MarineMax Inc (HZO) 2011 Q1 法說會逐字稿

Good day, everyone, and welcome to the MarineMax incorporated first quarter 2011 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 Ms. Kate Messmer of ICR. Please go ahead, ma'am.

Thank you, operator. Good morning, everyone, and thank you for joining this discussion and MarineMax's 2011 fiscal first quarter results. I'm sure that you've all received a copy of the press release that went out this morning. But if you've not, please call Linda Cameron at 727-531-1700 and she will FAX or e-mail one to you. I would now like to introduce the management team of MarineMax, Bill Mcgill, Chairman, President, and CEO, and Mike Mclamb, CFO of the Company. Management will make some comments and then will be available for your questions. Mike?

Thank you, Kate. Good morning, everyone and thank you for joining this call. Before I turn the call over to Bill, I would 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 a 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 turn the call over to Bill.

Thank you, Mike and good morning, everyone. We are very encouraged by a few areas of progress in the quarter. Even with the challenges our industry continues to face. Namely, we were able to achieve a significant year over year increase in new boat sales and product margins increased incrementally as the aging of our inventory improved. The industry challenges persisted in the December quarter with reports showing that the segments in which we operate, new unit sales were down approximately 30% in historically low consumer confidence levels continued.

Given this backdrop, the fact that our new boat sales for the first quarter were up in units about 25% overall lead by an even stronger strength in Sea Ray as well as some of the other key brands offering, is a real positive. The growth we experienced in new boat sales contradicts the latest industry data for the December quarter which we view this as evidence of our continued progress in gaining market share and we believe it validates our retailing strategies as well as to strengthen the brands we represent. As I mentioned earlier, we were also able to generate this increase in new boat sales while increasing margins.

The strength in new boat sales were masked in our overall results due to a decline we experienced in used boat sales versus last December quarter. Over the past few years, there's been a shift in our industry toward the sale of used boats due to the influx of inexpensive, but relatively good quality used boat inventory due to repossessions and other market dynamics. Historically, the industry sales mix has been made up of approximately 70% used boats and 30% new boats in terms of units.

In recent years due to the increased availability of attractively priced and an abundance of used boat inventory, this shifted to about 85% used and only 15% new. Now the industry is in a situation where the availability of late model used boat inventory at attractive prices has diminished greatly. As a result, our inventories of used boats and that of the industry has become leaner than in the past few years.

And this in turn has impacted our used boat sales. We also believe that this in turn has, and will continue to benefit new boat sales. As the pricing of used inventory is stabilized and increased consumers will focus more attention on new boats when making their purchase decisions and be more willing to trade their boats with improved trade values. We believe that eventually the historic levels of used versus new will likely return as new boat sales pick up.

Moving on to inventory, while our inventory levels generally rise seasonally from September to the December quarter, we were able to keep our inventories approximately flat on a sequential basis. As of December 31st, our inventory stood at $189 million. Importantly, the aging of our inventory continues to improve. Inventory levels across the industry also appears to be much better aligned with demand and also continue to show improved aging. Our gross margin of 25.6% for the quarter was up compared to September of last year.

We continue to make modest improvements in our higher margin businesses such as service parts and accessories, brokerage and finance insurance. These improvements should continue to benefit gross margins. Though there are always mix shifts that impacts our gross margins from quarter to quarter, we believe that we can maintain margins in the mid 20% range on an annual basis of course subject to further declines in the economy or deterioration of aging -- of the inventory aging conditions. Dealer failures this winter are ongoing, however the pace is certainly at levels far less than in the past few years.

The impact of the failures is also much less severe since for the most part the inventory at these dealers is very low. We believe that the pace of dealer failures will continue to diminish as we move ahead which is good for our industry and the consumer. During the quarter we were able to reduce our SG&A costs by $2.2 million year over year. We continue to make progress in reducing our operating costs and are maintaining a focus on tightly controlling this area. As we had mentioned in the past, the 56 stores we operate today produced an excess of $1 billion in revenue in 2006 and 2007.

So going forward we believe this provides us with a significant opportunity for growth without corresponding increases in our fixed costs. Our January boat shows are showing increased consumer attendance. However, sales at the shows reflect a mixed message with some shows being up significantly and others flat and others slightly down. Rather than a geographic mix impacting the result, it appears that adverse weather may have contributed to those that were flat or slightly down. It is still early in the winter-spring boat show season, so it is difficult to make a conclusion, but it does appear that the industry may have finally bottomed out. Retail financing is also showing that the availability of credit is easier. I will now ask Mike to provide more detailed comments on the quarter. Mike?

Thank you, Bill, and good morning again, everyone. For the three months ended December 31, 2010 our revenue was $92 million, down approximately $8 million from the prior year. Our same store sales declined by 8%. As Bill mentioned this decline was due to a decrease in used boat sales. Used boat sales declined due to the reasons that Bill mentioned. Keep in mind we had more used boats to sell last year as they were trade ins we took during our September 2009 inventory liquidation quarter.

I will add that the strength in new boat sales was fairly widespread across the country and across the side segments that we carry. Florida's performance was incrementally better than the rest of the country. Gross profit as a percentage of revenue was 25.6% in the first quarter, up about 400 basis points from the prior year and also up from the 24.2% that we reported in the September quarter. This improvement was driven by incremental increases in margins on new and used boat sales and improvements in our higher margin businesses as Bill mentioned.

These businesses have continued to gradually grow as a percentage of our overall revenue mix. Consider in 2006 service and parts and accessories accounted for 8% of our revenue and in 2010 they accounted for over 16%. This increase was caused by the sharp drop in boat sales, but also due to our focus to expand these businesses. When things recover in the future, our margin should be higher than in the past due to the expansion of these businesses from historical levels.

It is nice we had higher gross margin dollars despite the drop in revenue. Our selling general and administrative expenses decreased approximately 7% or $2.2 million during the quarter to $27.4 million. While this represented a slight increase as a percentage of revenue, we were pleased with our progress and continue to reduce our costs. Interest expense decreased more than 40% to approximately $840,000 due to a more favorable rate on our lines of credit and less average borrowings.

Regarding income taxes, we did not recognize any material income tax expense or benefit and as we have discussed in the past we will likely not do so until we return to sustained annual profitability. The net loss for the first quarter of fiscal 2011 was $4.7 million or $0.21 cents per share. The loss is much better than the net loss of last year of $9.1 million or $0.42 cents per share when you exclude the tax benefit. We also concluded certain aspects of our relationship with a manufacturer whose brands we stopped carrying in late fiscal 2008. The impact was that our loss in the quarter was reduced by the unwinding of reserves that proved to be not required.

Specifically gross margins benefited approximately $500,000 and SG&A benefited by approximately $700,000. Revenue was also increased by approximately $200,000. Altogether, before factoring in other costs that were associated with the wind down, the resolution with this manufacturer benefited our bottom line in the quarter by approximately $1.4 million. Turning to our balance sheet at quarter end we had approximately $17 million in cash up from $13 million last year. As we have mentioned in the past, our cash balance is a function of how much we want to leverage our inventory.

We had substantial cash in the form of unleveraged inventory. Our inventory at quarter end was $189 million which is consistent with both the September quarter and the prior year. As Bill mentioned we were able to keep our inventories flat sequentially despite the normal seasonal rise which typically occurs. Turning to our liabilities, our short-term borrowings were $94.6 million at the end of December quarter down 7% from $102 million the prior year.

We ended the quarter with the current ratio of 1.80 in total liabilities to [tangent] at work ratio of 0.67. Both of these are very healthy balance sheet ratios and are far better than our required covenant levels. Our tangible network now stands at approximately $200 million. As we have mentioned in the past we own more than half of our locations, all of which are debt free. We believe that these attractive locations, our leading brand offering, our capable team and strong financial position leaves us well positioned as conditions start to improve.

I would close by restating what Bill had said. It is very nice to be able to report that we had a sizable increase in new boat sales. It does make us feel that we have finally hit bottom. Many external variables will determine where things go from here. I think it is safe to assume that the industry will continue to balance along the bottom and experience choppiness until greater signs of a sustained industry recovery are underway. I will now turn the call back over to Bill for closing comments.

Thank you, Mike. As you've heard me say repeatedly over the years, our customers are boating and enjoying the boating lifestyle more than ever which is validated by our customers' participation in our get away events and increased fuel sales in our marinas. Their desires to escape and enjoy their families are stronger than ever. I want to take a minute to remind you of some of the brand expansion efforts that we have completed which should benefit us greater when the industry recovers.

At the beginning of fiscal 2009 we expanded with Azimut, a leading Italian luxury brand in the state of Florida and later Tennessee, Georgia and the Carolinas which is contiguous with our northeast market for Azimut. We also expanded with Meridian in Baltimore and San Diego. We added Nautique to Minnesota and Atlanta while adding Malibu to Arizona. These brands are the country's elite ski and wake board boat lines. We also expanded with Harris Float Boats, a brand of fine-tune products in several of our markets.

We added Cabo and Hatteras to our New Jersey and New York markets and asked Boston Whaler to our Naples and Fort Myers markets. With each of these expansions we added non-cannibalising brands to complement our existing brands that should help to yield increases in same store sales when things do begin to recover. We are working on additional line expansions as well. Historically we would have had to acquire the dealer that had the distribution rights to these market places.

In this economy we have been able to complete these expansions with no blue sky payments. During the quarter we relaunched our longstanding pricing strategy for our boats and yachts which includes equipments and services we believe that are needed by the customer. For those who remember, historically we sold by using our value price which was well received and embraced by our customers and teams.

Over the past few years as we rapidly downsized our inventory and faced considerable pricing pressure from repos and dealer predators, we moved away from this core strategy. We have returned to this pricing strategy and it is being received very favorably by not only our customers, but also our team members. We are convinced that it is the right approach for our customers and team and it contributed to some of our increased margins. It remains difficult to predict the timing of a full recovery for our industry and the choppiness will most likely persist for awhile.

We have positioned MarineMax very well for not only now, but also for future opportunities. Through the top, but necessary actions we have taken, we have a much lower expense structure, an attractive footprint of stores, high quality brands, a proven customer focus strategy and the financial strength to take advantage of opportunities as they arrive. Our team remains optimistic about the future based upon our customer's excitement and positive attitudes toward boating.

Their increased satisfaction with MarineMax and the many initiatives that we have implemented to capitalize on the opportunities ahead. We are also working on and actively looking at other strategic opportunities that continue to arise and will make expansion decisions when the economic rewards makes sense.

And with that, operator, we will open the call up for questions.

Thank you. (Operator Instructions). Our first question comes from James Hardiman with Longbow Research.

Good morning. Thank you for taking my call. A couple questions. First with the used boat sales. You talked about two factors that lead to that decline. One was a tough comp given the incremental used boat inventory you had last year, and two, that there is a shift away from used boat sales now toward new, sort of reversing the trend of the last couple years. How do I think about the significance of those two factors given -- the first one presumably is going to go away, right? The tough comp versus last year, that sort of goes away here in the March quarter, but the second one would suggests that you might have a head wind here at least for a few more quarters given the fact that presumably used boat sales out sold new sales last year, and those difficult comps might continue. How should I think about that, and should I expect used boat sales to be down sort of for the remainder of the year?

I agree with you on your first part of the question that the comps will eventually get behind us and they will go away, James. As far as the used boats are concerned, there is a big positive with the used boats drying up, and that means that the values of used boats are going up. And so as the value of the used boats go up, it enables us to allow more for our customers that want to trade their boats back in because the values are greater. And that's something that has hurt us over the last year, year and a half is it's been really difficult to make the trades because of the low value that was out there with some of the used boats.

That is increasing, and we see that as being a real positive to help us moving forward. So if you have a boat, James, and you are wanting to trade it in, the more we can give you, the better chance we will go ahead and sell you that new boat or that larger used boat. I guess having to tell you how horrible it is out there in the used market which is the way it was. So we see it as a positive, and the shift will move back to more new boat sales. But also that being said, there is a lot to be said for the new boats that are out there with the innovation whether it is Zeus or Axius or a lot of the new changes made to the product to encourage the buyer to say, hey let's go ahead and do the new.

And so I guess two sort of follow-up questions to that, the difficult comp versus last year, is that now over or did that sort of carry over into the I guess second quarter of last year? And then the shift away from used toward new, is that -- that's a positive margin impact there?

Yes, the new boats we sell at a higher margin than used by a couple of points. And we did have -- you look at the quarters last year, we did have strongest used boat sales in the December quarter. We still had some flowing into the March quarter. But I think if you look at the cycle that the industry has gone through, manufacturers were not building boats the last couple of years. Dealers were not buying boats. We were still getting rid of the inventory that we had. I think as new boat sales pick up, the cycle of the industry will recover.

Meaning as we sell more new boats we are taking more trades right, because we take trades as a dealer. So then the used boat sales will continue to pick up along with the new boat sales, but coming through a dealer if you follow what I'm saying, versus the repossessions and the liquidations that were out there in the market place which a lot of which went outside of the dealers last year, the last couple years.

Another point, James, is last year as we were selling the used boats, the value of used boats were decreasing. So inventory that we owned, we ended up taking less margin on to get it moved because the values were decreasing. We are in a lot better position to make more margin on the used boats that we do have.

And I think just with the, not to keep adding comments to your question you asked James, but with the inventory getting in better and better shape from and aging standpoint supply versus demand, dealers are making more money on the new boat or used boat today than in the past.

Great, That's really helpful. And then quickly here on the new boat side, can you comment a little bit on the mix, I guess the size of the boats that are selling? Obviously there has been a lot of discussion certainly with Brunswick at least, that the lower end aluminum boats are actually leading the recovery and the higher end fiberglass boats are lagging behind. But certainly the fact that you guys appear to be taking share and you guys lean more toward the higher end boats seems to refute that to a certain degree. Can you comment on that, the mix of your new business, and then if that compares, or how that compares to the industry trend?

I will tell you the industry trend for the December quarter, I have not been able to find too many reports that shows new boat sales are up. There is some data that shows that in the, on the Infolinks to give them a plug, on their website there is a, it looks like December quarter got much better as the quarter closed, but it was still negative. So to answer that question, you don't see a whole lot of data yet external from our press release that says that unit sales were up.

But our increase in our new boat sales was kind of across all segments in all categories. Certainly our aluminum products that we carry did very well. But even whether it is a small run about, a Sea Ray or larger Sea Ray, we did pretty well. I guess I would have to say we probably leaned a little more on the larger product. I mean we did have a greater dollar increase than a unit increase, but the unit increase is still pretty darn strong.

Excellent. Very helpful. Thanks, guys.

Thank you, James.

Next we hear from Greg McKinley with Dougherty and Company.

Thank you. Your comments on the used boat market were helpful and it actually seems like tighter inventories there will lead to improved margins and certainly as new boat sales pick up you will be getting trade ins, et cetera. One part of the equation which I am just wanting to better understand is the degree to which we will call it leaner inventories available to you on used boat market will weigh on, we will call it sort of near to mid-term revenue growth potential even if you are seeing new boat sales pick up. Will new boat sales be able to more than offset that? I know you indicated last December was your big used boat quarter, but are we in a situation where improvement in the new boat market is going to allow us to start producing year over year comp growth in the near to mid-term?

You know what, I think it all depends, Greg, on ultimately what happens in the March quarter. We reported one quarter, and it is the smallest quarter of the year, of significant increase in new boat sales. If that trend continues, or even if it is down from that, but still pretty strong, then there should be every thought possible that we would have positive comp growth and the trades taking on those would be more than enough to offset the used boats from last year. So it really all still depends on what's the trajectory from the bottom?

If we are saying we are at the bottom, which is what it feels like, what happens from here? If it just kind of bounces along, if I think through things we would probably have a little pressure in the March quarter because I think our used boats were a little higher last year. Now we have the opportunity to go out and purchase boats that are not trades and to sell them. And we have done some of that in the past, not to a real material degree, but we have that opportunity. So Greg, to answer your question, it depends ultimately on the trajectory as to which you think, or we all think the industry is going to recover.

Yeah, and then, Bill, you had commented about going back to an old pricing strategy, but I missed your comments on that. Can you elaborate there, please?

Prior to actually MarineMax and once we formed MarineMax we created what was called value price which is basically pricing the boat in the market, and basically saying that's the best price that we can do and still deliver everything that you want out of this MarineMax experience, and that was the price. So it was a non-negotiable price and the trade was the true value that we could allow for the trade. And we got away from that as times got tough and as the market started to be challenging, and so we got into a negotiation type mode with our customers.

What we know is what our customers prefer, and even though they are great negotiators, what they really prefer, Greg is to, I just want to know that the guy that's my neighbor didn't buy the boat for less than I did. That that is the best price that you can do and that you didn't give it to somebody else a better price understanding that time changes things and special promotions and manufacturers. Our customer has welcomed that. And so we have gone back to it. We are not calling it value price. We are actually calling it on the price sticker, it is a value price, but we are calling it "this boat as low as."

Psychologically when you hear that there is a couple messages that come across. One is that's the bottom price. We are not going any lower if we say this boat is low as, and then it begs to one big question and that is, well, what am I going to have to pay and what is not included and is this the bait and switch type story? And the answer to that is it is fully equipped. It comes with a full tank of fuel, coast guard equipment, a name on the back, it comes with all of the equipment we think should be there, and there is no games. It is this boat as you see it, the way it is equipped plus more. Including our get away trips and captains et cetera. It has been very, very well received and actually it is contributing to margins because as you know, as you probably know is once you start negotiation, where is the bottom?

So we are being fair with the price that we put on the boats and we adjust it according to aging and according to the market and that type of thing. But at the end of the day, that is the price, and it is the right thing to do for our customer. Of course, if we are into relationship selling, and that's really what we do. It is about people making friends with our customers, our team making friends with them. It is confrontational when you get into the negotiation part of it. We are hearing that the team loves it and also I've got calls from consumers saying they appreciate us getting back to it.

Okay, That's helpful. Thank you.

Thank you.

Thanks, Greg.

Next we will hear from Tim Conder with Wells Fargo.

Thank you, gentlemen. Can you hear me?

Yes, Tim, how are you?

Fine, good morning. A couple of questions here. First of all just wanted to make sure, are you seeing any hints in any way of any potential shadow inventory creeping back on the market? Not necessarily from the big manufacturers, but maybe small manufacturers that have maybe kept things hidden? Is there any evidence at all of that?

I would say maybe a very small degree at some boat shows or some manufacturers that are there direct without a dealer. Right. We haven't seen a whole lot of that really.

There are manufacturers that are really struggling and in serious trouble and that are doing some dumping at the shows of new inventory, which is a challenge. But we have been able to overcome it in most all cases because at the end of the day you are not buying a boat, you are buying a lot of things that go around that boat. And so you need the support of a good dealer and with the manufacturer direct, the consumer does not have that.

The banks that we speak with, Tim, who had, two years ago, had a lot of dealers they were watching and worrying about. There are still some they are watching and worrying about. It is a much smaller list today than it was. And then the inventory at those places is much lower. The industry has a decent size, it is still small enough that we know a bunch of the dealers and talk to them. Everybody has done a good job getting inventory down.

Okay. That's similar things to what we are hearing. I just wanted to ask you from a side standpoint there, maybe just a hair creeping back out, but it is just not that much relative to what it has been.

The other thing we are seeing Tim is like at boat shows historically, we would see other manufacturers with larger products at the show. So boats in the 35 to 50 foot range at the displays, and most of the shows that I have attended and Ed Russell our Chief Operating Officer has attended, what we are seeing is we are about the only game in town when it comes to large boats at the show. Which is an indication that, number one, the dealers either couldn't afford to bring it there or they couldn't afford to flow plan the larger boat so they don't have it to bring.

That gives us a competitive advantage. Albeit, it puts a lot of traffic into the boats that we bring that are larger because we are the only one at the show that has a larger boat, so it makes it harder to pick out the buyers and give them the room that they need to really make their decision. So there is positives and negatives to it, but it is an indication there is not a lot of problem inventory out there.

Okay. On another front and back to your original statement, Bill, if we look over the last 10 years, new boats as a percent of total new and used sold have averaged about 25%. Now that had dropped down to 16% in 09 and we kind of estimate that bottomed out at 13%, 14% this year. From where you are sitting today, and again I know a lot can change, what's your view as far as the total units sold? Do you think that will be flat, up, down in 2011 both new and used? And I will let you answer that, and I guess then the follow-up question is what you are eluding to that if a lot of this other inventory is dried up, then by default people have to come more into new. I guess just your perspective on what you think total units will do, flat, up or down for 2011 versus 2010.

First of all, Tim, the industry data that you quoted on new versus used is correct. As you heard me ours is more, has been historically more 30% used, and the reason for that is worth talking about, and that is because we do a lot of repeat business with our customers so we take a lot of trades and have the ability to take those trades. As far as what happens to the industry, what it will be for 2011 whether it is 130, 140, 170,000 units, I can't really give you that with any type of confidence give you any type of feeling as to where it would be because I think there are still a lot of things that are going on out there that we don't know how they are going to impact.

The housing market, we are still hearing that maybe it has bottomed, but we are also hearing maybe it hasn't bottomed. And so there is still a lot of things that are sitting out here in the economy to see it. We are more focused on what are we going to do? And we are doing everything we can to keep our customer satisfaction as high as we possibly can, and we measure it on, I look at every survey every single week that we get back with net promoter score with our customers and we grew our customer satisfaction last year over what it was the year before and it was world class the year before.

So we are keeping our focus on the customer. We are doing more get away events with them. This year I am hearing from the team that we have 30 something boats coming out of Lake Lanier in Georgia doing a cruise to the Bahamas. And understanding fuel prices have increased and maybe increase more. We are seeing a lot of -- we are investing most everything we do back into our customer in making sure that we keep them excited about boating. But hopefully the units go up, but I don't know that I could tell you what the industry will do.

Okay. And then lastly, gentlemen, you referenced earlier Sea Ray and Axius and Zeus, all that from Brunswick. Of the boats you are selling in the categories that carry Axius and Zeus, how are things trending there versus maybe other product that you see that are in the industry or that you sell that does not have technology like that as far as your ability to close those sales?

Once a potential buyer experiences Axius or Zeus it is something they want and desire. There is a cost that is associated with both of them and we are being sensitive to that. And in some cases we are not making the sale because the added premium to put them on. But it is being very well received and is a true benefit to the consumer. We believe innovation is still part of our, is still part of the future and of course manufacturers that get behind it is even better.

Okay. Thank you, gentlemen.

And we have a follow-up question from Greg McKinley from Dougherty and Company.

Yes, thank you. I apologize because I know you mentioned it earlier, but can you just refresh my memory on historically your revenue mix between new and used. What it is now and maybe how you think the market is setting up for that mix in the mid-term?

We as a dealer, if you take out these last couple years which were anomalies, we were typically, gosh, around 70% new, 20% used of our total revenue mix. And the remaining 10%, 11%, 12%, because I am giving you rounded up numbers, would be service, parts, accessories, F & I, and all the things that we do. We have actually grown those businesses from where they would be. So I would think kind of on a normal basis going forward instead of being 90% of our overall revenue, 70% plus 20%, it's probably going to be more like 83%, 84% because the other businesses have grown.

I would think for a dealer I think you are going to get back to that kind of mix because of the trades that we take. And I think for the industry, remember the industry is the exact opposite of what we are because there are so many more used boats sold out there than new. But the overall industry, the question that Tim was asking. But I would expect us to return to those normal levels that we experienced for 10, 11 years.

And where have you been then in the most recent year or two please?

I don't have it right in front of me, but it probably would be more like not far from those numbers, I don't believe. Take five points off of new and shift it over to used depending on the quarter, something like that. It is hard for a dealer to change those percentages unless you go out and materially buy used boats from a private party or from another dealer or bank or something like that. We did some of that during this down turn, but not enough to really materially alter our percentages.

Yes. Okay. Thank you.

Thanks.

Thank you, Greg.

Next we will hear from Brandon Taylor with Raymond James.

Good morning, guys.

Hi, Brandon.

I just wanted to ask if you could give us any color or direction on some maybe January same store sales trends Or just retail trends you have seen year to date?

I don't have the actual same store sales numbers for January. We did close the books. Probably the best way to answer and Bill may give you some boat show comments, but January's trends I think are consistent with our comments that the industry has probably hit bottom, and there will be some choppiness. January, we don't normally do monthly comps, but January wasn't down, but it wasn't up as far either as our new boat sales were up in the December quarter. So I think it is all consistent with the message that we believe it looks like the industry has hit bottom, and the trajectory coming off of that has a lot of variables at play.

But we recognize sales when we have completely closed the boat and we have had quite a challenge with weather here, and not only in December, the coldest December on record in Florida, but also in January and a lot of the areas of the country. That has been impacted -- impacting some of the deliveries.

Okay. Thanks, guys.

Thanks, Brandon.

We have a follow-up from James Hardiman with Longbow Research.

Hi, guys, thanks, quick follow-up for you. You commented on the momentum at some of your boat shows. Obviously as everybody sort of looks to read the tea leaves with the success of these boat shows. Can you talk a little bit about historically how good of an indicator those boat shows have been? I remember heading into the recession there was a little bit of a head fake. Boat show sales seemed to be good and the recession hit and a lot of people backed out. Excluding that year, are these normally a good indication, for example last year, ultimately what did your boat sales look like last year heading into a year that actually declined a decent amount?

At the shows you mean?

Exactly.

I think that shows -- we are much happier to say shows are up or flat than they are down obviously. I will tell you if they are down it is a real sign that things are soft. If they are up, you have to be careful. You have to have a good February, March and April. I think we have had a year back in another year where boat sales -- boat shows were pretty good in January, but then we had some struggles with floor traffic in the month of March. I think that was in 2007.

The one difference that we are seeing versus last year which is probably where you are getting to, James, is that the quality of what we are contracting at the shows this year appears to be much better. In other words, the ability to get them financed is looking better and they appear to be more firm deals that we are writing. So it is people that are putting larger down payments or their commitment appears to be there. So I am saying we are having less fallout, we are experiencing this year versus what we did last year.

And just to delve into that a little bit more, when you have a commitment at a boat show, does that translate into a -- what's the lag there? I'm assuming it doesn't typically translate into a sale that day, but what -- how does that normally play out?

Well, the way it plays out is usually there is demonstrations that go after the boat show contract is concerned. There is financing that has to be accomplished. And in some of the details that have to be worked out in equipment or whatever. If the customer wants to do that. Usually it depends on the market. If it is Florida following a boat show, it can close within a very short period of time, a week or a month. If it is the northern markets and some cases it may be spring before it actually closes. There is a lot of things that have to go on. But probably the one thing that is different this year, or appears to be different than last year, is that people that are contracting appear to be more serious than they were a year ago or at least the ability to get it done appears to be easier, is maybe a better way to put it.

Very helpful. Thanks, guys.

Thank you.

Thank you.

At this time, there are no further questions. I will turn the conference over to Mr. McGill for any additional closing comments.

Thank you, everyone, for your continued interest in support of MarineMax. I would also like to again thank our team members for their hard work and their passion for our business and their customers. It's truly due to their efforts that we can call ourselves the leading boat retailer in the country. Mike and I are available today if you have any additional questions, and thank you for joining us on the call.

This does conclude today's conference call. Thank you for your participation and have a nice day.