Q2 2025 MarineMax Inc Earnings Call

Speaker Change: Good morning and welcome to the MarineMax Incorporated Fiscal 2025 Second Quarter Conference Call. Today's call is being recorded. At this time, all participants are under listen only mode. A question and answer session will follow the formal presentation.

Speaker Change: I would now like to turn the call over to Scott Solomon of the company's investor relations firm, Sharon Merrill Advisors. Please go ahead, sir.

Good morning and thank you for joining us [inaudible]

Speaker Change: Posting today's call, our Brett McGill, MarineMax's Chief Executive Officer and President, and Mike McLamb, the company's Chief Financial Officer.

Mike Mclamb: Brett will begin the call by discussing MarineMax's operating highlights. Mike will review the financial results.

Mike Mclamb: Brett will make some concluding comments, and then management will be happy to take your questions.

Mike Mclamb: The Earnings Reliefs and Supplemental Presentation associated with today's announcement can be found at investor.marinemax.com With that, I'll turn the call over to Mike. Mike?

Mike: Thank you, Scott. Good morning, everyone. And thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward looking statements as defined by the private securities litigation reform act of 1995.

Mike: 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.

Mike: These risks can include but are not limited to the impact of seasonality and weather

Mike: Global economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10K and other filings with the Securities and Exchange Commission. Thank you.

Mike: Also, in 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.

Mike: These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a gap and a non-GAAP basis.

Mike: The reconciliation to non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett, Brett.

Brett McGill: Thank you, Mike, and good morning, everyone. Despite continued soft retail demand across the industry and an uncertain economic climate, we remain focused on our strategic plan with a team committed to our customer centric approach.

Brett McGill: A record March quarter revenue of more than 631 million reflects exceptional execution by our team and leveraging our digital marketing tools and data analytics .

Brett McGill: Technology is one of the areas that creates a distinct competitive advantage for MarineMax. Our digital tools enable our team members across retail locations to enhance engagement, anticipate customer preferences, and personalize the buying experience.

Brett McGill: Our digital investments, combined with the best team in industry leading premium brands and strong execution, enable us to achieve record March quarter revenue.

Brett McGill: Even more importantly, I am proud of the exceptional customer service we offer in a tough environment as evidenced by our world-class net promoter scores.

Brett McGill: Following Q1, in which hurricane disruptions and weak demand impacted same-store sales, we rebounded strongly in Q2. Comparable store sales grew 11 percent, benefiting from more aggressive pricing and targeted promotional initiatives in collaboration with our manufacturing partners.

Brett McGill: However, Hurricane impacted customers are still dealing with home and other related issues [inaudible]

Brett McGill: The aggressive pricing led to historically low new and used boat margins, and with the resulting growth in same-store sales skewed our overall revenue mix towards boat revenue, our lowest margin source. [inaudible]

Brett McGill: However, our successful diversification into higher margin businesses over the past several years has helped shield us from cyclical volatility and volatility.

Brett McGill: Here to date, through March, our gross margin is down by only 30 basis points, as high value products and services, such as marinas, super yacht services, and finance and insurance, continue to perform well.

Brett McGill: Reducing expenses has been a key priority for us, and we are now seeing these efforts contribute to improved profitability and reliability.

Brett McGill: Our focus on controlling costs along with sales growth and the resilience provided by our higher margin business strategy has resulted in adjusted EBITDA growth compared with last year, even during what is clearly a more challenging period for the industry.

Brett McGill: As part of our strategic initiatives, we continue to selectively close, consolidate or expand locations to align our retail footprint with growth opportunities and allocate those resources to stronger performing stores, where appropriate.

Brett McGill: One such example is Treasure Island Marina in Panama City Beach, Florida During the quarter we strengthen our long-term partnership with the Marina by extending our lease and acquiring its service and parts departments

Brett McGill: This expansion enables us to provide enhanced service and support to voters throughout the growing panhandle region of Florida.

Brett McGill: Additionally, during the second quarter, we expanded our Marina Portfolio with the acquisition of Shelter Bay Marine, a full service Marina and storage facility in Marathon, Florida. This is our 42nd US Marina or storage location.

Brett McGill: Shelter Bay is a great asset that enhances our ability to serve voters in the Florida Keys by offering our selection of premium boats, diverse dry and wet storage options, and quick access to the Gulf and the Atlantic. Thank you.

Brett McGill: IGY continues to expand its reputation as a global leader in the super yacht marine industry.

Brett McGill: About 14 months after the project was announced, the IGY Savannah Harbor Marine is fast approaching its grand opening

Brett McGill: Central located on Hutchinson Island near downtown Savannah, this state-of-the-art marina will feature about a hundred slips with capabilities of storing roughly 20 megabytes while offering fueling, shore power, and marina-concier services.

Brett McGill: Also, during the quarter, IGY announced through a new level its management agreement at the prestigious Porta Chair of Omerina and Shipyard in northern Sardinia, Italy.

Brett McGill: Renewing the agreement with Porta Cervo Marina is a testament to our commitment to fostering strategic partnerships that enhance our global super yacht and Marina presence and elevate the yachting experience for our customers.

Brett McGill: As part of our long-term strategy, we are committed to building relationships and iconic destinations like Porta Cerevo while driving innovation and setting new standards of excellence across the industry.

Brett McGill: The number of superyats being built worldwide continues to outpace the construction of new marinas by a wide margin. IGY and the rest of our higher margin businesses provide us with more durable long-term earnings power and solid growth potential.

Brett McGill: I also am proud to mention that for the second year in a row, MarineMax has been recognized as a great place to work.

Brett McGill: As an organization, we have incredible tenure within our team at all levels and across all functions. We take a great deal of effort trying to create a culture and atmosphere where people like to work.

Brett McGill: So, it's nice to get the recognition from an organization like Great Places to Work .

Brett McGill: Before I turn the call over to Mike, I want to briefly address our recovery from the two hurricanes in September and October , and also touch on the tariff situation.

Brett McGill: As for the storm recovery, most stores are generally back up to speed with only minor repairs remaining that need to be completed

Brett McGill: Our Sarasota Marina and Store, which was the hardest hit, is and has been operational, but the scope of storage and service are limited and to repairs are fully completed over the next 18 months or so.

Brett McGill: Having said that, the team there continues to amaze me with how well they are operating in a difficult environment.

Brett McGill: As for tariffs, like many other companies, we are working hard to fully understand the frequently changing landscape.

Brett McGill: with the current tariff levels and the availability of other mitigating factors as well as manufacturing partner support, we are less concerned about managing the actual tariff.

Brett McGill: While an increase in price may have some degree of impact on volume, we and our premium partners are best positioned to tackle this challenge.

Brett McGill: The uncertainty created by the tariffs is affecting consumers and this impact has already been widely reported across many sectors and industries.

Brett McGill: Nonetheless, regardless of the environment, I am confident that our strategy, team, technology tools, and premium brands will enable us to outperform and gain market share

Brett McGill: This will position us even better when the industry rebounds. So now let me turn the call back over to Mike for a financial review. Mike?

Mike: Thank you, Brett. Good morning again, everyone, and thank you for joining this call.

Mike: Before I discuss our financial results, I want to take a moment to thank our team for their incredible effort this quarter and helping to drive such strong results

Mike: In this very challenging retail environment, delivering record March quarter revenue, double-digit same-store sales growth, and an increase in adjusted EBITDA is a significant accomplishment.

Mike: For the quarter, our same-store sales grew by 11%, resulting in revenue of more than 631 million.

Mike: Although our overall unit volume declined year-over-year, the same store sales growth was driven by a shift in our sales mix toward higher average price point products.

Mike: Presumably partly due to Florida making up for some of the storm-related lower sales in the December quarter

However, most areas of the country showed improvement

Mike: Much of the unit decline was led by pontoon and more value-oriented segments while premium categories performed better.

Mike: We expected the March quarter to be very promotional given the inventory strain that many dealers are feeling combined with higher interest rates and seasonality . .

Mike: To successfully drive sales and manage inventories in such an environment resulted in among the lowest boat gross margins in our history in the history of our history.

Mike: Consolidated Gross Margin was 30% in the quarter, but with the help from our higher marcher businesses was basically flat with fiscal 2024 on a year-to-date basis.

Mike: Despite the significant growth in revenue, adjusted SCNA expenses declined on an absolute dollar basis and fell meaningfully as a percentage of revenue reflecting the benefits of ongoing cost reduction initiatives.

Mike: During the quarter we benefited from locations closed in prior periods while also enjoying revenue growth.

Mike: Although we are seeing some inflationary pressures across several key areas, we remain committed to enhancing our operational profile by maintaining a disciplined and targeted approach to expense management.

Mike: Second quarter, just a deed bit of 30.9 million was up 5% over last year.

Mike: Our balance sheet remains strong. Cash and cash equivalent succeeded 203 million, a significant increase from December

Lorplain Financing was up modestly from the December quarter

Mike: Incident with the increased availability of product, customer deposits as of March 31st were down from the same period in 2024, but encouragingly did increase sequentially from December .

Mike: At quarter-end, our net debt to adjust the deed that our ratio improved meaningfully from December and was approximately 1.2 times. This underscoring our continued financial strike.

Mike: This strong position reflects our ongoing focus on optimizing inventory levels and managing aging which has helped us maintain a healthy balance sheet

Mike: Looking ahead, our significant financial flexibility, including substantial unencumbered inventory, it access to approximately 200 million in available credit lines, positions as well to investing growth opportunities and navigate changing market conditions.

Mike: Turning the capital allocation during the quarter and to date, we have bought back over 1.2 million shares of our stock under our share we purchased plan [inaudible]

Mike: We will remain opportunistic with respect to such shared repurchases while also focusing on prudent balance sheet management.

Mike: Turning to guidance in light of the recent uncertain market environment due to growing concern about the actual effects to the economy from the tariffs, we are taking the prudent step of lowering fiscal 2025 guidance.

Mike: We now expect fiscal year 2025 adjusted net income in the range of $1.40 to $2.40 per diluted share, and fiscal year 2025 adjusted EBITDA in the range of $140 million to $170 million.

Mike: The main drivers of the change are expected pressure on both the top line and potential margins from the weekend environment [inaudible]

Mike: Of course, the tea leaves are very hard to read right now and seemingly can worsen quickly or improve quickly subject to announcements from Washington to Washington.

Mike: Our revised expectations do not consider or give effect for among other things material acquisitions that may be completed by the company during fiscal 2025 or other unforeseen events, including changes in global economic conditions.

Mike Mclamb: Before I turn the call over to Brett, I will comment on April trends.

Brett McGill: For starters, recall that last year we spoke of some March sales that fell into April and made April trends stronger than usual. Having said that as alluded to by our prior comments, we do expect April to be down from last year.

Brett McGill: In channel checks with lenders and other dealers and manufacturers, there is a consistent theme of general consumer softness caused by the uncertainties related to the tariffs. [inaudible]

Brett McGill: Obviously, as Brett mentioned, undoubtedly, we will perform better than the industry like we consistently do. Now, let me turn the call back,

Thank you, Mike.

Brett McGill: Given the increasing level of market uncertainty about future economic conditions because of the tariffs, we are approaching the spring-selling season with increased caution. As a result, we are tempering our expectations for near-term growth and recognize that the pace of industry recovery may be slower and more uneven and previously anticipated.

Brett McGill: Despite these challenges, we continue to believe that over the long term our strategic position within the premium segment and a diverse nature of our portfolio provides us with a degree of resilience.

Brett McGill: While we remain committed to innovation and expanding our higher margin businesses, we acknowledge that the near term is less predictable, and we will proceed prudently as we assess the impact of ongoing economic and policy developments.

Brett McGill: And with that, Mike and I will be happy to take your question, so operator, please open up the line for Q&A.

Brett McGill: 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.

Brett McGill: A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. In the interest of time, we ask that you please limit to one question.

Brett McGill: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions.

Speaker Change: Our first question comes from James Hardiman with City. Please proceed with your question.

Good morning.

Speaker Change: As always, I would love a little color as I think about disaggregating the plus 11 in terms of resource sales, units versus race.

Speaker Change: and I guess that's particularly important as we sort of roll that forward into April , which I think you said is likely to finish down.

Speaker Change: You know, just from the look of things, we're going from a plus 11 to something negative.

Speaker Change: and so within that, maybe I don't know if things had already begun to slow by the end of Q1, just trying to fully understand that drop-off from what was a double-digit growth number.

Speaker Change: in Q1 to what seems like it's negative, at least, sorry, in Q2 to what's negative, early Q3. Really curious what's happening specifically with units as we go from March to April . Thanks.

Thank you. Thank you.

Speaker Change: Hey James, just Mike, I'll take a stab at that. Just keep in mind in the March quarter for the key segments that we operate in.

Speaker Change: Most of them were down double digits and units and so while we always outperform the industry it's kind of hard to make up double digits So our units were in fact down in the quarter you know the mid single digit range something like that which would tell you that [inaudible]

Speaker Change: Our same-store sales in terms of the 11% would have been driven by the premium product MixShift, larger product, which often drives a big piece of our same-store sales grow.

Speaker Change: What we're seeing in April , and I expect the industry to be down again in April , but I think what we're seeing in April is

Speaker Change: Under the backdrop of a strong April last year, we are, so number one, it's a tough comp because of the business that fell on April but even with that we are just sensing uncertainties with the consumers and it does admittedly change.

Speaker Change: You know, subject to the news cycle and what's happening, you know, can look a little better one day, look a little worse one day but...

Speaker Change: We just think it's more likely that there's some underlying impact going on besides just the tough comparison to April which is what we tried to communicate in the prepared remarks James a good question.

and so just to just to clarify there there.

Speaker Change: You know, if I just do the math, it seems like ASP during the first quarter would have then been up, call it 15%. Roughly, if units were down mid-singles and same-store sales were up 11.

Speaker Change: Wood, should we expect that same sort of ASP benefit in April , which would suggest that units, you know, from down mid-single digits would be down something like 20%, or did that ASP sort of tailing and dissipate to some degree in April ?

Speaker Change: I think in my prepared remarks, I was talking about how when I look at the ASP increase in March, which is that's a big individual quarter ASP.

Speaker Change: I think part of it was some business that obviously came into the March quarter probably from the weekend December quarter because of the hurricanes in Florida and by no means that we made up all that business yet but Florida tends to have larger boat sales which could help to skew a quarter quarter.

Speaker Change: versus the prior years. I think you get a little bit of a mix shift because of that. And so I would not expect that same type of an increase in necessarily in April . It's always possible subject to what the products we end up selling. [inaudible]

Speaker Change: Okay, but we should assume that you got worse in April , but not 15% worse.

Speaker Change: Yes, I think industry wide. I think what you're probably hearing from all the different public companies in the industry is the outlook is...

Speaker Change: changed really starting here in April . It's changed for what everybody thought about the second half of the year, or for us our next two quarters.

Speaker Change: Just given the uncertainty caused by the tariffs and again who knows how long the uncertainty lasts and who knows again the new cycle that can influence that pretty quickly one way or another [inaudible]

You had it. Thanks for the call, Mike.

Thanks James.

Speaker Change: Our next question comes from Mike Swartz with the truest securities. Please proceed with your question.

Hey, hey guys, good morning.

Speaker Change: Hey, maybe just a couple questions on the guidance. I guess I'm trying to understand it. It sounds like most of the guidance reduction that you've outlined.

Speaker Change: is due to macro consumer concerns relative to terrorists. But are there any direct pair of costs that we should be aware of? I know you do some sourcing.

Speaker Change: Europe Asia for Boats, but is there anything quantifiable around potential tariffs?

Speaker Change: On the guidance comment, Mike, our updated guidance is really solely because of the...

Speaker Change: of the change in the outlook as you alluded to. I think before we were commenting that the industry would be flatish, we would probably be flatish in that neighborhood. Good.

Speaker Change: I think now the industry is going to be probably down in our fiscal year, a single digit will probably be down in that range from the same store sales growth. There's some possibility we won't be, but that's kind of what's baked into our numbers and maybe a little bit additional margin pressure. There isn't anything specifically built in. [inaudible]

as a tariff impact. We obviously do import some votes.

But by and large we can [inaudible]

Speaker Change: Brut alluded to this comment. So I'd be more of a potential volume issue down the road. And Michael, I'll add that, you know, the

Speaker Change: That the amount of inventory, the right amount of inventory we have going into our heat of our, height of our selling season here, you know kind of shields us against any of those immediate impacts correct.

Speaker Change: Okay, okay, that's helpful. And then on the, on just the boat march inside Mike, I think you made the comment and your your prepare commentary around this quarter being

Speaker Change: One of the softest from a margin standpoint for new boats I would presume.

Speaker Change: Any way to frame what exactly that means, what that looks like you're over here, and then should we assume that there's some level of improvement? If you're pulling back, maybe a bit on the level of a promotion going forward?

Speaker Change: Yeah, I would tell you really because of the macro that's going on with the industry, I would believe industry wide margins are probably a couple hundred basis points below would be a normal level and they would be below last year's level.

Speaker Change: Also, probably not quite a couple hundred basis points, but 150 basis points or so from, you know, lower than last year's level. And I think just given the current environment with the increased uncertainty, I would expect

Speaker Change: Margins to be somewhat under pressure, more so than perhaps dealers had originally thought for at least for the foreseeable future, which is also was baked into our guidance.

Okay, perfect. Thank you.

Thank you.

Speaker Change: Our next question comes from Joe Altobello, with Raymond James, please proceed with your question.

Joe Altobello: Hey guys, good morning. Talk about the emotional environment a little bit. You can just talk about Mike's question, you know obviously you're coming into the quarter you guys thought it would be a pretty promotional environment or was probably worse than you thought and now it sounds like you expect that promotional environment to persist.

Joe Altobello: Has the industry made any progress on clearing out this aged inventory at this point? And if not, what happens in July when we have the model you're changing over? [inaudible]

Joe Altobello: The builders are just not building very much product right now and so it does give the opportunity even even with weakened boat sales it gives the opportunity for the age product to

Joe Altobello: to continue to improve and speak and do the major floor plant letters in our industry.

but in the summertime industry inventory levels. [inaudible]

Joe Altobello: Should be below normal levels in terms of weeks on hand. It probably still could be a little bit of an aging problem, but overall dealers should start feeling

Joe Altobello: Much better about what they're stocking in the environment as they look forward to 2026. Again, that's probably got extended a little bit because the current environment, but they still generally think it's going to get better. Joe, going forward to promotional activity.

Joe Altobello: You know, the pressure there might just be the uncertainty in the markets trying to, you know, give people a reason they, you know, kind of get off the couch and come in and buy a boat less so than just, you know, inventory levels.

Speaker Change: God, okay, which is a good segue to my next question, which is, you know, pertaining to April , you know, how do you dorsally look at people coming in looking for boats or they're just, to your point, sitting on the couch, waiting for the uncertainty to dissipate.

Speaker Change: Oh, you know, people were pausing, you know, slow to make a decision thinking about it, but you know, let's even call it the last couple of days with just some light at the end of the tunnel possibly. You believe it or not, you get some more store traffic internet leads.

Speaker Change: So, you know, there's the first half I'd say was a little more stagnant than the second half of April . I would comment on it. I think it breaths prepared remarks Joe. He commented that the...

Joe Altobello: I mean, the interest in building, like the, you know, that really the front door of a dealership anymore is really, you know, your website and your online presence and

Joe Altobello: The amount of activity that we have in our online presence is still very, very high. It hasn't dropped and so that's encouraging. I think the desire to enjoy the boating lifestyle remains very high. [inaudible]

Okay, super, thank you guys.

Thank you, Jeff.

Speaker Change: As a reminder, if you'd like to ask a question, please press star one, one moment please, what we pull for questions

Speaker Change: Our next question comes from Eric Wold with Texas Capital Securities. Please proceed with your question.

Speaker Change: Good morning, Brett and Mike. I want to hear the hammer on April this one more time.

Leather Tunnel last couple days, we just in general. Thank you very much, Paul.

Speaker Change: That softness across all price points, was it did you get worse on the value side, do you see creep in to the premium side and then. And then.

Wooded at a level that

Speaker Change: You know, the promotional activity didn't, too, wasn't enough to counter it. And is it at a level that maybe you the OEMs aren't willing to boost promotion to solve?

Speaker Change: I'll talk about the first part on the segments. The lower end has been under pressure now for quite some time, you know, just a tougher segment.

Speaker Change: The higher end though was clearly affected, you know, we had a really good, you know, Q2 here ending March out, but there was definitely some softness I would say across all segments [inaudible]

Speaker Change: Right, Mike. Oh, yeah, I think that's kind of first comment there. Yeah, it's across all segments really for the last couple of court. Well longer than that. You've seen it across all segments. Hey, let's go on the premium product, but still softer. I think, I think- [inaudible]

Speaker Change: What we were experiencing in April and for sure early April , but what we were experiencing was...

It wasn't so much a

Speaker Change: I mean, you could probably solve for a price point. It was really just there was so much noise and so much uncertainty back and forth. I think people wanted to kind of get an idea of what the heck's happening. Yeah, I'd say, you know, my comments about getting people off the couch promotional, you know, that's in a, you know...

Speaker Change: General, not in the uncertainty we had, let's say, in the first half of April , which was kind of wild and crazy, as far as what information was coming out, the uncertainty about what does a tariff mean.

Speaker Change: So, I think any promotion we threw at that may not have been effective. Now that there's maybe a little bit of, you know, folks settling down promotional activity, let's say on larger yachts, it can be much more effective.

Speaker Change: No, it's good. It does come. My second question was kind of, I know that the value buyer probably needed some help recently and maybe the cash buyer had been a little bit more resilient, the hiring guy. Are the hiring buyers?

Speaker Change: Obviously, I've never always wanted to deal. Are they being increasingly, you know, in needle promotions and really kind of pushing that envelope? And is that somebody think is, if that is the case, that's something that's short term or could be, could be a longer term?

He a driver. Any kind? Yeah.

Speaker Change: Clarity with tariffs and there's some deal struck with countries and you know all that stuff which everybody's expecting at some point. [inaudible]

Speaker Change: I think all that will make everybody feel better. We'll probably have a little bit of potential margin till when if the industry inventory levels do, in fact, improve some of the floor plate letters are expecting. So, there's usually upside when you're coming off of low numbers at some point. [inaudible]

I appreciate the questions there. Perfect. Nice guys Thank you very much.

Thank you.

Speaker Change: Next question comes from Anna Glaston. Would be Riley Securities, please proceed with your question.

Anna Glaston: Hi, good morning. Thanks for taking my question. First, I'd like to start on April again, but I understand you talked about obviously demand slowing, but have you seen any change or pick up in cancellations of existing orders or people trying to get out of existing commitments?

Anna Glaston: You know, simply put, no, we haven't. We've, you know, Mike was just saying it, I commented on it, you know, then people, it's right now they're ready to go boating in the more, you know, seasonal environment. So we really haven't seen anything that the cause concern on, hey, I don't want to boat anymore. No. You know, we've, we've, we've, we've, we've, we've, we've,

Speaker Change: Got it. Thanks. And then secondly, and the and the prepared remarks you noted, you know, with tariffs like price increases would be [inaudible]

Speaker Change: Completed, but you feel confident, you know, you're well positioned in light of that. As we think about, you know, next year, I would assume pricing crises would probably be pushed through on the next model years, so really not impacting this fiscal year as much. [inaudible]

Speaker Change: Yeah, we first all like to say we have a good inventory level to carry us through the selling season.

Speaker Change: and we're working really well with some of the best manufacturers in the world, where they're trying to figure out how to mitigate expense and offset any tariff and really can't really still try and understand what that tariff will be and it feels like I think they're thinking it's going to be less than maybe what originally thought, you know, 15 days ago. So, you know, so we're trying to mitigate how much price

Speaker Change: goes into the new product, the new model year, which equates to a price increase, you know, manufacturers are working hard on that. It is, it is...

Speaker Change: You know, nice to keep in mind also that we do focus on the premium end to begin with, and the...

Speaker Change: Over time, you know, there have been other, you know, whether it's inflationary environments during, you know, COVID where we did successfully pass price increases on and continue to today successfully pass it on as you don't want it, but I think given what the likely outcome is of the tariffs, I think we feel reasonably.

Speaker Change: Comfortable with our future outlook in 26 and beyond.

Great, thanks

Thank you.

Speaker Change: Our next question comes from Mike Albanese with The Benchmark Company. Please proceed with your question.

Mike Albanese: Yeah, good morning, guys. Thanks for taking my questions. First one, just a quick clarification if you could, um...

Mike Albanese: Quantify really any of the delto between Florida and I guess, you know, national in terms of your constructs.

Speaker Change: Mike, in terms of the comps, I actually don't have that handy. What I can tell you though is

Speaker Change: Smorda did well, but every region in the country in the March quarter did really pretty well. We didn't have any good news.

Speaker Change: We had good growth in all the different parts of the country during the quarter seem to follow our normal season friends Yeah Midwest was yeah, that's exactly right

David MacGregor, David MacGregor,

Okay, that's helpful, thanks, and then...

Speaker Change: You know, I guess just to go back to consumer demands quickly, you know, we talk about kind of the value spectrum premium consumer value consumer can you just comment maybe quickly on the demand environment in the super yacht division and really that that specific consumer?

Speaker Change: entered into that business several years ago. One of the reasons we did because it's a much more resilient segment. It's a services business and so just for example, we see the bookings right now for the summer season in the Mediterranean and it's looking very strong in light of everything that's going on. That's a very strong indicator that kind of flows through to our...

Speaker Change: Marinas and the Income at Slips, and then also for the Super Yacht Divisions, Frazier, North of Johnson and others. So it looks to be resilient and solid.

Speaker Change: So when I think about softening demands, you're not really seeing it in that [inaudible]

Hard of your business, is that it?

Speaker Change: I'd say our comments are really focused on the boat sales here in the States, probably more is what we refer to, yes.

Speaker Change: Okay, great. That's health. I'm then just a last one if I can. I want to ask about...

Speaker Change: Capital Allocation, you know, we have kind of a shifting or the dynamic macro environment. I mean, does that change how you think about?

Speaker Change: Maybe your M&A strategy, I mean kind of if you could comment on what the pipeline looks like and I mean you just you lean into your services in this environment, do you think about maybe getting aggressive on the traditional deal this side? I'll let you opine but

Speaker Change: Yeah, but just generally we always have a good pipeline of, you know, of

Equasitional opportunities that come to us and we evaluate them.

Speaker Change: Obviously in a time like this we're being much more prudent or as we're always prudent but right now you know focusing on the synergies between all of these businesses our long term strategy with these higher margin businesses businesses

Speaker Change: and the operational excellence at each of these divisions to help us grow. There's a big opportunity there so we've commented on that before but we'll continue to focus on developing the synergies between all of these companies.

God, that's helpful. Thank you. Thanks, guys.

Thanks, Blake.

Speaker Change: Our next question is from David MacGregor with Longbow Research. Please proceed with your question.

Hey, good morning. This is Joe Nolan. I'm for David.

Speaker Change: I just had one question Hey guys just within the growth margin line

Speaker Change: How much of the year over your decline was related to mix, first price cost, first leverage, and just maybe how to think about those factors as we get into the third quarter?

Speaker Change: It's a great question, Joe. It's primarily the boat margins themselves. It's what's impacted in the overall consolidated margin, probably like two-thirds of it's that. I'd say a third of it is.

Speaker Change: mixed shift to a greater percentage of boat sales. So when you sell a lot of boats, which happens to be the lowest margin product we sell

Speaker Change: Even if they were great margins, it's going to reduce your consolidated margin on a year-over-year basis if you sold them in a lot more than the prior year.

Speaker Change: Okay, and expect that trend to continue into the third quarter as well, most likely.

Speaker Change: You know what it all, obviously all subject to how strong, you know, same-store sales are, you know, we currently expect increased, you know, promotional environment, which we're ready for that that's in our guidance numbers, and then just depends on the strength of sales here in the back half of the year.

Yeah, that's all right. Thanks, guys.

Thank you, Joe.

Speaker Change: We've reached the end of the question-answer session. I'd now like to turn our call back over to Mr. McGill for closing comments.

Brett McGill: Well, thank you everybody for joining us this morning. We're very confident in our long-term strategy and we'll look forward to keeping you updated on our next call.