Q1 2023 MarineMax Inc Earnings Call
Good morning, and welcome to the Marine Max Inc. Fiscal 2023 first quarter conference call.
Today's call is being recorded all participants have been placed in a listen only mode.
If anyone should require operator assistance during the call. Please press star zero on your telephone keypad.
We will have a question and answer session at the end of today's prepared remarks at this time I would like to turn the call over to Scott Solomon Other Companys Investor Relations firm Sharon Merrill. Please go ahead Sir.
Thank you and good morning, everyone and thank you for joining us hosting todays call are Brett Mcgill Chief Executive Officer, and President of the Marine Max Mike Mclamb, The company's Chief Financial Officer.
Brett will discuss the company's operating highlights.
Mike will take you through the financial results, Brett will make some concluding comments and then management will be happy to take your questions.
I know you should've received a copy of the earnings release issued today if.
If not please email our IR team at H Z O Investor Relations Dotcom and a copy will be emailed to you.
With that I'll turn the call over to Mike Mclamb, Mike.
Thank you Scott good morning, everyone and thank you for joining this call.
I'd like to start by reminding you that certain of our comments are forward looking statements as defined by the private Securities Litigation Reform Act of 1995.
Any forward looking statements speak only as of today.
These statements involve risks and uncertainties that could cause actual results to differ materially from expectations.
These risks include but are not limited to the impact of seasonality and weather global economic conditions and the level of consumer spending.
The 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.
Also on today's call, we will make comments, referring to non-GAAP financial measures.
We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results.
These metrics can also help investors, who wish to make comparisons between marine Max and other companies on both a GAAP and a non-GAAP basis.
A reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release.
With that let me turn the call over to Brett Brett.
Thank you Mike Good morning, everyone and thank you for joining this call.
Let me begin by thanking the entire marine Max team for driving record December quarter revenue and gross margins, while maintaining our commitment to customer service.
Our team continues to deliver despite industry choppiness caused by a return to seasonality and by a more challenging economic environment.
We executed well in the first quarter delivering revenue of nearly $508 million and gross margin of 36, 8% a significant increase over last year's December quarter record.
The margins were certainly aided by I G y, but new boat margins and our higher margin businesses generally demonstrated resiliency and contributed to the performance.
This shows the success of our long term growth strategy of adding high quality higher margin businesses to our portfolio.
And to that point it has been less than four months since our acquisition of I G Y marinas and the business is performing on plan.
I G Y has a great team and they do an exceptional job building long standing relationships with their clients by consistently delivering a world class customer experience.
In December I G Y hosted the Caribbean Charter Yacht show at our incredible Yacht Haven Grand property in St. Thomas.
The event was met with an outstanding response from charter brokers and managers, who attended the show and the turnout exceeded expectation.
Plus the <unk> team is currently in discussions with respect to several potential growth opportunities.
I G Y the leading global brand for marinas, and we will work to expand using this new growth platform.
We are already starting to see strong synergy with Frazier Northland Johnson with the exclusive I G Y tried it program.
We are continuing the <unk> integration and look forward to capitalizing on the best practices and resources to drive growth.
It is clear from industry data and trends that the seasonal patterns of the industry have return. It is also clear that the increased economic challenges impacting buyers buyers.
Buyers of premium and larger products still seem less impacted which has been the historical pattern as well.
Admittedly it is difficult to get a precise gauge on the granular market trends between what is seasonality and what is softness.
Both are impacting the industry.
Our comparable store sales declined about 1% in the first quarter, which when compared to strong comps last year, it's great to see.
While our unit volume was down more than we had expected the strength that the premium segment continues to insulate us from the majority of the unit pressure affecting the overall industry.
And our backlog by historical measures remains very strong.
From a supply chain perspective, there is clear improvement in smaller less complicated product and that type of inventory is building.
But some of the larger more complicated international product still has various issues, which should keep overall inventory levels for that type of product reduced as we move through 2023.
Inventory is up both on a sequential and year over year basis, driven largely by smaller product growth.
Overall I am proud of the strong earnings and cash flows generated in the first quarter. Adjusted EBITDA is close to flat to last year's record quarter. Despite the more challenging environment.
Plus our team is focused and working to drive further improvements to our operations as we progress through 2023.
While I am proud of our financial results I continue to be most impressed with our team's ability to take excellent care of our customers. This has always been a critical strategy of ours and it has never been more important this strategy at what is what leads to future business and market share gains.
Turning to our recent highlights since our year end earnings call. We have continued to focus on strategic growth initiatives in the first quarter. We completed the acquisition of Midcoast Marine Group, a full service Marine construction company based in Tarpon Springs, Florida.
The addition of Midcoast marine benefits us in two ways.
First we gained both the skilled team and equipment to cost effectively address our own marina construction needs and new service offerings.
The acquisition includes waterfront real estate, along the Unquote River in Tarpon Springs property that has multiple benefits for us in the important west Florida market.
We also continue to build our digital capabilities. We recently launched new wave of innovation, a new business develop to invest in and grow our technology related products and services.
Innovation and technology are the centerpiece of our strategy to be an integrated leader in marine products services and experiences.
New wave of innovation is the engine designed to enable us to achieve that vision.
To help fuel that technology engine that we recently acquired the remaining interest we did not already own in boats on the world's only 100% online boat and marine digital retail platform.
By giving consumers the ease and convenience to browse for finance purchase and ensure a boat online boson has the potential to dramatically improve the boat buying experience.
We are also excited about the momentum of our manufacturing businesses Intrepid Powerboats in cruisers, yeah. Both are continuing to perform well and have been great additions to marine Max.
We look ahead with confidence that our resilient business model will enable us to continue to deliver strong results for our shareholders. Our strong balance sheet provides the flexibility to capitalize on attractive opportunities, while continuing to invest in and drive organic growth.
And with that update I'll ask Mike to provide more detailed comments on the quarter Mike.
Thank you Brett and good morning, again, everyone. I'd also like to start by thanking our team for producing a strong start to fiscal 2023.
For the quarter revenue grew to a new December quarter record of $508 million.
The increase was largely due to the October acquisition of <unk> as well as revenue from both intrepid and cruisers yards, which are excluded from the same store sales calculation.
Same store sales declined modestly by 1%, but.
But due to a combination of a return to seasonality as well as a more difficult economic environment. Our units declined double digits. Our unit decline, while substantial was less than that of the industry, indicating share gains.
Our average unit selling price expanded significantly mostly driven by a greater mix of larger more premium product.
Most in the industry believe a lot of the unit decline is evidence of a return to seasonality.
That appears to be supported by generally positive trends at northern boat shows.
I would add our same store unit trend is about flat to our unit trend in the December quarter of 2019 with premium product generally showing growth.
Gross profit dollars increased to $187 million, an increase to our new December quarter record of 36, 8% up 140 basis points. The growth was driven primarily by the acquisition of <unk>.
Selecting our strategy of adding higher margin high quality businesses to our portfolio.
Absent <unk>, our margins were flat to last year's record, which is encouraging in this environment. While also reinforcing our focus on the premium segment of the market.
Total SG&A expenses rose about $20 million when removing the unusual costs in the quarter.
Well over half of that increase was due to the acquisition of <unk> and most of the remainder was largely due to our infrastructure being built for greater sales than we delivered seasonally.
SG&A also was impacted by the timing of the internal sales of cruisers yards to our stores versus to retail buyers.
In essence that results at SG&A expenses with no benefit of revenue or gross profit until a sale to a third party by our stores.
Having said that our team is focused on aligning cost where we can while still ensuring we are taking care of our customers.
As mentioned on our October call and as noted in the release because of the <unk> acquisition, we are expanding our financial disclosures to include adjusted EBITDA and adjusted net income.
In addition to non floor plan interest taxes, depreciation and amortization adjusted EBITDA excludes stock comp expense acquisition costs. The change in fair value of contingent consideration hurricane expenses and foreign currency changes.
We think it's a better measure to see how the company is performing.
For the quarter adjusted EBITDA was $53 2 million compared with $55 3 million in the same period last year.
Ignoring currency adjusted EBITDA for the quarter was $55 6 million.
Interest expense for the quarter was $9 5 million or one 9% of revenue up $8 8 million due to rising rates increased inventory and the long term debt related to <unk> on.
On the bottom line, we generated GAAP net income of $19 7 million or <unk> 89 per share.
On adjusted net income basis, excluding acquisition costs Hurricane heat expenses the change in fair value of contingent consideration and intangible asset amortization net income for the first quarter was $27 3 million or $1 24 per diluted share.
Moving on to our balance sheet, we ended the quarter with cash of $178 million down from the same period last year due primarily to the acquisition of <unk>.
Our inventory at quarter end was up 86% to $605 million from last year.
Close to 20 points of that increase is due to an increase in boats in transit that can't be delivered as well as greater deposits with manufacturers that a year ago.
But as mentioned earlier industry inventory as well as ours is built that quicker than expected.
Most of the build is in smaller more seasonally sensitive product.
It is nice that our stores finally have some product to show customers to help get them into the boating lifestyle quicker and easier in the last few years.
Consistent with the comments, we made on our year end call in October we.
We continue to expect leaner inventory on larger more complicated product.
Compared to December 2019, we now have about 58% of what we carry then in terms of units on a same store basis.
Our balance sheet at December 31 reflected over a $280 million increase in property the.
The increase is primarily related to the purchase of <unk> and a couple of smaller acquisitions.
Looking at liabilities, our short term borrowings rose more than 225 million largely reflecting the increased inventories and timing of payments customer deposits not surprisingly decreased sequentially from September and also versus last year.
The level of deposits in our backlog are historically very high.
Consistent with the guidance on our fourth quarter earnings call debt to EBITDA net of cash was less than one times at quarter end.
Our balance sheet reflects the $400 million of term debt used to finance the purchase of <unk>.
Available borrowings at December 31 totaled about $250 million.
Turning to guidance based on our first quarter results and the most recent industry data showing greater softness in new boat registrations.
We had anticipated.
Along with building inventory faster than expected, we believe that it is prudent to lower our 2023 guidance.
In general the retail registration data suggest the industry has returned to its historical seasonal buying patterns combined with tougher economic trends given the fed's continued interest rate hikes.
Admittedly it is hard to determine the difference between softness and seasonality.
Where we originally thought the year would see mid single digit unit declines. We now believe it is prudent to think that a high single digit unit decline is more likely for the industry.
Likewise, where we originally expected our same store sales to be flattish, we now anticipate a modest decline.
We do believe our skew to premium product will help protect us from the larger industry trends.
We expect margins to be consistent with our past guidance, which was a modest decline from 2022, but still in the mid <unk>.
SG&A will be slightly elevated but should improve seasonally.
We also are assuming interest expense remains elevated due to increased inventories as well as rates.
We assume a share count of $22 7 million shares and a tax rate of just over 26%.
The tax rate increased due to assumptions around geographic sources of income.
Certain rate changes and fewer deductions from stock based compensation.
On the bottom line, we now expect our full year 2023 adjusted earnings per share guidance to be in the range of $6 92.
To $7 40.
In addition, we are forecasting 2023, adjusted EBITDA to be in the range of 275 million to $300 million.
Looking at current trends January was strong last year and this January looks like it will be lighter than last year, but in line with our guidance overall.
Those who follow the industry will recall that the March is by far the biggest month of the quarter.
And historically has been as big as January and February combined.
Boat show season has started in early reports are encouraging.
Lastly, underlying demand remains healthy, especially for the premium segment.
With that I'll turn the call back over to Brett for some closing comments.
Thank you Mike.
At Marine Max our mission is clear to provide the world's best pleasure boating experience by consistently exceeding the greatest expectations of our customers our team members and our shareholders across our organization. We continue to capitalize on the significant surge in people enjoying the boating lifestyle that has.
Happened over the last few years.
It's why we are so focused on service and why I am so proud of our team's performance at keeping our customers happy, which ultimately yields greater future business.
This combined with our strategy focused on gross margin expansion will continue to yield significant cash flow growth.
Recreational boating is a 57 billion dollar industry in the U S alone and as a global company Marine Max is just beginning to tap into the full potential of this fragmented market.
We continue to execute on our strategic growth plan to drive sustainable value for stakeholders through a diversified business model built on premium brands Global Marine is world class services and innovative technology, we are well positioned for 2023 and beyond.
And with that operator, please open up the line for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question can you.
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In the interest of time, we ask that you each keep to one question and one follow up thank you.
Our first question comes from the line of James Hardiman with Citi. Please proceed with your question.
Hey, good morning, Thanks for taking my call.
Good morning so.
I just wanted to get sort of an order of magnitude of the ASP benefit that youre getting here I I know, Mike you said.
Units I think you said were down double digits.
But better than the industry, which I think it was down I don't know 30% somewhere in there.
Can we.
Sort of narrow that range down a little bit just just trying to get a feel for it seems like there was a big.
Benefit in the quarter, just just trying to triangulate back yeah.
Yeah, Hey, Thanks, James actually I think if you look at the segments that we primarily operate in the industry was probably down something like <unk>.
35% or more.
In the December quarter.
And if we're at a negative 1% same store sales and I said that our unit growth was a heck of a lot better if you assume where maybe in the mid twenty's that in terms of units down.
We had a very significant increase in average unit selling price in the quarter. It reflects really the migration to larger product more premium product, which is really the.
How <unk> changed over the years.
How our business model is these days.
Got it.
And then.
You basically lowered guidance by about a dollar.
Yeah, we didn't actually have what your expectation was for the first quarter, but I'm just trying to figure out.
How I should think about how that dollar is distributed between.
Whats already happened and how youre thinking about the rest of the year.
Yes, it's basically the mix if you will from last year.
Deflated a little bit for the revised guidance that we have when this year started.
Plus as I mentioned, we had some elevated costs, although seasonally they should align a little bit better.
Plus we are expecting inventories to be higher this.
This year, just given how fast the supply chain is built back and then a little bit softer retail expectations and then our tax rate change from 25 to just in the low 20 six's.
Is it has an impact also so.
So when you factor in those different variables along with the same store sales decline that I mentioned in our prepared remarks versus flattish being down just a little bit has an impact on EPS.
You should get right into our range.
That we gave in this year in this quarter's release.
Got it and maybe follow up on the inventory piece I think you'd said that versus 2019.
Youre down what.
42%, 58% of 2019 unit.
Correct.
On a same store basis that excludes all the I think store basis.
That excludes all of the acquisitions of dollar wise, we're probably down.
I don't know, its probably 30% or something like that due to inflation in larger product and so forth but.
But the units are down in dollars are down.
But what's the what is.
I'm, assuming you're not looking to get back to a 100%. It seems like most boat dealers are looking to get a little bit more leaner have more turns over the course of the year. What do you think the target is for that number relative to 2019 and when do you think you'll get there.
Yeah. James we're we're talking this is Brett we're talking to our manufacturers kind of every day I would say just to kind of try to keep them informed of what we're seeing with retail and.
We still don't have a magic number other than we want it to be less than we've historically operated at but we've got to kind of coordinate that with the acquisitions and the growth and candidly we have a lot of new brands in stores that we didn't carry in 2019, so that has to factor in as well.
It's a focus on really inventory turns more than just a dollar level.
And I would say as we've said on past calls all of our manufacturing partners.
And in Us and I think most in the industry have the same desire, which is to get to a healthier point and the discussions that we're having are all very very positive and very constructive with our manufacturing partners.
So we're all headed in the right place.
<unk>, obviously is a.
A little tougher to get there, but we're all working on it together sure.
Is there a way to think about inventory turns versus 19 minutes.
I think it's premature now I think well keep working we'll keep working on the overall goal with our manufacturing partners and work to obviously improve our inventory turns.
Got it good stuff, thanks, guys and good luck. Thank you James.
Yes.
Thank you. Our next question comes from the line of Fred Wightman with Wolfe Research. Please proceed with your question.
Hey, guys. Thanks for the question I just wanted to just sort of maybe put the current industry Saar.
What's our outlook into context with what you guys talked about last quarter. So I think if I remember you were talking about some softer.
Back half trends in calendar 'twenty, two but you didn't really expect 2023 to change a whole heck of a lot from there can you maybe just explain or expand upon what has sort of changed from an industry perspective today versus October .
I can make a comment and then Brexit I think our comments in October we just left 2020 to the month of October registration data is not out yet. We had commented we were having a very good October which we did.
On that call. We said, we expected the industry to be down I think we said.
Mid single digit low to mid single digits something like that.
Looking at the data for October November and December the registration data and you've got to recognize that there is inventory out there now for sure of pontoon products and some other product.
And youre seeing the registration data.
Which to US was less than we were expecting and others in the industry may have different opinions, but to us it's less than we were expecting and it is difficult to break apart what seasonality and what's economic related.
But now we're one quarter into it. So we were just reflecting back that the industry overall is probably going to be further down than we had originally thought.
And I think were saying high single digit now so the big difference is just three months of registration data that we have now for Ed.
But that was I mean, if I remember right just to be clear it always gets a little confusing you're talking about fiscal year comments or are you talking about calendar. Your comments here because it's it's a very good question and we get that from time to time, when we give industry comments were talking overall the industry during our fiscal year.
So that'd be between October one through 930.
As our commentary that we make.
Okay.
Got you and then just a clarification I think your guidance was for a modest decline in same store sales can you put some benchmarks around that is that low single digits mid single digits.
Low single digits, Okay, alright, thank you yeah. Thanks.
Thank you. Our next question comes from the line of drew Crum with Stifel. Please proceed with your question.
Okay. Thanks, Hey, guys good morning.
The gross margin in fiscal <unk> my sense is that with maybe a little bit better than you thought it would come in at but the guidance for the year is unchanged can you talk about what your expectations are over the balance of fiscal 'twenty three and the puts and takes there and then I have a problem.
Yes, I think that.
A little bit of conservatism in there just based on inventory build in.
<unk>.
Some discounting out there, although we've held really the all of the premium product seems to be holding up real well, but probably just a little bit of.
Of that baked in yes, it's really it's really not a change from our guidance that our guidance in October we did expect a little bit of margin pressure and boat margins to compress throughout 2023, you add as you add to the business.
$100 million, plus a marina revenue, which helps to offset that but we still think mid.
<unk> is great. We think we're going to be in the mid <unk>, but.
Slightly down from where we were last year.
Got it Okay and then you know back in October guys. I think you provided some metrics on I G. Why the 100 million plus of revenue 40 million of EBITDA and <unk> contribution to EPS.
Is that still hold or are there any changes to that.
No I think generally that that that those numbers still still hold for <unk>. We obviously are working through all the purchase price accounting and all the applications there.
You can do.
Okay. Now you can actually see that when you work through our numbers. They they had they had a very nice.
Contribution to this quarter.
When you when you look at the manufacturing segment. If you factor that we had negative 1% same store sales growth you can see that they had a nice nice revenue push in the December quarter, which is good to see especially in the quarter that we merged which obviously creates some distractions, but yes.
And I think we still stick by what we what our thinking was around <unk>.
Okay got it thanks guys.
Thank you. Our next question comes from the line of Joe <unk> with Raymond James. Please proceed with your question.
Thanks, Hey, guys good morning.
First question on the financing environment.
Are you starting to see more cash buyers coming to the market.
Are you seeing.
Anders pulling back at all weather, whether it be to consumers or on the floor plan side.
Yes, Joe Good morning, yes.
I'd say that our trends in the stores as far as closing deals financing deals all of that is holding up really well the banks.
You know, we have a pretty resilient wealthy client or lending to so everything seems to be on track on par I would say would you agree Mike yeah actually the retail lenders love the marine retail paper, they always hold it as I've said before there's never been a securitization of marine retail loans.
They like it the banks want it I mean, obviously rates have gone up that's but but in terms of how they underwrite theres been really no changes.
Theres no no increase in delinquencies or increases in losses.
On the wholesale floor play inside the.
I think the banks are finally glad they got a little bit of inventory to get some interest on.
So they're.
They're they're probably a little happier today than they were the last couple of years, but know the relationship and the way they view the industry is very positive.
Okay. That's helpful and maybe in terms of your same store sales outlook. This year I guess, you didn't you said down modestly.
Look at Q1.
You know some some weak unit numbers offset by much higher Asps, maybe help us understand how you're thinking about ASP this year and when or if do you expect to see some level of promotional activity back in the market.
Yeah I'll comment.
Cost increasing to a degree although costs are definitely stabilizing in pretty reasonable on a go forward.
Basis, what would you say.
Discounting I think some of the shows that <unk> seen is theres been some discounting out there again it depends on the product smaller well cheaper product may be under a little more pressure because of the inventory all thats well known out there, but so yes I think.
There'll be some pressure on some models and products to give a little discounting, but the premium stuff is holding up very well.
And if I could squeeze one more in and I get this question a lot any anecdotal evidence that both usage is coming down and you're still seeing.
You know people are still using the boats pretty at pretty regularly.
Good question, Thanks for asking that we watch it really close rate we look at our Marina is when we look at fuel sales are.
Our getaways in events and attendance and they're all sold out people are boating.
Here and there you have a given weekend or something that's off compared to the other but it's overall I mean I would tell you that's where we look we look at web site traffic to make sure people are out there looking on our website and that helps us understand seasonality a little if they're still actively on our website and then we look at activity and the marinas in boating and all of those are really good.
Got it thanks, guys. Thanks, Joe.
Thank you. Our next question comes from the line of Mike Swartz with choice Securities. Please proceed with your question.
Hey, Hey, guys good morning.
I think you had mentioned that boat margins really haven't changed to a great degree, maybe a little bit of compression, but maybe if you could drill down into that a little more are you seeing any softness in pre owned margins relative to new maybe give us a little more color there.
Yeah I'll I'll.
Comment.
Commented that if you remove <unk> from our business our margins were basically flat to last year.
So that would tell you that new margins are holding up pretty well in the quarter and used margins. So I don't think we're seeing a whole lot of change in used margins in our business no significant shift I mean.
A little more inventory in both new and used but we haven't seen any pattern or significant shifts. There are used as you know Mike are the trades were taken right, whether we took them.
We take trades last year and also this year and the margin structure and the profile tends to generally be the same so.
Got you, Okay, and as it pertains to seasonality I just wanted to touch on just the boat show calendar and maybe your presence I think you've pulled out and or downsize. Some of your activities around boat shows in the past couple of years, but I guess, how does that give you more or less visibility into seasonality does it change.
Anything it maybe from a cost perspective should that benefit certain quarters relative to other sort of I guess, how do we think about all of that together.
Yeah.
Boat shows there.
We've really done a lot of work studying the boat shows all across the country and Theres a handful of shows that really performed well and give you that good index and then Theres. Other shows that you go you spend a lot of money and.
You sell to the people that you've been working on working with for a year anyway, and I don't want get too deep into that but of course, we get gauges of whether.
Whether we are there or not we know how many people went through the turnstile. We know how many people attended our events at the store. So I would say when we're kind of through the boat show season here coming out of March we're in all the right places to understand all of those trends and capture all of the sales to be had I don't know if that hits, where you wanted to know, but we have a <unk>.
Pulse on it.
Okay, and maybe if I could just slip one more in I think Mike when you were giving kind of the puts and takes the guidance. You said one of the one of the negative we'll be having more inventory, which I presume would largely impact your flooring interest expense, but are there any additional carrying costs to think about as some of that inventory comes back.
Good question, Mike I mean, obviously interest expense is one that's very clear in the P&L you do have you've got to maintain the inventory and costs. So you do have some additional costs that run through the financial statements that that don't get line item out like interest expense to us. So there is some additional cost which is factored into our guidance.
Already.
Okay, great. Thank you yep.
Thank you. Our next question comes from the line of Eric Wold with B Riley Securities. Please proceed with your question.
Thank you good morning, just a couple of follow up on some of the prior comments.
Mike just on inventory I know you made the comment that it's 58% on a same store sales basis, we were at 19.
And youre going to talking to the OEM is about where you want to end up.
Is it is the inventory level right now.
A good level for the guidance you've given for this year.
Did it healthy level are you concerned that it may be maybe too high or is it more in line with kind of what you would need or.
Are you comfortable if that number actually goes up from here into your guidance given.
Do you still are somewhat underwear, where you were before.
Yeah actually that's a really good question our guidance.
Assumes inventories do build seasonally like they historically did from now into March and then begin to drop in June the question as to how much do they drop.
Is it a little unique this year, because we're still so lean on a lot of different boats high levels, Yes, I was going to comment I wish. It was just flatlined answer like that but we have models that.
We won't we will.
Don't even have any inventory of certain models and even have some brands, where we won't have much inventory and then others, where we have some so it's still I would say a couple of cases, we have enough boats right now and it will build may be a little in a couple of cases, we're way short.
Helpful. And then just a follow up question.
And you made the comment earlier that.
The the higher end customer of the premium products that are providing some installation.
But obviously, there's not as many boats sincerely want.
Kind of that price point and inventory is still a lean there are you seeing anything that's showing some of that softness and demand that's going to hit in the industry on the lower end is creeping up at all into the.
The middle to higher end buyer or is that just tough to gauge where one if you are if you are not are too.
The gauge.
The inventory situation.
Yeah, Eric Great question, that's actually what I'm trying to look at kind of in the last quarter and it really yes, yes, we saw it creep up into that kind of come up from where it was let's say three months ago, but I think it's really seasonally related since we have stores all over the country you can kind of connect those dots. So.
It appears that you know I'll call it.
Softening in the last quarter and net a little higher segment than the low end I think is seasonally related but we'll see how these shows go and how the spring comes together.
Got it. Thank you both I appreciate it thanks Eric.
Thank you. Our next question comes from the line of David Macgregor with Longbow Research. Please proceed with your question.
Yes, good morning, everyone.
You guys have been very active on M&A over the last few years and I guess I'd like to get your thoughts in terms of how youre thinking about how much capacity you have from a balance sheet standpoint for continuing to acquire.
Good question, David I'll comment then if Brent wants to Germany can do but we're our balance sheet has always been a great resource and asset for us and it still is today our debt to EBITDA is less than one times. The company has flown strong cash.
We are in discussions with various different organizations, where we can find great companies with great management teams that can help drive future earnings and cash flow growth for the company.
We're certainly still interested in those and we believe we have the financial wherewithal to do to grow accordingly. So.
We will continue to stay focused on as opportunities come in front of us obviously.
A little more.
Prioritization is going to be in play and some timing and things like that.
Just on that M&A topic.
I mean to the targets of your acquisitions lately have been somewhat diverse in terms of the nature of their businesses and how how do you think about priorities or white space or just where you need to where you need to go next in that endeavor.
Well I think.
I'd say I'd speak to what we talked about in the in kind of our comments is.
<unk> brings a whole new graph and growth platform for us and some of those include very low capital ways to grow and some might require.
A lot more capital, we'll continue to look at our digital approach in the dealership business is still very important to us.
And then of course, our growth with new brands and the brands that we've taken on over the last couple of years. It candidly. We're just getting started with brands like <unk> and whatnot, just really getting started.
And with new wave innovations that that seems to provide you with a little more scope, where do you set the guardrails on that in terms of where you're willing to go where you're maybe hitting limits.
Yeah, Yeah, I think we will.
We've been very strategic about the companies that we have their boat yard in both design and kind of to date still a very you know.
Hunter back experience for the customer so that's where we're focused I wouldn't say, we're going to get wildly out of that scope I think those two tools have some really good opportunities in the future here for US, let's say, we'll stay focused there because that's a front to back solution for the consumer and that's our goal is to create a better experience.
<unk> for the customer.
Right right. Okay. Thanks, very much and good luck and thank you David.
Yeah.
Thank you. Our next question is a follow up from the line of Fred Wightman with Wolfe Research. Please proceed with your question.
Hey, guys I just have a quick clarification on the EPS guidance all of the add backs that you are providing in the non-GAAP EPS number were those all contemplated in the 790 840 that you gave last quarter I know that you had given us some hurricane impact reconciliation for fiscal 'twenty, two but I just wanted to make sure that it's sort of apples to add.
The updated non-GAAP guidance versus what you guys had given previously.
Good question, Fred Yes, it's all contemplated it's apples to apples alright.
Alright, great. Thank you so much.
Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Mr. Mcgill for any final comments.
Well. Thank you everybody for joining the call. This morning, we're excited kicking off some boat show a boat show season coming up with the Miami boat show here in a few weeks kind of then following into Palm Beach, and many others around the country hope to see out there and look forward to talking to you on our next call.
Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.