Q1 2021 MarineMax Inc Earnings Call
[music].
Okay.
Greetings and welcome to the Marine Max fiscal first quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. If anyone should require operator assistance. Please press star zero on your telephone keypad as a reminder, at this conference is being recorded its now my pleasure to turn it on.
All of her to do on Frankfurt head of Investor Relations. Please go ahead.
Thank you operator.
Good morning, everyone and thank you for joining this discussion of marine assets.
First quarter 2021 conference call I'm sure that you've all received a copy of the press release that went out this morning.
Please call Linda Cameron at seven to 75311712, and she will email one to you right away and.
And now we'd 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 in mind, let me turn the call over to Mike Mclamb, 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 cash.
Companys ability to capitalize on opportunity.
Gross market share and numerous other factors identified in our form 10-K, and other filings with the Securities and Exchange Commission.
With that and mine I'd like to turn the call over to Brett.
Net.
Thank you, Mike and good morning, everyone.
Let me start by thanking the marine Max team for their focus and commitment which drove our record setting results to start fiscal 2021.
We have worked hard over the years to build the most experienced industry, leading team and I am very proud of their results.
Good day, I would like to start by reviewing at few of our first quarter highlights.
And then I will touch on how we are strategically approaching the important peak selling season at.
As well as discussing the meaningful opportunities in front of us to create growth and <unk>.
Long term shareholder value and finally, Mike will review the financial results in greater detail and provide some color on the balance of the year.
Let me start by reviewing the first quarter of.
Our top priority continues to be the health and safety of our team customers and communities.
As we serve our customers boating needs.
We're pleased that our first quarter results greatly exceeded the very impressive results last year, a year ago, we had very strong growth and the December quarter and set a record for revenue and earnings.
The marine Max team significantly outperformed those results and raised the bar yet again.
We further strengthened our financial position during the quarter, while completing the very strategic acquisition of skip her but the largest acquisition for the company to date.
As we indicated on our last earnings call in October we finished fiscal 2020 with the highest revenue and earnings of the company's history.
And that momentum and industry demand has continued as shown by our results.
Our record results continued to demonstrate our teams ability to evaluate customers need and act quickly and implement the right changes and how we operate our business.
For the quarter, we are particularly pleased with our continued solid performance and same store sales, which increased over 20%, which is on top of 24% same store sales growth at year ago.
Importantly, our new unit growth was even stronger at 35%.
Furthermore, in the quarter, we had meaningful growth across essentially all brand category and geographic region.
The marine industry continues to experience a significant acceleration and new customers.
And this new foundational layer of customers to the boating lifestyle is comprised of a combination of new first time buyers and people that decided to get back into boating, which should help support future growth as they migrate to larger or different types of products and the coming years.
Our team remains energized by the shifts and given our scale, we should continue to significantly benefit from this resurgence.
During the quarter, we also leveraged our investments and technology driving leads and marketing analytics, which is converting into sales.
Continue to make investments and world class customer engagement tools that improve our teams of efficiency and effectiveness and help us to take share and lead the industry.
In the quarter, we added skipper buds and its affiliates silversea is yet to our family.
And the acquisition added 20 locations, including 11 Marina and storage operations.
We have successfully integrated the business and believe many opportunities exist to share best practices brand and resources to drive even greater growth in the years to come.
From a profitability perspective, one of the best elements of the quarter was strong gross margin.
We benefited from increases in product margin.
Both at our storage and service businesses are asset light Frazier, and Northrop and Johnson global charter businesses, and our finance and insurance businesses.
Expanding our margin has been a long term strategic focus and recent acquisitions have contributed to that strategy.
The combination of gross margin expansion and focused expense management resulted in considerable leverage and a record $1 <unk> of EPS for the quarter.
But even more impressive is that we believe there is incremental growth ahead.
So now let me touch on how we are approaching the important peak selling season.
We are well positioned and prepared to serve our customers Covid has changed all aspects of customer expectation, including the historically important boat show.
Our team has adapted with greater digital capabilities, and refocused marketing spend that leverages, our stores and our online experience generating exceptional result.
Beyond and leaner industry inventory, we continue to invest and training and tools to ensure our team was able to pivot to continue to meet the needs of our customers digitally.
Our deep manufacturing relationships and nationwide shared inventory give us a competitive advantage.
With the largest selling season ahead, we expect to build on the strong start to our fiscal year and deliver exceptional customer experiences.
Our strategy to create long term shareholder value is focused on driving top line growth.
Operating leverage and disciplined capital management and building on our strong culture.
We continued to effectively execute on our multifaceted growth strategy supported by our global market Praful premium brands, Inc.
Exceptional customer service and ongoing investments in technology on.
Our focus on driving margins and improving costs continue to unlock significant leverage and our model.
Our performance illustrates the power of our business model, specifically, our scale premium location and cash flow generating capability.
Marine Max as well disciplined operator, with a strong foundation from which to grow.
With that update I'll ask Mike to provide more detailed comments on the quarter Mike.
Thank you Brett and good morning, again, everyone I would also like to start by thanking our team for their tremendous efforts that produced record revenue and earnings to start the year.
For the quarter revenue grew 35% to over $411 million due largely to same store sales growth of 20%.
At this exceptional growth was driven by even greater comparable new unit growth that exceeded 35%.
While our AEP declined at the quarter from seasonally very strong sales of smaller product.
And the demand for larger product is also robust.
The big takeaway from our results. This quarter is our ability to close very strong comps on top of already strong comps.
Our gross profit dollars increased over $43 million.
While our gross margin rose 370 basis points to 30%.
Our record gross margin was due to a handful of factors.
Among these are improving margins on new and used boat sales.
Impressive service and storage performance at skipper buds, which has a long track record of performance and these categories.
Growth of at a higher margin finance and insurance businesses and growth and our brokerage business, including our global Super Yacht services organizations of Northrop and Johnson and Fraser yachts.
We would note that the Super yacht charter business has remained adversely impacted by travel bans around the globe.
Our higher margin businesses have been a focus of ours for some time, including our acquisition strategy, which is helping to drive these results.
Regarding SG&A the majority of the increase was due to the increase in sales and the related commissions.
And by with the two mergers we have recently completed skipper bodes and north of Johnson.
Interest expense dropped and the quarter due to lower interest rates and a sizable reduction and short term borrowings given the cash we have generated.
Our operating leverage and the quarter was over 17%, which drove very strong earnings growth setting another quarterly record with pretax earnings of almost $31 million.
A record December quarter saw both net income and earnings per share more than double with EPS hitting $1 four more than twice the level of last year's previous record.
Moving onto our balance sheet.
We continue to build cash with about 121 million at quarter end versus $36 million a year ago, even after paying cash for both north of and Johnson and July and <unk> October one.
As discussed last quarter, given the attractive interest rate environment, we explored and did secure mortgages on a portion of our sizable real estate portfolio.
Besides some slight rate arbitrage at further positions us to capitalize on opportunities as they develop.
Our inventory at quarter end was down 23% to 379 million. However, excluding skippers, our inventory is down closer to 36%.
Illustrate this point to show how well our team has pivoted selling and of lean inventory environment as proven by the very strong unit driven same store sales growth this quarter.
Looking at our liabilities despite added borrowings per skippers inventory short term borrowings decreased of 171 million.
Due largely to a reduction of inventories and.
And an increase and cash generation with the contribution from the roughly $53 million of mortgages that are outstanding.
Customer deposits, while not the best predictor of near term sales because they can be lumpy due to the size of deposits of whether trade is involved or not nearly tripled in size due to the timing of large out of orders and more robust sales along with the contribution from skippers for future sales.
Our current ratio stands at $1 74, and our total liabilities of tangible net worth ratio is one four to.
Both of these are very impressive balance sheet metrics.
Our tangible net worth was $339 million or about $14 92 per share.
Our balance sheet has always been a formidable strategic advantage and today more than ever and it continues to protect us and uncertain times, while providing the capital for expansion as opportunities arise.
Turning to guidance the December quarter exceeded expectations and the industry trends remained strong.
Industry estimates for 2021 retail units are beginning to rise from the low single digits to the mid single digits.
And as we usually outperformed the industry and grow our AEP on on annual basis.
We now expect our annual same store sales growth to be and the high single digits. This is up from the mid to high single digits, we guided to earlier and the year.
Given the strength and earnings in December our guidance also assumes modest operating leverage improvement above our previous guidance.
This expectation assumes we reached the low end of our historical targeted leverage of 12% to 17%.
Given we have the bulk of the year is still in front of us along with continued uncertainty.
Accordingly, we are raising our earnings per share guidance to the range of $4 to $4 20 for 2021 from our earlier guidance of $3 70 to $3 90.
Our guidance excludes the impact from any potential acquisitions that we may complete.
As we progress through the year, we will provide updates as needed to our guidance.
Looking at the remainder of 2021 remember that our March quarter is the easiest comparison with our toughest comparisons and the more meaningful summer quarters of June and September.
Our guidance uses of share count of about $22 8 million shares and an effective tax rate of 26%.
Our tax rate for the December quarter was meaningfully better than this due primarily to equity compensation deductions, which are hard to predict and are not typically forecast of when we give guidance.
Turning to current trends January will close with positive same store sales and our backlog is meaningfully higher than last year at.
As we have said industry trends remained strong and we are generally outperforming these elevated levels.
We continue to feel good as we enter the important summer selling seasons.
It's early and the year and a lot of work remains.
With those comments I'll turn the call back over to Brett for some closing comments Bret.
Thank you Mike.
Marine Max continues to benefit and capitalize on the surge and demand and the desire of consumers to find a safe recreational activity.
Our team's performance to start the fiscal year has shown continued excellent execution, even on top of very impressive same store sales a year ago.
We are creating exceptional customer experiences through our teens services products and.
And technology.
Most exciting is that we see significant opportunity and our brand expansion and also our higher margin businesses.
With about 30 locations globally, we believe our Super yacht services business.
Considerable upside, including their charter business, which should contribute and a much larger manner.
We remain committed to the long term financial strength of the company by driving cash flow growth.
Importantly, our acquisitions are integrated and contributing immediately to our business.
Looking forward, we are focused on building our strong team culture. We are focused on executing on our growth strategy and we are focused on creating long term shareholder value.
With that operator, let's open up the call for questions.
Certainly we will now be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one on your telephone keypad of confirmation tone will indicate your line is and the question queue. You May press star two and if you'd like Trimble of your question from the queue for participants using speaker equipment may be necessary to pick up on handset before.
Pressing star one one moment, please while we poll for questions.
Our first question today is coming from Joe at the Belo from Raymond James Your line is now live.
Thanks, Hey, guys. Good morning. Good morning first question on on the guide for 'twenty, One and I guess, Mike you mentioned that you're still looking for flow through this year to be at the lower end of that 12% to 17%. We just did 17, plus and Q1. So I'm curious why you still think and low end of that range is at conservatism is there something.
And that you're expecting that's going to weigh on margins and the balance of the year.
No I think it's just it's early and the year, we of one quarter under our belt, we're certainly aiming to.
To achieve higher than that but like I said, it's early and the year and we need to get through the March quarter of getting into the June quarter and address things at that point in time.
Got it and then just secondly is there anything to take away from some of the jump and customer deposits and the lower asps and perhaps in terms of the composition of your buyer of the type of boat. They are buying or is it just noise and a small quarter.
Well I think I actually customer deposits, we do say, they're lumpy and we've said that for years and it's hard to kind of see real solid trends from that but I think it clearly points to everything that we said and the release and we said and these prepared remarks made of industry trends or our and continue to be pretty darn solid so it does refer.
The increased backlog that we have.
At this time at this time of year seasonally very strong and Joe I'll comment on the.
And the average price.
And I think thats, probably just a little bit of noise in the quarter. Some volume closing timing of both deals and those sorts of things.
Got it okay. Thank you guys. Thank you Joe.
Thank you and next question is coming from James Hardiman from Wedbush Securities. Your line is now live.
Hey, good morning, guys.
<unk>, obviously, another great quarter here.
My first question and I think I think.
I, probably know the answer to this one but.
You increased your guide by about 30 at the midpoint.
And you beat street numbers by call it 40% to 45, so all else equal.
The signal here is that we should be lowering our estimates for the balance of the year is that the way EBIT, you're actually thinking about and obviously you don't give.
And the guidance.
But how are you thinking about.
So the balance of the year.
So really it's kind of kind of similar to what I said to Joe It's early and the year and we have three quarters ahead of US we've completed one quarter, we hope to keep updating our guidance and looking at trends as we moved through March and the June and September quarters, certainly from an operational perspective, we are driving every day to keep creating more and more business through.
At the March quarter, and also of the summertime.
Okay, that's what I thought and then.
Obviously, some really great margin performance here.
<unk>.
I think one of the challenges across the board.
And.
The stock market right now and just trying to discern how much of two sort of pandemic surge related and.
And how much of an ongoing benefit there is longer term term.
Is there any way to think about.
Teasing out.
And I guess a promotional environment.
It's pretty favorable as we stand here today.
So I guess that being number one.
Huge leverage benefit and.
And you've also brought in some higher margin businesses as well I guess, what I'm trying to figure out at all of the dust settled.
First of historical margin levels should we be assuming that you're sort of sustainable margin number and is considerably higher.
And I can take a stab at Brent can chime in if he wants to but.
I commented about kind of three different components that helped to drive the gross margin expansion and roughly.
A little bit less and one third is due to new and used boat pricing in this environment and then the other two thirds is due to our.
Efforts, including our acquisition strategy, but our efforts around growing our higher margin businesses, whether it's or whether it's our brokerage business internally or by adding north of at Johnson, and Frazier or if it's adding skipper buzz, which does have a bigger element of storage and of course, we've been adding marinas within the core business of marine Max too, but and so.
I would tell you at least in the quarter of factually about two thirds is unrelated to the.
If you would say the more robust sales environment.
Okay.
Think about I guess looking specifically at gross margin that over the last decade of been anywhere from two.
<unk> 24 to 26 per se so call it mid twenties.
Should we now be thinking about that and sort of mid to high <unk> going forward.
Yeah.
And I can tell you we've got a lot of goals internally to keep driving our margin of I will tell you specifically at our guidance other than the benefit that we got on the March quarter, we arent really tweaking margins up meaningfully and our guidance. We will continue to evaluate margins as we move through the year, but I think that has some potential upside if we execute properly from a from a margin.
And James I'll add that as you can see with our acquisition strategy and the businesses were kind.
On a continuing to grow with obviously there is of strategic move to move that upward of as well not just benefiting from low inventory of high margin low discounting environment Thats, helping right now, but when we come out of that when that may normalize our strategic moves, we're making should continue to help us.
Got it and then lastly for me.
Pervasive bear case, I think across a lot of.
Big ticket discretionary categories that a bunch of.
People will have bought in this case.
And then.
Yes of both home and and somehow oops and realize they made at <unk>.
Can you speak at all to the satisfaction of.
Of new.
Buyers, obviously, you are close to them and if anybody and sort of a likelihood that the people are going on.
Down the line bail in and ultimately put that both on the on the used market a lot more quickly than and has historically been the case.
Okay. Good good question, we keep getting that same one but with our strategy for really since I've ever since we formed marine Max was to service the customer second to none there's no question of where and we're ramping up our service efforts trying to keep people happy.
Our net promoter scores reflect that everybody is happy and the ones that need more attention, we're getting that tool, but also on getaways and event strategy, we get them out boating get them and safe socially distance environments, where they can enjoy their boat.
And that you get them out using their boat you take good care of them and then you don't have that scenario that you talked about what are they said oops and and that's pretty rare people once they get into the boating lifestyle. They really enjoy it and there clearly could be of cycle when they want out, but those are opportunities for us as well and our brokerage market, but they're.
And we'll be a flood of people.
Excellent and really helpful. Normally I would say to you guys and Miami, but I guess.
And if I'm around all of them.
Thanks Scott.
Thanks James.
Thank you. Our next question is coming from Eric Wold from B Riley FBR. Your line is now live.
Thanks, and good morning, guys.
A couple of questions I guess one.
Can you give us a sense of what you would normally spend on on boat shows and I guess.
This quarter, specifically and I guess, maybe overall and just how much of that would be reinvested and two.
And enhanced.
So on experiences of kind of alternative ways to reach customers I guess net net kind of.
And what could you.
<unk> sales.
And if there is no loss of sales or at all.
And sales because of it.
Yes, I can comment on Brexit and China.
Also but.
And I did comment on a call on that long ago that we spent double digit millions and boat shows it's not a small number the biggest quarter for that spend is and the March quarter. We are allocating more of those dollars two of our digital spend and also the events and history and experiences and in store activities as Brett just alluded to.
There is certainly is the potential to have some savings that come out of at net savings that comes out of that I.
And I think it all depends on how well we execute on our strategies of what the results are from the different events and and.
And what other events, we may need to do it we have not baked into our guidance again any other than any savings. We may have had and the December quarter, but we've not baked in at a significant savings from our boat show costs.
And the forward quarters, yes, Eric all of China, and we want to realize some savings and Theres no question about it but we also want to continue to keep the excitement for our customers. So these in store events, we keep having.
More private showings over a longer period of days and those events to hold them socially distance and have them spread out over several days.
A little more costly than but it doesn't clearly add up to a boat show, but its hard to quantify because we pulled the marketing levers as we need and and we.
And we can create and in store event and half.
Hundreds of customers show up over a couple of weeks, it's pretty powerful.
And do you expect to come out of this and you kind of.
Come out of this merchandise usually kind of and look towards next year's boat show season, do you expect to come out of this at a different mindset towards how you would tackle physical boat shows.
And some boat shows.
And maybe not become relevant do more of do you go out of them at the smaller footprint, how do you think about that.
I think all shows will look much differently and the future, which will be better for the consumer.
And I think people that didn't go this year realize they probably didn't need to go.
Let's make them real good events to show people, what's new and the market and save everybody a little bit of money and actually make a better experience for the customer so they'll change what it will look like we don't know.
But we're working hard with the industry.
Or fix that.
Okay and then just on your question.
And your cash balance continues to improve or are you using for financing at the same level that you historically have for new inventory I guess.
At the return.
On cash better and invested in inventory of hanging form <unk>.
The acquisition and.
And opportunities or is that somewhat irrelevant given the quick turn youre actually seeing at inventory right. Now is net decision kind of.
And for you.
Great question, Eric and generally throughout a period, our excess cash is applied against our outstanding Floorplan and just to say whatever rate is there as we're looking for other opportunities to get different returns either through acquisitions or investing in our stores.
But no you are right. We do we take advantage of it and pay down and you can see a pretty substantial savings and interest year over year, despite and obtain.
And the cash that we did for skipper buds and also Northrop and Johnson and adding the inventory per skippers and that's because of what you are saying we are taking advantage of the cash and pay down the line.
Okay. Thank you Ed and thank you.
Thank you. Our next question is coming from Fred Wightman from Wolfe Research Your line is and a lot.
Hey, guys. Good morning, just a quick housekeeping question first did you give that customer deposit number on an organic basis. Some of it reflects some skip a bunch of contribution but do you have that organically.
And I don't have at in front of me what I can tell you as well as skippers as of contribution it would still be catching everybody's attention today, our customer deposits organically are up substantially.
Yep.
That's helpful and if we go back to last quarter, you talked about the industry potentially growing low single digit to mid single digit. This year. It sounds like you moved that up a little bit and are now sort of and that mid single digit range, but.
And if we take a step back and look at what Ssi was for <unk> and December specifically is there a chance at that target winds up being.
Conservative.
I think at Fred I think there's a chance for sure and I think everybody and the industry is at an all they can to make at conservative.
Trends there.
And the industry is up and Thats pretty good comps in the summertime, but just given where trends have been to date and and I'll remind everybody in the December quarter that we just announced so last year marine Max and at the industry, but marine Max at 24% same store sales growth driven by 24% unit growth.
And this year, we had 20% overall same store sales growth, but our unit growth was 35% and so I think as we move through the year it'd be great to be able to update you guys and and seed unit trends, continuing but I think we've got one quarter behind us there's still three quarters in front of us, including some pretty big comps, let's cross.
Those bridges, where we get to them.
And then just finally on the inventory side I think you gave the organic number is down 36%, so a little bit better than where you guys per last quarter, but some of the language and the Brunswick.
Released today makes it sound like they think it could be sort of 'twenty, two where maybe even later until we're back to kind of whatever of normalized level will beat do you think that timeline and time horizon makes sense, just from inventory replenishment and restocking timeframe.
Yeah, I'll take net yes, but just given trends and.
And what's happening and the industry.
I think that estimate is as good as any.
Trends continue to be very strong product coming in is going out I mean keep in mind, our September quarter, we were down roughly 40% and dollars and roughly 40% and December on an organic basis, but yet we still drove really strong unit growth. So the manufacturers and we think we're working with the best manufacturers they are getting us at <unk>.
Product, it's coming in and sold its going out of our team's doing a really good job.
<unk> continues to be good.
Our lead activity and the activity on our website and it's.
<unk>.
At the very good levels and increases so we like what we're seeing.
Perfect. Thanks, guys.
And thank you.
Thank you. Our next question is coming from Scott number from C. L. King and Associates. Your line is now live.
Good morning, guys and thanks for taking my questions. Thanks, Scott Yeah.
Can you maybe talk about the current trends you said that there are some but they were up solidly up nicely last quarter, you talked about how seasonally things were.
Other than normal even at the northern reaches of and it sounds like people don't want to get boxed out of.
Getting a boat this season, but can you maybe just talk about.
What some of the lead times are and then also maybe just talk about sort of helps.
Strong seasonally things on.
Yes, I think I'll, let Mike talk on lead times, specifically I think we mentioned at a little bit, but our ability to.
With our inventory across the country and the ability to share that inventory and the information we have in front of our sales team to know that of boats.
And maybe earmarked ahead to of Florida store, but of Minnesota customer wants at we can sell it quickly route at there. So we're not experienced and that what we're seeing is if somebody says look I want to buy at both have it ready for March or April we can make that happen and as.
Quick as boats or land and on our on our showroom floors theyre going out to the customer.
And we're finding and Thats a pretty good thing there are some really hot models out there that are sold out for way out and advanced and Thats a good thing.
But people seem to be willing to wait and it also seems like we're willing to hit their timeframes of when they want their new boat.
The other sort of comment on the models you already covered that and then it does seem like consumers are aware of how.
And how the industry sits and they do almost come in with more of a mindset of.
Let me get and the line to get the boat and depending on it but we may be able to meet their needs a lot sooner, but it just depends on the on the model.
Okay and just the last question I. Appreciate you guys are obviously.
One of the conservative for the back half of the year, primarily at the second quarter coming up.
How should we be thinking about that as far as since Youre really talking about January of being very strong.
And you contextualize and it versus a year ago or even versus the first quarter.
Yes, I can give you a little color and I think we've probably said this if you go back and look at our April transcript for the March quarter.
We've already said at our December quarter was quite strong our January and February of last year was was actually very strong. So we are again comping positively against pretty darn. Good comps in January last year, where things really decline was being the month of March with Covid. So I think for the overall quarter.
And I think were up 1% of comparison versus last year.
So it's the easiest comps. So if you think about just spreading out the year, we're saying high single digit call at 9% or 8% or however, you guys model at but.
And my guess is you'll put up a good chunk of it of March and then try to spread the rest of it throughout the summer time.
Got it.
That's all I have thank you.
Thanks Janet.
Thank you and next question is coming from Mike Swartz from two of Securities. Your line is and a lot.
Hey, guys. Good morning, Hey, good morning.
And just maybe touching on on skipper Budd and I think Mike you said, a number of things just related to the P&L impact and the quarter I think you said there.
Accretive to gross margin, but it sounds like at the seasonally small quarter and obviously the overhead of of 20 stores. It sounds like that was somewhat of an offset so I guess at the question is it was profitable in the quarter and maybe how do we think about the seasonality.
And the profitability of that business over the next couple of quarters.
Good question and yes, they were profitable and the quarter.
It is their smallest quarter, which is true for the industry and they generally followed the industry trends. If you guys are you guys. All follow the industry kind of their smallest quarters December and March quarters, a little bit bigger june's of very big quarter in September of decent size.
Quarter for them.
So there are probably a little more seasonal than even the industry data, but that's a pretty good benchmark. If you just follow that for them.
Okay. Okay, that's great and then just on backlog.
Maybe just help us understand and I think you said backlog.
And really how relevant is backlog right now just given the lead times given the backlogs that are out there is at relevant to compare this year versus last year from that standpoint.
Actually I think you are on a really important topic I think.
A lot of people do focus on our customer deposits and I understand why but I think our commentary is really what people should always listen to and our commentary is.
Pretty clearly at the industry is pretty strong right now and that January current trends I think Scott and just ask about current trends current trends there are very robust.
People are our store.
Coming into the industry I know there was some thought from from some folks that gosh. Maybe this was a june quarter event last year September quarter of it last year, but just given how strong the industry data was for October November and December granted and a small quarter. The commentary that we're saying probably the commentary that Brunswick, saying this as much.
All other than just the of.
A proof of summertime of 2021, it's much more sustainable word of mouth of spreading friends are spending time on friends boats and that trend wants to buy their own boat.
Out of grass roots.
Legs to it which I think is going to help fuel growth for a lot longer than just the near term, but it's very positive for the industry and our website traffic and lead traffic is up substantially and January here.
Okay, great. Thanks, guys Thats. It from me. Thank you. Thank you.
Thank you. Our final question today is coming from brands and Rose from Northcoast Research. Your line is now live.
Good morning, Congrats on a strong quarter I was going to ask you guys did touch on the <unk> acquisition, and just how they've been able to capitalize with our storage business on the surge of new buyers and.
If you could also touch on.
Just the availability of used inventory and pricing.
As we enter the first quarter of the year.
Yes, skippers was a very strategic acquisition for us for a lot of reasons. They were one of the largest they are the largest out there and.
And our family and they brought to US everything we've been working on higher margin business of storage just like you pointed out and.
And it.
Flow through properly and in the December quarter and it's.
They continue to sell boats and they have storage facilities for those people to take care of them and the winter. So it's playing out just as we had planned and expected and.
To your comment on question on used inventory.
At the light, it's tough to get a hold of.
Our brokerage business is also doing well.
So it's it's.
I think it's a good used is going very well, but obviously right now you can always.
Handle a few more used boats and when I say that we're also getting a lot of customers that are new to boating. So you don't have traded in that case.
Okay, Great and also just on the new customers are you seeing people that were first time buyers of this summer coming back maybe tradeoffs of larger units or are most people just realizing the backlogs.
For many months and.
We're just keeping the boat they have at the moment.
We're definitely I don't have any analytic of data on that but we're definitely seeing people already who bought last summer coming back, saying, Hey, maybe I should get something on the order that's a little different style of boat or a little bit larger I can sleep on it now so.
We're seeing more of that and probably people would expect and Thats a good day.
Okay, great. Thank you.
Thanks, Brian.
Thank you we reached end of our question and answer session and I like to turn the floor back over to management for any further and closing comments.
Well. Thank you everybody for joining the call and taking the time with us today, and Mike and I will both be available for you of any additional questions today and we look forward to updating you on our next call.
Thank you and that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.
Yeah.