Good day and welcome to the MarineMax Inc. Fourth Quarter 2013 Earnings Conference Call. Today's conference is being recorded. And at this time, I would like to turn the conference over to Brad Cohen of ICR. You may begin.

Thank you, operator. Good morning everyone and thank you for joining this discussion of MarineMax's 2013 fiscal year end and fourth quarter earnings call. I am sure that you have all received a copy of the press release that went out this morning but if you have not, please call Linda Cameron at 727-531-1700, extension 101-00 and she will email one to you right away. I would now like to introduce the management team of MarineMax. Mr. Bill McGill, Chairman, President and Chief Executive Officer; Mr. Mike McLamb, Chief Financial Officer. Management will make some comments about the quarter and the year 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 risk include but are not limited to the impact of seasonality and weather, general economic conditions and the level of consumer spending, the company's ability to capitalize on opportunities or grow its market share and numerous other factors identified in our Form 10-K and other filings with the Securities and Exchange Commission. With that in mind, I would like to turn the call over to Bill.

Thank you, Mike, and good morning everyone. Our fourth quarter was our eighth consecutive quarter of same-store sales growth. With the close of our fiscal year behind us more signs are forming towards the continuation and growing strength and a long-term cycle of recovery for our industry. While some of our most significant segment such as sterndrive and inboard fiber glass boats have lagged the recovery. We are encouraged that industry data reflects signs of improvement in these key categories. But the September quarter, our same-store sales increased 7% which we have done on top of 18% last year excluding any discontinued product we have generally we had growth across all segments that we operate within particularly we saw growth in larger product which ultimately helps us to drive growth more effectively than smaller products. This has been a consistent thing throughout the recovery thus far for us. What is even more encouraging is that our consolidated margins are continuing to improve, while showing steady improvement over the past several quarters. We saw margins generally exceed historical levels during the September quarter. Our increasing margins are largely met by improving new boat margins combined with incremental growth in each of our higher margin businesses. The growth in both margins reflects many positive trends. It shows the aging of inventory is reasonable and improving. It also shows the products we have available are experiencing increasing demand. Improved margins also reflect to change through our pricing philosophy that we implemented in the June quarter which we called One-Price. Basically the change we are implementing was acknowledgement to our customers that we respect their right to our best price. But also with the industry recovering, we are taking the opportunity to raise our margins. With higher margins, we do pay incrementally greater commissions…

Thank you, Bill, and good morning again everyone. For the September quarter, our revenue was approximately $150 million up about 9% or $12 million from the prior year. Our same-store sales increased by almost 7%. Geographically while most of our markets were up – markets outside of Florida led the charge which seems to be consistent with external industry data. It appears that the weather became less of an issue for the northern markets boaters came out and purchased. However, it was seasonally later than it’s typical. From a market perspective, Florida was up which we expect to be the case going forward. In the Greater New York area, we saw strength but New Jersey was still down, the expectation is that New Jersey will see improved results in 2014 once the infrastructure for boating is repaired from the damages that Sandy caused in later October 2012. For the quarter, we grew gross profit about $7 million or just over 21%. Gross profit as a percentage of revenue increased to 26.8% from 24.1% last year. The increase in our margins is noteworthy because these boat sale drives consolidated margins usually drop since boats carry the lowest margin of all of our business categories. The increase in our margin was also aided by our higher margin businesses which did grow as well. Our consolidated margins were the highest of any September quarters since 2007. In this quarter like our June quarter, we benefited from a damage recovery received from BP as a result of the Deepwater Horizon oil spill. We like many Gulf Coast based businesses filed claims to recover damages we incurred from the spill. Several of our claims are resolved this quarter resulting in the $4.7 million net recovery being recorded. For the year, we recovered $11.7 million net.…

Thank you, Mike. As Mike mentioned the Fort Lauderdale Boat Show which is typically one of the largest shows in our industry started last Thursday and ended yesterday. Crowd size and sales were encouraging. The trend to larger product continued but we also saw strength generate across all segments that we serve. This show and others that we have attended recently are further indication that the industry recovery is holding and gaining momentum. We all need to be cautious, however, until it becomes clear that meaningful gains are occurring and ultimately be reflected in our results. Our scale, size and commitment to providing our customers with the unique MarineMax experience continues to entice our customers boating season after boating season. Our company is positioned to increase its leadership position in the industry and with our enhanced product offering and the return of innovation by our manufactures, we expect to provide even greater desire for our customers to step up to a boater yard for a life changing experience with their family or friends as part of the MarineMax family of boaters. We continue to focus both on the strength of our team and our customers. These strategies have proved to be the key differentiator for us and have yielded improved sales and share as the industry [ph] solely makes its way towards a stable recovery. We will continue to grow our company and brand and capture additional opportunity as they arrive. We are well-positioned to generate substantial growth for providing a one-stop solution to all our customers boating needs. We expect to benefit from our competitive advantages which as we move forward will aide us in gaining additional market share and enhance profitability. We thank our team, well-aided in our efforts towards another profitable quarter. And with that operator, we will open the call up for questions.

(Operator Instructions) And we will take our first question from Jimmy Baker with B. Riley & Company. Jimmy Baker - B. Riley & Company: Hi, good morning. Thanks for taking my question.

Thank you, Jim.

Good morning, Jim. Jimmy Baker - B. Riley & Company: So Bill, if we can isolate the fiber glass inboard market your highest price category, it seems there are so few dealers willing to stock that product that the competitive landscape as really changed compared to previous session when the market was let’s say 4x or 5x greater than today. Can you just talk about how – your set-up to compete with some of the European or other brands that have elected to go more of a factory direct model and just kind of help us understand how you fit into the purchase decision-making process for that high-end buyer?

Well, Jimmy you are exactly right that a lot of the U.S. dealers and even around the world are not really stepping up and taking risk to stock the larger products. And to your point a lot of Europeans especially the French and even some Italians have come to market and even Chinese that are basically here with more of a factory direct or some representation in the market with the few dealers. But at the end of the day, if you’re investing into this lifestyle of boating and so you’re purchasing a larger boat especially the dealer becomes an extremely important part of the equation. As an example, we sell the Italian brand of Azimut, we’re doing very, very well with it. It takes a lot of support for us to support our customers because of the six hour time difference between here and Italy, getting parts that have come to across the ocean, the language differences et cetera and even with us it’s a challenge. Now, just imagine you don't have the dealer and you’re dealing direct. It would become, it could you turn your wonderful experience into a boating nightmare and we hear that for some customers that have stepped out of our family and have bought some of the products that have come back to us and said we should never have left the MarineMax family because at the end of the day, it’s not about buying a boat or yacht, you’re buying everything that goes around it. Then it’s the enjoyment that’s -- what it’s all about. And so we’re cognizant that they are out there and we’re doing everything we can to demonstrate to perspective buyers and our customers that we’re here as MarineMax to do it. We went to the One-Price selling and I talked about that a little bit and it’s working very, very well. And not only it’s helping our margins but we’re also hearing from our customers, thank you. It’s all about; I really just want your best price anyway. So, I can focus on all of the other things. And I was -- I just got back from the show last night Fort Lauderdale and had customers that over and over again came up to us and said that we love our Azimut, we long of our Sea Ray, we long of our Meridian, we long our Boston Whaler whatever the case may be but at the end of the day, we’re only buying what you guys sell because that’s the rest of the story. Jimmy Baker - B. Riley & Company: That’s helpful, great. So, in terms of the drivers of the 9% sales growth in the quarter, can you just speak to trends of unit sales gains versus price or mix and then you also I think talked about positive trends in October as well, should we take that to mean units or mix or both?

Yes, Jimmy this is Mike speaking. The bulk of the same-store sales came from up selling larger product versus last year units. I mean technically if you look at units and if you include the discontinued miles, when I say discontinued some of our manufacturers purposely stop building certain sized products although they’re going to relaunch their product here this coming summer and so technically on a unit perspective or down year-over-year that’s because we didn’t have the product to sell. If you account apples-to-apples, we’re probably about flat and so all the rest of the growth is coming from selling the larger products which is -- which we’ve been talking about. I think if you go back or probably I bet you eight quarters now, we’ve been talking about growth and we probably would say above 40-feet and sometimes you may say above 35-feet but that continues to percolate and do well and some of you heard me say, basically wherever we have relatively a new boat priced about right, it’s doing reasonably well. On October, I don't have the final data for units versus average unit selling price or size in the month. I’m going to assume that it’s going to be at the end driven by larger product but we did have a good unit month as well though. So I just don't have the final answer probably for October as we’re still kind of putting a bow around that month right now, Jimmy. Jimmy Baker - B. Riley & Company: Okay. Thanks for that. Just I have a couple more and I’ll pass it off. Just hoping you could talk about margins heading into fiscal 2014. You talked about how much stronger margins are being here in the back half, how should we think about the progression of gross margin, should the industry continue as a tailwind into next year. And then I guess the other side of that, can you just speak to the SG&A spend in 2014, what level of incremental investment you might need to support ongoing growth?

Yes, I can comment that mean, it certainly our intension to continue to incrementally grow margins. As you know that the answers around a little bit when it comes to mix of product, we saw a lot of big product that can stress the margin. Last year with the weather, we had in the March quarter, we had it to get more promotional. But I think generally, we ought to be expecting incremental improvement, just a little improvement like I said if you look at fiscal 2014 versus 2013, I’ll expect our margins are going to be up incrementally at the gross margin line.

And we also have a lot of new products that are innovative and which we’ll command the higher margin Jimmy. So some of the new products from Sea Ray and of course, the new products from Azimut and Boston Whaler are our higher margin business force and normally because the innovation and the inability to get it in some case in a timely manner because how hot they are.

And generally on the expense side, I think the way the company has always been modeled from a long time ago to now is that with every dollar of same-store sales growth, you’re going to increase your SG&A cost something like 8% to 10%. I’ve seen models on the sale side even having that higher. But if you just say 10%, it kind to make sense then you get 15% drop through the bottom line, maybe a little bit more as you begin to leverage the fix cost a little bit better. The challenge of the company has -- as for itself as we had some unusual increases really in 2013 and for the most part in the first six month although some of those increases continued in the second six months for most of them in the first six month. It’s how we get those costs out. And so that you could, in theory you get even a greater expansion at the expense line in 2014 than you would normally model just half of 2013. But I’m caution as being in the call as, I would model the business that we had until management proves that we found those extra dollars and then we start to produce more leverage in the business. Jimmy Baker - B. Riley & Company: Okay. Fair enough. Last one for me, it looks like -- did you actually close a location in the quarter and if so, where was that and when in the quarter did that closure take place?

You got me on that one, Jimmy, let me just think, you’re saying because the count dropped one. Jimmy Baker - B. Riley & Company: [indiscernible] 54 location?

Yes. We had a Tampa store that was a repossession center and repossession have significantly slowed in our industry which speaks to used boats margins coming out and the business economy gets a little better. And so we closed that and it’s actually -- we own the property it’s for sale right now. So, that’s what happened.

I don't think, just a general comment, I think our store count is going to remain around the size unless you see us growing geographically or doing acquisition something like that. Jimmy Baker - B. Riley & Company: Fair enough. We’ll trade repo sales for new sales. Thanks a lot guys. Great quarter.

Okay. Thank you, Jimmy.

And we’ll take our next question from Mike Swartz with SunTrust.

Hey, good morning guys.

Hey Mike.

Hey Bill, I know you touched on some broader commentary with regards to Fort Lauderdale but maybe you can provide just a little bit more color in terms of maybe what you saw in terms of early season order activity just qualitatively and just touching on some of the brands or new products that you think are doing better in the market than others.

Well, Mike, first of all, it’s been a quite since we had our Fort Lauderdale boat show, it didn’t have a hurricane or election going on. And so the weather was just about perfect except I think for the first three days, maybe a little longer [indiscernible] for a few customers. The attitude of the customer was definitely improved over a year ago or two or three years for sure and so we heard a lot more positive responses and indications from customers and our business activity there understand that at the show, you may agree on the purchase of a boat and then they got to go for a ride and get it financed et cetera. But indications are, it’s a improved environment over what it has been historically. New products continued to do very, very, very well. Sea Ray’s new 350-SLX, I mean I think we’ve got 14 of them. So this is a hot new boat that they have maybe its more -- 16 or 17 after the show and the first boat has not arrived. Sea Ray launched their new 510 Sedan Bridge at the show and it was a big hit they actually had in there conditioning floating along with the 350-SLX. Azimut very, very good show and lots of new product which they continued to do and lots of activity there. Boston Whaler continues to be a very, very strong brand with a lot of innovation and it was a very good show for us. And we -- Hatteras with the new owners that seemed to go real well and lots of activity going on, understanding these are in the both convertibles and motor yacht market or expansion boats and they take a while to happen but we feel excited about it. We also launched there the new Scarab Jet Boats and even though it was kind of hidden among the larger products in the water. The indications are, it’s going to be a winner. So we’re excited about that as we enter the Jet Boat market to get people into boating and take amount of their Sea dos and Yamaha personal watercraft et cetera and get them into boating where they have got a excitement about Jet. So, all in all, I’d say it was a very good indicator. We also saw that at the Atlantic City Boat Show where there was a very good indication and we talked about the drain that we had from New Jersey due to Hurricane Sandy. I think 2014 we will start to see some of the 65,000 boats that were either damaged or lost, start coming, I’d say add to our business and albeit what all happen in 2014 because there are still some infrastructure upon there. So we’re feeling better this year than we did last year about boat shows in the market.

Great. Thanks for the color on that. And then just touching on, I think you had mentioned in the back half of fiscal 2013. You took some actions to really improve the operating leverage of the business, you maybe flush out what exactly you did and are those kind of repeatable as we go into 2014?

Yes. I’d say it was just something that we’ve done over the years through this downturn. We just took a fresh look at every cost -- renegotiated everything that we can’t renegotiate. And looked at things as basic as even compensation structures and things of that nature, just try to really offset and find improvements for the increasing health insurance cost and property and casualty insurance costs that we were experiencing and we’re beginning to see some benefits from those efforts. We continue to do that again just we kind of -- we are always looking for that as every company does for opportunities. But we -- as we started 2014, we dug in a little deeper looking for opportunities. Again, nothing that we would take anything away from what we do to our customers, which is what Bill as said constantly in the last four or five years. But an overall silver bullet might just basic blocking and tackling and getting more out of each of our processes and each of our spend.

And MarineMax vacations was drained last year as we -- you have to get the size of the business at a certain point to justify the investments we’ve made and the facilities and team et cetera. And we’re starting to see that with the bookings for charters are up significantly and are looking very positive for 2014 as well as our sale of the yacht for the charter fleet and our real additional benefit is that we have a lot of interest metrics from a retail perspective on some of the boats that we’re building for the charter fleet. At the boat show as an, we’ve got 484, its 4-cabin, huge boat for 48-foot we have for charter and we’re building a private [indiscernible] on it. And it was one of the most active boats at the show and not only from a charter perspective but also from the standpoint, oh, my gosh, this would be one heck of a boat to have personally. So we should start to see some benefit from that is as we go forward into 2014 here.

Okay. Thanks a lot guys. Appreciate it.

Thank you, Mike.

And we will take our next question from James Hardiman with Longbow Research.

Good morning guys. Thanks for taking my call. Couple of quick housekeeping questions and I have a bigger picture question. The delta between same-store sales and total sales they had been roughly the same in the last few quarters, 2% delta this time around. We assume that they will stay the same year or is there going to be a gap. And then just real quickly, the Deepwater settlement that’s 100% SG&A, right none of that is in cost of goods sold?

It’s a 100% offset to SG& nothing cost of goods sold. And then really the things for our sales number in our normal number should be pretty close to one another and that’s where opening or closing a lot of stores which we don’t plan on doing.

Okay. But what drove that in the quarter that the 9% total versus the 7% same-store sales?

Got to be closures of stores last year James, I don’t have the numbers in front of me right now. But it’s got to be something we had opened in the September quarter last year which is not includable in data this year.

Got it. And then I was hoping we could dig a little bit deeper in terms of just availability of boats, the discontinuation of boat, you talked about unit being I guess down to year-over-year maybe flat on a apples-to-apples basis and you talked about getting away from certain segments. [indiscernible] talked about drawing down its inventories in that sterndrive inboard category at least in the short-term. I guess, we have seen that industry numbers I think are up pretty much across the board. I guess I could spin that in a couple of different ways. I could say that you are losing share and if you are not in the categories that people are buying, they are going to look elsewhere. I guess I could also look at that as potentially some pent-up demand which opens the door to even better sales as we move forward. How do I think about all that?

I will take a stab and Bill may jump in. If you look at the key categories that we are at, I have actually got these statistical surveys data for the September quarter in front of me. And it breaks down the sterndrive category and various different segments but still through the September quarter. Most of the key sterndrive categories were down. There was improvement in Sport Yacht. There was improvement in large cruisers again small numbers. The dead float look promising, if you break it apart between IO and outboard. The sterndrive deck boat business was down slightly but now having settled that the decreases are shrinking. So they are not – as the greatest they went for. I would also say that when a manufacture decides to stop building certain size product because of the reasons that they had which seems to make sense back at the time and you don’t have the product here by definition, you are going to lose some share down in that category. It’s probably not the most critical category to us or to the manufacturer but we would rather have the business which is why the manufacturer is coming back with the smaller product. But if you look at where dollars can, where sales were driven where the big dollars are, whether its largest sport yacht, the larger cruisers, the sport yacht, the Azimut business for us. I mean, we have been saying the right thing probably 8 quarters now, we are probably the first one coming out, I have to go back and maybe the December quarter of – and maybe the 2010 even, but while we started seeing unit growth year-over-year in these categories. So we are very pleased to see the industry data begin to stabilize and they start to turn green. We are pretty confident. We will keep our momentum going and our trends going. We will have a quarter down or quarter up or quarter flat. But over year-over-year, we are going to keep growing our share and getting more than our fair share probably that’s because we have the inventory, we have the competitive balance sheet – we have the competitive balance to the balance sheet and obviously Bill talked about. But we did lose a little share on the small product but as we have done well in the large product.

But we have been growing substantially better than the rest of the industry. So when you do that you are not going to show a bigger increase as the industry starts to increase, improve and sterndrives are still down and smaller inboards the same way. So at the end of the day we are not concerned about it because we got the lion share of it anyway in our market.

Very helpful guys. And I guess this last question, I guess is a follow up to some of the SG&A related questions, as I think about modeling that for next year, obviously I’m going to back out – I guess call it $12 million, I’m sorry that’s the Deepwater settlement. But yes, I guess I’m going to back up to that settlement for next year, as I think about some of the increases, can you help us maybe in order of magnitude around some of these items, obviously insurance played a big role, it sounds like compensation plays a role in SG&A, can we just think about the size of some of those factors as I try to model this next year, what’s going to be fixed, what’s going to be variable, those types of things.

I think modeling the business James, what I would do is, it’s kind of modeling the way that you model with the past which I think for the most part I don’t know your specific model. But most people tend to -- sales grow by $50 million, they end up adding roughly anywhere between 8% and 12% to expenses and the rest of the delta drops to the bottom line, which should be, you start with the gross margin around 25, the difference drops to the bottom line, something like that. I would model it – I model it half of our 2013 actual have we add back the BP dollars that be a – I think a reasonably prudent maybe safe way to do it and not take into account the benefits that management is trying to achieve in the expense structure of the company. Health insurance specifically that we talked about, I think if I add up my comments from the first three quarters of the year, there is probably $3 million increase or maybe a little bit more than that. Just through the June quarter on a year-over-year basis. And that was above what the actuaries had anticipated that was above what we anticipated that was above last year. We don’t think that’s going to continue. But we don’t know if it will or it won’t. So there could be some upside there. We did have some additional programs to incent our team and really the most of the March quarter. I think the magnitude of that from memory was maybe around a $1 million something from that I think I cited on the call. Again, I don’t think that specific program will have to continue again going forward once we see weather patterns really ugly and we make try something a little bit differently. But, that’s how I model business.

Yes. And we get additional marketing to try to offset the lack of spring and nobody can forecast the weather for 2014. But, hopefully we won’t have the lack of spring like we had up north. We do extra dollars have to try to not get our customers to differ the decision.

Perfect. Very helpful. Thanks guys.

Thanks.

Thank you, James.

(Operator Instructions) And we will take our next question from Greg McKinley with Dougherty.

Thank you. Sorry to keep – I guess revisiting the operating expense question. But, I was just looking at – if we look at year-over-year changes in gross profit dollars. And then we look at year-over-year changes in operating expense dollars. So there is a rather significant delta there much more than maybe that 10% variability that you referred to and I understand what you are saying about sales incentives and insurance premiums, are there any significant cost cutting opportunities available to the company or is it, would you sort of describe that as a large number of small things and the aggregate can add up? And I just – just wonder if you could just give us some confidence that I think if it had been top 10% variable cost excluding the deepwater fund, our G&A probably would have been $134 million. But instead it was maybe $144 million. And just want some confidence that as we look at that they will get back to sort of 10% variability?

Yes. I would say it’s a – the current year it’s a kind of accumulation a lot of, I won’t call them small things, $3 million on the insurance side is not small to me. But the accumulation of a lot of things hitting us that we were not obviously expecting or planning, the weather in the March quarter, the health insurance to the biggest Hurricane Sandy cost a lot of inefficiencies. If you step back or if you go all the way back to 2012, just kind of walk through from there. So 2011, the company lost a fair amount of money, 2012, we gained $50 million in revenue and we really didn’t add any expenses and the company basically broke even, made a little bit of profit. This year we added roughly another $50 million and I think our earnings, if you do the math and have a 10% expense increase like you would normally model. I think our earnings should be something like $8.8 million and we are at $3 million. So we are $5 million up of which you would theoretically model the business on or what normally people had modeled the business on. And if you think about, okay, we have $5 million delta, well, $3 million of its insurance and we just talked about $1 million of it being the compensation that we did to help drive additional businesses, I just mentioned that $350,000 loss of Hurricane Sandy in this quarter alone, you start working your way up to that $5 million pretty quickly, if you model the business the way it traditionally has been modeled. And I think that model can’t make sense, we think there is upside to that model, we are not pleased with the leverage. Greg, one of the things that I did, as I looked at the second half of the year and the first half of the year which is why I put those comments into my prepared remarks. The second half of the year, while its not perfect, it’s a lot better than first half of the year. The first half of the year we increased revenue and we lost a lot more dollars. The second half of the year, we increased revenue, we made a lot more dollars. And so you see back your confidence point, you can see it, if you just look at the June and September quarters combined, its not going to be quite back to the way that we used to operate the company but it’s a lot better than the first half.

Yes. Okay. All right. Thank you.

Thank you, Greg.

Thanks Greg.

And it appears there are no further questions at this time. I’d like to turn it back to our speakers for any additional or closing remarks.

Thank you everyone for your continued interest and support of MarineMax. As always I would like to again thank our team members for their hard work and passion for our business and our customers. Due to their solid efforts we are the leading boat retailer in the country. Mike and I are available all day, if you have any additional questions. Thank you.

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