Please standby. Good day, everyone. And welcome to the MarineMax, Incorporated Second Quarter 2012 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.

Thank you, Operator. Good morning, everyone. And thank you for joining this discussion of MarineMax’s 2012 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 e-mail one to you. 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 some comments about the quarter and then will be available for your questions. Mike?

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. 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. I may just start with a thank you to our team. I’m proud of our team’s effort that produced a $144 million of revenue and more importantly, earnings in the March quarter. This was our sixth quarter in a row of new unit sales growth. Our growth has largely been in contrast to industry reports, which until recently had not reported unit growth in the segments in which we primarily operate. We produced an increase of 26% in same-store sales for the quarter with a portion of the increase coming from the brand expansions that we executed on during the past downturn. It is encouraging to see the success that is just beginning to occur from these expansions. We are now tapping into segments of the industry that we never addressed before the downturn started. Our experience is that it takes a few years for new brands to gain momentum. These brands should continue to contribute to our growth as they ramp, especially as business continues to improve. From the industry perspective, there are increasing reports that indicate the industry is gradually improving as economic conditions and consumer confidence gets better. It is also very encouraging to note that in addition to the 26% same-store sale growth, we grew gross profit dollars 28%, and we were able to hold our costs essentially flat as we obtained sustainable SG&A leverage. As we have said before, 53 of our 54 stores that we operate today did over $1 billion in revenues in 2006 and 2007. As such, we should expect some additional leverage when our volume returns and we’ll begin to benefit more from the cost controls we implemented during the downturn. We are constantly managing expenses albeit with the focus of not cutting cost…

Thank you, Bill, and good morning again, everyone. Before I go through the numbers, I also want to thank our team for a strong quarter and for delivering the first March quarter’s profits in several years. For the three months ended March 31, 2012, our revenue increased to $144 million. The entire revenue growth was driven by a 26% increase in same-store sales. As Bill mentioned, some of the growth was driven by the new brands we expanded with. About one quarter of our same-store sales growth was from new brands. Our sales in the quarter were up in those markets and also across all segments that we operate and while some segments have been unusually slow to recover like a 25 to 30-foot cruiser segment, they all showed renewed strength. We also generated a strong increase in gross profit dollars. Gross profit as a percentage of revenue increased to about 23.9% in the quarter, up about 70 basis points from last year. Our improvement this quarter was driven by higher margins on new boat sales and increases in revenue in all our other higher margin businesses, as Bill mentioned. Our product margins are still trailing our historical averages by about 150 to 200 basis points, which should provide future long-term incremental upside as product margins gradually recovery. We are also pleased with our ability to control costs evidenced by the very small uptick in our selling and general administrative expenses, obviously, when sales and gross profit dollars grow to the extent they did certain expenses increased like commissions. The reason expenses overall remained in check was efforts we have made over the last few years to reduce other costs, such as fixed costs for our stores and marketing costs for boat shows. Also as our inventory aging continues to…

Thank you, Mike. While our results cause us to have a greater sense of optimism, as Mike said, we need to have a sustained recovery to feel significantly better about the industry in our results. There is no question that we have made and continue to make progress. The earnings power in the company is growing as we focus more on the segments of the business which we can control. We remain committed to the importance of finding ways to drive our gross margins, while we cannot control the timing of the sustained economic recovery, and therefore the strength of boat sales, we do have a greater ability to positively impact our higher margin businesses and also expenses. To that end, we have been incrementally growing these businesses just about every single quarter for years. This effort should result in ongoing, improved gross margins that at given revenue level relative to that same revenue we generated historically. While product mix shifts can affect our gross margins from quarter-to-quarter, we believe that we can continue to make progress on improving our annual gross margins over the long-term. As I’ve said before, our customers are out on the water using their boats more and more. They are attending our Getaways and the related events in greater numbers, and our customer classes in our stores are vibrant. All of our customer-centric strategy and our passionate team greatly differentiate MarineMax in the marketplace. I’m convinced that it’s our strategies of teaching, servicing and showing our customers how to enjoy boating with MarineMax has allowed us to exceed the industry unit trends for so long and improve our market share. We are convinced that with our focus on our team and our customers we will continue to exceed the growth that the industry otherwise will generate. When they turn toward more positive consumer settlement and generally improved economic conditions coupled with our team’s ability to enhance and improve our customer’s life through boating, we are well-positioned to build on the progress which we are making. Our team remains committed to our customers and we are encouraged by our customers passions for great recreation which connects them with their family and friends, and enriches their individual lives. We are proud to provide a recreation that impacts and changes lives. With that, operator, we’ll open it up for questions.

Thank you so much. (Operator Instructions) With that, we’ll take our first question from James Hardiman with Longbow Research.

Good morning. Thanks for taking my call and congrats on a fantastic quarter here guys. A couple questions, obviously, it’s really early in the year, we don’t want to get ahead of ourselves, but can we talk a little bit about where you guys fit into the broader narrative of this, at least what was in the first quarter a nice little pop here, somewhat of an industry recovery. On the one hand, we’ve got the industry up, call it mid-teens but the turning to our fiberglass still underperforming some of the other segments. That said, you guys were up 26%. How should I think about that with some of that geography, you mentioned some of the new brands in there, but how do I, how do you guys fit in with the broader industry at this point?

Well, first of all, thank you for that congratulations, James -- congratulate us and well, this year is more fun than what has been in previous years here. But what we saw is that businesses pretty well across all our segments were up and most of the industry increase has been in the outboard segment, in aluminum and outboard fishing and roundabout type business. But we saw an improvement in sport cruiser businesses, an example, which has been a long time coming and so it appears that the consumers, as they feel a little more confident, are willing to go ahead and make that decision. So we’re cautiously optimistic is probably the way to say it and as Mike mentioned, and what he said about, what happened to us last year, as we all know very well, is we were well-positioned for a good year last year and all of a sudden, it didn’t happen with all external things. So, we’re worried about the macro environment from a standpoint of it’s an election year and the world issues that are out there. But we’re very encouraged by our customers and their attitudes and the fact that they’re still out boating in there and they’re boating more. So, we’re keeping our fingers crossed and working as hard as we can to make hay while the sun shines here, not knowing what the rest of the year is going to bring in.

I just would comment, James, for, let’s say, the five quarters through December, right? So, if you go back a quarter, we had pretty good, in a lot of those quarters, double-digit unit growth for the segments that we operate, fiberglass, inboard, runabouts. During that time, the industry for those segments was all negative. In the March quarter here, we began to add pretty decent unit growth as you would think through our same-store sales growth. And I believe there are reports that are coming out right now at the end of March that are saying that the segments that we participate in are actually up -- not up a lot, maybe about flat, up a couple of basis points. So, I think what you’re seeing and what you’ve been seeing for several quarters is us outperforming due to the strategies that Bill already talked about. But now what’s nice is that we were -- we now have an industry that’s beginning to get its sea legs, if you will, and is beginning to increase also. That’s the reports that I’ve seen here of late -- in a late March and here in early April.

Very helpful. And how should I think about, I guess, two different impacts? One, geography, I mean, obviously you guys are overexposed to the Florida market generally. How did that compare to some of the other parts of the country which, in theory -- I guess, that leads to the second question. What was the role that weather played over the course of the quarter? Obviously weather, pretty favorable up -- on the East Coast, in the Midwest. And yet, nonetheless, you guys are overexposed to the Florida market and put up fantastic numbers.

I would tell you, Florida has been becoming an asset for us again for the last several quarters. And I would say that we had stronger growth out of Florida incrementally than we did out of the rest of the country. When we speak with our stores, it’s hard to quantify the impact of weather. It doesn’t seem like there’s been a material impact in the northern markets. If your boats are winterized for the winter, it’s winterized for the winter. There’s not a whole lot you can do about it. You would think there’d be some benefit from it, but it doesn’t seem to be very significant, given Florida’s trend versus the rest of the country.

And in the northern markets, as you know James, the boating season is just beginning. So we’ve got to wait and see what that does.

Great. And then, last question here, just on the operating leverage front, I mean, you grew sales about $28 million, operating income about $7 million. So, call it 25% leverage. As I think about the year -- obviously, there’s a lot of different ways we could look at this. But how should I think about what level -- if we continue that trajectory of operating leverage, you’re looking at maybe $525 million will get you back to breakeven. Is that how you guys think about and obviously -- the top line is the biggest unknown. But how should I think about the leverage in terms of getting back to breakeven?

I think, basically, we’ve been operating pretty darn close to breakeven for the last 18 months, let’s just say, maybe longer than that, just depending on a couple of margin assumptions, our ability to control expenses and so forth. So I think we’re very close to that now. I think the leverage we had this quarter was fantastic and if there are a couple of things going on this quarter, if you need to think through one, in the year-ago quarter we had 57 stores. In this quarter, we had 54. We did more volume which has been the story we’ve been talking about for a long, long time. As we think, we can get more volume through our stores. So, about 30% to 40% of our cost structure is fixed and we’re not planning on opening a lot of stores. We got to get additional leverage from that perspective. We also did a pretty good job in the quarter in controlling boat show costs, as I mentioned. And this is a quarter where we have most of our boat show expenses. We have a little bit of June quarter, a little bit of [October] quarter, but most are in March. So we’re able to reduce some costs there that we don’t quite have that opportunity to June quarter. So while it’s management’s goal and directive to get as much leverage out of the business. This leverage in this quarter was pretty sound.

Got it. Thanks again and congrats, guys.

Thanks, James.

Thanks, James.

(Operator Instructions) Our next question today will come from Greg McKinley with Dougherty.

Yeah. Thank you. I wonder if you could comment on the new boat brands you’ve brought into the folds recently and the contributions they’ve made so far.

Well, good. As far as the new brand that we’ve added is -- we’ve added Bayliner. We’ve added...

Nautique.

... Nautique which is sort of my passion of skiing, I think Malibu, similar-type boats, wakeboards, ski boats. We’ve also added …

Crest Pontoon.

Crest Pontoons and we’ve expanded some brands as well, a little bigger footprint with Azimut as an example. And so, as far as contributions, I don’t think we …

It was about a quarter of our same-store sales growth. So if our growth was 26% in the quarter, about 25% of that came from the new brands. If you follow that math, Greg, and some of those brands we had last year. So that’s the growth on top of the brands that we had last year. There are new segments that we didn’t used to participate in, which to me is pretty exciting. And in some cases, maybe they’re more of a value opportunity, Bayliner, Mako, and certainly the aluminum which is I think you guys all know has been very strong and that’s...

And Scout.

...continuing to grow.

Fishing mart -- our boats in select market.

Right.

Okay. So, a quarter every year. And you feel like you have more exposure to or more value, value segment of the boating market with those brands?

Yes. For some of them and some of the other brands that we mentioned are not necessarily valued to more premiums...

Premium brands.

Like Nautique and Malibu.

Nautique and Malibu.

Okay. On the inventory front, you commented that typically, inventories peak seasonally each year in March. Is that going to be different this year given the fact that you’re starting to see recovered retail demand? Is there a need to put more product on the floor than we might have seen in past years given that we’re heading in the right direction now or how should we think about that?

I think, kind of all the comments that we made. I mean, if we continue to see the growth, accelerating growth, then certainly we’ll be -- we’ll need product to satisfy that appetite. But I think given, even given our strong quarter, given what we see today, given our ability to get product for our manufacturers because the capacity is faster, we feel really pretty good about where we stand today and our ability to meet the demand that we think is out there.

But with the 54 stores that we have, if anything, we’re a little tight on inventory.

Okay.

And so, we need that really to be doing business and have the products for the consumer that wanted now for the season. And that’s one of our real strong benefits we have in MarineMax is the ability to move them around. So, if you have someone in New York that needs a larger boat that’s in Florida or Texas, we can get that boat for them.

Yeah. All right. Thank you. Nice quarter.

Thank you, Greg.

Thank you, Greg.

And we’ll go next to Michael Fox with Park City Capital.

Good morning, guys, and congratulations on a very strong quarter.

Thanks, Mike.

Thanks, Mike.

I was just wondering if you could talk about, if you think there was any pent-up demand in the quarter? And then second question was just regarding, if you think we’re at the point where you’re starting to see opportunities to make acquisitions because I know you didn’t want to really do that during the downturn but just kind of seeing where your thought processes around that would be great. Thanks.

When you have a huge quarter like we had in the March quarter with the bulk of that being in the actual month of March, which is historically the way it is, there is some pent-up demand that’s created. So, it can cause -- take a little bit of business from April and then you throw it over into March but we’re seeing signs that we could bring it back around. So, there definitely is some pent-up demand that was created.

In the industry, there’s a ton of pent-up demand because of three to four years of low unit sales. Yeah.

The units are really out there getting older and older and older.

Right.

So, that pent-up demand could, I mean, that could, kind of, persist to the spring in theory given that like you said three years of weak sales?

I would tell you that given the -- if you look at ‘08, ‘09, ‘10, ‘11 and even ‘12, the unit sales are historically well off of their peaks, there’s a lot of people out there who have not yet traded up into their new boat, and so we believe there’s a fair amount of pent-up demand and that the industry units ultimately are going to return, whether return to 300,000 or something of 200,000 I think is -- we all need to wait to see on, but doing this a fair amount of pent-up demand. And as people begin to feel better they’re going to get there and enjoy the pleasure, as Bill is talking about it. Acquisitions, I just would point out, we’ve done a lot of growth these last several years. Bill mentioned that brand expansions, the brands we’ve taken on or expanding with brands that we currently have and as Bill mentioned, taking (inaudible) in Florida, exploring experience (inaudible) boat in the Northeast and so forth. And I think there’s going to be more and more opportunities like that, where you’re not painting a blue sky. And but certainly, if the right opportunity comes around and if the economics are proper. We’ve had a pretty disciplined acquisition policy years ago. We’re not going to deviate from that. We would certainly look at something.

And we continue to get opportunities thrown at us through acquisitions. But unless they make a lot of sense and they’re steals, we’re not going to do them because there’s no need to, as Mike just explained.

Right.

We can grow the business with the leverage that we have with brands and our ability to grow the company back without having to take on the additional risks.

Right. Great, great. Thanks a lot and congratulations again on the quarter.

Thanks, Mike.

Thanks, Mike.

(Operator Instructions) Our next question will come from Jimmy Baker with B. Riley & Company.

Hi. Good morning, guys. Great quarter here, good start to the retail season.

Thank you.

As you think about -- I just have a couple of really follow-ups to some prior questions. So, as you think about expanding with brands like Nautique or Malibu and then also some more value-oriented offerings like your pontoon lines. Can you maybe speak to, even anecdotally trends in your customer mix, maybe broken down by first time boat buyers versus trade-in buyers versus those just adding, let’s say, incremental boats or a multi-boat owner that’s just increasing his fleet, if you will.

Jimmy, with the brands, which we were not representing before like in the ski and the wakeboard brands, Natique and Malibu obviously, that added customers to our database. If you look at Bayliner, we’re actually -- we’re picking up customers that were not doing business with the premium brands, Sea Ray, that we had before that are now into our family and so they’re more value-conscious, however, they’re very high-quality boats. So and that’s the reason it fits within our company. It’s not like we’re selling a low quality product with Bayliner. We’re selling a very high-quality product. It’s just not content at the level some of our premium brands. And that’s a lot of that is incremental business, but we are saying also that some of our customers that historically would have bought, perhaps a Sea Ray runabout, is now buying a Bayliner, and it has to do with their wallet or their own concern where the economy is going and -- or financing, whatever the case may be. And we’re also seeing there’s a shift to pontoons from what historically would have been a large boat type buyer. And it’s people looking for more value. So I can now put 14, 16 people on the boat and have a large, big deck on this pontoon aluminum boat, whereas I’ve got to buy a much larger sport boat to be able to do that same thing if I can even do it. So there is a shift that’s occurred out there and some of that is -- has to do with where people’s concern about the economy and maybe their own financial picture. But there is still a lot of wealth out there and a lot of customers who have the ability, who can get the financing. Financing is not an issue today. We can get it if the people have good credit, and even if there’s marginal credit, we’re able to put some deals together. But a lot of it is tied to people just need to feel better. We’ve got to remember that consumer confidence is still very, very low. And the media just does everything they can to paint the most negative picture you can possibly image, as we all know and of course, that kind of shuts our customers down. So, that’s the reason we get a lot out on the water with Getaways. In other words, they’re not watching the deck on those, because who knows what you can believe today with the news anyway. And it’s -- so that’s been a real issue for our customers to feel more confident to want to pull the trigger. They are boating. I mentioned that. And that’s -- and NMMA actually supports that data, National Marine Manufacturers Association that consumers are out on the water. I can tell you large for sure are out on the water and a lot more. And so our trips to the Bahamas and…

Lakes and rivers.

The lakes and rivers, it’s -- they’re all booked and the customers are out doing it. So I hope that answered your question.

Yeah. It does. If I could just clarify -- I mean, it sounds like clearly you’re seeing some incremental customers, new customers to you, to MarineMax. But do you feel like they are new to the industry, new to boating or maybe we’re not really there yet? We need to get further into the recovery.

No. We see…

We’re seeing both for sure, yeah. Some are new to MarineMax. And so, they’re conquest. But there are many that are new to boating, as families discover that boating is one of the few recreations out there that especially if you have kids, that you can really connect with your kids. And you’ve got them as a captive audience. And there’s not many recreation that do that today. And families are looking more and more for that. And -- one of our biggest competitors that we have is the extracurricular activity of kids today. And boating gives a chance to do that. And I’ll give you an example. One of our regional presidents has a son and he’s a teenager and has gone on numerous Getaway events with his dad. And so, we had a Bahamas trip planned a few weeks ago. And the sea is not yet up, just up too much to really do it. And his son had cancelled some baseball game and everything else that he’s involved in and, of course, was just extremely disappointed that he couldn’t do that trip. And that’s what families are looking for today. What is there that will bond and bring people together or again, give the ability to make new friends, et cetera? So, it worked.

Someone actually, they sent me a card. They want me to come...

Jimmy, to re-answer your question?

You did. I just have one more, and then I’ll back out. And it’s just a follow-up to the pent-up demand comments earlier. I think the question was framed as kind of in regard to near-term trends of that pent-up demand spills over beyond the spring. I guess I would think the release of pent-up demand as you see it would be a multi-year dynamic. I mean, it’s going to take several years to get the age of the fleet down and just get back even at natural replacement rate, if you will. I just want to make sure I’m thinking about that at the same way that you are.

Yes.

Yes. Absolutely. Absolutely. That’s the way we’re thinking about it.

Okay. All right. Thanks a lot for the time, guys.

Thanks.

Thank you.

And with that, we have no further questions. I’d now like to turn the call back over to Mr. McGill for any final and closing remarks.

Thank you, Operator. And thank you everyone for your continued interest and support in MarineMax. I’d also like to again thank our team members for their hard work and passion for our company and our customers. It is truly due to their efforts that we can call ourselves the leading boat retailer in the country. Mike and I are available today if you have any additional questions. So thank you, everyone.

And with that, ladies and gentlemen, that does conclude today’s call. We do thank you for your participation and ask that you have a wonderful day.