MarineMax Inc (HZO) 2016 Q1 法說會逐字稿

Good day, everyone, and welcome to the MarineMax Inc. first-quarter 2016 earnings conference call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Brad Cohen of ICR. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us for this discussion of MarineMax's 2016 fiscal first-quarter results. I am sure that you have 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 and she will email one to you right away.

I would now like to introduce the management team of MarineMax: Mr. Bill McGill, Chairman, President, and Chief Executive Officer, and Mr. Mike McLamb, Chief Financial Officer of the Company. Management will make a few comments about the quarter and then be available for your questions.

With that, let me turn the call over to Mr. Mike McLamb. Mike?

Hey, Brad, thank you very much. 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 by 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 would like to turn the call over to Bill.

Thank you, Mike, and good morning, everyone. I would first like to take a moment to thank the MarineMax team for all their effort and focus that led to a very strong start to 2016.

In our December quarter last year, our team produced unusually strong same-store sales growth of 45% and our first December quarter profit in many years. We challenged our team to exceed what they did last year and they delivered. I am pleased to say we posted 8% same-store sales growth on top of last year's incredible growth, but more importantly, we increased our pre-tax profit by almost 7 times.

Our team has executed on our fundamental strategy of delivering the boating dream by taking care of and exceeding our customers' expectations. This, combined with the right product from our leading manufacturing partners, allowed our unit growth to surpass our same-store sales growth. Furthermore, we again benefited and built upon our market share gains as we leveraged the significant brand and segment expansions we completed over the past several years.

In addition to our year-over-year growth in revenue, we also produced a meaningful improvement in gross margins. Our gross margin expansion was fueled by our third consecutive quarterly improvement in new boat gross margins, driven by the various new models our key manufacturing partners have produced. We believe that margins still have the potential to grow on an annual basis as we receive new models coupled with generally improving conditions being experienced by the industry.

For the second consecutive year, the industry ended 2015 on a positive note, with many categories showing increases for the year and the month of December. Actually, the last three months of the year, while smaller months, all showed good data points in the categories that we participate in. We also believe our growth outpaced that of the industry, resulting in continued market share gains for MarineMax.

In addition to gross margin improvement and new boat sales strength, we executed reasonably well below the margin line. And Mike will provide more detail on that a little later.

We continue to execute on our strategies that include passionate team members, our customer-centric approach, our unique pricing strategy, our focus on premium brands, and our ongoing training of our team and customers, all coupled with our energy-producing events that communicate the virtues of the boating lifestyle. This approach is helping us to continually increase market share and drive industry-leading results.

As we have communicated many times over the past several years, our brand and segment expansion was a key factor in strong revenue growth as we emerge from the downturn. Now this internal growth is being augmented by returning industry strength in our key segments.

To this end, in mid-January, we announced another brand expansion, as we added European-built Galeon yachts to all of our stores. Galeon has been manufacturing yachts for more than 30 years and is recognized around the world for their commitment to innovative designs and exceptional craftsmanship. Their new 50-foot model just won European Boat of the Year due to its numerous innovative features at the Dusseldorf show.

MarineMax will initially carry 10 Galeon models ranging from 38 feet to 66 feet. This exclusive relationship with Galeon brings together overall craftsmanship combined with new world ingenuity, creating some of the most innovative products in the market today.

While focused on quality, Galeon's value positioning in the marketplace makes it a complementary addition to our brands and should be additive while facilitating same-store sales growth, albeit our sale of Galeon will be limited due to product availability in the short term.

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

Thank you, Bill, and good morning again everyone. I also want to thank our team for their very strong performance on top of last year's outstanding December quarterly results.

For the quarter, we grew revenue over $11 million to almost $170 million. The growth was driven by high-single-digit same-store sales growth of 8%. Producing such a solid comp growth on top of last year's 45% same-store sales growth should be evidence enough that our industry continues to recover and that our strategies and brand expansions have worked.

As Bill mentioned, our unit growth was actually considerably higher than our same-store sales growth. This is a very healthy sign. From a cadence perspective, sales volume was very solid as we moved through the quarter, consistent with the prior year, but unit growth was stronger.

Geographically, Florida continues to be strongest, but we saw good growth in many of our markets. Our gross profit dollars increased to $41.6 million, while our gross margins increased nearly 100 basis points.

In addition to new boat margins, we also saw modest increases in key higher-margin businesses, like finance and insurance, which contributed to our overall consolidated margin improvement. Selling, general, and administrative expenses increased to about $39 million and slightly increased as a percentage of revenue, but improved as a percentage of gross profit.

We did have a few boat shows move partially or entirely from the September quarter to the December quarter, and we incurred prelaunch costs associated with our Galeon expansion. Absent these costs, our leverage would've approached 15% in the quarter. All such costs were factored into our annual expectations and we believe they will balance out over the coming quarters.

Interest expense was basically flat year over year. As noted last quarter, MarineMax has returned to providing an income tax provision. However, we are not expecting to pay significant dollars until we absorb about $50 million of NOLs and other deductions. We expect our fiscal year tax rate for the expense will be in the range of 38.5% to 39%.

The December quarter is typically the smallest quarter of the year and usually results in a loss for marine dealers, including MarineMax. However, for the second year in a row, we produced a profitable first quarter. We produced pre-tax profit of $1.4 million, an almost sevenfold increase over last year's pre-tax profit of $214,000. It is exciting to start the year off with the strongest earnings we have produced in the December quarter in over 10 years.

It's important to mention that the last time we produced better December quarter pre-tax profits, the industry was twice as big as it is now. This points again to the hard work we have done at controlling costs and expanding the segments and brands that we carry. It also illustrates the point that we can and we should be meaningfully more profitable at lower industry volumes than in the past.

On to our balance sheet. At year end, we had approximately $25 million in cash. Keep in mind we have substantial cash in the form of unlevered inventory. Our inventory at year end was about $326 million, which was up 17% from last year.

Part of the increase is the timing of deliveries of product as we get ready for the winter boat shows and part is due to improved sales and industry conditions. The age and mix of our inventory remains at very healthy levels, which we believe could effectively support the business.

Turning to our liabilities, our short-term borrowings were about $188 million at quarter end, which was up primarily due to increased inventory given the improved conditions. We ended the quarter with a current ratio of 1.73 and total liabilities of intangible net worth ratio of 0.79. Both of these are very strong ratios.

Our tangible net worth is now about $285 million or $11.51 per diluted share. We own over half of our locations, which are all debt-free, and we have no additional debt other than our inventory financing.

Turning to guidance, we are reiterating our earnings-per-share guidance for the full fiscal year. Currently, our guiding assumptions are unchanged. We believe we will deliver revenue growth for the full fiscal year of approximately 9% to 10% with the potential to exceed that.

We still expect after-tax earnings per share to range from $0.60 to $0.70. This would compare to our adjusted but fully taxed diluted earnings per share of $0.47 in fiscal 2015. The adjustments to 2015 eliminate the gains we recognized in the deferred tax asset reserve reversal.

While our December quarter was stronger from a top-line and earnings perspective than our directional guidance we gave last quarter, it is by far the smallest quarter of the year. We think it is prudent that we at least complete the March quarter to get a better perspective for how the season and year may unfold before addressing guidance.

Lastly, I will comment on current trends. Last year, you may recall, January was a very strong month for us. While this January finished down slightly due to the timing of closings, we are pleased that our backlog as we started the March quarter and today is considerably higher than it was this time last year. I would also note we sold a lot of units in dollars to the choppy stock market the last several weeks.

Looking at our January boat shows, like every year, some are up and some are down. It generally got better as the month progressed. But net net, some of our January boat shows is meaningfully up. It is also noteworthy that consumer confidence also rose during this time.

Having said this, it's early in what historically is a large quarter and one whereby March is usually as big as January and February combined. As such, we certainly have a lot of work ahead of us as we move through the winter boat show season and the rest of the quarter. We are also up against a tough comp again in the March quarter, with same-store sales growth of 27%.

And with that update, I'll turn the call back over to Bill.

Thank you, Mike. We have now entered the busiest time of the year for MarineMax and are energized by our first-quarter positive earnings. As we said earlier, new products utilizing innovative designs and technology are starting to permeate our inventories, while being advertised and promoted by the manufacturers at various boat shows.

These new products are resonating with the boating consumer and we are the Company best positioned to deliver their boating dream and the value added services we provide. Plus, they're great innovative products.

We are certainly very proud of the hard work our team does every day. Our customer-centric approach is fundamental to our core operating philosophy. In addition, the main message we have communicated for the last several years has been new, innovative product sales.

With our team, our strong industry manufacturing partners, and their investment in the new models to meet the rebounding demand, our growth has accelerated as we move forward in the recovery. The growing interest in new boats and our commitment to enhance the boating experience is clearly the right formula for the boating public based on the strong start to fiscal 2016.

Despite our increase in backlog and success at boat shows, we are fully aware that we are still early in the year and have a lot of work ahead. Overall, we are encouraged by the continually growing interest from potential customers and by the increase to date at the shows as well as the boating participation by our customers.

From an acquisition perspective, we announced earlier this week that we purchased another marina. The marina we bought in Pensacola, Florida, is one of the longer operating and larger marinas in this very important Panhandle market.

Besides producing solid cash flows from their slips and storage capacity, it is a great place for our operations and our brands to now call home. We will also continue to be in discussion with dealers as we seek accretive additions that we believe add long-term value in key select growth markets.

MarineMax remains an industry leader and we are committed to building and strengthening our presence with our team, our approach, our balance sheet, and the most desired brands. We are positioned to capitalize on the current trends, increase our earnings and cash flow, and fortify our position as the leading marine dealer.

Let me again thank our team for their efforts, their ongoing commitment, and their passion for our customers. Our team understands and is focused on the core philosophy that boating as a part of the MarineMax family changes people's lives.

And with that, operator, we would like to open the call up for questions.

(Operator Instructions) Mike Swartz, SunTrust.

Just around some of the commentary with regards to sales in the quarter, I think you said that unit volume was up considerably more than the same-store sales number you provided. In light of the industry unit volume up I think about 10%, can you just give us a little more color just relative to that 10% number where you came in on a unit volume basis?

Yes, thanks, Mike. Our -- when we talk about units being up, we obviously referring to new and used combined. And our new and used units combined were about double our same-store sales growth of 8%. So closer to 16%.

If you break it apart and look at just new, which is what you're looking at with the industry data, we're about 20% up in units in the quarter. And if you break it apart by certain brands, we had some very strong growth by some of the brands that have come out with a lot of new models recently, including Sea Ray. But no, it was a good quarter for the industry and obviously we had a very good quarter on top of a massive quarter last year.

Okay. And then just sliding to gross margin came in ahead of expectations. And I'm just wondering in terms of the quarterly progression -- I know years ago, the first quarter was your highest seasonal quarter for gross margin. But just given the surge in new boat retail sales we've seen the last two years, has anything changed in the way you think about just the cadence throughout the year? In other words, should first quarter be the high point in the year or should we see some sequential improvement over the next couple quarters?

Good question, Mike. If you go back over time and look at MarineMax's quarters during a -- higher industry volumes, the December quarter was not normally the high mark. It was probably one of the lower marks because of big boat sales and so forth.

As the industry is recovering and as we now have more meaningful boat sales in our revenue mix, our margins this quarter are -- I don't want to say they're at an all-time high, but they are a near-normal high. If you go back and look like 2003, 2004, 2005, 2006, of course we think we still have opportunities for improvement there.

So yes, I would think as we look at the March quarter and the June quarter and out, we think we still have opportunities for margin expansion, especially as the new models are coming in. None of that has been baked into our guidance, as we talked about last time. We've got to keep trudging through this big March quarter and then we can readdress all that stuff.

Okay, that's helpful. Thank you.

Jimmy Baker, B. Riley and Company.

So completely understand the desire to maintain the guide, given we're so early in the fiscal year and the seasonality of the business. But just I guess looking back at your comments on the last call that you would typically lose money in the December quarter and that a more normal expectation would've been for you to have negative same-store sales against the tough compare, is it fair to say not only that you exceeded Street expectations, but also you are ahead of your own expectations thus far in the fiscal year?

You know, I -- what we said on the September call in October, mathematically we should have seen negative comp. We said that and we believe that and we should normally have a loss in the December quarter. As Bill thanked our team, our team rose to the occasion and delivered a very strong quarter.

Now given also the backdrop, it was a healthy industry quarter also and we capitalized on that and did a lot better in the industry overall and grew share. We do continue to think it's prudent to not adjust guidance, though, as you said, until we get more meaningfully through the year, maybe after the March quarter, take a look at things.

But it was the new models, Jimmy, primarily that drove the margins. And we keep saying new innovative products is what sells. It's what the customers wants and gives us an even greater competitive edge. And so that was the biggest driver.

And I think going forward, we will get more and more of the new models from our manufacturers. And as a result, that should help margins for the full year. But we've got one of the biggest quarters ahead of us here, so that's the reason we are keeping the guidance where it is.

Understood. And then I guess just given your comments on the timing or availability of Galeon product, what ability will you have to capitalize on that incremental brand at Miami and the remainder of the boat show season?

Jimmy, the launch of the brand to the public is Miami, and we are very excited about the product. Not that it's going to compete against Sea Ray or Azimut and I think take business away from them because that's not the intention of the brand. It's to fill a void we had, which is there some value brands that are out there from Europe and the US that have created us some angst and -- from a pricing standpoint.

And so here we've got a quality product at a good price. And so we believe that it's a great addition to our family and it will keep our customers in the family so that down the road they can buy a bigger Azimut or a Benetti down the road by being part of our family versus having defected due to price with some other brand that we weren't representing.

So we're very excited about it from that standpoint and they are going to be great partners. And we did a press event a few weeks ago down at our Fort Lauderdale show and a few of the writers for some of the major marine press publications said you got a problem with this brand. And I said was that? And they said getting enough of them. So that's going to be a good problem to have.

So we are excited about it. But that being said, we have incredible new products coming from Azimut. We got wonderful new products coming from Sea Ray; the new SLX product is fantastic. And of course the 59s and 65s and 40s and the new 45 coming are all going to be very good.

All of that is going to help us not only with our margins, but also with sales. And our team is very, very excited about it. It's a really one of the first times in many, many years we have a portfolio of a lot of new products that are going to do very well for us.

Boston Whaler and Scout, we can't keep them in stock with their new models. So it's a very exciting time. Albeit we're still challenged in getting enough of them, which we'll also had that situation with Galeon. But you'll be able to see them in Miami if you are there and for our launch.

And we are doing this right and we're going to do it right. I think we've got -- I counted it. We are in like 10 different displays at Miami, so we are there in a big way and Miami will be a great telltale of what the quarter is going to look like.

Okay. I will be there and look forward to seeing them. If I could just sneak in one last question here, but just on the yacht segment as a whole. If I look back at the March quarter a year ago even, though you did put up the 27% same-store sales, you called out the headwind from industrywide declines in that yacht segment.

This time around, the yacht segment entering -- or exiting, excuse me -- calendar year 2015 on some considerable strength, double-digit growth. I think Brunswick indicating they are driving virtually the entirety of that growth.

So I guess when we think about it intuitively, maybe that buyer seems most exposed to volatility in financial markets, but we're just not seeing that in the numbers. So can you help us understand I guess the puts and takes in the high end and any anecdotes out of early boat shows?

The high-end market is for sure the strongest of all of our segments. And those buyers -- quite frankly, I think they are immune to what's going on -- with a lot of what's going on in the market because they do have a lot of discretionary dollars and also a huge boating desire.

So we continue to do well in the larger product and we did well even in January with potential sales, etc., given all the volatility that's going on around oil and China. And I guess we struggle to understand how oil has a negative impact on our economy because I would think that oil prices have to have a much greater impact on our economy positively in people's wallets than the damage that's being done to the oil industry by being down. What about all the transportation that exists in the world today in our economy?

So you know, it's just a bunch of noise and for sure our consumers that are middle market -- our middle-class America have more discretionary dollars in their wallets as they are spending less per heating oil and less at the gas pump.

Jimmy, I will tell you something else. Everything that Bill just said certainly applies, but a big, big, big difference today and really in the last couple of years but even more so today is the manufacturers in the industry have been investing in new models and in a big, big way. Not just -- obviously Sea Ray's doing a lot of it and they are doing a great job of it, but every manufacturer out there is investing in new models.

And you can see it, whether it's Marine Products or it's Malibu or anybody else who's public. The new stuff is selling and selling well. So if you look at the bigger product, Sea Ray has a new 40, which is being off-the-charts strength right now. Very, very strong. The 65 and the 59, you guys already know about.

There's stuff bigger than that that we have with Azimut and other brands that is new that is sold out or being very well received. So I think a lot of what's driving the strength up and down the size category and even the price category is new product. And it applies as well to big yachts as it does to smaller boats.

There was just such a void for so long in our industry of investment. And --

And to that point, Jimmy, a few years ago, Azimut came out with their 64 Fly. And I don't know if I can put the exact number of units that we've sold, but it's -- huge number. They just came out with a new 66-footer, which I saw at the Dusseldorf boat show and it is a wow product.

And so that's what drives the market. And when you get new product and especially to the premium segment, the luxury brands, which we sell, that's the game changer for us.

Thanks very much for the color. Appreciate the time.

Greg McKinley, Dougherty.

So we've talked a lot about how new product has helped product level margins. I wonder if you can talk about the ability of new product to influence margins I guess really by size of boat. Because my perception is most or a lot of the fresh product in the market today is smaller sized boats and more of the new product coming will be in larger boats, which I would think would have an opportunity to be more differentiated product versus what would be a pretty crowded market from a variety of vendors in the small boat category.

So as we get that fresh product, are we going to get a bigger gross margin delta than we've already experienced with the fresh product that's currently in the market today?

You bring up a good point. And generally the bigger the product, the greater you can differentiate it from something in the marketplace. And you do have an opportunity to have brand expansion -- margin expansion on it.

Having said that, for almost everything we sell, except for the very large products -- an AD Azimut or a Big Ocean Alexander or Hatteras -- our margins as a percentage are relatively consistent from a 19-foot boat to a 65-foot boat. So when a 19 comes out, everybody's excited about it, it sells well, and we use that as an opportunity to raise margins.

It's just when a 65 comes out, you can raise margins on that. It more materially affects our consolidated results. So that's really where it plays in is more of a mix of how many of the 65s are you able to sell or 59s or the 40 that I mentioned. The 40 Dancer 45.

And you -- Greg, I've got to couple that with the fact it -- from some of the manufacturers, we've had larger boats that were pretty long in the tooth. And we had to buy some in order to keep our business going until the new products came, and those really hurt margin. And so as they are being replaced by the new models, you don't have that pulldown from the older models affecting it.

Now that being said, that takes years to totally replace the line, which is where the manufacturers are headed.

Yes, thank you. And then can you talk about -- when we talked I think it was in the June quarter, part of the margin discussion was that used boat inventories were a little high. You had indicated that that had corrected in September. I wonder if you can give us any update there in terms of where you sit heading out of December.

And then also financing. Are you seeing any changes in the number of transactions financed or the percentage of the transaction financed and the terms available to people?

Yes, good questions again. So yes, we started this fiscal year with reduced used inventory. We actually are going into the March quarter with reduced used inventory in terms of dollars. So sort of consistent with how we left the last fiscal year is how this quarter starting.

From an F&I perspective, we are seeing more lenders come in. More people are wanting to get into the marine space than in the past, which I think is a healthy thing. I would say that given where rates are and so forth, people want to finance their boats today probably incrementally greater than maybe in the past.

Although I've always that said if we sell 100 boats, 85 get financed and that was true in the darkest days of 2009. That was true in the brightest days of 2006. Maybe not quite true in the darkest days of 2009, but no, there's more lenders there, it's a -- with each month and week it becomes a friendlier financing environment.

Very good. Thank you.

James Hardiman, Wedbush Securities.

Thanks for taking my call. Congrats on a great quarter. I was hoping you guys could give us as much geographical color as humanly possible. You mentioned Florida was strong, but as we think about -- two issues. One: the weather impact, right. So certainly Midwest, East Coast unusually warm. Just want to make sure we're not getting out ahead of ourselves, given -- based on demand being pulled forward a little bit.

And then I guess secondly with respect to energy markets. Obviously the big concern is that a lot of the states that are big energy producers are really struggling. Can you speak to geographical trends with those two facets in mind?

James, let's start with New Jersey. There was a sales tax law that just went in place which basically caps the amount of sales tax on boat purchases and yacht purchases. And it went in effect on February 1, so we actually had delayed sales --

Because it was announced in like November or December.

Yes, it was announced in November. So during our January and even part of December quarter, we had customers said I will just wait. Why wouldn't they wait until they can save some money on their sales tax?

The warmer weather in the Northeast, we haven't seen it is a positive impact on our business and we haven't seen it is a negative. And you know, I think the Northeast is more impacted by noise in the stock market than it is the weather in a lot of cases.

And so -- but the rest of the country, we seem to be doing just fine. Texas and Oklahoma are very heavily leveraged into oil-producing and business is okay there. And we are in the Dallas show starting today and we're in the Tulsa, Oklahoma, show as we speak. And so we are hopeful and we don't see a lot of negative impact on it, even though oil prices where they are at $30 a barrel or thereabouts. So go back to 2008 or 2007, the economy was doing fine in 2006, and 2005, and 2004 with lower oil prices.

So companies adjust to it. And we are not hearing a lot of hey, I'm not going to buy a boat or please cancel my order because of what's going on with the oil market right now.

I'd tell you specifically Texas was up in the December quarter and the Houston boat show was up in units in the recently completed show.

Very helpful. And then moving on to the ASP dynamic in the quarter. I guess big picture, you seem excited about the fact that ASPs are down. Why is negative ASP a good thing?

Secondarily, it seems like this is primarily a mix issue. A bunch of yachts last year; more in the way of runabouts this year. How should we think about that move forward? And on a like-for-like basis -- so with the same boat, how are we seeing pricing trend there?

Yes, I can comment that last year's December quarter -- the 45% growth. On that call, we said that roughly unit growth was around 25% or 24% and the rest of it was average unit selling price because of handful of much larger yachts. So it makes sense that it would come down in a more normal December quarter that had very healthy unit growth.

If you have a -- if the mix is what's driving unit growth, meaning you got more people coming in buying smaller product that we didn't used to have -- so a lot of what's happening is Sea Ray has relaunched some product that either was very long in the tooth or we just simply did not have a 19-foot boat as an example.

The new SPXs that launched are being very, very well received and so we are selling a lot of them. So that's part of the unit growth, although we saw great unit growth across just about everything we sold in the December quarter.

So I -- we always look at units and what's happening overall in the industry, and it's better to see it going up. That's the number one thing that we look at, anyhow. That's why we think it's a healthy thing to have negative AUP in the December quarter versus last year's December quarter.

Last year in the March and the June quarter, we never called out a bunch of big boat sales. So I would think as we move forward, you would start having same-store sales growth driven by a combination of average unit selling price and also unit growth, which is what we would be expecting.

On a like-for-like boat, the manufacturers are doing a very good job of holding costs down when they are replacing a model, trying to get it at parity with the model that's being replaced. Where price starts to increase then as if you take that -- the boat that's being replaced and you put a granite countertop in it versus a Corian countertop as an example. Or you put a different power on the back of the boat, then the AUP starts going up.

So I think in general, we have a small single-digit percentage increase on a like-for-like model after you factor in those type of changes, which will help drive same-store sales growth.

Very helpful. And along those lines, so it's not -- the ASP decline, it doesn't sound like much if any of that was discounting on your part. And I guess as we move forward to the second quarter, last year, you stepped up promotions materially and that seemed to be the biggest driver of -- I think it was about a 100 basis point decline in gross margins.

As we sit here today a month into the quarter, but obviously the most important month yet to come, how are you thinking about the need to discount? Should we benefit on a year-over-year basis from less discounting?

Last year what we did is we had -- it was the first year of a lot of the new Sea Ray models coming in. So we had a pricing strategy of basically leaving -- or setting the prices high on the newer models and lowering somewhat the margins on the to-be-replaced models.

And I guess I can say we were overly successful at moving out the old -- the to-be-replaced models, which is what drove the margins down. Plus we were more promotional from a marketing perspective. You are right on that front as well.

In the March quarter, it's always one where dealers and manufacturers are more promotional because of the boat shows and that's kind of normal. So we are out there right now at boat shows. We're trying to take advantage of the selling season, all that stuff.

We don't think sitting here today on February 4 we need to be aggressive like we were last year. That can always change if we get into late February, or early March and see something that makes us think we need to be more aggressive. But sitting here today, that's not our plan or our strategy.

But being in 10 displays in Miami is not an inexpensive effort. So we've ramped up some of our spend at the Miami showed, understanding that's a very, very important show to us -- to it -- to our Company. And we're also in Atlantic City. Just started today and I think we've got 33 units there.

And so we will continue to put those dollars where they are important to spend them. But promotional, I don't -- we don't see right now that we would be having to do as -- at the same level we did last year.

Got it. And then just last quickie for me. You talked about the increase in SG&A being a function of a couple incremental items. There was a shift in boat shows; there were some Galeon costs. Mike, can you tease out how much from each of those you saw on that SG&A line? And do you think the shift in boat shows impacted the top line in any way? Thanks, guys.

Good questions. So the Tampa show and the Atlantic City boat show, which were both very late September last year, were both in October completely this year. And then the Galeon costs -- there may have been some incremental top-line benefit, but it would not have been very big because whatever we would have closed last year -- because they had it right at September 30.

Yes, probably none.

Yes, so wouldn't have been very material at all. And then it's probably around $400,000, something like that, if you look at the costs that were expensed just for those shows. Shows aren't cheap. There's an expense that comes with them, so.

Thanks, guys.

(Operator Instructions) Steve Dyer, Craig-Hallum Capital Group.

Good morning, guys. This is Greg Palm on for Steve. Congrats on the good results.

Thanks, Greg.

Thank you, Greg.

Big picture, there's been a lot of talk about weaker consumer discretionary, whether that's autos, ATVs, RVs, etc. Doesn't look like you guys are seeing any change in sentiment. What's your take on how a boat buyer might be different than that from an auto, RV, ATV buyer, etc.?

Well, Greg, I think the big message is that we have new, innovative products that's very exciting. And also our average unit selling price compared to auto -- we are in the Bentley market as far as autos are concerned.

And so we are not seeing what the auto groups are seeing right now. And some of that could be that it's -- a lot of the auto is blue-collar and more middle-class America versus our buyers are more middle-class and people with a lot of discretionary dollars.

So we're just -- we feel pretty good about it. I can tell you that our customers are still out on the water; they are boating a lot. We just had a huge Azimut event down at the Keys, down at Key West. And I think we had 110, 120 people there attending it and many boats and a lot of excitement and -- so our events are doing very, very well and our customers are out on the water. They are boating.

Our customer satisfaction is at an all-time high, which is repeat and referral business. And so when you look at those signs, I think we are looking pretty good. Albeit who knows what can happen to the overall economy. We got elections this year and all that noise going on, but we're feeling pretty good about it right now.

That's helpful. Moving on to M&A, you made what looks to be a nice small acquisition earlier this week. Any update on the overall environment out there?

Well, we're in discussion with several larger dealers and the timing is got to be right. We keep saying that over and over again. Where not going to do it unless it's right for us and right for the people that are joining our family and it's getting right.

So I would say that the chances of something happening sooner is greater than it was six months ago or a year ago. And so we will continue to look at them, to analyze them, to review them, to do our due diligence, and to see if -- when and if they make sense.

And that's the important thing. We are not going to do it for the sake of doing it. We're going to do it for the sake that it's the right thing for MarineMax on the long term. And it's got to make sense for the people that are joining our family.

Okay. Then last one; this one is for Mike. Given some of those increased costs in the December quarter, anything to call out going forward? And I'm thinking out of the norm, where we should be sort of modeling some increased costs that might affect the flowthrough for a given quarter?

No. And the costs that I mentioned in our internal numbers and budgets and stuff, it was all factored into all that stuff. Obviously, we know when boat shows are going to be long in advance and we knew we were launching the Galeon brand. All that was baked into our directional guidance that we gave everybody a quarter ago.

I'll remind you -- and I think James had just asked it. We did call out last year during the March quarter some elevated healthcare costs and some elevated marketing costs. We hope there is an opportunity to have less costs than those. We will know that for sure when we get through the March quarter.

Our healthcare did come kind of in line as we wrapped up 2015, our fiscal year, which is nice. But no, nothing to call out that you ought to think through differently than the way you typically model the business.

Okay, thanks.

(Operator Instructions) Jimmy Baker, B. Riley and Company.

Thanks for the follow-up here. Just had a couple quick cash flow items, I suppose. So one: could you just comment on how many shares you bought back in the quarter and how we should think about that moving through the year?

And then separately, any impact to cash flow or the balance sheet from taking on Galeon? And I guess even more broadly, when you look at historical periods when your business was this profitable, you are leveraging the floorplan availability a little bit more. You had a higher percentage of inventory finance. So is that an opportunity for you going forward to pull some cash out of the business, so to speak, and return it to shareholders?

Again, another great question, Jimmy. I actually don't remember exactly what we bought in the quarter. I know that we're up to about $700,000 total of the $1 million that was authorized. And our plan would be is to buy the remaining $300,000 and then we would go back to our Board and request to reload it, which they would have to approve that.

The balance sheet is in great shape, to your point. We have cash, we have the capital, we just increased our floorplan to give us flexibility to do a number of different thing. So we feel more comfortable today even than a quarter ago or certainly six months ago about the strength of the industry. So the potential is certainly there to continue to buy back stock and return capital that way to shareholders.

Oh, and I'm sorry: Galeon. Really no impact -- no meaningful impact to how we finance the Company or to cash. It's inventory that can be leveraged and it's no different than if we were buying a different product from somebody else. So it's -- it goes on our floorplan like another product would.

Okay, very helpful. Thanks.

James Hardiman, Wedbush Securities.

So quick follow up from me. Same-store sales versus total sales -- same-store sales were a little bit higher in the first quarter. You just bought a marina. How does that affect that dynamic? And as we think about your -- what was it 9% to 10% type growth for the year -- how is overall growth going to compared to same-store growth?

It should be pretty close, I would think, like it was this quarter. We're not expecting material changes in store account, unless we make an acquisition, to what Bill had said. So it ought to track reasonably close to that, James.

What's happening there, James, is we bought the marina, so a lot of high and dry and wet slips in a perfect location in Pensacola. We weren't on the water. We are currently not on the water there with our location. It's a landlocked store that we've done very well over the years with. And so our entire operation is being moved to the marina. And so it won't be an additional store account once we get the other store closed, which will happen in a couple months.

But what's important to understand there is it's a strategic acquisition for us because we do sell large yachts into the Pensacola area and not being on the water is a hindrance. So this will be a real facilitator of especially larger boat sales there.

Got it. And then last one for me: a question you've answered a number of times on prior calls. I don't think you've touched on at this time around. So obviously you've got European boat makers that are benefiting from currency. What are you seeing in terms of price competition out of those guys and is that moving the needle in any way?

It's not really moving the needle one way or the other. As we've said before, a lot of the components that going to the products that are European-built come out of the US. And some of the European manufacturers, when the euro was so high, were supplementing the price in order to be competitive here in the US.

So it gives them the ability to make a little bit more profit and give us new models and that type of thing. So we haven't seen a reduction in price, but if it continues to strengthen -- the dollar continues to strengthen, then we may see some adjustment. We haven't seen it thus far. It's been a nonevent.

Yes, I would also comment the Dusseldorf -- at the Dusseldorf boat show, no one over there was being aggressive on pricing. Not that we saw.

No.

Got it. Thanks, guys. Great quarter.

John Lawrence, [Caribou Growth].

Yes, Mike, would you comment just a little bit on -- I believe it was last year in the March quarter weather in the Midwest, etc. pushed out some of those deliveries into the June quarter. Is that right? Can you remind us about how that -- some of that delivery schedule was impacted?

Yes, you're right. We did have some inability to close some boats as we ended the quarter last year. I think it is bigger the year before, though, John. I think last year, it was smaller the year before because the winter much more material than last year. But we did have some of that.

In fact, I don't remember the exact dollar amounts that moved from margin to June, but there were some; you're right. Hopefully we don't have that type of winter again, not according to the groundhog in Pennsylvania. We're supposed to have a nice spring and winter, which we would applaud after a couple bad years.

And just to follow-up on the last question on Pensacola; I've seen that location. Bill, I assume you are somewhat understating that because it's a real game changer for the number of boats you can have in the water and the throughput of that facility with the new place, correct?

That is correct, John. But understanding we have a very strong team there and they've done an exceptional job connecting with the large boat customer and -- but we just increased their chances of doing even more business up in that market; to your point that we can have more boats in the water.

We got a greater presence with a high-and-dry marina to capture those customers. And so we see it is a very strategic move and very important for MarineMax and helping our team up there to be able to do even more business.

And that does conclude the question-and-answer session for today. At this time, I would like to turn the conference back over to our presenters for any additional or closing comments.

Thank you, operator. And in closing, I would like to thank all of you for your continued support and interest in MarineMax. Mike and I are available today if you have any additional questions. So thank you.

And again, that does conclude today's conference. Thank you all for your participation.