Q4 2020 MarineMax Inc Earnings Call
At seven to 75311712, and she will E mail, one to right away.
I would now like to introduce the management team of Marine Max Mr., Brett Mcgill, President and Chief Executive Officer, and Mr., Mike Mclamb, Chief Financial Officer of the company.
Management will make a few comments about the quarter and then be available for your questions and with that let me turn the call over to Mike Mike.
Thank you Don good morning, everyone and thank you for joining this call before I turn the call over to Brett I'd like to tell you that certain of our comments are forward looking statements as defined by the private Securities Litigation Reform Act.
These statements involve risks and uncertainties that could cause actual results to differ materially from expectations.
These risks include but are not limited to.
The impact of seasonality and weather general economic conditions, and the level of consumer spending the companys ability to capitalize on opportunities or grow its market share and numerous other factors identified in our form 10-K, and other filings with the Securities and Exchange Commission.
With that in mind I'd like to turn the call over to Brad breadth.
Thank you, Mike and good morning, everyone before I start I want to say Wow, what a powerful quarter and year for marine Max while.
And to that point I want to thank the entire marine Max team for their hard work and persistence, which enabled us to finish fiscal 2020 with the highest revenue and the highest earnings in the company's history.
To generate this record annual revenue, which was driven by 25% same store sales growth and a record adjusted earnings of $3.42 per share for the fiscal year required our teams a truly think differently and how we operated our business.
With the onset of Covance, we took swift action addressing health and safety concerns while standing by our commitment to provide our customers and their families. The best possible boating experience.
Our goal is to emerge from this crisis as a stronger company and our fiscal year results support this ongoing objective.
This year, we recognize the first responders within the families of our marine Max team I would once again like to thank them.
And all of the first responders in all of our communities across the country. We sincerely appreciate all that you do for us.
As we entered the September quarter, we anticipated that the strong trends that played out in the June quarter would continue and they certainly did.
Adding proved to be a great way to escape the stresses of everyday life and strengthen the bonds of family and friends, while avoiding crowds.
Despite the various challenges we closed our fiscal 2020 with over 1.5 billion revenue nearly.
Nearly doubled our earnings and strengthened our already strong balance sheet positioning us well for the future.
Specifically, we drove a staggering 33% same store sales growth in the fourth quarter.
Our trusted brands and digital capabilities made it easy for our customers conduct business quickly and remotely and we capitalize on the dramatic lifestyle change of consumers wanting a safe recreational activity.
We once again experienced strong performance in all key categories and across most lines of business.
Our digital platform continues to be a competitive advantage as we leverage our fully integrated CRM system and data and analytics platform, creating a seamless experience for our customers.
The marine industry has also experienced a significant acceleration in new customers.
The growth in 2020 is adding a new foundational layer of customers to the boating lifestyle. It comprises a combination of new first time buyers and people, who decided to get back into boating.
Which should support.
Sure growth as they migrate to larger or different types of products in three years.
It is very exciting to see the shift in demand.
For Marine Max is perspective, given our scale, we are significantly benefiting from this resurgence.
It is also great to be able to utilize the benefits.
From the strategic investments, we have made over the past few years in new brands, New technology, the global expansion of our Super Yacht services business expansion of our marinas and growing our higher margin businesses.
During the quarter and year, our consolidated gross margins improved due to healthy product margins in new and used boats as well as growth in our higher margin businesses.
We remain committed to expanding our margins overtime.
Beyond our higher margin businesses of finance and insurance and parts and service, we have added new brands and asset light acquisitions, while expanding our geographic reach.
To that point, we had positive contributions from the Northrop and Johnson acquisition in early July, which together with Frazier yachts.
Further diversifies marine Max and new higher margin digitally focused businesses.
The integration has been smooth and we are glad to have them as part of the marine Max family.
In the quarter with the combination of increasing gross margins and focused expense management.
We generated considerable leverage driving significant flow through to earnings resulting in a record adjusted one dollar and 19 cents of EPS for the quarter.
Turning to inventory given the robust sales we created significant revenue by increasing turns we have good visibility into our manufacturing partners builder.
And have been able to leverage our company wide strategy of sharing inventory to meet our consumer demand.
Seasonally we anticipate increasing inventory levels as we move through the coming months and head into the prime boating season that typically begins in March.
Moving back to growth, we are pleased to add skipper buds and its affiliate silver sees yachts to our family. We have been very close to the organization for years, and we share similar culture and operating philosophy.
We completed the merger on October Onest and it is our largest acquisition in the company's history, we added 20 locations, including 11 Marine end storage operation.
The acquisition significantly grew our presence in the Great Lakes region and the West Coast.
We are very pleased to have their leadership and team onboard and believe the merger will add significant combined value in the coming years.
As I touched on previously we believe that in fiscal 2020, the industry experienced a foundational shift.
Specifically for Marine Max It resulted in a greatly expanded customer base that continues to evolve as they embrace and enjoy the boating lifestyle.
This should provide sustainable growth for years to come as many of our customers will most likely upgrade to larger boats and need additional services.
Our customer experience strategy of teach me service may in the very important show me how to have fun will continue to provide boating activities that have a proven path for repeat business.
Looking ahead, our business outlook remains promising and our team continues to focus on managing the controllable.
Our balance sheet is very well capitalized, allowing us to continue to pursue strategically accretive acquisitions to further enhance our digital capabilities to extend our marina portfolio and to further grow our other higher margin businesses.
The surge in new customers to boating supports continued growth, which gives us confidence in fiscal 2021 and beyond.
And with that update I'll ask Mike to provide more detailed comments on the quarter Mike.
Thank you Brad and good morning, again, everyone. Let me start by also thanking our team for their tremendous efforts in fiscal 2020 and for the record results in the September quarter end the year.
For the quarter revenue grew to a record level that approached $400 million.
The growth was driven by an impressive increase of 33% and same store sales.
This growth was driven by double digit unit growth and a mix to larger products, which increased our asap.
We saw strength in all categories of products and across all geographic regions, but Florida did lead the charge.
We experienced some challenges getting product early in the quarter as manufacturers were coming back from their shutdown. However.
However, as the months of progressed, our manufacturers attracting much closer to our expectations in terms of shipments to our stores.
Based on industry data, we believe we continue to gain share in most of our markets for the brands and segments we carry.
Our gross profit dollars increased over $116 million for the quarter, while our gross margin rose 80 basis points the.
The increase in margin was primarily due to improving margins for new and used boat sales and continued strength in our higher margin businesses.
Additionally, our Super Yacht services organization, which includes Northrop and Johnson and Fraser units.
Attributed to the margin gains.
There is no question those businesses were pressured due to travel bans across the globe.
But we still were pleased to see can tell its consolidated margins stand strong and actually grow, especially with such rapid growth from both sales, which tend to carry the lowest margin of all products we sell.
We achieved considerable leverage in the quarter with SGN as a percentage of sales improving dramatically.
Absent the July 1st merger with Northland Johnson, and the increase in commissions due to increased sales our overall SDMA was actually down.
The eight stores, we closed at the end of last year and our teams increased focus on expenses have yielded substantial benefits.
Interest expense dropped dramatically in the fourth quarter as a result of lower interest rates and decreases in short term borrowings.
Our operating leverage in the quarter was over 24%, which drove strong earnings growth setting another quarterly record with adjusted pre tax earnings of over $33.8 million.
Our record September quarter saw both net income and earnings per share almost tripling with adjusted EPS hitting $1.19.
For a few highlights from our record fiscal year.
Revenue exceeded $1.5 billion same.
Same store sales growth was a strong 25% growth.
Gross margins expanded operating leverage was in the high teens adjusted EBITDA grew substantially to approximately $120 million and adjusted EPS was a record $3.42 a very impressive year indeed.
Moving onto our balance sheet.
We continue to build cash with over $155 million at quarter end, providing us with significant financial capacity and the ability to quickly close on skipper buds.
Of course, we have much more liquidity in our attractive real estate portfolio, most of which is on the water, including several marinas.
Given the attractive interest rate environment, we have explored securing mortgages on some of our real estate to further position us to capitalize on opportunities as well as for any uncertainties as.
As of year end, we have mortgage one property with more likely in the future.
Our inventory at quarter end was $298 million, which is about flat to the June quarter balanced. Despite the 33% increase in same store sales.
This should alleviate some concerns about inventory availability versus the strong demand.
As we indicated last quarter, we are in a better position than most because of our deep manufacturer relationships and how material we are to them.
Also most of our stores carry the same brands, allowing us to share inventory, regardless of where the customer is.
Looking at our liabilities, our short term borrowings decreased $168 million due largely to a reduction in inventories and an increase in cash generation.
Customer deposits, while not the best predictor of near term sales because they can be lumpy due to the size of deposits and whether traders involved are not increased 31%.
But looking back a year ago deposits jumped 43% as we began to see the industry stabilize as such the two year increase is very substantial.
Our current ratio stands at 1.85 in our total liabilities to tangible net worth ratio <unk> 0.86.
Both of these are very strong balance sheet metrics.
Our tangible net worth was $371 million or about $16.42 per share.
Our balance sheet has always been a formidable strategic advantage and today more than ever it continues to protect us in uncertain times.
Let's now look ahead to fiscal 2021 in our annual guidance trend.
Trends for the industry remains strong.
Industry insiders are expecting unit sales to be up in the low to mid single digits.
Given this assumption and our history of typically outperforming the industry plus some inflationary growth yields an expectation of same store sales growth in the range of the mid to high single digits.
Using our historical operating leverage and adding in the October Onest acquisition of skipper buds.
Produces solid EBITDA growth from approximately $120 million to over $140 million in 2021.
Using a prudent modeling tax rate of 26%.
And an estimated increase in shares to 22.8 million yields an expected EPS range of $3.70 to $3.90.
I would add that as you model the business skippers is more seasonal than marine Max overall, given its northern exposure.
Let me provide some additional context for 2021 based on current trends.
Keep in mind the December quarter last year was very strong with 24% same store sales growth driven almost entirely by units today.
Our backlog is higher than last year in October should finish with positive same store sales driven by units.
So as noted earlier industry trends generally look good.
With those comments I'll turn the call back over to Brad for some closing comments.
Thank you Mike.
Looking forward through fiscal 2021, we will continue to create exceptional customer experiences through the best services products and technology.
We are committed to keeping our team customers and communities safe during these unprecedented times.
We remain focused on emerging from these challenging times, even stronger as we capitalize on the foundational layer of new buyers, which will drive growth over the long term.
We have a seasoned team that is cycle tested and a strong balance sheet that we believe will continue to differentiate marine Max and continued to result in additional long term value for our shareholders.
The surge in new customers to boating supports continued growth, which gives us confidence in fiscal 2021 and beyond.
And with that operator, let's open up the call for questions.
Thank you Sir at this time, we'll be conducting a question and answer session.
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Our first question today is from Gregg Abella tracking of Wolfe Research. Please proceed with your question.
Hey, guys. Good morning, its actually Fred Wightman on for Greg You mentioned, a few different times in your prepared remarks, Mike that the industry trends seem to be holding up Im wondering if you could just expand on that a little bit are you seeing signs of an extended retail season and some of those northern markets. What are you seeing in some of the warmer markets down south.
Just a bit more there would be helpful.
We're seeing all of what you just said thread.
Season to season tends to be extended the northern markets.
Buying patterns are stronger the north in northern markets people are out enjoying their bodes more in northern markets and then all the same is true in.
In southern markets, our commentary around our customer deposit line.
It's one thing you can see in terms of our financial metrics in terms of the selling trends and so forth but.
No generally trends in the industry I think the quote in the press release was seasonally accelerated activity. So it's a.
It continues to be a good market.
And people are continuing to enjoy an and understand the benefits that voting can bring especially in these uncertain times.
And then maybe if you could just touch on inventory availability, I mean totally get that retail strong but inventory.
Inventory is down a bit more year over year than what you saw last quarter or so so.
Sounds like you're not that worried about these replenishing a bit ahead of March but anything that you could talk to add there in terms of line of sight from Oems would be helpful.
Some of the Oems had struggles when the quarter started kind of leaving their shutdowns in may and June.
We track what are we getting each month relative to what we expected to get from each manufacturer and there were some shortages.
Early on June July nothing too dramatic, but we noticed it.
Some in August, but better than July and then here in September there is still some but we also have other manufacturers that are making up for the lost ground in.
In June July and August so generally it looks like the manufacturing ramp up is happening and it also looks like the lease with the manufacturers that we work with they are all doing everything they can to keep their workforce safe and to try to avoid any other issues and to reduce absenteeism. So.
[music].
Again, we had 33% same store sales growth with heavy unit growth in the September quarter inventory dollars were flat basically from June to September that should leased let people know we think we have enough inventory to meet the demand that we're seeing out there you know that if someone wait a little longer than they would like to share in this environment.
But that's a given but but I think we can still.
To get the product we need to hit the sales expectations that are out there.
Perfect. Thank you.
Hello.
The next question is from Joe Altobello of Raymond James. Please proceed with your question. Thanks.
Thanks, Hey, guys good morning I.
I guess first question quickly for you Mike a quick housekeeping question, you mentioned unit growth with double digit could you give us what that number was.
Yeah, we normally say around the same store sales of 33%, we normally say what percentages.
P versus units, it's close to 50 50, not quite meaning.
ASP is a little higher than 50% again some of the units struggles we had for manufacturers early on in the quarter, which is catching up now which is leading to the unit growth also that we continue to see here in in September, but with strong overall unit growth strong mix from larger product sales got.
Got it and it does that sort of leads me to my next question, which is how do we square the influx of new and lapsed motors that you're seeing with the mix to larger product I would think that new boaters, we tend to skew towards smaller less expensive both but it doesn't seem like thats been your experience. So maybe help us out on what's going on there.
Yes, Joe it's Brad yes.
Yes, I can talk about that specifically I think when we're talking about there is a couple of things more when this new foundational layer, we're talking about of new customers.
Some of these are brand new people to boating, they've never voted ever and it would it would seem that typically those people might buy something smaller in a little more entry level on the price and when we are seeing that both in our business and I think other dealers are seeing that as well. We're also seeing a lot of customers who have been out of boating for five or 10.
In years for whatever those reasons or add they're getting back into voting and in so I'll call that a little more experienced boater, who can step right into a 35, Twitter or something like that so.
And.
Candidly, we see in our business model, we see people get brand new boaters coming in sometimes even at the 45 or even larger level. So it's to the bottom line is it's two people returning devoting and brand new to boating.
Got it just one last one if I could what are you guys baking in in terms of the skipper, but occurring.
Accretion and Thats 370 to 390 bps number.
So if you remember the press release that we put out in 2019, there were 220 million. They don't quite have our pre tax earnings are lower than our pre tax earnings of the lower than our pre tax earnings was in 2019.
If you factor in the purchase price, which was 55 million on the front end with with an itch interest drag from that you're going to get in the you can get as much as 30, 30 says that you're going to get 20 to 25 cents.
For skipper so we're in that range in terms of our accretion and then while they're experiencing growth like we like we have they haven't experienced quite the growth we have but also in the first year of every merger very merger win win.
There's some new changes that can be always be a little bit prudent in terms of how you model their earnings expectations. So.
We think we're being prudent in terms, what we're expecting in from Fisker fiscal 2021 prescribers.
Got it okay. Thank you guys appreciate it.
The next question is from Eric Wold of B. Riley FBR. Please proceed with your question.
Thank you good morning.
Two questions I guess, one follow up question on the on the.
On the inventory, obviously, you did a great job operating through some inventory tightness in the inability to have some Oems to ramp up fast now clearly has an impact and what you've delivered does that does that change. The way you think about the amount of inventory you actually need to hold as you move into next year, and then kind of a normal environment.
You can actually.
Great efficiently with a lower level.
Yes, Thats a great question and it's for many many years, obviously as the dealer we've always been trying to figure out how to have greater turns in our inventory kind of get that love to have the just in time type of approach, but clearly it's a great business model to have.
The seasonality of the business.
Causes challenges to that and the manufacturers typically tend to build boats and a flat across.
Across the year.
Some of our strength of having the northern and southern stores and being able to time bodes properly to those clearly helps us as well, but yes we.
We think that having less inventory, but hasn't come into the right locations at the right time.
As always been the right business model, it's trying to find that.
Right mix between us and the manufacture.
Got it and then second.
Second question.
You know just given those acquisition the marine as they bring in.
How do you want to define it can you give a sense of kind of where your.
Broken to recurring revenue streams are done on a pro forma basis is Q1 include marinas, maybe an average servicing fee in a kind.
Kind of level or have you want to find that and what would you like that to be.
Going forward as you look at other acquisition opportunities.
Yes, I can take the first part obviously, we're working on growing the recurring business a marina revenue as well.
Gone from the low single digits now to the higher we're over $20 million down Marina with skippers over $20 million in recurring Marina revenue with our service parts ethanol time Marina business is something like.
16, 17% of our of our revenue there is of our road shows being posted today that shows that through 2020. So we still predominantly most of our revenue still predominately come from new and used boat sales, but the percentage is getting better and better in terms of the recurring business and obviously the cash flow that comes off the marinas in the margin enhancement comes off the Marina.
And also the.
The.
There are so many good positives that come in our business to operating these marinas, including the stickiness of the customer there's there's so many benefits that come from that.
That are hard to quantify that we're going to stay focused on growing that part of our business and growing the overall.
Higher margin a portion of our business like we've done with Frazier Northrop and Johnson the last 15 months.
Perfect. Thank you guys. Thank you.
The next question is from Mike Swartz of Trust. Please proceed with your question.
Hey, guys good morning.
Yeah.
Pete just in terms of I guess with a bunch of these new acquisitions coming onboard Frazier Northrop and now skipper, but maybe give us a sense for how you think about your incremental leverage going forward should we still think about it and that historical range or something structurally change now where it could be above that.
Yes, great I'll comment in Brecon comment I think it's a great question I think today, we would tell you as you're modeling the business to to use our historical leverage which is 12% to 17% of the bottom line in there for every dollar of revenue growth.
We think with the businesses that we have merged with Theres, probably some additional upside to that even including skippers, even though I said historically they've operated a lower pre tax percentage, we think that as we as we merge and spend time together will still be some upside coming come.
And they're in all of our guidance, Mike we've actually modeled in the very low side of of that just until we get out there and get through the year and start proving otherwise and hopefully give us a chance to to update our guidance throughout fiscal 2021 as well but.
Good question.
Just a follow up to that I think you said that that skippers pre tax margins were lower than your corporate average for 2019.
Is that something can you can you actually bring skippers pre tax margins in line with your core legacy business over the next several years does that is that a target is that.
It's actually a good another great question and historically, we've done mergers now for 22 years and and with every merger the profitability of the merged companies increases over time and with various ways whether its a.
Perhaps some M&A opportunities, perhaps some stock.
Strategies around expenses.
Bringing little things like maybe our interest expense is less than there is on our line of credit maybe or health insurance. It was a little bit less maybe our property insurance was less maybe theres a bunch of little things that add up that we tend to get additional leverage out of the business.
Overtime.
That's right okay.
And maybe one follow up.
Last question for me just.
With the kind of the world of boat shows a lot of uncertainty right there as well.
At Lauderdale is going on this week, but maybe give us some sense of how you're thinking about boat shows this year and maybe the timing of revenue relative to the two years prior.
And Mike we.
You know boat shows they're going to be a challenge. This year. There is there is no question about it at Lauderdale starts right away, it's going to be lesser crowds high risk high restrictions getting in and out I think it will be a fine show, we have a lot of digital approaches and online approaches going on simultaneously.
And those are already working were seeing the data from that and I'll I'll just back up a second if you look through the summer although those aren't the high focus shows that we all talk about we managed without those just fine, including the Palm Beach show early on and then a few other small shows.
With these winter shows that are always so big and so talk about whether they happen in a big way, a very small way because of restrictions or they don't happen at all.
I don't think the timing of things change too much because you got to keep in mind a lot of people might say.
I'll buy my vote at the boat show, but we're already engaged with those customers through our prior.
Prior relationships the more inviting them to show so showed.
Shows are important.
With today's world, it's not as much so back to the bottom line on this the timing of sales I don't think its going to have an effect. In fact, you could talk about somebody that might say in December hail weight of the January boat show they won't wait for that as an event. They might just go and buy a boat, especially knowing that inventory.
Availability for the spring time is could be a challenge for them.
Does that help.
Yes, no that's great. Thanks, a lot guys.
Thanks, Mike.
The next question is from Scott Stember CL King. Please proceed with your question.
Good morning, and thanks for taking my questions. Thanks, Scott.
I guess I'll ask if the eventual question about the election.
How you're seeing things play out I know in the past you've talked about.
Usually doesn't have much of an impact on your business and maybe just.
Give us a little bit more color on that and how you would.
You are in your guidance for next year in the low to mid single digit industry growth will kind of you know.
Environment how are you.
Yes ill, let Mike comment I think our guidance was talk.
Talking about the trends that we see in the data. We're looking at we didnt have a scenario a or b, depending on an election result.
Kind of we studied a lot of history on this and how we've done in other.
Other than the noise in the media and the uncertainty going on right now.
We're pretty confident with how the marine in the boating lifestyle and what people are looking for will continue into next year with the island, we didnt bake in any.
What I'd call real material policy changes that may or may not impact one way or another.
[music].
Someone's propensity to want to buy above what we looked at is.
Just how how how.
How the the word of mouth and how the demand for the boating lifestyle, how strong it's gotten and how it's it's still feeding upon itself. So these.
People, who have been out loading this past summer and this past month.
They're telling their friends their friends are wanting to get into the and enjoy the boating lifestyle. I mean, we're seeing it in our stores were seeing an online.
I hear when I go to the gym in the morning made people are wanting to get into voting and I don't think thats going to change.
For the foreseeable future.
[music].
I think this foundational layer the shift that we've seen is I think going to be more powerful than than whatever comes out of the of the white house in the near term anyhow. So.
It's a pretty phenomenal trend that's happening right now and you're seeing it certainly marine you're seeing another recreational spaces too.
Got it and last question on the non bulk sales.
Peter its brokerage.
Parts and service summer into can you just talk about how those trends are go, particularly with more people buying bolt on line without actually going to a dealership how will the attachment rates and just.
Give us an indication on that thanks.
Yes, the other.
Higher margin businesses of our company are doing very well in those trends look look very good when you have such an increase in new and used boat sales are hard for those actually keep up pace.
With what's going on because of the high dollars of new and used but when you Peel. It back those all those businesses continue to grow for us.
Okay Thats all I have thanks, Thanks Scott.
The next question is from James Hardiman of Wedbush Wedbush Securities. Please proceed with your question.
Hi, Good morning, guys and congrats on a great fit to the year, yes.
Thanks, so much.
So couple.
A quick clarification on the guidance so same store sales growth mid to high single digits.
Revenue growth assumption in there once you once we factor in the acquisition.
So skippers in our press release, we said was $220 million you could probably add something reasonably safe to that in the neighborhood of 10% to 15% something like that.
Just given that was a 2000 1919 number and then.
2020 has been pretty strong and then just apply our same store sales growth to the rest of marine Max.
It gets shift upwards of a $1 billion $1.8 billion or something like that.
In that range give or take.
So hopefully that helps.
Hey, guys.
And just to clarify when.
When you compare.
What you were saying industry insiders expressed in unit sales low to mid single digit.
<unk> versus.
Versus your mid to high.
The industry numbers are for calendar 21, correct, which is what we're looking at your fiscal year should maybe be a little bit better just given the momentum that we're seeing.
So our commentary is really around model year, 2021, which is basically our fiscal year and discussions yes in discussions that we've had for the industries mid let's say low to mid single digit.
And then and then I convert that to revenue so our mid to high single digit as revenue versus the Industrys units and we typically outperformed the industry and then we typically have some benefit from average unit selling price, increasing which is how you get up there and.
Hopefully throughout the year, we'll be able to update that and have a.
Hopefully some positive updates throughout the year, but I think given today and where we're at that's the prudent way to think about.
The industry for next year.
Makes sense and then.
Working our way down the income statement here briefly just if I do the quick math I mean, you did.
342 in 2020.
Skipper buds. It sounds like you are going to add 20 to 30 cents basically I'm already at the lower end of your guidance.
For 2021, what am I missing that's at the low end of your guidance are you assuming that's not much leverage are the margins come down or am I doing the math wrong, there actually I hope everybody is listen to the James's question Thats, a very important question and what's happening is in the current fiscal year and in 2020, our tax rate is 23 and.
Half percent and we're modeling using a tax rate of 26%. The reason is in the current year, we had some excess benefit from equity compensation. We also had some income coming in lower tax states, which could happen again in the future, but we're not modeling that we don't think it makes sense to model that so our tax rate that we're modeling it.
Is 26% which has a.
As an impact overall, obviously on the on the net income in the second thing is as we're currently expecting the shares to increase from call. It 22.2 million to 22.8 million.
So if you hold everything constant.
And if you kind of run through my assumptions, you'd you'd be well over $4 a share as opposed to what you just did James the differences tax rate and also share count.
And we're going to work real hard on both of those our tax team here and all of US here to to try to keep the tax rate low, but when you model taxes, just prudent to model. It based on what you know today, which takes the right back out and hopefully we'll have some excess compensation, but excess equity compensation benefits.
And hopefully will be able to generate additional income coming from low tax states.
And.
Hopefully, we'll be able to get our share count down, but those two things are negatively impacting EPS for 2021.
Perfect Thats kind of what I thought look the interest number that you are assuming in that guidance I'm, assuming that picks up as well.
It's I'm sorry, James I lost you on that.
Yes, the interest number.
Thank you that I actually I don't have that right in front of the it's going to be comparable to maybe up slightly to what it is today.
Oh, Okay, I thought maybe as a result, the acquisition that would that would drop a few minutes.
Yes, it will it will go up because the acquisition you're right I can take that back and looking at my my guidance figures right now.
Okay.
Okay. Good stuff I appreciate it guys. Thanks James.
The next question is from Brendan Romain of Northcoast Research. Please proceed with your question.
Good morning, and congrats on a strong quarter. Thank you guys for him.
A couple of questions from me first with the acquisition of skipper, but what do you estimate your market share now is in the U.S. industry and as a second question.
Have you had to start.
Promoting at all to drive any extra retail demand or are you still seeing strong demand without having to promote.
Yes, I think.
Comment just on maybe Mike has a more color on overall market share I think when we look at an acquisition like skipper buds one of the best operated companies out there. They believe in the boating lifestyle and the same culture, all those things and they have leading market share in their markets. So that data at least comment on that they're on.
Extremely high leader in their markets for market share and products. So.
I don't know about the overall market share Mike do you have any no I think I think that.
In terms of the national market share for the marine industry, we would still be a relatively small percentage in any given market.
We're going to be elected higher percentage, obviously and.
Skippers organization this overseas organization, they both in such a great job.
On the West Coast, United States and also in the Midwest. It gives us such a great footprint I was talking to a couple of different people last week, just about how well known the organizations are so.
Real strong presence down in the Great Lakes, which is which is great but on a national basis, we still have a lot of opportunities for growth.
Okay and then on the second question on promotions just currently yes.
Yes, Brendan sorry about that yes that.
We haven't had to have any major promotional activity, obviously, we're creating excitement and signed on the website and through our marketing campaigns on a select model by model basis, we're trying to create excitement, but no. There is no heavy promotional activity at all out there. The demand is is very good.
Okay, great. Thank you thank.
Thank you.
There are no additional questions at this time I would like to turn the call back to Bret Mcgill for closing remarks.
Okay.
Thank you for joining the call today, both Mike and I will be available all day. So please reach out with any questions and we look forward to updating you on our progress on our next call. Thank you very much.
This concludes today's conference you may disconnect. Your lines. Thank you for your participation.
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Okay.