MarineMax Inc (HZO) 2007 Q4 法說會逐字稿

Good day, everyone, and welcome to the MarineMax Incorporated Fourth Quarter Fiscal 2007 Earnings Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Brad Cohen of ICR. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining this discussion of MarineMax' 2007 fourth quarter and fiscal year. I'm sure you've all received a copy of the press release that went out this morning but if not, please call Linda Cameron at 727-531-1700, and she will fax or email one to you immediately.

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 and then will be available for your questions. Mike?

Thank you, Brad. 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 of 1995. These statements involve certain 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 complete and integrate its acquisitions into existing operations 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. Unless you are very new to our story, you most likely know that fiscal 2007 was a challenging year for MarineMax and for the entire marine industry. Weakness in the housing market coupled with uncertain economic indicators contributed to making the consumer more cautious, causing many to delay their boat purchase decision.

I would add that in my 30 plus years in the marine industry, the environment we are experiencing today is pretty tough, and it is about as bad the softness we felt in the early 90s with the Luxury Tax, recession and Gulf War.

Given this backdrop, I'm extremely proud of the MarineMax team and their abilities to properly execute on our [reselling] strategies. Our customer-centric strategies and extraordinary focus on execution has resulted in MarineMax seeing -- delivering an increase in unit sales with the industry declining approximately 15%. I need to restate this fact. MarineMax has actually sold more boats in the last 12 months on a same store basis, while the industry has declined 15% or more.

Our performance, which is in stark contrast to the industry, has resulted in our largest market share gains ever. These gains in market share are important for a few reasons. First, it weakens the competition, which further strengthens MarineMax and our brand in this very fragmented industry.

Second, our strategies revolve around taking care of the customer to ensure that they enjoy boating. Once customers become part of our MarineMax family, they typically trade into larger and larger products in the future. As such, the gains we have made in market share are akin to planting seeds for future revenues and earnings growth.

While we are very happy with the market share gains, it has come at the cost of reduced gross margins and increased expenses. We have been more aggressive in the marketplace, both on the pricing of the product and on increased -- increasing awareness through heavier marketing. As an example, during the fiscal fourth quarter, we held our Second Annual World's Largest Boat [Sale]. This year, we held it over two weekends versus one weekend last year.

We also increased the marketing around that event, utilizing print, radio, TV and the Internet. Where our unit sales were strong during the World's Largest Boat sales, we did not see the dramatic increases that we saw last year when the event produced a 14% growth in same store sales and over 30% unit growth. Against that comparison and in this more difficult retail environment, we consider the event to have been very successful and necessary to add customers to our family of boaters.

Additionally, we increased our number of getaways and our educational classes for our customers. It is impressive that during fiscal 2007, we held over 1,000 events and trips for our customers, demonstrating that our customers are boating and are as passionate as ever for the great family recreation.

On a positive note, our inventories continue to come in line as we expected they would. As we said on the last call, we are planning to buy significantly less units in dollars during 2008 model year, which started generally on or about July 1st. These reductions, coupled with our sales expectations, will result in a continuing decrease of same store inventory as we roll through physical 2008.

We are entering the boat show season and have already completed a few important shows. The results are mixed, as you may expect. Tampa was a softer show this year than last year, but it was also one day shorter. Atlantic City and Norwalk were pretty good shows, both above last year in terms of contracted revenue.

We just left Fort Lauderdale this past Monday, which is the largest show in the industry. In general, we had a good show. Despite a few days of rough weather, the show produced results that were very similar to last year. The challenge for us now is to ensure the contracts that we have written actually close.

As a reminder, we had a good show last year in terms of deposited contracts only to see an increase in our fall-out ratio as we tried to close the deals. But, it is encouraging that in general, the early boat shows are in line with last year, considering the market. I do think that the Fort Lauderdale show primarily results -- excuse me.

I do think the Fort Lauderdale preliminary results speak volumes about the passion our customers have for boating. The press in Florida has had a hay day with the soft real estate environment, and it is good to see people want to enjoy boating, despite all the negative news.

Additionally, the fact that these early shows are tracking reasonably well also says a lot about the target market that our brands address. Since we only sell premium quality products, we have always felt that our business is more resilient than the rest of the marine industry. Our performance over the past year and the results of these early shows confirms that belief.

Despite our comfort in our market position and the successes our team has had selling boats, the marine reselling environment continues to be challenging. We are not sure when the boating industry will get its recovery, but we are sure we will deliver much better results than the industry as a whole and capitalize on the strengths of this unique brand that we have created.

We believe that 2008 will be a challenging year at retail, but we are optimistic that the industry is taking the correct steps to reduce field inventory levels, which adds the potential to allow for increased gross margins, less marketing costs as less boats will need to be sold and less carrying costs as we move through the year.

Getting the supply more in line with demand over this year should benefit us long term. The question is, (inaudible)? As such, we believe it is prudent to expect that the earnings of MarineMax will be adversely impacted until we start to see a clear sign of recovery.

I'll now ask Mike to provide a few comments on the quarter, to [physical] 2007 and our outlook for 2008. Mike?

Thank you, Bill. For the quarter ended September 30th, 2007, our revenue decreased to $318 million from $324 million last year. The decline in revenue was caused primarily by a 1% decline in same store sales due to the difficult environment that we are operating in.

Gross margin as a percentage of revenue declined over 250 basis points to 26.2%. The decline in gross margins was due primarily to two factors. First, we were more aggressive in the marketplace and utilized pricing strategies to take market share.

Second, during September quarter, we earned performance monies from our manufacturers, based on meeting certain purchase levels. This year, we purchased less than last year and cancelled orders during the year. This resulted, as expected, in a reduction of our performance dollars that we recognized during the quarter and therefore, lowered our margins.

Our selling, general and administrative expenses were essentially flat with last year. However, with the slight decrease in revenue, SG&A as a percentage of revenue rose modestly to 21.1%. As Bill mentioned, we were more promotional during this quarter than a year ago, which led to increases in marketing-related costs.

Interest expense decreased 4.5% to $5.4 million due to decreased borrowings on our revolving credit facility and mortgages. We expect interest expense will modestly decrease as our inventories and related borrowings decline through fiscal 2008, resulting in less average borrowings.

Our tax provision was $4.3 million, which equated to a 39.4% tax rate for the quarter. We believe that our rate for fiscal 2008 will approximate 40%. Finally, our net income for the fourth quarter was $6.6 million or $0.35 per diluted share, compared to $12.6 million or $0.66 per diluted share for the fourth quarter of fiscal 2006.

Now, I'll make a few comments on fiscal 2007, hitting only the highlights. Revenue grew 3.5% to $1.26 billion, and same store sales declined less than 1%. Keep in mind that posted essentially flat revenue and an increase in units while the industry was reportedly down 15% in units. Our team did a great job of staying focused and delivering results that are in stark contrast to the industry during one of the more difficult times for marine retailers.

Net income before unusual items was $20.1 million or $1.04 per diluted share, compared to $39.4 million or $2.08 per diluted share last year. However, backing out the one-time unusual gains mentioned in our press release, earnings per diluted share for fiscal 2007 was $0.74 per share. Turning to our balance sheet, at quarter-end, we had $30 million in cash, compared to $25 million a year ago.

Additionally, we have substantial cash in the form of unleveraged inventory as we utilize excess cash to reduce our inventory financing. We ended the quarter with $478 million in inventory. As we expected, our inventory decreased from the June quarter. The decrease from the June quarter is the largest dollar decrease and one of the largest percentage decreases we have had between the June and September quarters.

For model year 2008, we are planning on buying approximately 20% less in units, which equates to approximately 15% less in dollars. This reduction in purchases will be felt as we move through the next 12 months. Our dollar level of inventories is expected to decline as we progress quarter to quarter.

As Bill indicated earlier, we also believe that most dealers are ordering less for this model year than last year. This will help to ease the pricing pressure that has occurred over the last 12 to 18 months as the inventory levels get more in line with demand from an industry perspective.

Customer deposits increased more than 90% year-over-year, but as we have said repeatedly in the past, our deposits are lumpy and not necessarily an indicator of the strength of future business. Overall, our balance sheet has gotten stronger year-over-year with book equity exceeding $373 million. Our book value per share now stands at $20 before giving any credit for the appreciation that has occurred over the years in our real estate, which we have previously estimated at $60 million above book value.

Now, I will briefly discuss our guidance for fiscal 2008. As we discussed last quarter, and it's important to reiterate, we have very little visibility, and we continue to feel the effects of the softer environment in just about every segment and market in which operate. While we are hopeful conditions will improve, it is extremely difficult for us to predict when that will happen.

Most industry reports indicate that conditions have not improved and, in fact in some cases, the reports point towards a softer environment. As such, based on current business conditions and all available information, our fiscal 2008 guidance is $0.60 to $0.80 on a fully diluted basis. This guidance assumes a low single-digit decline in same store sales on an annual basis and excludes the impact from any material acquisitions that we maybe complete.

The guidance assumes that the upside that may be expected from higher gross margins or reduced inventory costs is not currently enough to offset the uncertainty that is presented by current industry conditions, and the efforts it will take to continue to successfully sell products in this environment.

I will now turn the call back to Bill for a closing remark before we open it up for questions.

As Mike indicated, our outlook for the physical 2008 is that our markets could remain sluggish as we have yet to see indications as a sustainable improved cycle. Having said that, with the strength of our balance sheet, our trained and motivated team members and unsurpassed customer-centric retailing strategies, we are excited about being positioned to excel as the market recovers.

To that end, we are singularly focused on execution and efficiency and getting even better at reducing costs and maximizing the value of our assets. Despite the challenges that we have encountered over the past year, we have never wavered from our core disciplines, which has resulted in a stronger MarineMax today. If we can focus on these competencies, we will continue to grow and capitalize on opportunities as they arise, allowing us to grow earnings.

Based upon my 35 years in the boat business, with challenges such as the oil embargo in 1973, many recessions, the Luxury Tax of the early 90s, 9/11, high interest rate periods, and now it's a soft housing market, our customers will continue their passion for this great recreation, which provides a stress relief and also a wonderful family bonding experience.

As I said earlier, our customers' events were greater last year as our customers enjoyed the lifestyle of boating with their families. When the boating industry returns to better times, and when is the appropriate question, the MarineMax will capitalize on the strengths of our customer-centric strategies, our team and our financial strength to exceed our, and hopefully your, expectation of financial performance.

With that, we'd now like to open the call up to questions. Operator?

Thank you.

(OPERATOR INSTRUCTIONS)

We'll now take our first question from Ed Aaron from RBC Capital Markets.

Thanks. Good morning guys, and all things considered, nice results in the quarter.

Thanks, Ed.

Thank you, Ed.

I'm -- just looking out into '08, and I know where you're guiding your sales to low single-digit comps, or negative low single-digit comps. But, I'm trying to just get a better sense of where those next sales are going to come from, because -- and you had great demand in your business from '03 to '06.

And you've managed to maintain that momentum over the last 12 months despite a down market through getting more aggressive. Where does the next incremental sale come from, because it seems premature to expect that the customers that you brought in over the last year are going to be willing to trade up again in the next -- within the next year or so.

Well Ed, there were quite a few customers that did not trade up that still had the desire to do but yet tabled their decision to see when things would get better, and maybe they've experienced difficulties with the housing market as well. So, there's still a lot of customers that I talked to and the team talked to that have tabled their decision that perhaps would have traded last year or two years ago that will do it.

I think the thing that's the probably most important is to understand, and I think you understand this as we do, and that is is that our customers, their passion for this recreation called boating is just unbelievable, and their resilience is very, very strong. So as time moves on, even in difficult times, they decide to pull the trigger, even though they may not see that total light of recovery that they'll go ahead and do it because their passion is there.

I mentioned, over 1,000 events with our customers. It was up over last year, not just because we had a couple acquisitions. It was up almost in every one of our markets. Our customers are out there boating, and they're boating more than they did a year ago and five years ago. So, I think that's the most exciting part of it. But the show, you could see the excitement with the customers. Some of them were still waiting. But at the end of the day, this passion for boating is what'll drive it.

I think it's important to recognize, Ed, that even in challenged times, boats will be sold. And we, without question, have the best team, have the best-trained team. We have the best marketing strategies. We have the best products, locations and everything, and we definitely plan to continue to take share as well. We will see market share gains going through this next 12 months, like we did the last 12 months also.

And also, we're seeing innovation return to the products, and to a greater extent, there's a lot of very innovative products coming out of the manufacturers that are yet to launch. And that will drive our customers.

Fair enough. But just a follow-up question to that, this -- over the last few quarters, your unit growth has outpaced your dollar growth, mainly because you've gotten more aggressive getting, I guess, the new customer into MarineMax.

So, do you think it's -- based on your comments, I'm kind of -- I've kind of come into the conclusion that you think that '08 will be more driven by trade-up sales as opposed to new customers acquisitions compared to what '07 was looking like. Is that a fair statement? And if so, do you expect that your dollar growth in relation to your unit growth will kind of shift more positively relative to what you saw in 2007?

I think, by definition, you'll -- that, Ed, because of how many boats we're buying less, we're buying a lot less of the smaller product. But, I think you'll continue to see the dollar AUP will switch back around, but we'll still have positive unit growth, or at least looking for that for the -- for 2008.

Okay, great. And then, one more question for you Mike, the interest expense, could you give us some guidance there for '08?

Well, what I said in the remarks is that with the average borrowings coming down, you would think that we'd get a incremental reduction for fiscal '08. I haven't done it as a percentage of revenue, Ed. The dollar decline for the quarter that we have now, I would say certainly if you multiply that by four times, it would be at least that, if not greater than that.

Okay.

All of '08.

Got it, thank you very much

Thank you, Ed.

And for our next question, we'll go to Steven Rees with JPMorgan.

Hi, thanks. So, we've seen SG&A dollars level off for the last two quarters, and I wanted to hear your thoughts in terms of what opportunities you have next year to perhaps reduce the SG&A spend in dollars. Or, do you think it needs to remain flat just to maintain the market share?

Well Ed, the biggest part of SG&A is in personnel and marketing. We're not going to back off on the personnel, and we've -- we may do a little bit less with incentives to help drive some of the sales as inventory comes down. And we're -- marketing as a -- as the balance of supply and demand gets a little more even, which is happening by the fact that we're ordering less, Steven, is -- should help us on the not having to go out and do as -- quite as much marketing.

We are also focused on becoming more efficient and effective with everything we're doing. And so, we're -- we are looking at every aspect of our business to see, how can we do business better without compromising what we do for our customer at all? And so, we don't see our SG&A getting worse, but it may not get dramatically better until we work our way through these challenging times.

So, will we repeat the World's Largest Boat Show, yes -- next year, probably most assuredly we will. Will we spend less? We don't know right now.

Okay.

Will we do other events? We probably will, because the market share is probably one of the most important positives that we have in our story right now, because that is future sales, as we discussed.

Okay. And then just on the gross margin, you mentioned both less performance payments from manufacturers this quarter as well as just more aggressive pricing on your part. How should we think about gross margin going forward? Should we expect this similar magnitude of decline, at least the first half of '08?

Yes. I would tell you that if you look on an annual basis where we're down, I think, 150 basis points for this year, you need to look at '08 as you're doing your models you ought to expect that level to be consistent and not drop another 150, but be consistent margins in '08.

I think the challenge that we all have right now is, these next two quarters are more heavily driven by Florida. And we need to see how the business is reacting and moving down here in Florida. And we're going to do what's necessary to keep the business moving. So, these next two quarters could have some type of different implication, perhaps from our gross margin perspective.

The theory is, as I said in my -- in the prepared remarks, that with us buying so much less product and with the industry having and building so much less product that margins have the potential to begin to rise during this year. It's just a matter of timing and also some of the news that's currently circulating around the industry.

And we're working very hard with our team to get them refocused back on the lifestyle of boating and making friends and earning the right to the sale and filling the balloon, we call it, with everything that we do for our customers and less on this rebate-itis that we've had [them on]. This excess inventory creates problems in their heads as well as the heads of our customer. And at the end of the day, it impacts gross margins to a big extent. And so, our thrust is to get them off of that.

We just had all of our store managers in for what we call the Proprietors Club, which is meetings where we get them all together and because get them -- getting them refocused. So, we're hoping and we're working to get the gross margins up. But as Mike said, Florida is struggling right now with this housing situation, and we'll have more visibility when we see what sort of deals we retained from this show. And we're sure working, and we're believing it'll be better than last year, which would be very positive.

Okay. And just my last question on was on inventory. I know you've pretty significantly, the number of units for '08. How much flexibility do you have kind of mid-year if sales don't improve to reduce that even further? Or, would that have to wait until '09?

Ultimately, we work very well with our partners, and we're constantly talking with them, not just weekly but daily, about inventory levels and what's moving. The ultimate answer is, we can stop buying boats today.

Yes.

And for the rest of the year. Now obviously, that has big implications on our partners that we do business with, so we usually try to do a more balanced approach. So, I guess the answer to your question, we have a lot of flexibility, but we also don't want to be short-sighted.

Our partners obviously need to continue to build boats, need to make money, need to fund their research and development departments to give us new and innovative products. So, there's a balance there between what we're seeing at retail, what they're producing, between us and the manufacturers.

Okay. Thanks, Mike.

And for our next question, we'll go to Hakan Ipekci with Merrill Lynch.

All right, thank you. First, can you give us an idea on how the customer response changed during the quarter as we got all the negative headlines?

I don't think we saw a whole lot of different responses from our customers. I think we may have reacted a little bit differently. We may have made sure that we were -- as an example, that we had two weekends of the World's Largest Boat Sale during the month of August, which was probably the worst news month that we've ever had. I'm not sure the customers were as --.

But, I think the passion for boating is as strong as it has been. The Fort Lauderdale Boat Show was challenged with weather and so, I think we missed some opportunities with people from the west coast and even up north that perhaps did not come because we were rained out on the Friday, and we had rain on Saturday and Sunday. And we had wind that would blow you off the dock on Monday, the final day, but the people that were there were very serious.

We -- and our team, I think we saw -- or not think. I know we saw at the show, they were more focused on rather than let's make a deal because of excess inventories, and let's you get you into the -- into boating, this wonderful recreation or, let's trade you into your next newer model.

Okay. And with respect to the competitive environment, you mentioned the inventory situation. But, has there been -- when you look at the overall health of the industry, have there been any exits or [you guys] have been a little weaker? Has anything changed recently, given the negative developments?

Yes. There's been some dealers that have got out, a lot of smaller dealers that weren't as well capitalized, or -- and a lot is probably a big statement. But, there's been several in almost all of our markets that we look at. And some markets more impacted more than the others.

But, I think our feeling in what we're hearing is is there's -- we -- if we're -- if we took you to market share, which we did, we took it from others. And if we took it from the competition, it has to be hurting them to a big extent. And so, I'd say there's going to be others that are going to go out and continue to struggle. And our challenge, and this is the challenge to our team, stay focused on what we do. And what we do is, we sell lifestyles. We don't sell boats at a price.

And so, we need to work on getting the margins up. And ultimately, what gets customers to buy boats is, what does it do for me? What does boating do for my family, not let's make a deal. So, that's our biggest message for next year -- this year.

I see. And finally into acquisitions, you haven't done one recently. Is it because you're holding back in light of the uncertainty? Or, the other side is not willing to make a deal at this point? How are those dynamics working at this point?

Well, there were two things that were going on. One is, we made the two largest acquisitions that we've made in the history of the Company with Lake of the Ozarks and with Surfside in New York. So, they were big acquisitions to bring into our family. And with that is a lot of education and a lot of getting them into the MarineMax family in a big way. And by the way, that's going very, very well.

That was part of it, so we slowed things down. And with the industry where it is right now, you're exactly right. Most that we're talking to, and we're still talking to them in a big way, are saying, let me wait until it returns a little bit so I can get more for my business, because as you know, we pay on a multiple of earnings.

True.

And we've stayed pretty consistent of that on trailing earnings, not future. So, we'll continue the discussions. And when they -- if and when they make sense for us and our shareholders, we will absolutely move forward. But, it's not -- it's not something we're going to do just for the sake of adding growth to the Company. So when it makes sense, we'll do it. But, it is more challenged right now to accomplish something because earnings are down.

Okay, thank you.

Thanks, Hakan.

And for our next question, we'll go to Laura Richardson with BB&T.

Thanks, hey guys.

Hi, Laura.

Hey, Laura.

Just launching into questions here, I'm trying to get a sense of how you expect certain things to flow quarterly next year, like the inventory reduction.

Right.

Is it going to be 15% down every quarter?

Yes.

Or, is it going to sort of progress?

I tell you, the manufacturers basically produce evenly throughout the year on a straight-line basis, so we keep getting the boats, but that sales don't necessarily fall that way. You know, our December quarter is more seasonal as is March, so it -- I would not expect a -- the 15% per quarter. The way to think about is, obviously subject to our sales, when we get to June is when you'll see the ultimate biggest decline. It's just going to kind of come through the year as revenue comes through the year.

Okay. And then -- so, that has implications obviously for the borrowing and the interest expense and --?

Correct. Correct.

And cost of goods?

It -- well yes, I'd say all of the above. It has implications, and I think my cost -- my margin comment really is more of a kind of a big-picture macro perspective when you look at what we're buying less, which is very significant.

Right.

And we talk to all the other dealers out there. There's a lot less products being produced throughout these next 12 months, really as we get from now through next summer, this model year, where I think the opportunity for the industry to start seeing an improvement in margins is real at some point as long as things don't get worse for the industry. And as that's -- that's a question of timing as well.

Okay. And that -- so Mike, if the inventory -- let's see. If you get that -- to the 15% down level by June, does it stay down in September? And then, do you get like a big cost of goods hit in September from the volume-related stuff that you commented on in this quarter?

Yes. We get our highest margins next -- in the September quarter. So, we'd get the same performance dollars with -- there, and you'd have the chance to have a return to normalcy for our September margins a year from now. That's correct.

That [would] return --.

And then, we haven't really forecasted out yet. If you look at -- now, you're going into the next modeling, which I realize is the ending of this current fiscal year, I would say at this point, you would see a sizable dollar decrease September over September in inventory.

Yes.

A year from now, even though we haven't forecasted out that quarter's purchases, because that's in the next model year.

Right.

But, I would suspect that will be the case.

Right. So, if you're down 15% in June, you're going to stay down 15% in September inventory probably?

Correct.

That's assuming the industry doesn't get worse.

Right, great.

Right.

Okay. And then, I guess I'm still having a hard time understanding how that would help your gross margin --.

(inaudible)

End of next year, because don't you get volume-related discounts at the end of the year?

Yes. It helps up -- it helps gross margins on a couple of fronts. One is, when you have less boats sitting in your stores, you're less susceptible to negotiation power from our customers, who are --.

Yes.

Very good negotiators. They look at your store.

Right.

And they see you've got 18 of a certain model. Well, you're not going to see that anymore, because the inventory is coming down.

Right, okay.

We have the ability to hold margins at the transaction level now more than we had in the past. And then, the performance monies are -- that's something that we get every year. It's earned in the September quarter. It's paid then, and we recognize it then.

But, it'll be less based on less purchases this year.

Right.

The dollars are less, which is -- the dollars will be less on less purchases.

Correct.

The percentage will be the same.

Correct.

Okay. So then, if I'm reading this quarter's gross margin correctly from what you just said, probably the bigger impact on the margin was the customer concessions and the salesperson concession and not the manufacturer?

Yes. The gross margin from the transaction standpoint, like with each deal, I'd say fell 185, 190 points. And the differential between that and our total decline during the quarter would be the drop in the backside monies, the performance monies.

Okay. And then --.

(inaudible)

Okay. And then, I'm -- I guess I'm trying to figure out how earnings kind of shake out by quarter too, just because if -- the guidance basically is like, next year -- pretty much flat to this year at the better side. Does that mean you're seeing every quarter being relatively flat? Or, the biggest contraction to come is still in the first half? Or --?

I think the first half is the part that has the most difficulty because again, Florida being the bigger percentage of those two quarters. I think the upside potential is going to be in the June and September quarter, as your modeling the business.

Right.

Okay. That makes sense. And did you -- us said something I think earlier, Mike, about units. And I didn't catch all that. No. You said, the industry is down 15% in units.

And we --.

I didn't get the time period, and I didn't get how you were in this quarter of units.

Okay. Well, we -- our remarks said that during that quarter, and the quarter data just so everybody's clear, the actual data won't come out until December. But the preliminary data, and it's been widely reported, the industry's down 15% during the --.

September quarter.

During the September quarter. We were down about 2% during the September quarter. So we were down also, but near as bad as the industry overall.

Okay. Thanks, a lot.

Thanks.

Thank you, Laura.

And for our next question, we'll go to Tim Conder with Wachovia.

Thank you. A couple of questions on -- Mike, just to follow up maybe on the direction of the discussion with inventories, can you give some commentary, I guess, on a comp store basis? You'd been putting that out there. And then again, following on the previous discussion, where do you see that a year out from now on a comp store inventory basis? Should we see that flattish then, based on your commentary?

Basically at the end of the September and for all intents and purposes, everything's comp at the end of September. We've opened a couple of small locations, but the 3% increase, if you do the math, September over September, that's a comp store increase at this point. We've anniversaried, taken on [Combo], we've anniversaried the acquisition, so we're up 3% in dollars.

Okay.

If you do the math, if we're buying 15% less in dollars and if we're going to sell -- have a low single-digit decline in same store sales, then a year out, we ought to be something like 10%, 11%, 12%, 13% down in dollars of inventory.

Okay. Okay. Okay. And then, you were talking again about your fall-out, tie ratio, whatever you want to attach to it. Where did that -- for -- do you have that statistic on a fiscal-year basis? How did that look fiscal '07 versus '06?

You talking boat show fall-out?

Or, I guess initial contact with the customer or once the sign the contract versus consummation of the contract?

I think the comment that Bill made was that at Fort Lauderdale last year, we left the show feeling pretty good. And those of you who were following the Company then will remember, we commented on the strong show, had a lot of contracts in hand, we were pretty excited.

What happens then is you've got to get the contracts closed, which can take anywhere from a couple of days to six months -- six weeks, depending on the boat and whether it's ordered or not and all that stuff. And by the time we got around December 15th, our fall-out rate from Lauderdale was hovering around -- close to 50%, a little bit less than that. And that's unusual for us. Normally, our shows are 15% fall-out or thereabouts. And so, we had a big fall-out last year.

And I think what Bill was saying is, we're pretty pleased with the results from these shows. We've just got to make sure all the contracts actually close.

And we won't know for a couple of months.

Until mid December, yes.

Right, right.

But what about, gentlemen, again maybe leads that are not generated at a show but just with walk-in or other than show leads that come in, the same type of fall-out ratio there?

I'd say -- I would tell you that of walk-in traffic today, Tim, our penetration is likely up, because we have less walk-in traffic in an environment like this.

Okay.

I don't have the statistics in front of me.

Okay. Okay. Okay, thank you gentlemen.

Thank you, Tim.

And for our next question, we'll go to Jonathan Cramer with Cowen.

Good morning, guys. Just a quick question on regional performance during the quarter, and then if you could talk about trends within your top markets.

Well Jonathan, the regionals -- the regions that were the strongest during this last quarter were Texas and also, we saw the northeast light back up. It had been very, very weak. So -- and Missouri came back on as being very strong. You know, we had an ice storm out there last winter, so we had to do a little recovery for that. The weakest markets were, obviously, Florida and also California, and those markets have struggled the most with this housing impact in that -- all the trickle-down effect with it.

So, if we look at trends as to where things are going with Florida still being our biggest market, we'd see probably some recovery happening there with any sign that this whole housing thing is going to correct or the resiliency of the customer returning a little bit more. And we're not sure about California. We just had major fires, as you know, out in San Diego, which it's kind of hard to sell boats when you can't even see the sky.

So, we're hoping that it'll continue to be strong in the northeast. We had a great Norwalk show. We had a great Atlantic City show, so that's an indicator that things are getting better there. But, we -- we're probably going to have a tough year still with this market, and I don't think anyone's got a crystal ball enough to know when we're going to see the recovery.

But of course, as we've said, when it does, in all the years I've been in this business, it'll return with a vengeance. And when it does, we're positioned to get it, because we took market share in it, which is huge.

Okay. That, good luck [next quarter]/

Thanks, Jonathan.

Thank you.

And for our next question, we'll go to Joe Hovorka with Raymond James.

Thanks, guys. Mike, just a clarification on what you where saying about interest expense earlier, did you say if you take the $5.4 million in the quarter and multiply it by four, that's roughly where you're going to come out in '08, maybe a little bit better than that?

No. What I said is, the decline from the previous quarter --.

Okay.

So September-over-September decline. Just as a conservative -- let me just look at that real quick. Just as a conservative estimate, let's see here.

So, $300,000 a quarter?

Yes. Yes. And it has the potential to obviously have a bigger savings than that. The question though, it all relates to kind of to what Laura Richardson was asking. It's the timing of when we start seeing the drop.

Yes.

And so, it's hard for me to say, hey guys, we're going to get a $5 million decrease or something like that. We can't do -- we can't even begin to predict that until we get through these -- for sure, the December and the March quarter, which are critical from a seasonal perspective.

Right, okay. And then on your SG&A for the full year, if you look at it '08 versus '07, can that number be flat or down? How -- what's that going to look like next year?

I do not think it'd be -- with the sales assumptions that we put out there, it should not be up. And keep in mind, we've got some unusual gains in the reported numbers. So you would take our reported number, add back the gains. That gives you your starting SG&A. And then, our goal would certainly -- we're going to -- our goal is to try to get it reduced from there.

Right.

Okay. And then as a percent of rev, it may actually be up a little bit but down hopefully in dollars?

That's the goal.

Okay. And that just one final question, if -- talking -- what Brunswick had said on their call about some of the regional demand, Florida down 20 in units for the quarter, California down 30, if I back into the rest of the industry, that's saying everything else is down kind of low double digits. Does that sound about right?

Yes.

That's probably right.

That's what's reported.

Yes.

The -- those declines are what's reported.

Okay. Great, thanks guys.

thank you.

Thank you, Joe.

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And we'll take our next question from Anthony Lebiedzinski with Sidoti & Company.

Good morning. Can you tell us what percentage of your sales came from Florida, in the quarter and also for the year?

I actually don't have that right on my hand. I'd tell you, Anthony, it's in the low 40%. It's probably -- on the annual perspective, it's probably 43% for the year. The quarter would be -- it should be a little less than that, because you have all the -- the northern market's still pretty strong to the September quarter.

Yes. So typically, in the December and March quarters, the percentage from Florida would be somewhere in the 50% range?

Yes. Actually, my memory -- I think last year, I gave the number. It jumps like to 65% in the December quarter and probably drops to 55%, 60% in the March quarter or something like that. Then in the June, it drops, and September drops below that.

Got it, okay. Now, looking at your guidance for the year, and I know you don't give quarterly guidance. But, are you assuming that at some point that you'll see an improvement in Florida as -- is that safe to say?

That's not in our guidance, no.

Okay.

We assume that, based on the guidance you have, we're assuming that things won't get dramatically worse in Florida, that things won't get dramatically better in Florida.

Got it, okay. And also, can you tell us what your average selling price was in fiscal '07?

It was comparable -- it was pretty close to last year. It went down just a little bit during '07. With the units being up a little bit and a decline in same store sales, we had a -- and I don't have that right in front of me. It's over $100,000. It probably went something like $112,000 to $110,000, something like that. And for the quarter, it was similar to that as well.

At about four times the industry.

Right.

Okay. All right, well thank you.

Thank you.

Thank you, Anthony.

At this time, that concludes the question-and-answer session today. At this time, I'd like to turn the call back over to Mr. McGill and Mr. McLamb for any additional or closing remarks.

We'd like to thank everyone for participating in our fourth quarter conference call and our web broadcast this morning. Mike and I are available after the call to answer any questions you may have. Thank you for your continued support and belief in MarineMax, especially during these challenging times. Thank you.

That does conclude today's presentation. Thank you, for your participation. You may now disconnect your lines.