Good day everyone and welcome to the MarineMax Incorporated second quarter 2011 earnings conference call. Please note, today’s conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Ms Kate Messmer. Please go ahead ma’am.

Thank you, Operator. Good morning everyone and thank you for joining this discussion of MarineMax's 2011 fiscal second 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, and she will fax or email one for you. I would now like to introduce the management team of MarineMax, Bill McGill, Chairman, President and CEO and Mike McLamb, CFO of the company. Management will make some comments and then will be available for your questions. Mike?

Thank you, Kate. Good morning everyone and thank you for joining this call. Before I turn the call over to Bill, I would like to tell you that certain of our comments are forward-looking statements as defined in the Private Securities Litigation Reform Act. These statements involve risks and uncertainties that may cause actual results to differ materially from expectations. These risks include but are not limited to, the impact of seasonality and weather, general economic conditions and 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 pleased to be reporting our second in a row with positive growth in new boat sales. While most report still shows that the industry experienced declining unit sales for the quarter overall; recent reports are starting to show that the industry appears to be beginning to turn the corner. We view and these recent reports as another positive sign that the industry has indeed reached bottom and is in the early stages of recovery. Our product margins improved, compared to the prior year, due to several factors including the decrease in pressure for bank repos, our improved inventory (inaudible) and our streamline one-price selling process. These combined with a focus on expenses allowed us to report a smaller loss in the prior year, as we work towards regaining profitability. Preliminary industry reports for the March quarter, specifically those that track state registration, suggest that in the segment in which operate, new units sales were down in the high single digits as consumer confidence remained choppy. However, our new unit sales were up more than 10%, which again signals our progress in gaining market share. We believe this has been achieved not only through our leading retailing strategy, but also the additions we have made over the past years to strengthen and broaden our portfolio to appeal to a wider segment of customers. As a reminder, since the beginning of 2009 despite industry challenges, we expanded with as much in Florida, Tennessee, Georgia and the Carolinas. We added Meridian in Baltimore and San Diego. We added Nautique in Minnesota and Atlanta, and Malibu in Arizona. We also added Cabo and Hatteras in New Jersey and New York; and Boston Whaler to our Naples and Fort Myers markets. During the March quarter, we…

For the three months ended March 31, 2011 our revenue was a 115.8 million, up approximately 5% or 5.6 million from the prior year. Our same store sales increased by more than 5%, compared to a 5% decrease in the prior year. As Bill mentioned, this increase is primarily due to growth in our new boat sales. Used boat sales were down but not as significantly as of the December quarter. The strength we have seen in new boat sales over the past few quarters has continued to be fairly widespread across the country and across the side segment that we carry. Gross profit as a percentage of revenue was 23.1% in the second quarter, up about a 120 basis points from the prior year. The year-over-year improvement was driven by higher margins on both our new and used boat sales. With the increase in boat sales, our gross profit mix did shift slightly away from higher businesses like service, parts and accessories and finance and insurance, which limited some of the overall increase in gross margins. On a sequential basis, our margins were down compared to the past few quarters, due a slight increase in large boats as a percentage of our revenues. As you may recall, larger boats carry smaller gross margins. As market conditions continue to recover, our margins still has a significant opportunity to expand. Our product margins, while improved, are still running 300 to 400 basis points below historical levels. We were still pleased to drive an 11% improvement in gross profit dollars on a 5% increase in revenue during the quarter. Our selling, general and administrative expenses increased slightly compared to the prior year. The dollar increase was primarily related to higher commissions as a result of our growth in boats and brokerage sales…

While it’s little early to read how the spring and summer selling season will shape up. Early indications suggest that the boating industry is starting to improve as we head in to the key selling and boating season. Retail financing is easier to obtain, compared to the same time last year, and our results have suggested that buyers are starting to turn to the market. Keep in mind that last year at this time most of the headlines involved the elections and status of the Bush tax cuts as well as the oil disaster in the Gulf. With the exception of rising fuel cost, the headlines are much more in the favor of the consumer this year. However, consumer confidence is something we watch and it unfortunately declined in March, but rose slightly in April. Accordingly we are cognizant of the fact that any recovery is likely to be somewhat uneven. The good news is that we are well positioned for any type of increases, given our passionate teams, our product offering, the market share gaining, our leading retail strategy, improving our product margins and our lower cost structure. While we will need additional volumes to get back to the point where we can achieve the profitability we want; the actions that we have taken are allowing us to maximize the flow-through of each incremental sale. Finally it’s important to note that participation by our customers remain as strong as ever. Our customers are out on the water enjoying the escape and family bonding aspect of boating as part of the MarineMax family. We look forward to continuing to serve their needs as they decide its time to upgrade to their boat of choice. Additionally we are seeking more and more family; we are seeing more and more families getting in to boating after realizing that at MarineMax we are focused on helping them select the right boat, we are focused on teaching their entire family how to enjoy their vote and operate assistance; we are focused on providing their servicing needs of their boats at our facilities and also at their docks; and we are facilitating their enjoyment on the water, with our numerous getaway events. With that operator, we will open the call up for questions.

(Operator Instruction). We’ll take our first question from James Hardiman with Longbow Research.

I just want to be clear on how you are slicing and dicing the industry data. You were saying that the segments that you participate in down sort of high single digit levels, is that a certain level of price points, a certain type of boat. Can you just shed a little light on that?

It’s generally fiberglass pleasure boats, and as you know James the data on the industry is always somewhat tough to get and it moves around. But based on the data that’s available to you and everybody out there in the segments that we operate, it looks like for the whole March quarter it was down in the high single digits. I have heard there were some other reports that even show it’s higher than that, but that sounds about right to us from what we are hearing from our storage and what we are seeing at boat shows and so forth.

I don’t know how close you follow Brunswick’s calls, but the number they threw out there for the industry was, they said stern drive and inboard fiberglass were down 25%, and that outboard fiberglass was down 2%, and my assumption was that you guys probably sell more inboard fiberglass than outboard certainly. Is that fair?

We do more stern drive in inboard than we do in outboard.

If those numbers are right is sure sounds like and you are saying your business is up, so you are outperforming the industry by even more; by healthy margin. Is that safe say?

That’s what we believe. The market share data is not out yet, but we believe we are taking shares.

Within that it sounds like, you were saying your boat sales are up and you also made the commentary that at least sequentially you talk about this in the mix section of things. But sequentially, large boat sound like they are bouncing back as well. That seems to be contrary to some of the small boat, big boat dynamics that a lot of other people are talking about. But is that the correct takeaway that your large boats are picking up?

Yes it is. James that is a correct takeaway. We believe it’s due to a couple of factors. Number one is, we do have the inventory, and there are a lot of dealers out in the industry right now that are challenged to have larger boat inventory in particular, because of constraints on wholesale financing. So we have a good mix of the right product and are focused on it. The other reason is that, we really have kept the pedal to the metal so to speak, as far as keeping our customers excited about boating and out on the water; and so with our getaway events that we haven’t backed off on, we’ve actually increased and participation has gone up. What that means is the excitement for this season in the northern markets and getaway events that we have in the summer markets in all, even in Florida, the anticipation of that is very high and of course we believe that is resulting in some larger boat sales as well. We also have not backed off, and when it comes to expenses, there are a couple of things that we said. For the long term we absolutely would not back out on and that is, we will not back out on what we are doing with our customers to keep them excited and we will back out on making sure that they are happy with all the services we are providing including maintenance and service itself. Our customer satisfaction which we measure weekly with net promoter score; actually we’ve grown networks promoter score real (inaudible) number we see here even in this last challenging year. Our customers are happy and very pleased with what we are doing and they are excited and they are out on the water and that is probably the one thing that’s making a big difference. So that pent-up demand is there and we are starting to see some of it comes back in the bigger boats. So a long waiting question. I answered it but.

That’s very helpful. I just want to make sure I understand the momentum within the quarter. You are saying overall first quarter new boat sale is up 10. March sounds like it’s meaningfully better than that, and then your commentary on April saying its likely to show a nice increase over the last year. I am assuming that’s for you guys, you are not necessarily making an industry assumption, but that’s how you guys comment.

That’s us and you characterized the quarter right. March was very strong. Those of you who were on the call in January would remember me saying that January was up slightly over the prior year, following the December quarter we knew those sales were up 25% and that the quarter finished very strong for us. We had a nice increase in new boat sales for it as well.

Then just last question. I am sure you guys have gotten this question but everybody wants to talk about what the impact of higher oil is on boat sales. I am sure majority of this is anecdotal at this point, but it seems clear that higher oil prices potentially hurt boat participation and people might take the boat out last. Is there any evidence that you’ve seen that would suggest that that really enters in to the purchasing decision over and above the obvious impact on the broader economy?

I think the largest impact is probably, as you mentioned the impact on the overall larger economy. As far as our customers are concerned, we hear from our customers and we truly believe this that as oil prices climb; they are $9 a gallon in Europe. You go to France or Italy or Germany its equivalent to nine bucks a gallon. It’s still a bargain here in the US, but that being said, it’s a very small percentage of the overall expense to the customer, and the customer has the ability to adjust what they are spending on the fuel cost, by adjusting how they boat. Perhaps they turn off that generator when they are out swimming or just running to boat and down not in the cabin or they decide to do a little shorter trips or not run it as hard. If you take some of these larger boats and you reduce the speed from running at 32 knots and down to 22 knots, you can save perhaps 30% in the overall fuel cost. So our customers will adjust. What we are really seeing James is, you just keep hearing more and more from on that, hey I am going to boat, I don’t care what. If I have to adjust a little bit if the fuel prices go up, we will. Now, as fuel climb we believe that it will be more and more in the headlines and the thoughts of all consumers. But I think once it stabilizes life is going to go on and be fine. We don’t think anything of the $3 a gallon price right now, and we were petrified of it when we were a [$1.50] a gallon as an example. So we don’t think our business will be significantly impacted by the oil prices other than the external impact in the overall economy.

Our next question comes from Greg Mckinley with Dougherty.

Mike I just want to dig in to your expense structure a little bit more. You had mentioned may be some incremental expenses this year tied to your brand extensions in certain markets in particular as it relates to the winter and spring boat show season. How should we think about operating expenses for this fiscal year in relation to what we saw from the company last year? I know you had closed a bunch of stores; you talked about some variability with commissions which make a sense. But have you tightened the belt enough, where you actually would expect some leverage in that; even amidst modest revenue increases, and what’s like G&A is essentially flat as a percentage of sales for the six months of the year.

I think the brand we’ve expanded; what they are doing is they are adding some cost, which some of it is to be expected like boat shows, marketing some training, a little bit of travel; and you are not only getting the benefit of it yet. Like we recognized very little revenue during the quarter from these new brands; it will better start coming in during the season. So that’s part of what happened in this quarter. I would think overall, with the exception of variable compensation which is commissions, you should expect any increase in expenses, albeit unless GP rises and sales rises then you will get the variable component of expenses coming in. So the remainder of the year, the next couple of quarters, the incremental cost associated with the new branch; I don’t have the schedule in front of me to show what that’s projected to be, but it’s not very significant in the next couple of quarters. It is more significant in the March quarter. I can tell you that we certainly sat back and said; okay we are done looking at expenses. We are constantly revisiting contracts, leases, any thing we can and accompany to figure out, how to keep cost down. The one thing that we are very committed and focused to is keeping our locations down. We think with the marketing that we are doing now and with the team we’ve got and some other things that we can really gain big leverage as the revenues come back. Because when you open a store it’s not just the cost of lease of the store, it’s everything that goes along with it. You’re going to add team members, data lines and all that stuff. That’s where you will see the big leverages revenue comes back.

We are also investing a lot more in to training. If the season is the Super Bowl or the NBA Playoffs, we are headed in to the NBA Playoffs and Super Bowl here with the season and there is not a team out there that doesn’t practice even more before the big games. So we’ve got every single one of our sales team members in the company here in Clearwater that are going through basically a three-day MarineMax University on one price selling, which we call as, this boat has slow ask type price and the culture and focus on the customer strategy that we have. We are seeing the results as they start to return back to the stores. So we’ll have all of them through there by the end of this, middle of May and a little bit later. So we are investing in that in a huge way, because at the end of the day that’s what it’s about.

I wonder if you could just give us a little more color on your view on the used boat markets. You talked about how you think leaner inventories and used boats are now resulting in for that boat transaction; may be a little less competition for a new boat sale versus a used boat sale because those inventories have been right sized, and those used boats are no longer selling at huge discounts. So there is not that perceived value difference for the customer that may have been a year go. When did you begin to feel like used boat values were beginning to recover and that a lot of inventories were stabilizing. Is that something that just happened in the last month or two or would you say, maybe it was six months in to that trend.

It began to happen, we began seeing signs of it late last summer, and it’s only got better and better. We are active looking to see if there are used boats out there that we should be buying, as an example, so we go to auctions across the country that’s I am saying. We aren’t buying any because we are seeing the values are up, which is very positive. It doesn’t mean that we don’t buy a few and we do where they make sense. But we are hearing from other dealer and we are also seeing it our selves that the true value of that used boats that we are taking it on trade or that the customer is trying to sell is actually increasing. The biggest benefit we’ll see from that more than anything; we were just pointing we didn’t have used boat to sell just this quarter, March quarter, because we would have sold them because the demand was there, but what that equated to was increases in new boat sales. So what the biggest benefit is going to be is that we can now allow the customer more than we were historically because the value is worth more. Of course that was one of the difficulties in trying to put deals together with our customers six months ago and three months ago is that the value were still low because they were driven by what was going on at the used boat market. But it’s getting better.

Next we’ll hear from Christian Buss with Thinkequity.

Wondering if you could talk a little bit more about the margin structure of used versus new larger boats versus small boats, and walk us through what let to that gross margin not being in line with what you were able to do in the first quarter. A little more detail.

A couple of things Christian; first of all boats for good or for bad or the lowest margin product that we sell. When you have an increase in boat sales, which we’ve seen, it does put pressure on the contribution from the other segments of our business. Service, parts and accessories is [up and high] and so forth. In a world where boat sales start ramping back up, it is going to pressure margin. What’ve said and what we believe is at a future point in time when our revenue is whatever its going to be, 600 million, 700 million, 800 million, our margin should be higher than then they were historically, when we were 60 million, 700 million, 800 million because of the expansion that we are doing in service, parts and accessories and these other things. We will still get a margin benefit. Larger product, some of the (inaudible) and so forth that we carry, usually have a low double digit margin like in the 10%, 11%, 12%, 13% range from a gross margin perspective, but their operating margin typically is about the same as our other products because they are carried in fewer stores, fewer people are working on them and so forth. If you exclude those categories of brands, the rest of what we sell generally has roughly the same margin for the most part. Used margins tend to be lower than new margins by a couple of 100 basis points. I think the comment that we made is, it kind of gets all put in to the kettle of soup here Christian; but what happened during the quarter is, we saw used boat margins rise, we saw new boat margins rise, we saw a slight increase in mix, and I do want to say slight, it wasn’t that significant in the growth and in our larger products which pressure the new margins a little bit on a comparable quarter to the December quarter and then we saw an increase in new boat sales. So when you put those components together, you get a margin that’s a little bit less than what it was in the December quarter or even that in the September quarter.

How do you get to mid-20s margins for the balance of the year? What are your expectations for that commentary?

Product margins continuing to come back and mix shift in the business on an annual business, where you have a normal mix of, let’s say, large product, small product. So you won’t hear us say, hey large products are up a whole lot. If large products end up gaining more strength than the small product, it could be hard to be in the 20s, but our revenue is going to higher then. You follow me?

Absolutely.

I think given the trends that we’ve got and that we’ve seen. We do believe that in that mid-20 range is a reasonable margin for the company on an annual basis.

Helicoptering up a little bit. Can you walk us through, at what point you expect to be breakeven, at what point do you expect from a top line standpoint assuming certain margins? Can you walk us through the model there?

We haven’t given guidance for a number of years. Just from a mathematic exercise and I’ve done this once before on the call. If world’s doing what we are suppose to be doing, let’s say we hold our expense structure to something around 120 million. We are working to get it down; we are working to keep expenses in line. If margins go to 27% on 400 million in sales, you start getting close to breakeven; and that’s where they were heading as sales were falling and they kept on higher and higher in the quarters. You can do the same type of math. If we are up to 500 million in revenue; lets say expenses are around 120 million, maybe a little bit north of there and margins are around 23%-24%, those macro figures get you close to breakeven in either scenario. Part of it depends on what’s the margin assumption, does demand do a good job on monitoring and getting leverage to other business from an expense perspective. So in essence Christian whether you and some of other folks of the company modeled its around those revenue figure, that 450 to 500 in that range, the company is what I call around breakeven, which is slightly profitable or slight loss. But I think in any scenario the company is producing cash.

Next we will hear from Joe Hovorka with Raymond James.

Just a couple of questions and clarifications. On the market share James was asking the question earlier. He asked about what you define it from a (inaudible). Would you define it differently from a geographic standpoint? Is that it or are you talking about just your state that you are competing in.

It’s only our markets Joe.

Our market is for the segments that we operate.

So that will be a wide there it self, you guys are talking about the whole market.

That would be correct.

The events by Bayliner; can you talk about how you expect that to ramp in the June, September quarters and in to fiscal 12? Are you fully inventory [jazzed] one way before the inventory, that kind of commentary?

In the March quarter we were not fully inventoried. Going in to right now we probably have the product we need subject to a couple of markets or a little bit late. But I think inventory won’t be an issue for us in the June quarter. From a ramping perspective we are pretty excited about having that product. Bayliner in most market where we have it, historically have been in the top three from a market share perspective before [20-40]. So we are expecting good things from a unit perspective. They are smaller boat, so its not like its going drive $50 million of revenue over night. It’s going to grow and we have the ability with them to get more product. If it’s more successful than we have anticipated early on or even to curtail it, if it’s not as successful as we think it’s going to be.

Initially we are seeing Joe the team is not only excited but it is working well with the Bayliner and Sea Ray brands in the same store. Understanding that they are really two different type of products as far as content is concerned, but quality of the Bayliner product is still excellent, and it fits with our business model. So its not like we are getting a cheap product in to our stores that has issues. The team is very excited and pleased with the way it’s working and it gives us the ability to take the customers that just don’t want to step up and price in for a Sea Ray purchase, and say, hey we can get you out boating. Of course customers have changed a little bit, especially in the blue collar segment. So it’s an opportunity to get them out in the water and bring them in to the family and then it’s time to get better bringing back in the larger boats that we sell also.

Have you ever disclosed what Bayliner was doing in those markets prior to taking it over?

No, we haven’t, but generally Bayliner again in the side segment that they primarily operate has had decent market share. It’s not to say in each of the market that we took over, because in some cases deals had gone out of business, so there was a void in the marketplace for a period of time. But it’s a product that’s well received by the segment that it goes after, and they know who they are going after and so forth. So it will do well in the market place is we expect.

Part of our training Joe is, we are teaching our team, we have brought them in here; we are doing a lot of education on how you handle both brands within a store. That’s part of the education we are doing as well.

Just one last question on gross margin for the June quarter specifically. You were almost 30% last year, and obviously that was because of the mix of new boats were low and the mix of your high margin (inaudible) and that stuff was high. How should we think about that in June obviously our expected margins go down. Can give us more detail specifically as to how the could impact there.

I’ll state the obvious that if our revenue is about the same, subject to us having an unusual mix shift to some of the mega yachts that we sell, our margin should be pretty good. Now I don’t know if they hit 30, that was a record for us, but they should be pretty good. We are going to work like heck to have our revenue higher than that and we’ll see how things pan out from that perspective. As both sales would grow Joe then you would have some compression of that on margin side. I know I am kind of stating the obvious, but I would tell you that 30% was very good. I probably won’t expect that, I’d expect 30 thinking that may be the boat sales could help drive that.

But what you are saying is if you had a $115 million revenue like you did last year in the June that the composition that revenue will not be materially different. So the margin on that 115 would be somewhere in the range of what you did last year.

I don’t have the June quarter date in front of me to see if there is unusual mix. I don’t remember any unusual mix. It did seem like it was probably more of a small boat driven quarter than a large boat driven quarter. If that’s the case then margins would have the opportunity to be pretty decent again. There was anything unusual than effective margins in that quarter. It may have been buoyed of large mega yachts perhaps.

Your next question comes from Jimmy Baker with B. Riley & Company. Jimmy Baker - B. Riley & Co. : I am interested to hear what kind of traction you are gaining in the boat market. Can you remind us how many of your 57 dealer are carrying Nautique or Malibu line and if there are opportunities to grow that number without infringing on established partners with those OEMs, and then may be some color on how you did in the total boat market, during the boat show season would be helpful.

We hand all the Nautique in Minnesota where we have three locations. The initial results are showing it’s a very quality high-end product and I’ve gone to much of them personally myself over the years. But we are really excited about that opportunity in Minnesota and we also have it in Georgia, and it’s been well received by the customers and the team. Albeit we are heading in to that season, and it’s been a little weathery challenge in both of those markets. Typically in Minnesota it always is. Then in Malibu we are out in Arizona and [tempting] with it and that market has been pretty pressured by the housing. So I think we are getting market share at the end of the day there, even though the sales are not very many for everything we sell in that market, but we are gaining share while we are doing it. Then we have a partner-dealer arrangement in Missouri for the Malibu brand. So two very good brands and we are excited about the future understanding that there is a little bit of a learning curve, getting the team in place and the manufacturers have been very good and supporting us at the boat shows and helping our team to take it on the page and that type of thing. So we are excited about the future.

It’s going about as we expect it to go in this environment. Jimmy Baker - B. Riley & Co. : Would say it’s a fair characterization let’s say if those lines can be sold at higher than corporate average and do you see opportunities above and beyond the norm to selling [Technical Difficulty]. I am interested to know if those lines are above corporate average in terms of margin contribution, and then separately if you have noticed that those customers might be interested more so than your typical customer in accessories and related items. [Technical Difficulty].

The margins in that product tend to be similar to our other products. I don’t know that’s answered in the way proper. Was that your question Jimmy? Jimmy Baker - B. Riley & Co. : Yes, that was my question. I will just move on. Aside from the comments you already made on Bayliner, in general are you comfortable with your inventory on a per dealership level. There are two parts to that, some speaking much about the dollar amount, but are you confident that you have the right inventory at the right dealerships, or is there some room for improvement there.

[Technical Difficulty]. If anyone can hear us, we have an issue with our phone line down here, we apologize. We’ll have to signoff on the call, and Bill and I are here this afternoon for questions or comments, if there’s something that we haven’t addressed.

We thank you for you continued interest and support in MarineMax. I’d also like to thank our team members for their hard work and passion for the business and it’s truly their efforts that make the difference, and we look forward to any additional questions. Jimmy if you want to call back in, we’ll be happy to take your call. So thank you everyone and have a good day.

This does conclude our conference. We thank you all for your participation.