MarineMax Inc (HZO) 2013 Q3 法說會逐字稿

Good day, and welcome to the MarineMax, Incorporated Fiscal Third Quarter 2013 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Shannon Devine of ICR. Please go ahead.

Thank you, operator. Good morning everyone and thank you for joining this discussion of MarineMax's 2013 fiscal third quarter results. I'm sure that you've all received a copy of the press release that went out this morning. But if you have not, please call Linda Cameron at 727-531-1700, extension 10100 and she will 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. Management will make some comments about the quarter and will then be available for your questions. 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. We are proud of our team's ability to effectively execute our strategies and grow our business and earnings in the face of weather that impacted our industry and much of the United States during the June quarter. Our same-store sales growth is a great accomplishment in normal times, but the growth is even greater feat with the adverse weather conditions we faced.

Our 16% improvement in same-store sales in the June quarter follows a 12% growth in same-store sales in the March quarter and marks the first back-to-back double-digit same-store sales growth we have had in a long time. This further validates our opinion that the industry has entered a long-term cycle of growth. This quarter, we also benefited from a damage recovery received from BP related to the Deepwater Horizon oil spill, and Mike will speak about that in more detail in a few minutes.

Our same-store sales growth came primarily from increases in new boat sales. Of all our product categories, boats carry the lowest margins when compared to our higher-margin businesses, such as brokerage, finance and insurance, parts and service, storage and our MarineMax Vacation charter business. Hence, our consolidated margins increased slightly on strong boat sales. You can tell that our boat margins are at a healthy level, even though they are still below historical averages. We have additional margin expansion opportunity in the coming years, as we are still approximately 50 to 75 basis points below historical levels.

The increase in new boat sales were strongest in the larger products. We now have the right selection of brands that allows us to serve a larger array of customers and bring them into the MarineMax family. Our experience, the past few quarters, is showing us that within almost any category of product, we have a relatively new model that is priced appropriately and selling very well. Our manufacturers are accelerating efforts to provide us with product and product innovation and new models, which should help drive additional demand.

While all of our markets were impacted by adverse weather during the June quarter, the primary growth contributions came from our New York region, including Connecticut and Rhode Island, and to a lesser degree, Florida. Interestingly, our March quarter resulted in even more meaningful market share gains than we had previously anticipated. As we discussed on our March quarter call, we were fairly promotional, which was in response to our efforts to offset out adverse weather conditions. Based on the market share data that we recently released, our efforts were rewarded in a major way in terms of market share gains.

Midway through the June quarter, as weather conditions persisted, we increased our promotional activities further, in an effort to gain additional market share and revenue. We believe we will again see strong market share gains from the June quarter as well, but this growth came at the cost of incremental expenses, which pressured our earnings in the short term.

As we have previously stated, it is apparent to us that the industry recovery is underway and that the industry growth in units will be much greater in the future. However, we have also noted that the steps along the way will be susceptible to headwinds. Based on this past quarter and with the wide-ranging impact of Hurricane Sandy last year, these challenges will not be economic, but weather will play a role as well.

The lingering effects of Hurricane Sandy continues to dampen sales in our New Jersey market. Understandably, our customers are paying attention to rebuilding their homes and infrastructure before they focus on their boat purchase. Based upon feedback from our customers, we believe there will be significant pent-up demand in the State of New Jersey starting in 2014.

MarineMax continues to make progress during these times and it is capturing business and consequently, market share, as our customers return to boating. While we had needed to invest and push demand, we have proven we can do it in an effective manner. As the industry continues to rebound, we expect to be able to curtail some of our promotional expenses. We will continue to work to overcome the forces of nature and other obstacles that may come our way as we drive long-term growth.

And with that update, I'll ask Mike to provide more detailed comments on the quarter. Mike?

Thank you, Bill. Good morning, again, everyone. For the June quarter, our revenue increased more than 16% to just over $175 million. Our same-store sales increased by about 16% as well. Based on preliminary industry data for the June quarter, we are trending above the industry and gaining share. In the quarter, generally larger product were the strongest. Yet, we did see good sales growth in segments, such as premium fishing boats and ski and wakeboard boats.

Geographically, we do not have quite the extreme differences between the north and the south that we saw in the March quarter. The north did kick in, just too late for the quarter in most markets due to the weather. The notable exceptions are the New York, Connecticut, and Rhode Island markets, which were also late to respond, but made up all the ground and more in the month of June. In total, based on the strength of these markets, our growth in northern markets overall exceeded our southern markets. Florida continues to improve, but the June quarter is traditionally not a strong growth quarter for Florida.

Gross profit increased 16.2% to $46.8 million for the quarter and increase slightly as a percentage of revenue. The increase in gross profit dollars was primarily the result of increased boat sales. Stronger boat margins and increases in our higher-margin businesses added to our overall margin expansion.

This quarter, we benefited from a damage recovery we received from BP, as a result of the Deepwater Horizon oil spill. We, like many Gulf Coast-based businesses, filed claims to recover damages we incurred during the BP oil spill. Several of our claims worked their way through the appeals process and were resolved this quarter, resulting in a $7 million recovery being recorded. We do have additional claims in process and the exact outcome of these claims is difficult to predict. The recovery is significant enough that it meaningfully increased our tangible net worth and further strengthened our already strong balance sheet.

Absent the BP recovery, which is reflected as a reduction of expenses, our SG&A increased to $40.1 million, but decreased slightly as a percentage of revenue. The increase in SG&A was the result of variable costs from our increased sales, along with increases in our promotional activities that included enhanced payouts to our sales team and an ongoing rise in insurance costs. Specifically, we continue to experience rising health insurance costs. The increase in health insurance this quarter was approximately $500,000, due to an increase in health insurance claims. We also recorded about $350,000 in the quarter, related to resolving certain Hurricane Sandy-related insurance claims.

We continue our efforts to control and reduce other costs to offset our rising insurance costs and improve leverage in the business. Interest expense increased to about $1.2 million for the quarter, as a result of the additional average borrowings. Interest, as a percentage of revenue, remained flat. The Company had an income tax benefit of $1.1 million for the quarter, due to certain tax positions that were reserved, which were ultimately approved by the taxing jurisdiction. As a general rule, our effective income tax rate will remain essentially zero for the near term, due to the availability of substantial net operating loss carry-forwards, which are fully offset by a valuation reserve.

Our net income was $13.6 million, or $0.56 per diluted share, compared to net income of $4.6 million, or $0.20 per diluted share last year. Excluding the BP recovery and the tax benefit, our net income was $5.5 million, an increase of 20% on a year-over-year basis. And our earnings per diluted share was $0.23.

For the year-to-date figures, I'll only comment on a few items. First, our same-store sales growth is double-digit at 13%. Our gross margins overall held up reasonably well and have certainly improved as we got deeper into the season. Excluding BP and the tax benefit, our net income was $1.8 million or $0.07 per diluted share for the nine months ended June.

Turning to our balance sheet, at the end of the quarter we had approximately $37 million in cash, plus a significant amount of liquidity in the form of unlevered inventory. Our inventory level at quarter end was about $235 million, which is up 18% from last year. The increase in inventory is due to a handful of factors, such as increases in several product lines and growth in our charter business. Overall, the aging of our inventory and the levels are in good shape.

Turning to our liabilities, our short-term borrowings were up approximately $30.5 million, largely due to timing of [floor plan] pay-offs associated with increased inventory and the increase in the cash balances. Our customer deposits continue to show promising signs, increasing 112% over the prior year. There is lumpiness to deposits, given that they can relate to large yacht orders and skew the dollars higher, but generally it is reflecting increasing demand for such product and business in general.

Our balance sheet is strong and will continue to strengthen with increased cash flow, as the recovery takes hold. We ended the quarter with a current ratio of 1.57% and total liabilities to tangible net worth ratio of 0.91%. Both of these are very strong ratios. Our tangible net worth stands at almost $216 million. We own about half of our locations, all of which are debt-free and we have no debt, except for the inventory financing that I mentioned earlier.

During the quarter, we increased our financing capacity. We added two lenders to our GE-led facility and increased its size to $205 million from $150 million. We added the capacity, as we believe the recovery will continue and we will need it to support growth in the coming years. Furthermore, we received a modest interest rate reduction of 28 basis points as part of the amendment, which helps.

As for current trends, I will remind you that last September quarter had strong same-store sales growth of 18%. So we are up against a tougher comparison than the June quarter that just ended. However, today, we expect that July will finish above last year's July.

With that update, I'll turn the call back to Bill.

Thank you, Mike. As we continue to outpace the industry, based upon the latest data, we attribute this to our size, the scale and breadth of our products. Additionally, we are providing for our customers an outstanding experience throughout every part of our organization.

Our customer-centric business model is allowing us to capture greater share of the market, as this recovery continues. We continue to grow the brands within our stores and we will continue to look for additional opportunities, with not only brands, but also strategic acquisition opportunities as they arise.

With the innovation of new products, coupled with our capabilities and balance sheet, our Company is poised to generate sustainable growth. This combined with MarineMax's ability to provide a one-stop solution for all of our customers boating needs, positions us quite well for success over these coming years.

We have significant competitive advantages that will continue to result on ongoing market share gains and one of the strongest advantages is our team that always finds a way to overcome the challenges we face and it's the reason our customer satisfaction is at a world class level.

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

(Operator Instructions) Mike Swartz with SunTrust.

Hey, good morning, guys.

Good morning, Mike.

Hey. I just wanted to touch on promotions and just to clarify, I mean, when we typically think of promotions, we think price discounting. But I wanted to just hear your take. I mean, it sounds like it was more on the sales force kind of incentive front. And then, how should we think about that going forward? I mean, should we see that start to kind of ease in the back half of the year or are you going to continue to have to run some of those promotions going forward?

Well, Mike, as we went into June and we saw that weather was still an issue across the Northeast, we did quite a few promotions. Some of it was some campaigns we were advertising, [other was] we went to a few more offsite events and perhaps some smaller shows in order to try to stimulate some of that business and we did. I mean, we got some business out of it. And we, going forward, we don't believe we're going to have to continue to do that. It's pretty active, as we mentioned, in New York, New Jersey, there is not much we can do to drive it too much more than we are doing right now, meaning the infrastructure is not there. But then rest of the country is -- it's performing well. People are out boating. As we've heard, the weather is pretty (inaudible) all night. In fact, it's very hot, which helps drive people to the market in the northern market. So I'd say, we are going to be spending less in promotional activities going forward.

And you did mention that your outlook for July, I mean you are saying your comp looks up year-over-year. I mean, did any of that promotion extend into July or is most of that done by the end of June?

A lot of that promotional activity and in some cases you don't see it right away. And so, it is more of -- some of it's short-term, but a lot of it is more of a long-term play. So I would say some of the business we are seeing now, in July, is a result of the efforts we have put forth last quarter to help drive it. And so, we are encouraging our people to get out on the water. We've got a lot of promotions going on right now, not only with the manufacturers, but also internally to get people into the showroom and also get them on our Getaways and get them out boating.

And, Mike, to be clear, I think where you are going with this also is the -- given the industry data, I think everybody have seen on sterndrive and inboard boats, which is our primary product, which was soft in the June quarter. we are incrementally more promotional right now to keep driving business into shorter markets. So we are running a little harder than we would normally be as well from an expense perspective.

Okay, great, thanks for the color. And then just final question, just as we think about the comp for the current September quarter, with July being up year-over-year, I mean how did that kind of trend last quarter? Was July the strongest month or did the comp increase as you went into August and September last year?

Well, first of all, in the September quarter, typically July and September are the two biggest months and August is usually a low, as people go back to school, and so July being up is good right now. We obviously have two more months to sell a lot of boats and get the quarter in the right direction. The quarter did finish pretty well last year, it's my memory, I did not actually check that before the call, but I'm pretty sure it finished well last year and strong. And so, we've got probably some increased headwinds as the quarter goes through August and September.

Okay. Thank you.

Okay. Thank you, Mike.

James Hardiman, Longbow Research.

Hi. Good morning. Thanks for taking my call. A couple of questions. I am sure it's not lost on you guys that your stock got completely hammered following last Friday's release of some of the industry data. Talk a little bit about how we could reconcile what you guys have done so far this year with the industry data that's meaningfully worse, and I guess, conversely, can we reconcile those numbers or is that just, I think, ultimately a bad read on your business? And I guess, sort of related, how should we think about -- if we were to deconstruct that 16% growth, how should we think about that in unit growth versus pricing and mix? I mean you mentioned that the high-end boats are really a big part of the growth that you are seeing.

Yeah. I can try to address a couple of them. Bill may want to chime in. But what I'd say generally, if you see negative industry data in sterndrive and inboard boats, which today is still primarily our biggest part of our business, although we're becoming more diversified with aluminum, center console fishing boats, ski and wakeboard boats and all that. But if you see the type of negative data that you saw, you can probably assume that we experienced it. I'd like to say we're fighters and we are scrappers, so we're trying to make business happen and so our earnings may be pressured.

So the impact of the data that you saw, or the impact of the softness, really was resulted on our bottom line more than our topline. We're able to still sell boats and sell them for margins, but I think you can interpret the data as probably impacting our bottom line as much as anything. We tend to outperform the industry. We tend to incrementally gain share each quarter or in different segments now and we're growing in those segments, which is good.

From a unit perspective and looking at our quarter, the bulk of our growth in same-store sales was driven by an increase in product size and average unit selling price. Our unit growth in the quarter on an apples-to-apples basis was low single-digits. So you can tell that most of our growth is coming from product with higher average unit selling price. And that doesn't mean a price increase. That means we're selling larger, more expensive product this quarter. James?

I'm sorry. That's very helpful. And then what's the narrative -- let's talk about your balance sheet for a minute. What's the narrative that we should take away from the increased customer deposits in the quarter? Basically, the story that seemed to make sense coming out of the second quarter was you had a lot of people that were interested in buying boats. They put down deposits, but the weather was sort of holding them back. Is that ultimately what we are also seeing in the third quarter? Do we think that number comes down to more normalized levels to end the year, or is there something else that I should read into that? And, I guess, separately, in terms of the cash, I mean you guys are sitting on more cash, on my math, than I've ever seen on your balance sheet. Where does that finish the year and ultimately what are you going to do doing with the cash?

Let see if I can address the first point. The first point of customer deposits, I think the customer deposit line reflects generally increasing strength in larger product, but in business in general and where we have -- I think Bill mentioned it, but where we have a relatively new model that's priced appropriately, it's selling reasonably well, we do have new models coming.

And on the new models there is demand and so, they are on order, which means customer deposits.

That's exactly right with certain of our manufacturers. So, I think, generally the deposit line is signaling good things. The deposits, as I mentioned, can be very lumpy. You can take a $1 million deposit on a boat that's going to deliver next March quarter. So it's hard for us to predict where deposits are going to be come September. It's that lumpy of a business, but I think generally it's nice to see that it's increasing. And there isn't any -- there is nothing this quarter, like there was at the end of March quarter. We did have a bunch of boats that we weren't able to deliver where there were deposits. That was true in March, that's not true in June. We just have normal customer deposits in June.

As for cash, we are a net debtor, because of our floor plan and our inventory position as a dealer. We take all of our cash and pay down our floor plan daily and the rate on that is some place close to 4% or thereabout. So that's how we use our cash throughout the year to reduce our interest expense. We also, as Bill mentioned, we are exploring other growth opportunities through potential acquisitions and other means, which are always out there. And as for where the cash balance will be at the end of September, part of that depends on the strength of the September quarter, but will probably be approximately near what it was last September.

Very helpful. And then just last follow-up. You guys sort of call out some new products being particularly helpful. Are there any particular products that you'd sort of call out as being really meaningful and sort of what's the inventory situation there? How are you keeping up with demand? Thanks guys.

James, we've had quite a bit of success with the Azimut brand, the Italian products, and some of that is that (inaudible) slow coming out with some sport yachts and yachts that are new models. However, that being said, they've lit the fire up real strong. And so, we've got a five, ten Sun Dancers that's doing very well right now, that's out, there is bridge that's coming out on top of that. We've got some new 58s that are coming. There is new 65-foot motor yacht that's on the horizon. And additionally, more product on the drawing board, outboard deck boats and a new 35 Sun Dancer that we received. And new sales, it always does. Some of it is the innovation and some of it is the styling and what they do with the interiors that gives consumer a chance to say, oh wow, I have a good reason to go ahead and trade up or to buy that new product.

So I think there is a lot of opportunity going forward, because of the products that Brunswick is coming out with for Sea Ray. And Whaler has been doing this for a few years and we've seen a lot of success with the Boston Whaler product as well. And if you jump over to sea boats for a minute, a lot of innovation, lot of new products, a lot of wonderful features. And so, we are doing very well with the ski and wakeboard product in our stores. And, of course, if you look at outboard, aluminum continues to be strong, as well as outboard fishing boats are doing very well.

So I think we are starting to get the products that we need and of course we've leveraged the brands into our stores that we need and thank goodness we did that, because with sport cruiser and yacht business being down on the Brunswick front, it helped supplement what we need in the stores.

So I think there is a lot of opportunity going forward, because the products that (inaudible) coming out with for Sea Ray. And Whaler has been doing this for few years and we are seeing a lot of success with the Boston Whaler product as well. And if you jump over to see boats for a minute a lot of innovation and lot of new products, and lot of wonderful features. And so what we are doing very well with the Sea and Ray boat product and are still. And of course if you look at our boat, aluminum continues to be strong as well as our boat are doing very well. So I think we are starting to get the products that we need and of course we have leverage the brands into our stores that we did need and we did that because with sport cruiser and out business being down on the (inaudible) front, it helped supplement what we need in the stores.

Perfect. Thanks, guys.

Thank you, James.

Jimmy Baker, B. Riley & Company.

Hi. Good morning, Bill, and good morning, Mike.

Hi, Jimmy.

Just a follow-up on the increased selling commissions. Are you using that incentive to attract and grow your sales force or is it simply to maybe better incentivize your existing team?

There's a couple of things there, but the primary one being that we've re-launched one price selling in our Company in a major way. So we got all of our store managers together, we do that a couple of times a year anyway, and we brainstormed how we're going to get off of negotiation with our customers. And we came up with the model that'd working and part of that is rewarding the sales team member for getting the margin that we need and increasing the margins from where they've been in the past. And so, we're paying a greater percentage of commissions, but at the end of the day the margins are coming up. And that's the primary increase in commission expense that we've got out there.

And so, we're seeing it working. We didn't see very much of it in the June quarter, because we really launched it in May. But if you go way back before MarineMax and we launched one price selling, we did customer focus groups, and if you ask the consumer, do you want to negotiate, the consumer will say, yeah. If you ask them, what are you really looking for in price and they'll tell you I want your best price. I just want to make sure that I haven't been mistreated and so I want your lowest and best price. And so, we got away from that, especially with what happened in the economy in '07, '08, '09, '10, '11 and so we're getting back to it and we're doing it in a more precise manner than we even did in the early days of MarineMax and it's working. The customers are saying, I love it, give me the best price, that's all I really want and I don't really want to negotiate and -- because that's taken away from this all emotional reasons to buy boats. And as such, we're seeing our margins come up. And so, we're hopeful that going forward we'll be able to demonstrate that to you in future earnings.

That's helpful. And then I was just hoping maybe you could talk a little bit more about, let's say, prioritizing market share versus margins. And also, are you seeing other dealers promoting more aggressively, are you kind of leading the charge there, maybe catching some competitors flat-footed? And I guess a follow on to that would be, I'm just interested, given the weak industry trends, if you expect more rebates or incentives from the OEMs here in the back half of the calendar year?

As far as others are concerned, there's a few manufacturers that are out there in a major way, doing advertising. But from a dealer level, we're not seeing -- we're probably seeing the opposite. We're seeing less promotional dollars being spent. In fact, the other thing we're seeing is there is less appetite to buy larger products. And so, that's one of the things that's helped us through this, is that there is not a lot of competitive product out in the field, because today, as we've discussed on previous calls, the dealers have to put a deposit when they go to floor-plan something and then they've got to curtailments as it age and so their appetite to do that with their balance sheets and with their net worth is less than it was back in the better times.

And so, we see that as a competitive advantage. And the fact that we're taking market share is a couple of things and one of them is, I think we're out promoting boating to our customers and get them out on the water and taking excellent care of them. And the other thing is we have the products and the strategies nailed.

Okay. And then, just maybe a follow-up on the competitive environment in fiberglass and sterndrive and inboard. It looks like that -- with that category taking another leg down this year, it's tracking down about 80% from previous session years and compare that to the number of fewer dealers, which I think is quoted, it's down 35% or down 40% from the previous session years. It would seem there's maybe still too many mouth to feed in that category. Are you seeing many of your competing dealers exit sterndrive, inboard brands altogether or the category altogether, particularly given your share gains?

I don't think we have seen recent exits in the markets that we're in.

I think it's been more of a downsizing of how they run their business, so it's --

Fewer locations.

And also more of a focus on brokerage and smaller boats, versus the risk associated with -- on their balance sheet of some larger products. So I think there has been an adjustment in their business model. But we're not seeing very much fall out as far as additional dealers. But that being said, we're not seeing dealers coming on as new dealers either.

And what's happened, Jimmy, as these -- as the 40% or 35% of the dealers went out of business, the manufacturers that built the brands that those dealers had are still in business today. And the brands are now being carried by the rest of the dealers. So, as an example, we've expanded with brands and some other dealers have expanded with brands, so while they have a decrease in their sterndrive and inboard sales, they may be selling some outboard boat or some other pontoon or something like that to help keep the lights on and keep the business moving.

Thanks a lot for the time, guys. I appreciate the color.

All right. Thank you, Jimmy.

Peter Mahon, Dougherty.

Good morning, guys. Most of my questions have been answered, but I have a couple more. Could you talk about just kind of the characteristics of your inventory right now, have we seen a shift towards new product away from that used product? And in addition to that, how is the pricing environment right now? Are those used products still kind of carrying a premium like they were a few quarters back? So if you wouldn't mind kind of talking about that a little further that would be great.

The supply of used product out in the field is more normalized and it ties back in the better times. And also the pricing is more normal. So, as an example, if someone got a boat, it's three, four, five years old, the deprecation on that product is about the same as it was in better times, not like it was in '07, '08,'09 and a few years ensuing. So, the inventory has dried up. There is not a lot of it out there and a part of that is caused by the fact that there was less being sold new in the last four or five years. And so it's just not available. And that's helping new boat sales and I think it'll continue to help new boat sales to grow, as consumer confidence improves. And I think it's better for our industry that we'll get back to the level of perhaps 30% or so of the product that's being sold annually will be new versus where it is right now.

So, we're able to take trade much better, financing is very good. We're not having too many issues with financing, other than in a lot of cases, they want a down payment, whereas they didn't do that back in the times before '07. But the new boat business, I think, has a real opportunity and used will continue to be impacted to where it'll be a demand type product, because there was less being sold.

Great. That sounds good. Second question has to do with gross margins. We saw gross margins remain flat year-over-year, which is good concerning the environment you guys are in. In the past, you've used promotions, such as discounts on boats and whatnot, which has impacted gross margins. It sounds like this time you focus more on the incentivizing your sales team. Do you think there is any chance, or what's the likelihood of you guys maybe using, like, more price promotion in the near-term?

We used it in the March quarter, if you remember, in the northern markets, we were a little more aggressive on price. I think with where the aging of our inventory is and the mix of it, which is all in pretty good shape, I don't think it's the price issue as much as it is just a focus issue. And I think the enhanced plan that Bill talked about, should help margins. We constantly, in the business that we are in and the diverse locations that we are in, you constantly look at what lever you can pull to drive business. So I won't say never, but that's not our intention.

Got it, okay. So you would say that the change year-over-year in margins in Q4, the September quarter is largely going to be related more to -- in fact, it probably should go up, as you've kind of worked out of those pricing promotions, so we should probably see some margin expansion in Q4?

You know, it all depends on mix. One key thing in our business is mix. If we sell a lot of larger yachts which carry typically lower gross margins that typically pressures our gross margins, but drive same-store sales. So that's the one thing that I can see talking about on a quarter-to-quarter basis, is more what's going on from a mix perspective. And hard to comment specifically today on what the September quarter margins will be, because of what the mix could play out.

Sure. Okay. Okay, great. Thanks a lot, guys.

Thank you, Peter.

And it appears there are no further questions in the queue at this time. Mr. McGill, I would like to turn the conference back to you for any additional closing remarks at this time.

Well, I would like to thank our team for their passion and commitment to providing our family of motors with world-class customer service. Our team enhances our customers' boating life style by helping them maximize their boating experience and the MarineMax experience changes customers' lives by uniting them with their self and with others on the water. So I'd like to thank everyone for joining us on our call today and for your continued interest and support of MarineMax. And Mike and I are available today if you have any additional questions. Thank you.

And this does conclude today's teleconference. We do thank you for your participation. You may now disconnect at this time.