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MarineMax, Inc. (NYSE:HZO)

F1Q09 (Qtr End 12/31/08) Earnings Call

February 03, 2009 10:00 AM ET

Executives

Brad Cohen - ICR, LLC

Michael H. McLamb - Executive Vice President, Chief Financial Officer and Secretary

William H. McGill, Jr. - Chairman, Chief Executive Officer, and President

Analysts

Robert Henderson - Rutabaga Capital Management

Hayley Wolff - Rochdale Securities

Gregory McKinley – Dougherty

Tim Conder - Wells Fargo-Wachovia

Operator

Good day everyone, and welcome to the MarineMax Incorporated First Quarter Fiscal 2009 Earnings Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Brad Cohen. Please go ahead sir.

Brad Cohen

Thank you so much. Good morning everyone, and thank you for joining this discussion of MarineMax's 2009 fiscal first quarter results. I'm sure 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, and she will e-mail or fax one to you.

I would now like to introduce the management team of MarineMax, Mr. Bill McGill, Chairman, President and CEO, and Michael McLamb, Chief Financial Officer of the company. Management will make some comments and then will be available for your questions. Mike?

Michael H. McLamb

Thank you, Brad. Good morning, everyone, and thank you for joining this call.

Before I turn the call over to Bill, I'd like to tell you that certain of our comments are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. These statements involve uncertainties that may cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company's ability to complete and integrate its acquisitions into existing operations, and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission.

With that in mind, I'd like to turn the call over to Bill.

William H. McGill, Jr.

Thank you, Mike, and good morning everyone. As you saw by our results, we continue to be impacted by the ongoing challenges in the consumer environment and soft economy in general.

In my 36 years in this industry, this is probably the worst environment we have seen. Thankfully, MarineMax has amassed substantial tangible net worth over the years, which provides us with the confidence and flexibility to weather this storm.

It is this financial strength, proven customer-centric strategies, and our passionate team that will help to ensure we capitalize on the opportunities even more when the economy begins to recover.

As we mentioned on our last call, we are very focused on managing the areas of our business that we can't control. This focus allows us to report a significant decline in our expenses and inventory levels on a year-over-year basis, as well as secure an amendment to our credit agreement.

As you may remember from our last call, we made additional reduction in our orders for manufacturers for model year 2009, which approximated a 70% reduction in purchases in dollars and units, as compared with model year 2008. These reductions, combined with our achieved sales, allowed us to report a $92 million reduction in inventory levels compared to the prior year. Usually during the winter, inventories rise sequentially from September to December quarter, yet we were able to report a significant reduction.

While we are constantly evaluating our purchases, we will conservatively bring in new models, which assist in marketing and selling of existing models. We expect sizeable year-over-year inventory reductions as the year progresses, provided that retail sales do not deteriorate significantly further from current levels.

We believe these efforts to reduce our inventory levels will also help support gross margins on our core products. Our new boat margins have held up relatively well in this environment, albeit, we are working and will continue to be aggressive on sales of the more aged inventory.

On the expense front, we continue to look for opportunities to take costs out of our business and better align our expenses with sales trends, without taking away from the many services we offer our customers.

During the first quarter, we reduced our SG&A expenses by approximately $14 million, including store closure costs.

Our biggest and most difficult reductions have come from the reductions in our number of team members as we right-size our business to the sales levels.

Additionally, we have closed five of our stores since the end of fiscal 2008. And we will continue to evaluate our footprint. These were and are always very difficult decisions, as they affect the lives of families. But they are actions that were, and are necessary.

With all the reductions in expenses, we remain committed to maintaining our high standards of customer service and growing our customer base, as we seek to continue to gain market share and keep our customers enjoying their lifestyle of boating.

One of the things that is encouraging to us as we look at the industry is that the cost of owning a boat is about as low as it's been for over a decade. Interest rates are relatively low. Financing has tightened some but is still available to our customers at low rates. Fuel is more affordable, and slips are even less expensive and readily available.

We know the passion for the boating lifestyle has not waned, and we believe it is even stronger as family looks for the escape and the family bonding attributes of boating.

In fact, reports in Florida were that this holiday season was the busiest on record, with our customers out boating. We are confident that customers have not lost their passion for boating, and they will continue to turn to MarineMax for our service, our brands, and our team.

In the meantime, we expect continued pressures, and we will keep our focus on controlling the areas of our business that we can impact and stay actively involved with our customers.

I will now ask Mike to provide more detailed comments on the quarter. Mike?

Michael H. McLamb

Thank you, Bill, and good morning, again, everyone.

For the three months ended December 31st, 2008, our first quarter revenue decreased to $100 million from $215 million last year. Our same-store sales declined approximately 52%, or about $108 million, compared with the 9% decrease in the same quarter last year.

Revenue from stores, not eligible for inclusion in the same-store sales base, approximated $7.6 million. The December quarter last year benefited from several large yacht sales, which helped to make it our least impacted quarter last year and as such our hardest comparison this year.

Generally, we experienced softness across all of our markets and segments that we participate. I will add that the worst month by far was October, which is usually the largest in a quarter.

Interestingly, we did see increases in certain categories of our Sea Ray products in November and December, which was largely led by activity in Florida.

Gross profit, as a percentage of revenue, increased approximately 130 basis points to 23.7%. This increase in our overall gross profit margin was attributable to several factors.

First, as I just mentioned, we sold fewer large yachts, which carried lower margins this quarter versus a year ago.

Second, since our parts and service businesses are less cyclical, we experienced a mix shift towards these higher margin businesses.

Lastly, while our boat margins have been impacted, they are holding up relatively well in this environment.

Our selling, general and administrative expenses decreased approximately 27% of 14 million in the first quarter, including approximately 400,000 of costs associated with closing five stores during the quarter. The dollar decrease in SG&A expenses is primarily due to the decrease in personnel costs, from downsizing our workforce, as well as reductions in sales commissions and manager bonuses along with a decrease in marketing, T&E and other expenses.

Interest expense decreased 31% to $4.1 million as a result of the reduction in our average borrowings in our line of credit, the early payoff of all of our outstanding long-term debt in the second half of fiscal 2008 and more favorable interest rates.

Finally, our reported net loss for the first quarter of fiscal 2009 was $14.3 million or $0.78 per share, compared to reported net loss of $6.4 million or $0.35 per share for the comparable quarter last year.

Turning to our balance sheet. At quarter-end, we had approximately $15 million in cash. Keep in mind that the amount of cash we have at any point in time is a function of how much we leverage our inventory. As I have stated before, we have a significant amount of cash in the form of unleveraged inventory.

We ended the quarter with about $441 million in inventory, which is down approximately $92 million from the comparable period last year. This reduction in inventory level was due to our continued efforts to aggressively manage our inventories and reduce our purchases for manufacturers, amidst the challenging retail environment.

While our dollars showed the sizeable reductions, our units felt much greater. At December 31st, the new units that we had on hand of all brands were down about 40% from the year-ago period. This is a very significant drop and is part of the reason that margins are doing better than they otherwise be expected in this tough environment.

While we have substantially decreased our purchasing, our manufacturing partners have continued to support us and our customers well, and continue to invest in development of new models, which will be sought after by customers as the economy recovers.

Additionally, as I mentioned last quarter, our dealer agreement with Freddie expired on August 31, requiring them to repurchase our remaining inventory at essentially our our purchase price, less the costs to repair and refurbish the products.

During the quarter, they repurchased approximately $20 million, and we are negotiating with them on the remainder of the inventory that they are contractually required to repurchase. While this may prove more difficult given the current financial situation, we are in regular communication with Freddie, and feel that we will be able to reach an agreement.

Turning to our liabilities. Our total debt also decreased by about $92 million on a year-over-year basis. This is roughly made up of about$ 62 million reduction in our short-term borrowings and then the complete pay-off of about $30 million in mortgages versus the year-ago period.

Overall, our tangible net worth now stands at approximately $235 million or about $12.75 per share. We own over 30 of our stores, which have no outstanding mortgages. In a very difficult December quarter, we were able to produce in excess of $28 million in cash from operations, largely due to the sequential inventory reduction from September to December. And we believe the potential for sizeable cash flows will continue as we manage the balance sheet.

Against the backdrop of difficult economic conditions, we continue to believe that our significant amount of tangible net worth, including our large unleveraged real estate position helps provide strength to weather these economic conditions.

During the quarter, we secured an amendment to our credit agreement, which provides us with increased financial flexibility to operate our business during these difficult market conditions. The amended facility provides the line of credit with asset based borrowing availability of up to $425 million, which steps down to $350 million by September 30, 2009, and steps down again to $300 million by May 31, 2010.

The amendment includes a cumulative EBITDA covenant for each quarter until June 30, 2010, and replaces the prior fixed charge coverage ratio, with an interest coverage ratio for the year ending September 30, 2010, and thereafter. This amendment also modified our current ratio requirement, reduced the amount of allowable capital expenditures for 5 to 5 million, plus leasehold improvements and requires lender approval for any stock repurchases and acquisitions by the company.

Our interest rate also increased a LIBOR plus 425 basis points through September 30, 2010, and thereafter at LIBOR plus 150 to 400 basis points, depending on our company's performance. The facility matures in May of 2010.

We are pleased and appreciate our bank's partnership that allowed us to secure an amendment during such a difficult credit environment, and believe it provides us with the financial flexibility we need in this environment.

And now, I'll turn the call back over to Bill for some closing comments.

William H. McGill, Jr.

Thank you, Mike. And Mike, let me correct one thing you said. The facility, the new facility expires in May of 2011.

Michael H. McLamb

Oh, I'm sorry.

William H. McGill, Jr.

I want to take the opportunity to reiterate my confidence in our customers' passion for the lifestyle of boating with their families, and then our business model to teach, to service, and to show our customers how to have fun.

While this is certainly one of the most significant downturns we have seen, we know that growth will eventually return. And when it does, we believe our customers will continue to trust and turn to MarineMax, as the leader in the industry for the best boating experience when they decide to make a purchase, or recommend us to a friend or associate.

We are focused on continuing to make our organization leaner through reducing expenses, managing our inventory, keeping our team focused, and optimizing our store footprint to protect our financial strength.

And I know that this is a difficult time for all consumers, but I am always inspired to see how many people continue to be involved in the boating lifestyle. And I'm convinced this should continue to strong financial growth for MarineMax and our shareholders when conditions improve.

With that, operator, we'll open it up for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). And our first question will come from Robert Henderson with Rutabaga Capital Management.

Robert Henderson - Rutabaga Capital Management

Hi Mike. Good morning. I was wondering if you could give us a few additional numbers if they're available. For the quarter the depreciation and amortization, the restructuring expense in the quarter if there was any, and the stock option expense in the quarter, if there was any?

Michael McLamb

Yeah, depreciation and amortization tends to round about $2.5 million for us. I think that was about the number in the December quarter. We put in the press release that from the store closures it's about $400,000 worth of store closure-related costs for the five stores that we've closed. The stores that we closed in the prior year were pretty much expensed in the prior year.

And stock-based comp, I think, was down around a little bit over $1 million, which is lower than it typically is, really due to the downsizing of our team members that also had some equity awards that were retired when they left the company.

Robert Henderson - Rutabaga Capital Management

Okay. Great, thank you.

Michael McLamb

You're welcome.

William McGill, Jr.

Thanks Rob. Thank you.

Operator

And next, we'll hear from Hayley Wolff with Rochdale Securities.

Hayley Wolff - Rochdale Securities

Hi guys.

William McGill, Jr.

Hey Hayley.

Michael McLamb

Hey Hayley.

Hayley Wolff - Rochdale Securities

Could you give us a sense of what you've seen in January, in terms of same-store sales, inventory reduction? And then, as we roll into the boating season, can you comment on what the year-over-year comparisons look like, when do they get easy?

Michael McLamb

Yeah. January trends, we're not seeing a whole lot of... we're not seeing improvements, obviously from what we had in the December quarter. We were putting the finishing touches on the month. Same-store sales are going to be in the mid to maybe high 40s down, boat sales are down anywhere from probably like, I'd say, the couple that are flat, most are probably 20% to 40% down from a boat sale perspective.

William McGill, Jr.

Right.

Michael McLamb

The December quarter is our toughest same-store sales comparison, with the 9% decline where the March quarter is 28% down, the June quarter of last year was 29% down, then September is 45% down. So, in theory we start coming up against easier comps. I think that we've got to continue to get to these boat sale seasons and then more importantly, get into the month of March which is a very important month of this quarter.

From an inventory perspective, I don't have the specific balance sheet for January. We continue to make pretty darn good progress in getting those dollars down. And that is... our focus obviously is to right size the balance sheet, get inventories down, and grow market share this year obviously.

William McGill, Jr.

And Hayley, at the shows what we're seeing is attendance is down for most, which you would expect. But the quality of the buyers are still there. And what we are hearing at the shows is no discussion to almost none, about what's going on in the world today, more focused on boating. But as Mike said, we've got some that are flat, and we got some that are down 40 %.

But that being said, we're seeing that those that we are putting on paper and writing, which are less than last year, they seem to be holding up, holding better and taking delivery. And so, we're hoping that retention will be better than it was last year and offset some of that. But very positive with our customers. I think that's the most encouraging thing. And I mean, I think you saw some of the activity with the line up at the Mountain area where (inaudible.)

Hayley Wolff - Rochdale Securities

That was pretty well said actually. Last year when you talked about the second quarter down 28%, what if we think about January, February, March, did things start to drop-off in March? What was the distribution like on a monthly basis?

Michael McLamb

March was, if you remember from the comments that we made right around... and I don't know if it's a coincidence, or it's tied directly to the Bear Stearns weekend, but that second weekend of March which I think is when Bear Stearns collapsed. Our business dropped off dramatically from there to March 31.

Hayley Wolff - Rochdale Securities

Okay.

Michael McLamb

And that month is typically as big as January and February as combined.

Hayley Wolff - Rochdale Securities

Okay.

Michael McLamb

And so, March was the real... real soft month. January, February were soft, but March has drilled the whole quarter down to the degree that it did.

Hayley Wolff - Rochdale Securities

And the March sales, what's the geographic distribution typically?

Michael McLamb

I don't have that specific. I would say that I am sure that you... Florida is still playing a pretty big part of that month.

William McGill, Jr.

And we got the Miami show...

Michael McLamb

Yeah Miami showed in February, some deliveries in March. If I have to guess it's probably 55% non-Florida, 45% Florida something like that.

Hayley Wolff - Rochdale Securities

Okay. Great. Thanks a lot.

Michael McLamb

Yeah.

Operator

And the next question will come from Greg McKinley with Dougherty.

Gregory McKinley - Dougherty

Yeah thank you. Mike, could you remind me you're now at a $425 million facility availability and that's just under $350 million at the end of this fiscal year.

Michael McLamb

That's correct. It's $425 now, there is an interim step-down on May 1st of $375, at the end of this year it has to be $350, that has one more drop next May year and a half away down, all the way down to $300. And we don't think those step-downs are a problem at all in terms of our progression that we are making on our balance sheet and so forth.

Gregory McKinley - Dougherty

And are there any stipulations as to whether that full amount is available to you or it is fully available to you until the step-downs fully occur?

Michael McLamb

The full amount is available. There is a borrowing base formula. So you have to have that assets to borrow against,.

Gregory McKinley - Dougherty

But you don't anticipate that being an issue?

Michael McLamb

No.

Gregory McKinley - Dougherty

Okay. I am just wondering from a liquidity and balance sheet standpoint, can you talk to us a little bit, you mentioned your 30 stores that you own with no mortgage, when you are looking at your cash flow needs going forward, are they to the point where you've started thinking about how can we use some of these other assets to create liquidity or maybe you could give us a context for how you look at that just so we can understand how broadly you are looking at ways to bring cash into the business?

Michael McLamb

I think in general Greg, reducing the inventory and right sizing the balance sheet is going to generate very substantial cash flows from operations this fiscal year. It did in the December quarter when our Q hits you'll see it. The draft has 28 million of cash from operations in the smallest quarter of the year.

I think that's number one focus. So I will add that our facility that we amended, does allow us to pledge real estate that can then be leveraged to give us cash if we needed. And that's an enhancement from our previous facility. Our previous facility you cannot pledge real estate. And in this environment, company is trying to get real estate mortgages out there. It's challenging. And so, we appreciate the flexibility that we got in our current facility.

We think that's sort of out of a cautionary position that we got that into the document. It's not that we really need it. At least we don't foresee that we need it. So, number one is bringing the balance sheet in line, and that would generate a lot of cash. And then two, we do have the ability to leverage some of the real estate through our current facility.

And then I guess third, is if we needed to leverage other facilities, we could still do that as well.

Gregory McKinley - Dougherty

And if you had everything sort of to come together from a working capital standpoint to the degree that you'd like, where could that $440 million end up being towards the end of your fiscal year?

Michael McLamb

We've been reluctant on previous calls to give specific numbers, because we're not giving guidance anymore. I'm just trying to predict what's going to happen at retail. I think the comments that Bill used, either in this call or last call, we're looking for a pretty significant reduction in our September 30 year-over-year inventory.

Gregory McKinley - Dougherty

Okay.

Michael McLamb

And I'd say the December quarter has given you a magnitude, and I think it reflects the company's ability in partnering with those manufacturers and how it can make an impact. And I guess I would also point out that we made the progress, we're $92 million down in one quarter.

Gregory McKinley - Dougherty

Yeah.

Michael McLamb

And really, the Freddie Group was contractually required to buyback $38 million in that quarter. So in theory, we could have been down $130 million in one quarter.

Gregory McKinley - Dougherty

And Freddie didn't buy anything down?

Michael McLamb

Nothing in addition to what I disclosed in the last call, which was $20 million in the month of October.

Gregory McKinley - Dougherty

Yeah. How about from use of cash standpoint and from your operations, $39 million in operating expenses, of course, there's non-cash items in there. But are there likely additional store closures to occur, as you consolidate market areas into less square footage. How about from a corporate standpoint as the market shrinks, where is your infrastructure set up? Can you give us some thoughts there?

Michael McLamb

We're looking at our footprint, given what's going on with retail, whether that's stores or whether that's our facility here in our office space that we have here. We're certainly looking to make sure that our expenses are in line with we're seeing at retail. And as I think everybody on the call knows, to a certain degree, it's been challenging from a broadcasting perspective. But we are looking at additional stores, we are looking at lease space here to reduce costs and...

William McGill, Jr.

Some of the most... Greg, some of the most significant cuts we've made in SG&A has occurred in the corporate level.

Michael McLamb

Correct.

William McGill, Jr.

So, we will continue to look at it.

Gregory McKinley - Dougherty

Yeah. Okay. And then maybe, just one last question. Is there, I'd say a leaseback environment that could become attractive to you, if you needed to pull cash out of the real estate, or is that market bone dry as well?

Michael McLamb

I think the pricing, the cost, everything associated with that market would not be our best option. Our best option would be to leverage some under our current facility. And if we need to go get other mortgages from third party lenders to bring cash in, and so that would be the most likely scenario from where we need the liquidity, Greg.

Gregory McKinley - Dougherty

Okay, thank you.

William McGill, Jr.

Thank you, Greg.

Operator

And next we'll hear from Tim Conder with Wells Fargo-Wachovia.

Tim Conder - Wells Fargo-Wachovia

Thank you. Gentlemen, just two questions here. Mike, the Sea Ray movement that you talked about in Florida in December, do you know was that current product or older product, and again was that just being driven by some substantial discounts or just a little more color on that? And then second question relates to your inventory, and I apologize if I missed this earlier. But if you could break down your inventory, now that you guys have in that the percentage in the 12 to 18 months category, and the amount that's over 18 months, and whether that... in your answer whether it's going to be framed in the terms of unit basis, or dollars.

Michael McLamb

On the sales in Florida, it was primarily two categories of product. We actually saw some beginning of positive signs in the third category, Sea Ray Sport Cruiser category, which is 24 to 34 feet. But in the sport yacht category, 38 feet to 50, and then 50 to 60, we actually finished up in units in November, which is the first time in probably 18 months that we are up in any category of, just about any category product. We've had few here and there brands that's some positive signs. And Tim, that would be mostly driven by..

Tim Conder - Wells Fargo-Wachovia

Older?

Michael McLamb

Not '09 product. That's mostly '08 product.

Tim Conder - Wells Fargo-Wachovia

Okay.

Michael McLamb

And I would tell you, you can tell from our margins that we are not giving away the product. I mean, there certainly is some additional discounting going on now. But it was encouraging to see that. Then in December, similar trends in sport yachts and yachts. And I'd say Florida, we saw some positive signs elsewhere, just because of Florida size to our business and that type of product, it tended to show a little more in Florida.

And Tim, when you look at the aging of our product in terms of units, and if you just do, how may do you have on hand today that are '08s versus '09s, or that are year old versus under year old, you're going to get distorted information because we are not bringing in any '09s. I think Justin made a similar comment on his call last week. But the percentage has started getting pretty big in terms of how much is '08 versus '09. It's the biggest percentage we have ever had of '08 product versus '09, because we are not buying '09s.

But I think if we look at our units, which are down 40% year-over-year at the end of December, which is enormous, and not all that progress is made in one quarter, because we're down some in September. And then you look at the dollar declines that we've made in one quarter. We’d certainly like to have less of the product that's 18 months or so. But we are comfortable with what we've got and in the environment, and continuing on our goal of getting that product in our balance sheet down.

William McGill, Jr.

And then Tim, we have a big focus by all store managers, and regional presidents and sales team members to move the oldest first. And we're doing things like if there's a boat that's 400 days old, and there's another one that's 200 days older or 100 days old, whatever it may have to be, we're moving the 400 day old boat to another store, just to get it done. Because obviously, that's the biggest focus we need in our company.

So we are actually rewarding some of the sales team members and store managers in order to keep the focus on the older first. But, I think we're making good progress on it, and we will continue to do that as the market allows.

Tim Conder - Wells Fargo-Wachovia

Okay, gentlemen. Thank you as always.

Michael McLamb

Thanks Tim.

Operator

And next in queue, we have a follow-up question from Hayley Wolff with Rochdale Securities.

Hayley Wolff - Rochdale Securities

Hey. I mean as you think about liquidity on your balance sheet, given the cash you generated in the first quarter, versus what you typically do in the first quarter, I mean, are you concerned about liquidity going through the year, or do you think you're rolling up inventory off?

Michael McLamb

We're not concerned about liquidity. We think we're rolling that inventory off.

William McGill, Jr.

And with the new banking agreement, there is more liquidity in the inventory over that change.

Hayley Wolff - Rochdale Securities

Okay. I mean it just seems like liquidity is not that central of an issue right now for you?

Michael McLamb

No. We feel that with the progress we've made, and we continue to make that that should not be an issue for us as we go through '09.

Hayley Wolff - Rochdale Securities

Do you ever kick around the notion of share repurchase down there? Is it hard to wave with the banks?

Michael McLamb

Well, I've mentioned that, we take the lenders approval to do a share repurchase at this point, with the amendment that we've got. We certainly have talked about it with the lenders. But currently, we don't have the permission to do a share repurchase.

Hayley Wolff - Rochdale Securities

Okay. And have you evaluated land sales at all... just explored?

Michael McLamb

I'm sorry. Say it again.

Hayley Wolff - Rochdale Securities

Have you explored land sales?

Michael McLamb

We have two stores that we have closed that are on the market. And we've had those\ stores, we obviously would sell. And we have had a couple of contracts on one of the properties, and in this environment we've got in kind of close to the businesses, and the businesses have not been able to get financing for the property.

Hayley Wolff - Rochdale Securities

Okay.

Michael McLamb

Which is, I'm sure a couple of years ago, would've been done by now. But the rest of the profit that we own, we believe they are very important in our business. And obviously, we understand the industry is in a very big fight now. But industry is going to come back, and we need our facilities to operate our business effectively.

Hayley Wolff - Rochdale Securities

Okay. All right, thanks.

Michael McLamb

Thank you.

William McGill, Jr.

Thank you.

Operator

And next we'll hear from John Hollow with Bear Hanley..

Unidentified Analyst

Hello, hi. I was curious about tax refunds if your NOL from your losses, are you likely to get cash back from the government this year. And then a follow-up on the same subject, if the carrybacks go from two to five years, if the law changes, how much cash would that bring you ?

Michael McLamb

That would be a pretty sizeable benefit as the...

Unidentified Analyst

Oh that would be.

Michael McLamb

Yeah, because the '08, our loss was carried back to '06 and '09 will carry back to '07, but our income in '07 is limited. So, depending on where the assumptions are for '09, if there is a tax loss, you could be limited by our limited income in '07 to some degree. If the law gets changed, you then have more years to carry back to when we made substantial income. It also helps from a GAAP accounting perspective, besides the cash flows. But in 2008, we generated pretty sizeable refund by carrying it back to '06.

Unidentified Analyst

Have you received the refund yet?

Michael McLamb

We got the refund in the December quarter. Yeah for carrying it back to 2006.

Unidentified Analyst

So how much was it?

Michael McLamb

About $12 million.

Unidentified Analyst

Okay. And how much is there anything to be gained or gotten back between now and June, or this year, calendar year '09?

Michael McLamb

Nothing of any size, nothing like that.

Unidentified Analyst

But do you have an estimate for what it would be, how much cash you'd be able to bring back in?

Michael McLamb

I don't...

Unidentified Analyst

(inaudible) if they went back five years.

Michael McLamb

Well, we carried everything back we could for '08.

Unidentified Analyst

I understand.

Michael McLamb

So really it becomes an '09 question as to what's happens in '09, and we just finished one quarter. So, we don't know what '09 is ultimately going to bring to figure out how much ultimately we can get back. But if the law gets changed, basically say 35% of our loss in theory and we ought to be able to carry that back.

Unidentified Analyst

Right, okay. Thank you very much.

Operator

And at this time, there are no further questions. I'd like to turn the call back to Bill McGill, for any additional or closing remarks.

William McGill, Jr.

Thank you, everyone for your continued interest and support in MarineMax. I would also like to acknowledge our team and express my sincere gratitude for their continued commitment to our customers during these challenging times. They continue to work very hard, make personal sacrifices, but they remain passionate about our future and our continued success.

Mike and I'll be available today if you have any additional questions. And we thank you for joining us.

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Source: MarineMax F1Q09 (Qtr End 12/31/08) Earnings Call Transcript
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