial Accounting Standards Board FASB issued Accounting Standards Update ASU No 2022 04 Liabilities Supplier Finance Programs Subtopic 405 50 Disclosure of Supplier Finance Program Obligations which is intended to enhance the transparency surrounding the use of supplier finance programs The guidance requires companies that use supplier finance programs to make annual disclosures about the program s key terms the balance sheet presentation of related amounts the confirmed amount outstanding at the end of the period and associated roll forward information Only the amount outstanding at the end of the period must be disclosed in interim periods The guidance does not affect the recognition measurement or financial statement presentation of supplier finance program obligations The guidance became effective for fiscal years beginning after December 15 2022 including interim periods within those fiscal years except for the roll forward information which is effective for fiscal years beginning after December 15 2023 We adopted this ASU during the first quarter of fiscal 2024 and the adoption did not have an impact on our consolidated financial statement disclosures
In November 2023 the FASB issued ASU 2023 07 Segment Reporting Topic 280 Improvements to Reportable Segment Disclosures which improves reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses The guidance in this update is effective for all public entities for fiscal years beginning after December 15 2023 which for the Company would be the fiscal year ending September 30 2025 with early adoption permitted The Company is currently evaluating the ASU to determine its impact on the Company s disclosures
In December 2023 the FASB issued ASU 2023 09 Income Taxes Topic 740 Improvements to Income Tax Disclosures which includes amendments that further enhance income tax disclosures primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction The amendments in this ASU are effective for annual periods beginning after December 15 2024 which for the Company would be the fiscal year ending September 30 2026 Early adoption is permitted and the amendments should be applied on a prospective basis Retrospective application is permitted The Company is currently evaluating the ASU to determine its impact on the Company s disclosures
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
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
The fair value of the Company s contingent consideration liabilities is based on the present value of the expected future payments to be made to the sellers of the acquired entities in accordance with the provisions outlined in the respective purchase agreements which is a Level 3 fair value measurement In determining fair value we estimated the acquired entity s future performance using financial projections developed by management for the acquired entity and market participant assumptions that were derived for revenue growth and or profitability We estimated future payments using the earnout formula and performance targets specified in each purchase agreement and the financial projections just described The risk associated with the financial projections was evaluated using a Monte Carlo simulation analysis pursuant to which the projections were discounted to present value using a discount rate that takes into consideration market based rates of return and then simulated to reflect the ability of the acquired entity to achieve the earnout targets Such calculated earnout payments were further discounted at our estimated cost of debt to account for counterparty risk Actual results changes in financial projections market participant assumptions for revenue growth and or profitability or market risk factors result in a change in the fair value of recorded earnout obligations
The contingent consideration liabilities balance is included in accrued expenses and other long term liabilities in the accompanying Consolidated Balance Sheets Contingent consideration liabilities recorded in accrued expenses totaled approximately 5 4 million and 77 4 million as of September 30 2023 and September 30 2024 respectively Contingent consideration liabilities recorded in other long term liabilities totaled approximately 80 7 million and 3 9 million as of September 30 2023 and September 30 2024 respectively 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
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 and term loan 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 and term loan as of September 30
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 2023 or 2024 was based on our consideration of past collection experience current information and reasonable and supportable forecasts
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 2024 the weighted average remaining lease term for our leases was approximately 21 years All of our leases are classified as operating leases which are included as right of use ROU assets and operating lease liabilities in the accompanying Consolidated Balance Sheets For the fiscal years ended September 30 2022 2023 and 2024 operating lease expenses recorded in selling general and administrative expenses were approximately 23 5 million 30 4 million and 33 8 million of which approximately 0 6 million 0 7 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 Topic 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 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 2024 the weighted average discount rate used was approximately 6 5
The Company enters into certain agreements as a lessor under which it rents buildings to third parties Initial terms of our real estate leases are generally three to five years exclusive of options to renew which are generally exercisable at our sole discretion for one term of five years These leases meet all of the criteria of an operating lease and are accordingly recognized straight line over the lease term
In June 2023 we acquired C C Boat Works a full service boat dealer based in Crosslake Minnesota In January 2023 we acquired Boatzon a boat and marine digital retail platform through our technology entity New Wave Innovations In December 2022 we acquired Midcoast Marine Group a leading full service marine construction Company based on Central Florida s Gulf Coast These three acquisitions completed in fiscal year 2023 were purchased for an aggregate consideration of approximately 49 0 million net of cash acquired of 0 1 million including estimated contingent consideration of 9 7 million Tangible assets acquired net of liabilities assumed and cash acquired totaled approximately 20 3 million intangible assets acquired totaled 1 9 million and total goodwill recognized was approximately 26 8 million The goodwill represents the assembled workforce acquired capabilities and future economic benefits resulting from the acquisitions Approximately 13 6 million of goodwill related to these acquisitions is deductible for tax purposes
In October 2022 we purchased all of the outstanding equity of IGY Marinas for an aggregate consideration of approximately 552 9 million net of cash acquired of 28 1 million including estimated contingent consideration of 67 7 million Tangible assets acquired net of liabilities assumed and cash acquired totaled approximately 259 4 million intangible assets acquired totaled 30 4 million and total goodwill recognized was approximately 293 5 million The goodwill represents the future economic benefits resulting from the acquisition Approximately 193 3 million of goodwill related to this acquisition is deductible for tax purposes
In total goodwill and other intangible assets increased primarily due to acquisitions by 353 1 million and 30 2 million for the fiscal years ended September 30 2023 and 2024 respectively These acquisitions have resulted in the recording of goodwill deductible for tax purposes of 216 0 million and 0 7 million for the fiscal years ended September 30 2023 and 2024 respectively Current and previous acquisitions have resulted in the recording of 559 8 million and 592 3 million in goodwill and 39 7 million and 37 5 million in other intangible assets as of September 30 2023 and 2024 respectively
In July 2023 we executed the Amended Credit Facility with Manufacturers and Traders Trust Company M T Bank as Administrative Agent Swingline Lender and Issuing Bank Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent and the lenders party thereto the Amended Credit Facility The Amended Credit Facility provides the Company short term borrowing in the form of a line of credit with asset based borrowing availability the Floor Plan of up to 950 million and establishes a revolving credit facility in the maximum amount of 100 million including a 20 million swingline facility and a 20 million letter of credit sublimit The Amended Credit Facility also provides long term debt in the form of a delayed draw term loan facility to finance the acquisition of IGY Marinas in the maximum amount of 400 million and a 100 million delayed draw mortgage loan facility The maturity of each of the facilities is August 2027 As of September 30 2024 our available borrowings under the delayed draw mortgage loan facility were approximately 100 million and our available borrowings under the revolving credit facility were approximately 86 million
The interest rate is a for amounts outstanding under the Floor Plan 3 45 above the one month secured term rate as administered by the CME Group Benchmark Administration Limited CBA SOFR b for amounts outstanding under the revolving credit facility or the term loan facility a range of 1 50 to 2 0 depending on the total net leverage ratio above the one month three month or six month term SOFR rate and c for amounts outstanding under the mortgage loan facility 2 20 above the one month three month or six month term SOFR rate The alternate base rate with a margin is available for amounts outstanding under the revolving credit term and mortgage loan facilities and the Euro Interbank Offered Rate plus a margin is available for borrowings in Euro or other currencies other than dollars under the revolving credit facility
The Amended Credit Agreement has certain financial covenants as specified in the agreement The covenants include provisions that our leverage ratio must not exceed 3 35 to 1 0 and that our consolidated fixed charge coverage ratio must be greater than 1 10 to 1 0 As of September 30 2024 we were in compliance with all covenants under the Amended Credit Agreement The Amended Credit Agreement is secured by the Company s personal property assets including inventory and related accounts receivable The mortgage loans will also be secured by the real estate pledged as collateral for such loans
In August 2022 we entered into a Credit Agreement with M T Bank as Administrative Agent Swingline Lender and Issuing Bank Wells Fargo Commercial Distribution Finance LLC as Floor Plan Agent and the lenders party thereto the 2022 Credit Agreement The 2022 Credit Agreement provided the Company short term borrowing the 2022 Floor Plan in the form of a line of credit with asset based borrowing availability of up to 750 million and establishes a revolving credit facility in the maximum amount of 100 million including a 20 million swingline facility and a 20 million letter of credit sublimit The 2022 Credit Agreement also provided long term debt in the form of a delayed draw term loan facility to finance the acquisition of IGY Marinas in the maximum amount of 400 million and a 100 million delayed draw mortgage loan facility The maturity of each of the facilities was to have been August 2027 The 2022 Credit Agreement was replaced by the Amended Credit Facility in July 2023
As of September 30 2024 our outstanding short term borrowings under the Floor Plan associated with financing our inventory and working capital needs totaled approximately 709 0 million As of September 30 2024 our short term borrowings which solely consisted of the Floor Plan included unamortized debt issuance costs of approximately 1 3 million As of September 30 2023 our short term borrowings under the Floor Plan totaled approximately 537 1 million and included unamortized debt issuance costs of approximately 1 6 million
As of September 30 2023 and 2024 the interest rate on the outstanding short term borrowings which solely consisted of the Floor Plan was approximately 8 8 and 8 7 respectively As of September 30 2024 our additional available Floor Plan borrowings under our Amended Credit Facility were approximately 1 5 million based upon the outstanding borrowing base availability As of September 30 2024 no amounts were withdrawn on the revolving credit facility or the delayed draw mortgage loan facility As of September 30 2024 we had approximately 14 1 million in letters of credit that reduced the available borrowings under the revolving credit facility
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 Amended Credit Agreement 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 Amended Credit Agreement also depends upon the ability of our lenders to meet their funding commitments particularly if they experience shortages of capital experience excessive volumes of borrowing requests from others during a short period of time or otherwise experience liquidity issues of their own as other lending institutions have recently experienced 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 Amended Credit Agreement to fund our operations Any inability to utilize our Amended Credit Agreement 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
Mortgage facility payable to Hancock Whitney Bank bearing interest at 7 38 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
Mortgage facility payable to Hancock Whitney Bank bearing interest at 7 88 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
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
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 2024 we have no available taxable income in prior carryback years and have not identified prudent and feasible tax planning strategies Therefore the recoverability of our deferred tax assets is dependent upon the reversal of existing deferred tax liabilities and generating future taxable income It is more likely than not that we will generate sufficient taxable income to realize the deferred tax asset not offset by reversing deferred tax liabilities
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 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 2021 we are not subject to assessments prior to the 2018 fiscal year for the majority of the State jurisdictions and we are not subject to assessments prior to the 2019 calendar year for the majority of the foreign jurisdictions
The Company maintains a stock repurchase plan authorizing the Company to purchase up to 100 million of its common stock through March 2026 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 2024 we had purchased an aggregate of 7 354 237 shares of common stock under the current and historical share repurchase plans for an aggregate purchase price of approximately 150 8 million Based on our closing stock price of 35 27 as of September 30 2024 approximately 2 8 million shares remained available for future purchases under the current share repurchase program
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 15 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
Cash received from option exercises under all share based compensation arrangements for the fiscal years ended September 30 2022 2023 and 2024 was approximately 2 2 million 2 4 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
In February 2023 our shareholders approved a proposal to amend our 2021 Plan to increase the total number of available shares by 1 300 000 In February 2022 our shareholders approved a proposal to authorize our 2021 Stock Based Compensation Plan 2021 Plan which replaced our 2011 Stock Based Compensation Plan 2011 Plan Our 2021 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 2021 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 The total number of shares of our common stock that may be subject to awards under the 2021 Plan is equal to 2 300 000 shares plus i any shares available for issuance and not subject to an award under the 2007 Plan or the 2011 Plan which was 545 729 in aggregate at the time of the approval of the 2021 Plan ii the number of shares with respect to which awards granted under the 2021 Plan the 2011 Plan or the 2007 Plan terminate without the issuance of the shares or where the shares are forfeited or repurchased iii with respect to awards granted under the 2021 Plan 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 2021 Plan the 2011 Plan or the 2007 Plan The 2021 Plan terminates in February 2032 and awards may be granted at any time during the life of the 2021 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 2021 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
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
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
We have granted non vested restricted stock awards restricted stock and restricted stock units RSUs to employees directors and officers pursuant to the 2021 Plan 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
For the fiscal years ended September 30 2022 2023 and 2024 there were 71 976 10 963 and 6 325 weighted average shares of options outstanding and non vested restricted stock outstanding respectively that were not included in the computation of diluted net income per share because the options exercise prices or non vested restricted stock prices were greater than the average market price of our common stock and therefore their effect would be anti dilutive
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 2024 we believe that these matters should not have a material adverse effect on our consolidated financial condition results of operations or cash flows
In connection with certain of our workers compensation insurance policies we maintain standby letters of credit and surety bonds for our insurance carriers in the amount of 2 3 million relating primarily to retained risk on our workers compensation claims In connection with our equity investment in Cannes France we maintain standby letters of credit of approximately 11 8 million
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 18 years of age Under the Plan we matched 50 of participants contributions up to a maximum of 6 of each participant s compensation We contributed under the Plan or pursuant to previous similar plans approximately 6 1 million 7 1 million and 7 6 million for the fiscal years ended September 30 2022 2023 and 2024 respectively
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 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 rentals we arrange related boat financing insurance and extended service contracts we offer boat and yacht brokerage sales and we offer 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 We also maintain a network of strategically positioned luxury marinas situated in yachting and sport fishing destinations around the world through IGY Marinas which is also included in this segment The Retail Operations segment includes the majority of all corporate costs
Product Manufacturing The Product Manufacturing segment includes activity of Cruisers Yachts and Intrepid Powerboats 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 Intrepid Powerboats also a wholly owned MarineMax subsidiary is recognized as a world class producer of customized boats carefully reflecting the unique desires of each individual owner Intrepid Powerboats follows a direct to consumer distribution model and has received many awards and accolades for its innovations and high quality craftsmanship that create industry leading products in their categories
Through one of the subsidiaries that it acquired in the IGY Marinas acquisition the Company has an investment in certain entities that own a marina asset in Cannes France which is accounted for under the equity method as well as a series of notes receivable due from these entities with a total notes receivable balance of approximately 7 0 million as of September 30 2024
In October 2020 we acquired Skipper Marine Holdings Inc and certain affiliates collectively SkipperBud s and retained the previous management of SkipperBud s As a result of the acquisition certain SkipperBud s locations were leased by MarineMax from the SkipperBud s sellers and management Total lease payments to the management of SkipperBud s were approximately 5 7 million and 5 9 million for fiscal years 2023 and 2024

Company Name	MARINEMAX INC Vist SEC web-site
Category	RETAIL-AUTO & HOME SUPPLY STORES
Trading Symbol	HZO