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MarineMax's Q1 FY2015 Earnings: Many Wolves In Sheep's Clothing

Feb. 10, 2015 5:42 PM ETMarineMax, Inc. (HZO) Stock
William Bias profile picture
William Bias


  • MarineMax saw robust demand for its products in the most recent quarter.
  • The company saw its free cash flow deficit expand due to inventory buildup in anticipation of higher demand in FY2015.
  • HZO's huge amount of short-term borrowing is creating excessive interest costs.

On Feb. 5, recreational boating company MarineMax (NYSE:HZO) came out with its Q1 FY2015 Form 10-Q which follows up in more detail on its earnings announcement released on Jan. 29. In the most recent quarter, the company experienced a robust expansion in its fundamentals and beat Wall Street expectations. However, over the long term, investors should heed caution. Let's take a look to see what's going on with MarineMax.

Demand drives revenue and net income

In the most recent quarter, MarineMax saw its revenue increase a whopping 44% year over year. The company reported net income of $214 thousand in the most recent quarter, which was proudly touted by management, considering it was the off-season. This compares favorably to a net loss of $3.4 million the same time last year.

There were some wolves in sheep's clothing in the most recent quarter. Improving economic conditions served as a catalyst for increased demand. Same-store sales saw a whopping 45% increase year over year. However, demand came at a cost - company management noted a stark increase in the sales of its larger boats which carry lower profit margins. MarineMax saw its gross margin go to 23.7% in the most recent quarter vs. 27.3% the same time last year. Nevertheless, increased demand put the company in the black, which isn't typical for its first quarter.

Free cash flow deficit expanded

While MarineMax's revenue and net income had exceptional comparisons, things were more normalized for its cash flow. In the most recent quarter, the company saw its free cash flow deficit expand 236% year over year. MarineMax is building up its inventory due to higher anticipated demand. Moreover, the company expanded its capital expenditures 26% year over year. Hopefully, the company can clear out its inventory during the year.

Balance sheet is not

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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