Good day everyone and welcome to the MarineMax Incorporated First Quarter 2015 Earnings Conference. Just a reminder that today’s call is being recorded. And at this time it is my pleasure to turn the conference over to Shannon Devine. Shannon, please go ahead.

Thank you, operator. Good morning everyone, and thank you for joining this discussion of MarineMax’s 2015 fiscal first quarter results. I’m sure that you’ve all received a copy of the press release that we announced this morning. But if you have not, please call Linda Cameron at 727-531-1700 and she will then fax or email one to you right away. I would now like to introduce the management team of MarineMax. Bill McGill, Chairman, President and Chief Executive Officer; and Mike McLamb, Chief Financial Officer of the company. Management will make some comments about the quarter and then be available for your questions. With that, let me turn the call over to Mike McLamb. Mike?

Thank you, Shannon. Good morning everyone, and thank you for joining this call. Before I turn the call over to Bill, I’d like to tell you that certain of our comments are forward-looking statements as defined in the Private Securities Litigation Reform Act. These statements involve risks and uncertainties that may 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 company’s ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission. With that in mind, I’d like to turn the call over to Bill.

Thank you, Mike and good morning everyone. Let me start by thanking the MarineMax team for producing our first profitable December quarter since 2005. As we have stated for several years, the marine industry is in a long-term period of recovery. A strength saying in the December quarter is clear proof that the recovery is underway and broadening into more of the key categories and segments that are critical for MarineMax. With more than 45% growth in same store sales for the quarter, which was on top of 9% same store sales growth for the same quarter last year, the boating enthusiasts is letting us know, that they are even more committed to enjoying the boating lifestyle in purchasing boats. Most industry wide reports were encouraging during the quarter. Specifically, the December data shows that the industry ended 2014 on a positive note with most category showing increases for the month. That said, we believe our growth outpaced that of the industry, resulting in continued market share gains for MarineMax. During the quarter we saw strength in just about every segment in almost all of our markets. As in the past quarters Florida continues to be the bright spot of activity, especially in a seasonal quarter like December. However, New York and other northern markets also showed strong growth. The quarter was highlighted by an increase in our large boat activity, as it surged and it continued to contribute to the growth which we saw. Specifically, we saw a big increases in larger Azimut and Hatteras Yachts as well as Ocean Alexander Yachts, which we started representing in April last year. Since boats carry the lowest margin of all of our products and services which we offer when boat sales arise as fast as they did our gross margins are…

Thank you, Bill and good morning again everyone. For the December quarter, our revenue was over a $158 million, up more than $48 million from the previous year. The very strong growth was driven by same store sales growth of more than 45%. Bill mentioned that we saw growth in all segments. I think it’s important to note that we again saw solid increases in the stern drive segment. This segment has been the slowest and the last segment to recover for the industry. We believe that as new models are introduced, this statement should continue to progress through the recovery. As far as cadence during the quarter, the quarter started of well and ended even stronger. Typically sales drop off during the holidays, but this year momentum increased right through the end of the month. This was really good to see. For the quarter, we grew gross profit dollars over $7.5 million. But as Bill mentioned, our gross margin fell to 23.7%. Each of our higher margin businesses dropped meaningfully as a percentage of revenue, due to the extreme growth in boat sales, which pressures our consolidated margins. Couple this with the increase in larger boat sales and the result is lower over all margins, but increase profits. Fundamentally, all is well in the product margin front. We did a good job managing costs. SG&A dramatically improved by almost 700 basis points as a percentage of sales as we effectively leveraged our cost structure. As sales and gross profit dollars rise, certain expenses like pay roll and commissions typically increase, as well as a few other areas that are tied to sales. However, we were able to gain leverage and fixed cost in other areas of the business. It’s important to remember that 50 of the 54 stores we…

Thank you, Mike. We’ve entered our prime selling season energized by the positive impact new boats are having on sales. We are also finally seeing our traditional segments starting to gain some traction, which should help us drive growth in our sales as core segments, finally start to participate in the industry recovery. Our customers’ enthusiasm and energy about the upcoming boating season is definitely growing and this is where our team can and should excel in getting season boaters and new boaters on the water and that boat sold by MarineMax. With our selection of new products and then our one stop solution for all of our customers’ needs combined with our commitment to putting customers and their families on the water to positively impact their lives, we know, we truly have a great effect on improving their quality of life. This approach continues to provide us with a competitive advantage. Our team is very busy this quarter with boat shows across the country. We are encouraged by the increasingly positive signs in our economy such as the stock market, unemployment, housing recovery and yes, low oil prices. Couple of these external factors with the new products and fundamentally a healthy boating lifestyle in the ageing fleet of boats that are out there among the many customers, one can understand why we in the industry are seeing better results. While we have stayed disciplined and will continue to heed this approach, we are always in discussions with dealers to join our family. With 54 stores today, we will look to augment and complement our stores by adding strong market locations. However, we will only do this if the terms are compelling and we believe that the additional stores will contribute sustained levels of profitability. MarineMax is the industry-leader and we are committed to building and strengthening our presence within this rebounding industry. Let me again thank our team for their efforts. For their ongoing commitment and their passion for our customers which ultimately drives our success. And with that operator, we’d like to open the call up for questions.

Thank you. [Operator Instructions] We’ll go first to James Hardiman at Wedbush Securities.

Hi, this is Sean Wagner on for James today. Just got a quick question, what was the growth of the new boat sales in the quarter?

So our same store sales growth which was up 45% was, units were more than 50% of that growth. So say that we were up 25% in units, 23% in units. We saw a good growth in new boat sales, so new boat sales will be up about that same percentage overall.

Yeah, pretty close.

Okay.

Okay, what we did, we had big boat sales during the quarter what we certainly had small boat sales during the quarter as well.

Okay. And how do you anticipate ASP’s trending over the next few quarters?

I think as one of our primary suppliers Sea Ray is introducing some smaller products a 19 and a 21, we should sell enough of those at the potential for the ASP to actually come down exists, but that’s a good thing we are just selling more units overall.

And the success thus far at the shows was Sea Ray’s 19 and 21 has been very encouraging. So, they didn’t have smaller boats that were new for quite a while and so they’re being very well received. So, I would echo Mike’s comments there.

Okay. How was the availability of the new products specifically from Sea Ray, I know you’ve spoken in the past about shortages?

Yeah, the larger yards are continued to be a challenge. They are starting to come in, but they open the Sykes Creek plant to help augment that although it will take a little while to get that up and running. The smaller boats, I think they are doing a very good job getting them to us and I expect that demand will exceed supply here as we go through the shows, but it’s very encouraging with the new products.

Okay, I appreciate it.

Thanks, John.

Thanks, John.

And we’ll go next to Jimmy Baker at B. Riley and Company.

Hi, good morning guys, and congratulations on an exceptional quarter here.

Thank you, Jimmy.

Thank you, Jimmy.

So it seems like a very exciting time here for your business. Earlier this week I saw your big announcement that you’re looking to add 100 people to your sales force that strikes me as a fairly significant increase not to say you don’t have the demand to support it. But thus for you continue to show really nice expense leverages as comps improve clearly the case in fiscal ‘14 looks like you are off to that same kind of start here. How should we think about any change to the SG&A structure the model and in terms of incremental flow through from your hiring needs?

Well, first of all Jimmy hiring 100 additional sales team members are primarily it’s a long-term focus, long-term being over the next 12 months spotted to two years, I mean we’re always looking for good team members. But as business starts to improve, we need the additional team members and it takes a while to get them on board, get them trained and get them producing. So, the SG&A expense for most of them is a small base salary and they are our own commissions and so as they start producing that’s not a problem for SG&A.

Yeah, I wouldn’t expect that the way you model the business traditionally is going to change because of that I think honestly it will give us more potential add backs if you will and potentially could help the top line as well.

Okay, great. And then you called out strength in Azimut and Hatteras and Ocean Alexander on the big boat side and we’ve heard from a few other yard OEMs that are telling us they’ve been able to take advantage of, I don’t want to call it delays, but let’s just say long wait times to get some of these new Sea Ray El Galati [ph] yachts, would you say that dynamic partly explains the strength you are seeing in the brands you outlined and I guess to take that one step further, just to the extent buyers are choosing something else due to the Sea Ray wait time, do you see an opportunity to kind of recapture that trade in once availability improves.

Jimmy, the strength – when we call out the larger Azimut, Hatteras and Ocean Alexander’s, those really don’t compete with what Sea Ray is bringing into the marketplace, but we are talking 70 feet and above. And so our specific comments would not impact or correlate with the strength or the cadence of product coming out of Sea Ray from the 65’s or the 59’s, you know we, may be addressing your point we certainly see very strong interest in customers for those models. And once the models are fully integrated and out in the field, we think Sea Ray is going to have dramatic share growth with really any of the new models we’re bringing out. That’s what the story has been so far. So, we think whatever share they’ve lost, they’ll gain that share back.

Okay and then just lastly I recognize the need to manage expectations here that are plus 45 comp is probably not sustainable, but that said you are up against a very easy comparison here in the March quarter and you talked about really back-to-back bad years of weather for the industry, do you think you pulled forward any sales out of the March quarter? And I guess just given your backlog and what you’ve gathered from the boat shows so far, how would you characterize mix in the March quarter to tie this all back in the margins?

Honestly the backlog is more normal of our normal backlog not heavily weighted – or not weighted disproportionately to some of the larger product that we saw in the December quarter. That’s not to say we won’t end up having more of those larger sales as the quarter progresses, but the backlog is more normalized. So, I wouldn’t expect based on that any type of margin erosion from a mix perspective.

And you know we are encouraged by what we are seeing at the boat shows, Jimmy and but you know we are also very cautious, you know as an example Boston got hammered you all missed it, everybody missed it in New York with the blizzard that you know a few events like that can have a dramatic impact on the March quarter, as we’ve seen in the last couple of years. So, we just – with bigger boat sales that contributed to our performance this quarter and we just and – we need to get through the March quarter and in the June quarter we’ll know a lot better.

Okay, fair enough, well, thanks very much for the time and good luck in the selling season.

Thanks, Jimmy.

Thanks, Jimmy.

And we’ll go next to David Gregor at Longbow Research.

Yeah, hi. This is Shane Rourke sitting in for David this morning. Thanks for taking my call. On the last call we were talking a little bit about how you are making some efforts to clear out some non-current inventory and I am wondered that it was a big problem. But I was wondering, if that had changed it all the progress that’s been made sort of where we stand there at this point?

We continued to understand that as new models in particular come out, you’ve got to clear the decks for the older models, and so some of the reduction in margin that we saw this quarter was attributed to basically pricing the product right that is being replaced. And we feel very comfortable right now with out inventory level and the ageing is not something that really has us worried, in fact that say, we’re probably in better shape than we’ve been in a bunch of years. So we’ll keep to focus there at the end of the day when models being replaced or it gets to be a year older are there about so that erodes the margin because the buyers looking for more of a discount and so we - it’s a focus in our company and we understand that we’ve got to keep our eye on the ball there and keep moving out the older products, so those products which are going to get replaced. And so we made substantial progress this quarter and have been continuing to make progress.

Okay. That’s helpful and just switching gears quick. You said, you definitely still sort of in the market for acquisitions and so forth. I am just curious, do you see anything different in the market in calendar 2015 that to be either sort of speed that up or slowed that down or anything going on there that we should know about?

Well, there's a couple of things Shane. One is the earnings of some of the dealers that we’re interested in becoming part of our family, their earnings are looking better or look to better for 2014 than they did in previous years. And additionally, with many brands we had today especially if you take Azimut and Ocean Alexander [indiscernible] to leverage those brands into potential acquisitions in markets that we’re not in right now, offers an opportunity to them as well as to us. So we will continue to make sure that what we do is right for our shareholders is that we’ll get future earnings out of it, then it makes sense. But at the end of the day it’s looking more attractive for not only potential acquisition but also for us as the shareholders.

Okay, thanks a lot.

It’s okay. Thank you, Shane.

[Operator Instructions] And we’ll next to Mike Swartz at Suntrust

Hi, good morning guys.

Hi, good morning.

Hi, good morning.

Hey, I just wanted to talk about and you mentioned it earlier in your commentary just about Sea Ray bringing out some of the smaller deck boats, I think the 19 and the 21 you mentioned. Where that they have – are they’re offering these in both outboard and inboard propulsion systems, could you just kind of talk about what you’ve seen thus far as far maybe consumer interest in one propulsion versus the other and maybe looking forward, how you would expect that to impact you in terms of market share or margins or any of that good stuff?

Well, as you’ve mentioned Mike, the 19, 21, the 27 are available in outboard not only just stern drive. And for a lot of the markets, take the northern markets, there is still a preference for the stern drive and we’ll continue to have very good sales with the stern drive market with these new products and we’re seeing that. But if you take the coastal markets especially Florida and even parts of Texas, it’s more outboard focused and so to be able to have outboard product with Sea Ray will absolutely help our market share and will open up the doors to many buyers that we wouldn’t get when they were just strictly stern drive. So we’re very excited about the outboard product and – but it doesn’t fit in every market and there is still advantages and disadvantages to both and so we’re very cognizant to that and take markets like Minnesota, it’s still a stern drive market. But yet, if you look at the East Coast to Florida, it’s very outboard focused so to have that product is very important to us. So we thank Brunswick for that and we’re very excited to be able to grow market share with it.

And then one question, you also have touched on the charter business, namely the Aquila Catamarans, if I said that right. Getting into selling those to private customers, I mean as you think about and understating it’s not material now, I mean, how should we expect that to maybe show up in the P&L? Is that something that will be included in same-store sales or is that more of a direct sale that will flow through differently?

No, it will show up in same-store sales as we go forward but please understand that we’re having to ramp up production. We first had to supply the charter fleet and we’re still growing the charter fleet down the BBIs [ph] with the products. So the manufacturer, we’re just now starting to get in their new 443 which is a 44 foot three cabin boat with a full beam master that’s up. And so having that product available for our stores, it’s been a challenge right now, but they will start ramping up as we go forward. And same way the new 48, that’s either a three or four cabin yacht, but you know it’s got it’s place, it gives a lot of volume, a lot of space and lot of accommodations and there is a retail market for it. And so – but it’s going to be that very slow coming because it says 30 days across the ocean and it’s also – they can only ramp up production so far and maintain the quality which is what we want to do.

Mike and the transactions that we end up doing in other countries are – we’re setting up call it dealer or distributor relationships and then that type of a transaction would not go though same-store sales and that would end up being more of a fee-based business between us and the manufacturer. So that – we’ve done some of that today but that’s certainly not material either.

Okay, great. Thanks guys.

Thanks.

Thank you.

Our next question today is from Greg McKinley at Dougherty.

Yeah, thank you. So wanted to talk about product level margins, you’ve indicated they are healthy, but I wonder if you can maybe give us a little more color there, how are they shaping up, what you saw in the December quarter versus either maybe the last peak cycle or what you experienced in 2014?

Historically, when we look at brand by brand and model by model, our margins have been approaching peak for the last probably a year and then when you look at some of the new models, they’re exceeding peak. The demand, the pent-up demand is so strong that they’re transacting at even higher than we historically had transacted. So the new models that we sold in the December quarter were transacting above what we normally sell boats for. The existing models were transacting at not always at peak, but certainly comparable with where they were in 2014 or where we would have expected them to have transact during the quarter. So margins were fundamentally sound and on-track with what we expected.

And then the larger yachts obviously are lesser margin.

The larger yachts, you’re going to get 10%, 11%, 12% margins on some of those larger yachts in that neighborhood.

Yeah. But taking sales mix out of the equation, product margins sound something like they like improve later in the year as more of your sales come from -- you’ll just have more fresh new models from Sea Ray?

Correct.

Yes. So if we would have stripped out any of the mix form the – I’d say the explosion of boat sales and then the larger boats, our margins would have probably been down a little bit because of us moving out some of the models that are being replaced, which is what we had thought and ready to expect. But not a lot, it would be down just a little bit, kind of inline with where we would have expected.

Okay.

Yeah.

Okay. So we called out Azimut, Hatteras, Ocean Alexander, how – can you give us a sense for what kind of dollars we are talking about related to those products in relation to what you may have experienced year ago, or products that fit those description.

It’s probably better to think about how our – what drove our same store sales growth. So if we are up 45%, the unit growth was near 25% for boat sales. And new boat sales were around that same number. And then the difference would be just an expansion of the average unit selling price because of a handful of it and it is a handful. It doesn’t take too many $5 million or $6 million yachts to add a fair amount of revenue in a small quarter like December quarter.

Yeah. Okay. You talked about sales momentum accelerating as the quarter progressed and that January has continued to demonstrate that. So I guess, just by definition, December must have comped more than 45%, maybe 50-some-%. Is January literally comping 50% to 60% then?

January is going to be good month, but I got to repeat that January is a small month in the quarter. So I think the key point is, if you look at January and February and combine them.

Yeah.

March is as big as the two of those combined. And so, our cautionary language -- well, certainly trends right now are encouraging.

Yeah.

Our cautionary language is we need to really get through the boat show season and through the month of March. Let’s see, if what we saw in the December quarter and January here is sustained and if it’s we’ll have a nice quarter and if it isn’t obviously we’ll talk about that, but then obviously the June quarter is just critical for the – for us to. We have high earnings expectations for ourselves and certainly there are decent earnings expectations out there for the company I think more than doubling from last year. And I think just – my prudent cautionary language is let’s stay muted until we get through this at least this quarter and then take a look at what’s going on in the June quarter.

Right.

Yeah, okay. Thank you and then you’ve talked a little bit about the regional preferences for different propulsion systems. Can you give us some contacts for what drives those?

If you look at the outboard market, it’s so full of product that is outboard focused like fishing boats and pontoons et cetera. And there is a mentality that goes around, I want outboard, because it’s downed to the back of the boat and it must be easier to work on, and all of those things that go with it and so there is just a preference for outboard power, however, if you go up into the northern markets saying the advantages of a stern-drive, you don’t have it hanging up at the back of the boat and it’s not in your way at the swim platform and that type of thing, people prefer the stern-drive to the outboard.

Okay.

Especially, when it comes to run a boats, deck boats and that type of thing, so there is a place for boats and as I said before we’re just really excited that we now have Sea Ray outboard power product to offer, because there is a lot of people that just are not aligned with buying the stern-drive.

Yeah, okay, thank you.

Thank you. Greg.

Thank you.

Moving next to Seth Woolf at North Coast Research.

Hi, guys, congrats on the fantastic quarter.

Thanks.

Thank you, Seth.

Thank you, so just two quick questions. First, it sounds like you guys are ahead of plans with moving the older inventory. So I guess, as we think about gross margin throughout the year, I was hoping you could remind us the kings of the new product introduction, and when you guys will actually be getting these to the store, so that we can kind of putting everything together and think about the gross margin in the right way?

Well, I think, obviously, as the new product Seth becomes more available and please do not misunderstand, we could use a lot more of the Sea Ray new product, especially the 65s and the new 59 as an example and some of the deck boats. So I think supply and demand will – the demand will outpace the supply. So it’s not like we can get everything we need right now. What’s encouraging is we are starting to get what we need. And as such margin should continue to rise as we are able to introduce more and more of the new product, but so, as far as gross margins are concerned, I wouldn’t get too aggressive that they are going to just jump up immediately because we’ve got to get the product first. And we are clearing the deck and we’ve made a lot of progress and we feel good about where we are right now. But at the end of the day, it’s a lesser margin on a boat that’s being replaced and for sure one that’s got a little bit of wage on it. So we are pushing hard in that direction.

Okay. And then the second question is, if we look at some of the categories, you’ve had for a number of quarters now, you’ve called out the strength in some of the bigger boats, and I want to say maybe the last few quarters you’ve seen some improvements in the smaller boats, the 30-foot boats? And then to follow-up on an earlier question, I was just kind of – I was hoping you could share us some of what the consumer response is to those new SPX lines? And then additionally at what points are you going to feel comfortable that the growth is going to be more sustained in these categories because a lot of the bigger boats, it sounds like they are already – you’ve basically sold through the supply that you are going to get this year. So the delta in any of the sales upside is probably going to come from the smaller boats, is that’s fair?

I think that’s correct, Seth. To answer your question on the 19 and 21 SPX, they are being very well received both outboard and stern drive, and we think that will continue. We are in some – we are involved in more show weekend and we follow that Dallas next week and New York last week and so the Atlantic City in two weeks and then we move into Miami. So some pretty big show is still ahead of us. And I think that product will continue to be very, very strong. And to have that back into the portfolio is very important for us. And I think we’ll start seeing the advantages of it. But now if you look at the larger product, 65s continue to be very strong, 59s and of course, even the larger Azimut above that are still lots of opportunity and that market is very vibrant. So take the 27 through the new 30-foot SLX, I mean it’s still very, very strong and – so that means higher margin, that means little easier sale for us and at the end of the day it will mean market share.

Great. Thanks guys.

Thank you.

Thank you.

And we’ll go next to Joe Hovorka at Raymond James.

A - Good morning, Joe.

Looks like Joe’s lines has disconnected.

We must have answered his question.

And we’ll take our last question today from Jimmy Baker at B Riley.

Thanks for the follow-up. Just had a couple here, so earlier I think you mentioned that you are seeing strength in Azimut above 65 feet, any reason why you are not experiencing strength there in kind of the 40 to 65 foot range or particularly maybe you could speak to the reception of their new 50. And then separately just a follow-up to the question on your acquisition strategy, I know you’ve been a very disciplined buyer, but as your confidence in the industry recovery is improving, might you be willing to step up your evaluation range, it just seems like – especially if you are able to use your stock as currency or structured in some sort of earn out that you have a really opportunity to present a evaluation arbitrage to your shareholders here.

On your first question, we are doing very well with the smaller Azimut in Atlanta’s product, which is built by Azimut in less than 65 feet, but – so our comments that – the market above 65 is still very strong for the product as well. So, but the smaller products are doing well and we do not have a new 50 from Sea Ray as an example, it will be coming and so in the 40 foot, 50 foot range we are still struggling with some of the older product and Azimut is a great opportunity understanding that in some cases they are different buyers, but in some cases – when someone wants a new 50 and we don’t have it with Sea Ray they will buy the Azimut. As far as acquisitions, we don’t really see stepping up the range, we don’t – we are the only dealer out there that’s making any acquisitions and at the end of the day it’s becoming part of the family as to whether we would use stock – it’s possible, but at the end of the day the discussions are going very well and when they make sense we’ll do it, but we’re just not going to get ahead of ourselves and get too far beyond what the model is as we’ve stayed consistent with since we formed our company.

And we have entertained earn outs with some people, obviously the people we’re talking to believe the future is a lot brighter than the past. So, that helps them to get rewarded to if they are able to produce in the future.

Okay, excellent. Thanks for the color.

Thank you, Jimmy.

Okay. Thank you, Jimmy.

And as we have no further questions at this time. Mr. McGill I’ll turn things back over to you for any additional remarks.

Thank you operator. And in closing, I’d like to again thank all of you for your continued support and interest in MarineMax. Mike and I are available today, if you have any additional questions, and again thank you our team for a great quarter.