MarineMax, Inc. Stock

Good day and welcome to the MarineMax, Inc. Third Quarter Fiscal Year 2026 Earnings Call. Today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Scott Solomon of the company's investor relations firm, Sharon Merrill Advisors. Please go ahead, sir.

Thank you, Operator, and good morning, everyone. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President, and Mike McLamb, the company's Executive Vice President and Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance, strategic priorities, and recent highlights. Mike will review the financial results and the company's fiscal 2026 financial guidance. Brett will make some concluding comments, and then management will be happy to take your questions.

The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinemax.com. And with that, I'll turn the call over to Mike. Mike?

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations.

These risks include, but are not limited to, the impact of seasonality and weather, global 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 most recently filed 10-K and 10-Q and other filings with the Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

On today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non-GAAP basis. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett. Brett?

Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our fiscal third quarter results. Before reviewing the quarter, I want to recognize our teams across MarineMax who make this company special. In each operation, we have such tenure and expertise that help ensure we are fulfilling our customers' needs while also driving results.

As reflected in our industry-leading Net Promoter Scores, our teams work hard every day to deliver an exceptional customer experience. Whether we are helping a customer purchase their first boat, supporting them through service and marina operations or assisting with yacht brokerage, charter or finance and insurance, we strive to build lasting relationships at every stage of the journey. The customer-centric approach remains a meaningful competitive advantage and an important driver for our long-term success. Turning to our results.

Our third quarter performance reflects the benefits of the diversified and resilient business we have built. As reflected in industry registration data, U.S. retail demand has remained challenged amid economic and geopolitical uncertainty with the premium end of the market generally being more resilient. In this environment, the strategic investments we have made to diversify our business, strengthen our operating capabilities and enhance the customer experience have helped to drive our performance.

Perhaps the clearest evidence of the success of our strategy is the gross margin performance we delivered during the quarter. While market conditions weighed on revenue, gross margin increased 530 basis points to 35.7%. This result underscores the durability of our business model, supported by a premium product mix, disciplined inventory management and the growing contribution of high-margin, less cyclical revenue streams such as our brokerage, finance and insurance, marina operations, including IGY, our Super yachts division and our parts and service businesses.

All these businesses performed well in the quarter, helping to offset lower boat revenue while driving growth in gross profit dollars. The actions we have taken to reduce inventory and maintain pricing discipline are also contributing to healthier boat margins and improved profitability. Consistent with prior comments, as industry inventory levels continue to normalize, we believe the margin environment should gradually become more favorable across the industry, particularly for well-capitalized dealers that have managed inventory responsibly.

Together with our diversified business model, these dynamics support our ability to deliver attractive profitability across the cycle. In late June, supported by strong cash flow, a solid financial position and long-standing strong relationships with our lending partners, we successfully refinanced all of our term debt on improved terms, extended maturities to 2031 and further enhanced our financial flexibility.

This positions us to execute our strategy with confidence, including selectively pursuing higher-margin growth opportunities aligned with our long-term objectives, while continuing to invest in initiatives that strengthen our market position and expand our premium product portfolio. During the quarter, we also launched an industry-leading certified preowned program to help capitalize on the strength and attractiveness of the used boat market.

Late model pre-owned boats continue to be an excellent opportunity for individuals desiring the boating lifestyle. Thus far, the interest in the program is high and the initial successes reflect improved gross margins while providing excellent comfort to our customers. More recently, we announced a strategic partnership with NextBoat that expands the distribution opportunities for our financing and insurance offerings through our Newcoast Financial Services subsidiary.

The partnership provides access to a broader network of pre-owned marine transactions and marketplace participants, creating additional avenues to grow one of our strategically important higher-margin businesses. Together, the CPO program and NextBoat announcements underscore how we are strengthening the MarineMax platform and sharpening our execution. These actions continue to enhance the quality and durability of our earnings stream.

The marine market remains highly segmented, and that dynamic plays to our strengths. Demand has generally remained more resilient in premium categories where our industry-leading brands, customer relationships and service capabilities provide meaningful competitive advantages. While conditions remain challenging in some parts of the market, we continue to outperform broader industry trends in the categories that are most important to our business. And with that, let me turn the call over to Mike for the financial review. Mike?

Thank you, Brett. I also want to thank our teams across the globe for their efforts to strengthen our business while driving industry-leading performance. Third quarter revenue of $611 million reflected continued softness in boat sales across the industry. Same-store sales declined 7%, driven primarily by lower unit sales, although our performance was meaningfully better than that of the unit declines reported for the industry.

Gross profit rose to $218 million for the quarter, despite lower boat sales due to strong gross margins of nearly 36%. As Brett noted, our margins were up 530 basis points over last year, reflecting the strength of our higher margin businesses and the progress we are making improving profitability across the business. For context, the tariff refund contributed approximately 110 basis points during the quarter. The remaining 420 basis points of improvement reflected a combination of stronger new and used boat margins and the growing contribution from our higher margin businesses.

The third quarter marked the second consecutive quarter of improving boat margins, a positive development considering the current stage of the industry cycle. As we have commented on prior calls, as industry inventory normalizes, boat margins should rise. For the March and June quarters, that is what we experienced, with trends improving meaningfully on a sequential basis during the June quarter. SG&A expenses increased modestly year over year, excluding the items noted in the press release.

The increase in expenses is largely a function of growth of our higher margin businesses, which naturally carry a higher operating expense structure, but also generate stronger margins and earnings than traditional boat sales. Interest expense declined driven by lower inventory levels and reduced borrowings, further reflecting our strong balance sheet and prudent capital management. Building on our improved profitability, adjusted EBITDA increased over 44% to $51 million from $35 million.

Reported net income per diluted share was $0.66 compared with a loss of $2.42 last year, which included a non-cash goodwill impairment charge of $69 million. Using the same estimated effective tax rate in both periods, adjusted diluted earnings per share improved to $0.81 from $0.05. Turning to our balance sheet, we ended the quarter with cash of almost $175 million. Inventories declined approximately $118 million from last June and are also down from the March quarter.

Customer deposits at quarter end increased meaningfully from last year and modestly from March, an encouraging sign. Importantly, we completed the refinancing of our senior secured credit facilities during the quarter. Successfully refinancing the facilities on improved terms in the current environment reflects the confidence our lending group has in MarineMax, our operating performance, and our long-term strategy. Our continued focus on inventory reduction and cash flow generation contributed to improvement across all balance sheet metrics. We believe MarineMax remains well-positioned to navigate the current environment while continuing to pursue opportunities that enhance long-term value for our shareholders.

Turning to guidance, after considering operating conditions, recent industry trends, retail performance, and other relevant factors, we are reaffirming our fiscal 2026 expectation for adjusted EBITDA for the year to be in the range of $110 million to $125 million, and adjusted net income to be in the range of approximately $0.40 to $0.95 per diluted share. This outlook reflects our disciplined approach to the current environment and the progress we are making in shifting our business mix towards higher margin, recurring, and service-oriented revenue streams.

At the industry level, based on continued industry softness, especially in the meaningful June quarter, we now anticipate industry unit volumes will finish the year down, as much as the mid-single-digit range. Same-store sales for fiscal 2026 are now expected to be down and likely in the same ballpark, reflecting continued macroeconomic uncertainty and a slower pace of retail recovery than anticipated earlier in the year. Although industry inventory levels are improving, retail conditions remain competitive and promotional activity, while moderating, remains elevated. We believe that continued normalization of inventory is an important positive development that should support a healthier operating environment over time.

We now expect our full-year tax rate to be in the range of the mid-30s, and expect our diluted share count to approximate 22.9 million shares. These estimates exclude the impact of any material acquisitions or other unexpected events, including changes in the broader global economic environment. As for July, trends have remained consistent with what we experienced in May and June. Demand continues to be uneven with periods of stronger activity followed by softer stretches.

Based on what we see today, we believe July will finish with positive same-store sales. However, the final days of the month remain important as they always do in our business. Regardless though of how the month concludes on boat sales, we remain confident that our higher margin businesses will continue to perform well. And now I'll turn the call back over to Brett for closing comments. Brett?

Thanks, Mike. While macroeconomic and geopolitical uncertainty remains a factor across our industry, we are encouraged by the continued performance of our higher-margin businesses, the strength of our financial position and the progress being made across the industry toward more normalized inventory levels. As challenging as conditions have been at times, customer engagement and participation reinforce the enduring appeal of the boating lifestyle. The investments we've made to broaden and diversify MarineMax, combined with disciplined execution and prudent capital allocation positions us well to manage through the current cycle while remaining focused on long-term value creation. And now Mike and I would be happy to take your questions. So operator, please open up the line for Q&A.

[Operator Instructions] Our first question comes from the line of Mike Albanese with The Benchmark.

I just wanted to ask about gross margins. And if we exclude the 110 basis points from the tariff refunds, can you just kind of bifurcate between the remaining 400, I think 420 basis points as a result of improving boat margins versus higher margin service mix?

Hey, thanks, Mike. And by the way, I'll mention we're having a little bit of issues on the call. I think I heard your question. You want to know kind of how does it break down between how the improvement in gross margins, the 420 basis points, how does it break down between growth and higher margin businesses and boat sales?

Yes. Correct.

Good question. Yes. All the higher-margin businesses continue to perform really well. And when I say that, I mean service at a store, parts at a store, finance and insurance in a store, the marinas, the stores have, obviously, super yachts, IGY are performing well. Newcoast Financial Services, they're all performing really pretty well. But this quarter, what's nice to see is as the industry inventory normalizes, boat margins themselves have really improved a lot.

Of the 430 basis points or 420, excuse me, on my math, it's roughly 60% is from growth in higher-margin businesses and a little bit of mix and about 40%, maybe a little bit more than that is improvement in boat margins. So if you actually do the math, you'll see that we had something like 175 basis points, maybe a 200-point improvement in the underlying boat margins themselves this quarter versus a year ago. And if you remember, we've been saying for a while, as industry inventories normalize, the real upside even in a choppy environment is having boat margins begin to recover. We still got a ways to go to get back to pre-COVID levels of '17, '18, '19. But it's good to see in the March quarter, we had very modest improvements. And now in the June quarter, we had much more substantial improvement.

And I'll add to that a little bit. Mike said something at the beginning, our parts and service businesses within our stores is performing well. And, you know, in prior decades or other times when we've had down sales environments or tough economic backdrop, although parts and service do well, they kind of flow down also. But in this environment, we're seeing people using their boats, getting out on the water, and they're spending money with our service and parts departments at growing levels, which is nice to see.

That's great context, thank you. And I'll ask just a quick follow-up. I guess two quick ones, but relevant to what we were just talking about. First, in terms of boat margins, and I'm sure it differs, you know, segment to segment, so maybe just talk in a blended sense here. You know, where are you seeing boat margins relative to those pre-COVID levels? And then just quickly on the recurring higher margin service pieces of the business. Obviously, there's a few within that. Are they all growing when you say performing well, can you just provide a little more context into what exactly that means? Thank you.

Yes, I can address the boat margin piece. We've been saying on these calls of the last probably 4 or 5 quarters that margins are 300 to 400 points below pre-COVID averages of '17, '18, '19, thereabouts, call it 300 points, 350 points. And let's say we're up 175. So we got, you know, another 175 to go or there or something like that. But this is just one quarter. All the other quarters in the year were not up, they were down, except for the March quarter, which was up a little bit. So for one quarter, we've seen nice improvement. We would expect margin improvement in an environment where industry inventory continues to normalize. That's kind of a longer term outlook. Do you want to comment?

I was just going to say the higher margin businesses are expanding. It's not a blanket statement across the board, but they are expanding.

Our next question comes from the line of Brandon Rolle with Loop Capital Markets.

First, just on the product manufacturing side, it seems like from an operating profit standpoint, you started to almost break a profit there. How do you feel about that business heading into fiscal year '27? Is it reasonable to think that business could potentially break even or even be profitable given inventory levels that you said have started to rightsize?

Yes. Thanks, Brandon. Yes, we've kind of set a plan in place. We kind of reset things, started a new model refresh in both brands that are coming along pretty well. And yes, that trajectory, we kind of said would start to kind of tick up at the end of this fiscal year and should carry through to next year as well.

Okay. Great. And then just on the used boat market, could you just talk about what you're seeing there in terms of used boat inventory demand and maybe how that's helping out maybe your used sales?

Yes, I can comment. I mean late model used boats are pretty hot commodity. People like them, which is our trades that we take. Obviously, I think Brett mentioned in his prepared remarks, we did launch our certified preowned program this quarter, and it's early days, but the certified preowned program boats are being well received and margin improvement is being measured in that type of product also. But used boats are doing well now. Turns are improving, margins are improving.

I'd say we've had a marked increase -- usually when you launch programs like this or something new, you need several laps around the track to kind of find out what's going on. We've seen early success. Some market timing, but some is truly attributable to the program that we launched. So we're happy with the early success of the program, and we'll see it expand.

Okay. And just finally, just on your appetite for new inventory moving forward as we move to a slower period of retail in the year. Could you just touch on maybe which categories you will have stronger demand for and just kind of your overall inventory level or your desired inventory levels in the off-season?

If I heard you right, and I apologize, we're having a little bit of a connectivity issue. But yes, I think we're watching inventory trends very carefully and managing our order pipeline very carefully subject to what we're seeing at retail levels. Obviously, for the industry, April, May and the June quarter overall was not as strong as people were expecting.

So when you see a quarter like that, which is an important quarter, you're obviously adjusting your orders to try to meet -- your inventory to try to meet what you're seeing at retail. I'd say, overall, there are certainly pockets that are outperforming other segments of the industry, and we just -- we order accordingly when we're looking at trends, if I'm addressing your question properly, Brandon.

No, that addressed it. Thank you.

Our next question comes from the line of Joe Altobello with Raymond James.

First question on guidance. You obviously left it unchanged in terms of EBITDA and EPS, but took down your industry outlook, took down your same-store sales outlook. What are some of the offsets that you're seeing that are allowing you to kind of stay within your prior guidance? Or should we assume that the lower end of those ranges are probably more realistic at this point?

Good question, Joe. And I would tell you, the industry has been volatile, as you know. I mean we did not expect the June quarter to turn out the way it did. We do have periods where trends are strong and followed by periods of weakness. If we can string together a couple of months in the June quarter that are stronger than, than maybe the June quarter was along with decent margins overall, it's -- the math would tell you we're going to be on the higher side of guidance. The inverse of that is true. If we keep sledging through the industry here and trends are down, and we're still seeing some margin -- some margin improvement, we'll be on the lower end of the guidance. And in all those scenarios, as I said on the call, we're pretty confident the higher-margin businesses in our stores and outside of our stores are going to keep doing very well.

Yes. And Joe, we like how July was kind of starting here, but we've seen that before in the early part of the summer and things going on in the Middle East, it sounds like an excuse, but that uncertainty does, we see it move things meaningfully at the stores. So just we got to keep the momentum going here through. August, which is a tough month, back-to-school and so on. So...

Got it, very helpful. And maybe just to follow up on that, I think both you, Brett, and Mike refer to higher margin growth opportunities now that the refinancing is behind you. Could you elaborate on what those might be?

Joe, can you repeat that question? We did not hear the first part of your question. I apologize.

Yes, sure. Both you and Brett talked about higher margin growth opportunities now that the refinancing is behind you. Can you elaborate on some of those, what they might look like?

Growth opportunities? I could make a comment in general. We always have an active acquisition pipeline, which we do. Obviously, as dealer earnings have been lackluster, most of the dealers we're talking to aren't real excited about selling off of very low earnings. As we begin to see margins improve, you know, we believe the entire industry is beginning to see margins improve, which should be good for earnings. The comments also tied to the flexibility we have with our refinanced facility, and also the confidence that our lenders have and the extension of the maturity of the debt, it just opens the door to be a little more selective and creative on the pipeline that we have.

Our next question comes from the line of Gregory Miller with Truist Securities.

This is actually a related question to what Joe asked. I'm hoping you can provide a little more context in terms of dealership health, particularly for the mom-and-pop.

Operator, we're not picking up on the audio here. If you can hear this, Greg, can you repeat that?

Sure, can you hear me better now?

Yes, we can. Yes, thank you.

Okay, sorry about that. This question is fairly similar to Joe's. I'm curious if you could provide some more context in terms of dealership health, particularly for the mom-and-pops. Do you expect any more dealer consolidation or closings?

Yes. Just repeat the last part of that question, Greg. We may have to dial back in. Yes, we're unfortunately not getting all the questions.

I'll try one more time and maybe I'll shoot you an email. Are you expecting any more dealer consolidation or closings, particularly from the mom-and-pops?

Great question. I would think that if we would have seen closings by now, I would think where industry inventory levels are normalizing and margins are beginning to improve, I think probably the worst of the closings would be behind us. Brett, what do you think?

Yes, unless things soften. Yes, we're here and people got inventories corrected, so that's a good sign. I mean, there's always something here or there, but I think we're in good shape as an industry.

And as for my second question, could you provide a little more granularity in terms of how value versus premium boat sales...

Thank you, Greg. Can you hear me?

I'll try to repeat it. I was wondering if you could provide a breakout in terms of how value and premium boat sales have been trending in the last couple of months, and if you're seeing any positive surprises in terms of changing trends for improvement to the value space?

Hey, operator, I think we've gotten disconnected somehow. Can you hear us?

No, I can hear you. I'm not sure why you're not able to hear Mr. Miller's second question. Do you want him to try again?

Can you hear me?

Can you hear me? Ladies and gentlemen, it seems we're having some technical difficulties. Please stand by a moment. I'm sorry, ladies and gentlemen, it seems that we have technical difficulties, but we'll need to end the call at this time. We thank you for your participation.

Good day, and welcome to the MarineMax, Inc. Fiscal 2026 Second Quarter Conference Call. Today's call is being recorded. [Operator Instructions]

I would now like to turn the call over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Advisors. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President; and Mike McLamb, the company's Executive Vice President and Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance, strategic priorities and recent highlights. Mike will review the financial results and the company's fiscal 2026 financial guidance. Brett will make some concluding comments, and then management will be happy to take your questions. The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinemax.com.

And with that, I'll turn the call over to Mike. Mike?

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, global 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 the company's most recently filed 10-K and 10-Q and other filings with the Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

On today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gain a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non-GAAP basis. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release.

With that, let me turn the call over to Brett. Brett?

Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our second quarter performance. Before getting into the quarter, I want to thank our MarineMax teams across our organization. Their focus, discipline and commitment to our customers is unwavering even in what remains a more challenging and dynamic retail operating environment.

Our second quarter results demonstrate the benefits and durability of MarineMax's diversified integrated business model and the progress we've made in reshaping the operations to perform across a range of environments. While retail demand and margins for new and used boats remained pressured during the quarter, we delivered gross margin of 34.4%, expanding 440 basis points year-over-year, driven by continued strength across our higher-margin businesses.

Macroeconomic uncertainty and geopolitical dynamics continue to weigh on consumer confidence throughout the quarter, and that pressure was evident in double-digit unit declines for the industry. Due to the strength of our leading customer-focused approach, our team was again able to outperform the industry. However, we certainly were not immune from the impact. As expected, revenue in the quarter was down given the difficult comparison with last year, but the softness was more pronounced than anticipated.

Having said that, our higher-margin revenue streams continue to benefit our consolidated operations, finance and insurance, parts and service, brokerage, superyacht services and our vast marina portfolio, including IGY, once again provided balance and margin stability, helping to offset cyclicality of retail boat sales. This quarter further validates the strategic intent behind our diversification. Over time, we've deliberately expanded MarineMax beyond traditional boat retail to build a more resilient and higher-quality business model, and that mix shift is increasingly evident in our gross margin performance.

Today, MarineMax is uniquely positioned in the industry as an integrated model that others simply can't replicate. Each of our higher-margin businesses generally performed at or above our expectations. IGY is performing well and continues to benefit from its outstanding reputation as the only world-class operator of luxury marinas from the Caribbean to the United States and across the Mediterranean. IGY recently renewed its relationship with St. Katharine Docks in London, a highly visible strategic marina. IGY was also recently appointed Marina Advisor for the Il Monte Galala Marina Towers project on Egypt's Red Sea Coast. This engagement is part of a broader strategic partnership and is a capital-light, advisory-driven way to deploy IGY's expertise, operating standards and global brand.

Technology is also becoming an increasingly important differentiator for MarineMax. Through New Wave Innovations, we continue to invest in digital platforms designed to enhance the customer experience, increase efficiency and support long-term growth. Our technology portfolio now includes multiple products across the enterprise, including Boatyard, our all-in-one platform for marine service management. Boatyard continues to gain traction with subscribers up 47%, demonstrating how our digital tools can strengthen customer engagement and deepen loyalty. More broadly, New Wave Innovations is steadily increasing the technology and data content of our business, which we view as a key driver of long-term value creation.

Both Cruisers and Intrepid have launched new models, which are being well received. While all manufacturers are clearly impacted by the soft environment, developing and launching new models is a proven way for brands to gain share, especially in tough times.

From a market standpoint, we are navigating a challenging near-term environment, but we continue to see resilience in the recreational marine consumer, particularly in premium segments. Recent boat shows, including the Palm Beach International Boat Show, produced strong results, reinforcing the demand in our premium categories. We continue to see healthy engagement with premium brands, which is also reflected in the continued strength in our superyacht service operations.

Months ago, it was widely expected that the industry would return to positive new unit sales during the spring or summer. Industry inventory continues to normalize, but added uncertainty due to geopolitical concerns throws into question the timing of when unit sales turn positive. Regardless, we did see very modest boat margin improvement in the March quarter and are optimistic that similar improvement could be in store for the summer. While a small step, the boat margin improvement is important for us as well as for the industry.

Additionally, our balance sheet remains very strong and is a competitive advantage in this environment. Disciplined inventory management, lower floor plan exposure and solid liquidity provides us with meaningful flexibility as we move into the summer selling season. That financial strength allows us to better protect margins, manage inventory proactively and remain highly selective in how we allocate capital through the cycle with a focus on returns and flexibility. Taken together, the quarter highlights the value of the diversified model we have built, one that is designed not only to perform in favorable conditions, but also to remain resilient during periods of uncertainty.

With that, I'll turn the call over to Mike to walk through the financial results in more detail. Mike?

Thank you, Brett. I also want to recognize our teams across the globe for their strong performance in a tough environment. It's great to see the success of our diversified business model. For the quarter, revenue was $527 million. We expected revenue to be down given the comparison, but it was softer than expected due to the increased global uncertainty. Most of the decline was due to a 15% decrease in same-store sales, driven by lower new and used boat revenue. Overall, our comparable units were down in the mid-single digits, which is much better than the industry overall. Our average unit selling price declined due to mix. Last year's March quarter had the benefit of delayed hurricane closings from Florida, which increased last year's mix of larger boats.

Turning to margins. As Brett noted, gross margin expanded 440 basis points to 34.4%, driven by strength in our higher-margin businesses. Higher-margin businesses, including our service and parts, finance and insurance, superyacht services and marinas, including IGY, all performed well in the quarter, growing as a percentage of revenue and importantly, year-over-year in absolute dollars.

SG&A expenses, excluding changes in contingent consideration, transaction-related costs, weather-related impacts and other items noted in the press release increased slightly year-over-year. Many of the higher-margin businesses, while more profitable than traditional boat sales have a higher expense structure. This, combined with more aggressive marketing in a tough environment, drove the modest expense growth.

Interest expense declined by more than $3.5 million, driven by lower inventory and lower rates. Adjusted EBITDA was $23.9 million compared with $30.9 million, reflecting the impact of lower new and used boat sales, partially offset by our stronger margin mix. Adjusted earnings per diluted share were $0.04 compared with $0.24 last year.

Turning to the balance sheet. Cash was a very healthy $189 million at the end of the quarter. Inventories declined roughly $130 million from a year ago to $845 million and were also down from our fiscal year-end. This is encouraging given that inventories typically grow seasonally from September through March. Customer deposits increased sequentially and year-over-year to about $62 million, which is also good to see. Through our disciplined approach, we improved both our current ratio and our total liabilities to tangible net worth ratio. At the same time, we maintained a healthy net debt to adjusted EBITDA ratio of just over 2x at quarter end.

Before turning to guidance, it's important to remember that last year, in the first 6 months ending March, even in a challenging environment, MarineMax delivered flat year-over-year revenue and EBITDA. Our performance and that of the industry dramatically weakened following Liberation Day. As we entered fiscal 2026, we expected and guided that the first half will be more difficult given those elevated prior year comparisons. As we move into the second half, we are now beginning to lap the Liberation Day weaker periods, which should result in more favorable year-over-year comparisons. This context is important to remember from a guidance and expectation perspective.

After considering operating conditions, recent industry registration trends, retail performance and other relevant factors, we are reaffirming our fiscal 2026 outlook for adjusted EBITDA for the year to be in the range of $110 million to $125 million, and adjusted net income to be in the range of approximately $0.40 to $0.95 per diluted share. Our guidance reflects our disciplined approach to the current environment alongside continued progress in expanding the mix of our business toward higher-margin reoccurring and service-oriented revenue streams.

With the first half of the fiscal year behind us, our full year outlook continues to assume industry unit volumes will range from modestly down to modestly up, reflecting ongoing demand dynamics. Same-store sales for fiscal 2026 are still expected to be flattish, primarily driven by a favorable product and segment mix and improvements in the back half summer selling season. While retail margin pressure persisted through the first half, we expect industry conditions to modestly improve in the back half of the year alongside more meaningful progress in industry inventory levels compared with the second half of fiscal 2025.

Driven by continued growth in our higher-margin segments, we remain confident in our ability to sustain consolidated gross margins in the low 30% range for the year. Our guidance continues to incorporate interest rate reductions announced to date and assumes an effective annual tax rate of 26.5%, along with an average diluted share count of approximately 22.8 million shares. These estimates exclude the impact of any material acquisitions or other unexpected events, including changes in broader global economic environment.

April trends generally have been up versus last year, which is what we anticipated versus the softness following Liberation Day. Since early March, we have seen periods of very strong retail trends followed by weaker periods, but overall trends have been improving. We do realize that world events and other factors can change consumer behavior quickly in one direction or another, but today, trends would result in positive same-store sales for April as expected.

Now I'll turn the call back over to Brett for closing comments. Brett?

Thanks, Mike. Looking ahead, we recognize that geopolitical uncertainty and broader macroeconomic conditions may continue to influence consumer behavior over the coming quarters. Against that backdrop, our outlook reflects a balanced assessment of the operating environment and a disciplined approach to execution. Continued growth in our higher-margin businesses provides us both flexibility and resilience as we navigate near-term variability while positioning MarineMax to drive attractive long-term value creation for our shareholders. Over the long term, we remain confident in the strength of the recreational marine market, particularly in premium segments and in our ability to drive sustainable long-term value creation.

Now Mike and I would be happy to take your questions. So operator, please open up the line for Q&A.

[Operator Instructions] Our first question comes from the line of Joe Altobello with Raymond James.

I want to talk about the guidance for a second. You mentioned on the call earlier that the industry was a little bit softer and your own revenue was a little bit softer than you anticipated for the fiscal second quarter, but you maintained the full year. Is it just that the quarter is really just too small to matter all that much and the second half is much larger? I'm just curious why maintain guidance when 2Q was a little bit below expectations?

Yes. Joe, I can answer that. Good question. So Q2 -- so I think I'll give you some color on the quarter. So January was doing reasonably well, as we had said on our January call. February is a little lighter. And then when the war started in late February, early March, March started soft, but finished pretty well. And we commented about the Palm Beach Boat Show doing pretty well. And we talk about current trends being strong or being pretty good, which is what we expected with April being -- looking like it's going to be up. And so that's playing to what we expected when this fiscal year started, which was the first half was going to be the tougher comparisons. The second half was going to be the easier comparison. So we still feel generally pretty good about that. And so we're still comfortable with the unit thoughts, with the revenue thought with the same-store sales range, all of that within the guidance. The quarter's EBITDA was kind of around where we expected. We always try to do better, but the revenue was a little lighter because of how March started primarily.

Okay. That's helpful. Maybe just a follow-up on that. I think the expectation was, as you mentioned, the second half with the easier compares, we start to see some better top line plus better margins as promotional intensity ease. Are you starting to see that level off here in April?

Yes. I'd comment that in the March quarter, we did comment that overall boat margins did modestly improve. And I got to stress the word modestly. They modestly improved. I think everybody is still kind of aggressive in the wintertime. I would expect that as we go through the summer, as inventory levels continue to normalize, we will continue to see modest improvement in margins, which is what we had anticipated.

Our next question comes from the line of James Hardiman with Citi.

So to the margin question, I've been following you guys a long time. I can never quite nail down the margins ahead of time. I think last quarter, gross margins were down, call it, 440 basis points. This quarter, up about 440 basis points. Maybe help us think through the back half of the year, 3Q versus 4Q. I'm assuming we won't see swings that large in either direction during either of those quarters, but maybe help us think through sort of back half margins and what you expect? Obviously, a bunch of moving parts, not just sort of what's happening in the underlying boat business, sort of the mix effect of the non-boat businesses seems like it's a big factor at least here or was here in the second quarter. So maybe how to think through those items going forward?

Yes. I'll address some of the swings you mentioned. When -- clearly, when same-store sales are strong or weak, it could impact the consolidated gross margins because -- like in this quarter, when same-store sales were weak, then all of your higher-margin businesses, everything from service parts, F&I, marinas, superyachts, it all -- those are all being steady or growing. So they grow as a percentage of the business, which will definitely skew the margin higher, which happened this quarter to a degree. But my point was they all grew in absolute dollars also.

If you go to the December quarter, we had stronger same-store sales growth on top of the previous year's hurricane. So that kind of helps to explain some of the swings. In this June quarter, we're now up against a minus 9% comp from last year. For us to achieve the -- our guidance, which is about flattish same-store sales growth, we pretty much need to see growth this quarter. And if you have -- depending on the strength of the growth, it could drive margins -- consolidated margins down from the 34% as an example. But when you work your way through the whole year, our margins should be at or above kind of where we finished last year, partly because of this -- well, two reasons, the strength of the higher-margin businesses growing and then the modest improvement in boat margins.

That is -- that's really helpful. And then I guess maybe dig into the inventory side of things. I think on the last call, you had hoped to be in a pretty good place coming out of the first half. Just looking at your balance sheet, it looks like inventories are down about 13%. I guess, a, is that a clean number? There sometimes there are some sort of one-off offsets there that we should be factoring in. But if so, sort of are you in a good place from an inventory perspective, both in terms of aggregate amounts and aging of inventory, but anything to note there?

Yes. I'll comment real quick. Yes, we worked hard to manage our inventory. I think even in light of light boat sales this quarter, still got our inventory in check and managed it properly. And so that obviously puts us in good shape. And I feel good about the quality of our inventory. The aging of inventory is in a good place. We're always obviously working on that, continue to work on it. So heading into the back half of the year here, we set ourselves up in a great inventory position.

Our next question comes from the line of Gregory Miller with Truist Securities.

I'd like to ask on the international front. And maybe starting off with the quarter itself, I'm curious what you saw from consumer sentiment, particularly in Europe and the Middle East over the course of the quarter? And to what extent that consumer sentiment changed with the Iran conflict?

Yes, Greg, I'll comment. I think I'll speak globally, our consumer, even here in the U.S., when you have conflict going on over there, it creates uncertainty, which we've talked about so many times on these calls that uncertainty in our consumer just causes them to wait and pause. That's part of what we saw. So it did affect us. As it relates to consumer sentiment exactly in those areas of the world, we don't really operate retail boat business there. So it's not applicable. But marinas and the operations all, as we noted, are operating according to their budgets. Our superyacht businesses there do have done very well as we put in our earnings. So I think, however, anything going on in the Middle East that is right now is creating uncertainty for consumers worldwide.

Okay. And you mentioned adding in Egypt. I'm curious, would you expect any degree of slowdown in terms of your pipeline of growth as a consequence of Iran at least in the next couple of quarters? Or is it more of all systems go in terms of landing contracts in that part of the world?

Yes. I think all of these types of things we engage in are kind of long-term thinking and take a while to develop anyway. And so I think that -- yes, this is a moment in time when it's not ideal, but that's that project and our services are more of a long-term process.

Our next question comes from the line of Eric Wold with Texas Capital Securities.

I want to kind of go to the comment on customer deposits. I know that's geared towards larger boats. The rate of sequential growth was more than double what you've seen over the past couple of years. How should we read further into that in terms of what you're seeing from that customer and then kind of how that strength might have been kind of throughout the quarter?

Eric, I think that's a great question. I commented on it on the call that it grew sequentially and also year-over-year, which is probably maybe the first time that's happened in a little while. I think it speaks to the -- what we commented about how the month of March kind of played out. It started soft and it gained momentum, and we finished with a pretty good boat show. Some of that growth is deposits and deals that we wrote in the month of March. But I think overall, it just speaks to the consistency and passion that people have for boating and why we think that the back half is going to be better than last year's back half.

Got it. And then a follow-up, taking that, I guess, to the other side of the equation, away from kind of premium larger boats. I know the general read coming out of the boat shows was improving demand around premium larger. Maybe kind of talk about what you're seeing from the lower-priced boats or kind of the other kind of buyer demographic in terms of traffic, leads sentiment, that will be helpful.

I'll comment on -- I'll classify it as good strength in leads and consumer demand, and I'm going to use premium segment, so not just the larger boats. I think that's holding up in our premium product that's, call it, smaller boats. They're not inexpensive, but smaller product is premium. So I think generally, it's not just in the larger boats. It's -- we've seen good strength. And we're hearing good reports lately of product maybe that we don't carry that's lower priced is starting to accelerate, too. So -- yes, good feedback.

Our next question comes from the line of Anna Glaessgen with B. Riley.

I'd like to dig into the progression through the quarter a little bit more. Nice to hear the strong performance at the Palm Beach Boat Show. Should we be taking that as a sign of building momentum through March? Or is there something within that of just better show performance versus performance back home at the dealerships?

I can comment on March and just how the quarter kind of played out. As I mentioned, January was -- as we articulated back then, it was a decent month versus the prior year, not a great month, but a decent month. February was weaker. March started off weaker than we were anticipating. And this way -- this quarter, the way it falls, March is usually as big as January and February combined. So you kind of need March to start like it should, which is strong, and it was weaker because of the war. And then it just gained momentum as the month went on. And the Palm Beach boat show was near the end of the month, which was a very good boat show as we commented. Brett, do you want to comment on...

And the Palm Beach show signifies what we've seen in a lot of shows this year that we've performed very well. You kind of mentioned that, but the show performance was outstanding. And much of that business is -- wasn't captured in our March number and some of it's kind of giving you an indication of how things are looking for April.

Got it. And then just as we contemplate gas prices being high, I guess, historically, to what extent has that affected your customer? And how should we be contemplating that risk to demand?

If you set aside the uncertainty that I spoke about, gas prices, they get extremely high. It does affect the entry-level buyer a little bit more. The premium, premium buyer, they might go a little less and boat a little -- they're still going to go boating, but maybe not go as far. But we have been monitoring our gallons sold over a period of time here. And we -- in some cases, Mike could comment a little further, but we're up in gallons sold.

Yes. Through March, we're up in gallons sold at our marinas, which is something that we do watch just to see. But I think in the past, periods of rising fuel prices, people have just boated for different distances, quite frankly.

And we're so focused on the experience of boating and getting people out on the water and our getaways events continue to be full. People are boating. They're out there on the water. So that's always a positive sign.

Our next question comes from the line of Greg Badishkanian with Wolfe Research.

This is Scott Stringer on for Greg. There's some positive commentary on your inventory positioning at this time. Wondering what your expectations are for the industry and when industry inventories could normalize?

Yes, I can comment. I think in general, the expectation for the industry to normalize was probably supposed to be by now. But given the softness that we've seen in the last 6 months -- or actually the last year following Liberation Day, the expectations are sometime in the June quarter, which could be the end of April, it could be the end of May. What normalizing means is that weeks on hand actually dropped below where they were pre-COVID. So I think today, the industry is still -- maybe it's a week above or something like that. It's not near as bad as it was when the last summer. I think last summer ended, we probably had 3 weeks or maybe a whole month's worth of extra inventory in the channel. It's been cleaning up because manufacturers are not building as much. And then we are -- the industry is selling boats, which is good. But seasonally, it should happen this quarter, which will be a welcome news for the entire industry.

Great. That's helpful. And then just to piggyback off of that, what are your expectations for the promo environment? It sort of sounds like that gets better as these industry inventories improve. Is that a fair characterization?

Clearly, the better shape the inventory for the industry comes in, the promo activity kind of brings -- comes down a little bit. But I will say our manufacturers continue to work with us to get our inventory levels right. They continue to work with us at retail, for example, at all the boat shows to really move through inventory. The more we can sell boats, the more they can keep their pipeline and build products. So we're still having great partnerships with all the manufacturers.

Our next question comes from the line of [ Mike Albanese ] with StoneX.

I think most questions have been asked and answered here, but I just have a clarifying question on these ancillary, I guess, higher-margin businesses for lack of a better term, but there's a lot within there, F&I, brokerage, marina storage, IGY, et cetera. Did you say that they're all comping positive or at the consolidated level, they're comping positive in dollar terms?

No, that's a good question, Mike. No, they're all positive in the March quarter, I specifically referred to and probably even year-to-date in absolute dollars year-over-year, all the different services that we're in.

Our next question comes from the line of David MacGregor with Longbow Research.

This is Joe Nolan on for David. You guys have a nice performance from the higher-margin businesses. Can you just talk about how scalable these businesses are if you continue to see softness in new and used boat sales and just how you're thinking about that in this type of environment?

It is good to see, as you point out, we -- unfortunately, we didn't like having less boat sales for new and used, but it was nice to see all those high-margin businesses perform. If you separate them out and you say superyachts and IGY continue to grow and perform on its own, but so did service and parts within our boat dealerships and at our marinas at the MarineMax stores. So they -- they're all scalable to a degree, but there's some limit on that. The flow of boat sales in most of the MarineMax stores is a critical part to the growth.

Okay. Got it. And then also, can you just bridge the gross margin performance for us? I assume a lot of that was mix, but just talk about some of the other moving parts as well.

Yes. It's almost all mix, Joe. It's -- I commented that boat margins made -- were modestly up, and I do want to underline the word modestly. They did increase, but it was a slight increase year-over-year. The rest of it is all strength in these other businesses that were in these other revenue streams that drove the overall improvement in gross margin.

Our next question comes from the line of Gerrick Johnson with Seaport Research Partners.

Congratulations on your Palm Beach performance. I was there -- I was there and it was clear that your brands, the brands you represent were greatly outperforming. And I want to dig into that a little bit further, you -- some boat trends. I want to ask about center console and offshore fishing. The numbers haven't been good and some of the commentary has been wishy-washy. Can you talk about what's going on in that segment of the market in particular?

Yes. I'll just give some general comments. There's a lot of manufacturers, a lot of product out there in the marketplace. There's a lot of models, and there's brands ranging from the lower value orientation to the upper, maybe even custom side of that. So when things -- when consumers start pausing and waiting and then when they start coming back into it, I mean, it's a lot of product out in the market, and it's kind of an inventory comment as well as just a lot of brands to choose from.

It's -- but I think what you probably saw at Palm Beach, Gerrick, is that the more premium brands definitely performed better. That was our experience at Palm Beach and really it's always our experience that the premium end of the market tends to hold up better almost regardless of the cycle.

Okay. And the recreational fiberglass look very strong. And touching on that, are the European brands with the tariff implication, I realize they're all high-end brands, but has that had any impact on demand or pricing even?

I think some of the softness in our numbers reflects that some of the foreign product has been slow and has been affected. The really large stuff is kind of a little bit immune to that because of the foreign flagging and whatnot, but it is reflected in some of our softness.

And we have reached the end of the question-and-answer session. Now I'll turn the call back over to Mr. McGill for closing remarks.

Well, thank you for all the great questions this morning, and thank you for joining us. We'll keep you -- we look forward to keeping you posted on our progress. Talk to you on the next call.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. We thank you for your participation.

Good day, and welcome to MarineMax, Inc. Fiscal 2026 First Quarter Conference Call. Today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President; and Mike McLamb, the company's Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance and recent highlights. Mike will review the financial results and the company's fiscal 2026 financial guidance. Brett will make some concluding comments, and then management will be happy to take your questions. The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinemax.com. And with that, I'll turn the call over to Mike. Mike?

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations. These risks include, but are not limited to, the impact of seasonality and weather, global 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 the company's most recently filed 10-K and 10-Q and other filings with the Securities and Exchange Commission.

The company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. On today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gaining a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and a non-GAAP basis. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett. Brett?

Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our fiscal first quarter 2026 performance. I'd like to begin by acknowledging the work of our teams across our stores, Marinas, manufacturing and Superyacht service organization. Market conditions remained challenging throughout the quarter, with elevated promotional activity and cautious retail behavior continuing to influence demand patterns. Even in this environment, our teams maintained a strong focus on the customer experience while working to keep inventory aligned with current demand levels. Their efforts, which are reflected in our strong Net Promoter Scores contributed to the results we delivered and will help to ensure operational improvement as we move into the upcoming season.

Revenue for the December quarter increased year-over-year with strong same-store sales driving the growth. Granted, as we previously noted, we were up against an easier revenue comparison this quarter due to the hurricanes last year. Retail boat margin pressure increased across the recreational boating industry with the onset of winter. Competitive intensity remained high and overall consumer sentiment continued to be affected by broader uncertainty. These dynamics reflected what we expected as the industry continues progressing toward normalized inventory levels. Against this backdrop, margins on new and used boats remained well below historical levels. However, our same-store sales performance was supported by our premium brand offerings and the migration to larger products as well.

Our long track record of sustaining gross margins above 30%, even in one of the more challenging lower-margin periods for boat sales underscores the strength of our strategy to expand into higher margin, more stable businesses. By steadily acquiring complementary, less cyclical, higher margin operations, we've built a broader and more durable model. As these businesses continue to grow, together with improvements in our core operations, including Marinas, Storage, Service and Finance and Insurance, they are elevating our performance and will enhance our cash flows as the retail boating industry begins to recover. Even with industry challenges in what is seasonally our smallest quarter of the year, we were able to deliver on our goal of reducing inventory levels by nearly $170 million compared with last year.

Also, looking ahead, we expect the industry's inventory environment to continue progressing toward more normalized levels as we move into the second half of the fiscal year. Although the timing and extent of improvement will depend on broader macroeconomic and industry factors, a return to more typical inventory levels should help ease pressure on retail margins over time. Our presence at the premium end of the market continues to be a point of differentiation, reflecting the strength of our brands and product portfolio. At the same time, we remain appropriately cautious for our outlook given the broader retail and macroeconomic environment. We continue to prioritize maintaining an appropriate inventory position, delivering a reliable and high-quality customer experience and managing the business with discipline and long-term perspective.

As we look at broader demand signals, the Fort Lauderdale International Boat Show effectively served as the kickoff to this year's selling season, providing an early read on customer engagement across key segments. Subsequently, winter shows in Boston, Atlanta, New York, Milwaukee, St. Petersburg and Minneapolis, among others, offered additional touch points that collectively helped us gauge early season positive sentiment across a variety of markets. While it is still early, the consistency of interest across these events has us increasingly optimistic as we prepare for the core spring selling season. Looking ahead, the Miami and Palm Beach shows in February and March will be important indicators of in-season demand at the premium end of the market and will further inform our outlook as seasonal retail activity accelerates.

While recent demand has been positive, our outlook for fiscal 2026 remains balanced given the ongoing uncertainty regarding the broader consumer and macroeconomic environment. Against this backdrop, we continue to prioritize maintaining appropriate inventory levels, delivering a consistent and high-quality customer experience and managing the business with discipline and long-term perspective. The execution of these priorities, combined with our scale and operational capabilities, positions us well to navigate the near-term uncertainty and support long-term value creation for our shareholders. So now let me turn the call over to Mike for our financial review. Mike?

Thank you, Brett. To amplify Brett's comments, a customer-first culture is essential regardless of where we are in the cycle. And our team has done an outstanding job in that regard. Through previous cycles, repeat customers created through our outstanding customer experience have played a prominent part in propelling us forward. Looking at our first quarter results, achieving nearly 11% same-store sales growth was encouraging. Our revenue of $505 million supported our efforts to reduce inventory and contributed to an even stronger, more liquid balance sheet. We also benefited from our location optimization strategy which resulted in a more efficient footprint compared with last year.

You can see from reported industry data that boat sales were challenged throughout the quarter, particularly in the fiberglass segments, which are most important to us. Accordingly, our unit volume declined by low to mid-single digits. This implies a significant increase in average unit price, driven primarily by mix and aided in part by the strength of the Fort Lauderdale Boat Show which skews toward larger products. Historically, in past recoveries, the larger product has tended to lead the way. Not surprisingly, gross profit of $160 million was down from the prior year, due to anticipated margin pressure in the winter months from the industry's inventory overhang and its impact on less capitalized dealers.

Gross margins today are more than 400 basis points below what would be considered a normal historical margin in most periods. That said, our higher-margin businesses like our Marinas, Finance and Insurance and Superyacht services contributed favorably to consolidated gross profit, demonstrating the benefits of our diversified portfolio. Selling, general and administrative expenses increased to over $155 million. But when adjusting for transaction costs, changes in contingent consideration, which was a gain of over $25 million last year, Weather events and other items in both periods, SG&A was about $1.7 million higher year-over-year, but it was down 200 basis points as a percentage of revenue. Interest expense also declined due to decreased borrowings from lower inventory and lower rates. Interest expense should continue to be a tailwind for us in fiscal 2026 compared with last year.

Our reported net loss per share was $0.36 per share or $0.21 per share on an adjusted basis. Adjusted EBITDA was $15.5 million. Our balance sheet remains strong with nearly $165 million in cash. While fiscal 2025 and Q1 of 2026 were challenging periods for the industry, we still generated significant cash flow that allowed us to repurchase approximately 6% of our shares, acquire the high-quality Shelter Bay Marina and retail business in the Keys and continue investing across the company to support long-term growth and operational excellence. These investments included the opening of IGY Savannah, the expansion of our Stuart Marina, the rollout of our enhanced Fort Myers operation and several other strategic initiatives.

Interestingly, as we start the March quarter, our customer deposits are flat year-over-year, an encouraging sign given the environment we just navigated. Through our disciplined approach, we improved both our current ratio and total liabilities to tangible net worth ratio. At the same time, we maintained a healthy net debt to adjusted EBITDA ratio of just over 2x at quarter end. Based on current business conditions, recent industry registration data, retail trends and other relevant factors, we are reaffirming our guidance for fiscal 2026. We continue to expect fiscal 2026 adjusted EBITDA to be in the range of $110 million to $125 million, with adjusted net income in the range of $0.40 to $0.95 per diluted share.

As I noted on our last earnings call, this guidance assumes industry units for our fiscal year will be down slightly to up slightly depending on the various factors that have affected consumer demand. Same-store sales are expected to finish fiscal 2026 flat to slightly positive, depending on mix. We anticipate retail margin pressure to persist across the industry through the end of our fiscal second quarter, which aligns with the typically slower winter period. We also expect inventory levels in the industry to show more meaningful improvement in the second half of the fiscal year compared with the same period in fiscal 2025. Supported by the continued growth of our higher-margin businesses, we believe we can maintain consolidated gross margins in the low 30% range for the year. Our outlook reflects the interest rate cuts announced to date and assumes an annual effective tax rate of 26.5% and a share count of approximately 22.8 million shares.

These projections do not incorporate the potential effects of significant acquisitions or other unforeseen developments, including shifts in global economic conditions. Reiterating what we said when we provided our fiscal 2026 guidance in early November, it's important to note that for the 6 months through March of last year, our revenue and EBITDA was flat to up slightly, while business became drastically more challenged for us and the industry after Liberation Day in early April. Liberation Day disruption was at the very beginning of the June quarter, which seasonally is the most meaningful quarter to us and the industry. The resulting softness in that quarter caused the inventory overhang the industry is still working through.

Accordingly, when modeling the business, you should bear in mind that the front half of the year is meaningfully more difficult from an earnings comparison. Having said that and looking at current business conditions, January trends have been solid, thanks in large part to successful boat shows and the month will finish with positive same-store sales. With that, I'll turn the call back over to Brett for closing comments. Brett?

Thank you, Mike. Despite the challenging economic environment across the recreational boating industry, we expect activity to seasonally strengthen as we head into the spring selling season. Early momentum at this year's boat shows has been encouraging, and our position within the premium segment puts us in a strong position to capture meaningful growth and outperform the broader market as conditions improve. Our strength in the recreational marine sector comes from our diverse interconnected business lines. This integrated approach builds operational efficiency and long-term value. Through continued innovation, and elevated customer experience and expansion in high-margin areas of our business, we remain confident in our ability to drive sustained growth and long-term value.

With that, Mike and I will be happy to take your questions. So operator, please open up the line for Q&A.

[Operator Instructions] Our first question is from Joe Altobello with Raymond James.

Not surprisingly, I want to start on gross margin here. I know, Mike, you mentioned your second half compares get easier, but what are you assuming in terms of the discounting environment as we progress throughout the selling season. And if that does get better, is this offset by lower OEM promotional support?

Good question, Joe. So we expect, as we said in the prepared remarks, that during this quarter, which is during the winter time, the promotional environment is still going to be pretty active and pretty aggressive. That's baked into our guidance numbers. We do think when you get into maybe late March or early in the June quarter, the weeks on hand of inventory in the industry are expected to actually drop, first get even with where they normally would be and then get below where they would normally be. And at that point, I think lesser capitalized dealers out there who have been under a lot of pressure will feel a lot better. They'll be easing their aggressiveness, which does impact the entire industry, including us. And I think in kind of early in the spring is the opportunity for margins to begin to recover from the levels that they're at today, which is historically very, very low.

I don't think it's going to be a hockey stick recovery, but I think it's going to start to recover for sure, in the June quarter, which is meaningful. And then as it relates to how -- what that means for promotional environment for the manufacturers, I would think in some cases, they probably can also take a little bit of -- their foot off the gas a little bit as they work closely with dealers like us and their partners. But we're all aligned in terms of continuing to create retail and stay ahead of demand and continue to create demand.

Got it. Very helpful. Maybe just a follow-up on that. You mentioned you still expect inventory reductions in the back half. Is there a number that you have in mind where you want to end the fiscal year from an inventory standpoint?

You know what, we talk a lot about numbers internally, but really what we're trying to get to is the inventory -- or the inventory turns for us are below what we normally would like them to be. We're below 2x now, which is we're normally above 2x. So we're trying to end fiscal 2026 with inventory turns above 2x. And to get there, our inventory will have to be a little bit lower than where we ended last year, which was already a reduction from the year before. And we've made very good progress as Brett said, being $170 million down year-over-year at December. And subject to retail expectations, I think we'll end the year with less inventory dollars.

Our next question is from James Hardiman with Citigroup.

This is Sean Wagner on for James. I just wanted to first confirm, so you said nearly 11% same-store sales growth in the quarter. Unit volumes, I think you said declined low to mid-single digits and ASPs were down. Is that correct? Or ASPs were up?

Yes, to get to the 11% same-store sales growth with a mid-single-digit decline in units, we had a very significant increase in average unit selling prices, which I think I said on the remarks, the strength of the Fort Lauderdale Boat Show really helped to propel that. That tends to be a bigger boat show, and it was a very strong show. So that drove AUPs in the quarter.

Okay. And I guess following up on that, if there's a mix benefit on the top line, I guess, why didn't that translate into better gross margin where you called out sort of a negative mix headwind?

Yes. Actually, it's not -- it isn't really necessarily a negative. The mix is when boat sales increase as much as they did in terms of boat sales revenue 11%. And boats today are the lowest margin product we sell, given the fact that we're -- we have so many other higher-margin businesses, that mix increase is adverse to your consolidated margin if you follow them. If you sell a lot more of a lower-margin product, it impacts your consolidated margins. That's what that comment meant to hit on.

Okay. And you -- but you did -- you called out higher margin businesses contributing favorably to the consolidated gross margin. Is that just saying without those businesses, it would have been even worse?

Yes, yes, for sure. The Marina businesses that we're in, our Superyacht services, Finance and Insurance, Service, all the other business -- Brokerage, all the other business we're in, contain a much higher gross profit margin. And they all keep doing and performing pretty darn well.

Our next question is from Eric Wold with Texas Capital Securities.

Just coming out of just the initial set of boat shows into the winter, I guess, can you talk a little bit about what you're seeing with demand kind of across the various income groups and price points? I know you talked about seeing demand on the high end, which raised the average price point. Does that mean there was weakness at the low end or just that you saw a greater demand at the high end? And does that give you -- if that's the case, does that give you more confidence that some of the higher-end premium buyers that surprisingly were kind of staying on the sidelines are starting to come off?

Yes. Eric, it's Brett. I think the Lauderdale Boat Show is exactly what we saw. It's a higher ticket price type of show and the demand was good. And in fact, like you just said, there were some people that had been waiting that were just kind of want to go boating and they just decided to kind of come in and get boating. So that was good momentum. Second half of the quarter was tough. Trends were down. I don't know if I'd categorize it because that time of year for us is kind of a larger product winter season type of sales. So it's the bigger boats. There's some industry data out there, but the fiberglass segment continues to be under pressure, which is we're trying to fight through that. And that's Mike's comments about kind of getting into the second half of the year with inventory being in good alignment, good things will happen for that.

Okay. Just to follow up, I know you're not necessarily a low-end boat seller, but I guess on the lower end of your scale, are you seeing that cohort of buyers change at all? Are they staying relatively cautious? Are you getting more cautious? Are they starting to come off the sidelines as well with rates coming down? What are you kind of seeing from the lower end?

Yes. I think it feels similar. I think my comment about it being seasonally the larger boats, we're not feeling any additional pressure on the lower end of what we carry versus the upper end, it feels generally about the same. Mike, you want to add to that?

Eric, I think what I can add to that is that the within the industry, obviously, we see what's happening within our stores. We know it's happening outside of our stores. And clearly, the data tells you that the premium product, the higher price point, the premium end is performing better overall than the value or entry-level end segments. They're both challenged. I think the value end and the more entry level is more challenged for sure than the premium end. And the strength that we saw in Lauderdale, and Brett commented on other shows, the strength that we saw in January in a lot of shows, it does seem to be being led by some of our larger product, which is historically what's happened in past cycles when we come out of a cycle. The more premium product that we sell tends to lead the way, which is encouraging when we start thinking about the rest of 2026 also.

I'll add 1 more thing. I think sometimes right now, it's less about this segment for us, for the products we carry. It's less about 1 segment being up or down. And this buyer, it's about kind of a start-stop thing, different world of news that comes out, just literally, we can see sales, buying trends change for 2 weeks after some crazy news that might get released. And so it's great Lauderdale Show and then a couple of weeks of crazy news and the buyers all stop. So it's really the uncertainty right now that's out there that's causing people to either be buying or slowing down for a little bit.

Our next question is from Anna Glaessgen with B. Riley Securities.

I'd like to turn back to the cadence of boat margin embedded in the guidance, you've been clear that you expect some pressure through the second fiscal quarter. Should we expect that in the back half, there's less pressure or that it actually inflects the positive year-over-year as you lap that Liberation Day impact?

Yes, if I understand your question right, Anna, it's the March quarter will have very similar pressure to what we experienced here in the December quarter. And then yes, it's going to be less pressure. So there ought to be opportunities for consolidated gross margin expansion, I'd be modest in that is what's in our guidance. But there should be the opportunity for some boat margin expansion which would affect and improve our consolidated margins in the June quarter and the September quarter.

Got it. And then turning to the customer deposits. We've seen kind of an extended stint of year-over-year compression in light of the broader retail environment seems to be a positive that that's starting to inflect. Just trying to understand if there's anything one-time in this most recent quarter. I know it can be lumpy if you have 1 really big boat in there. So anything to call out on mix or anything to note there?

Actually, great question. I called it out on the -- on our prepared remarks, I think it's a great point to note that our the customer deposits is, in some way, fuel for future quarters and the fact that it's stopped declining and evened out on a year-over-year basis despite all the uncertainty, I think it's a real positive. There isn't really anything overly lumpy in there. It just reflects solid business trends with some of the larger products, which is usually where you're giving deposits. But no, generally, it's good that deposits are holding up year-over-year.

Our next question is from Gerrick Johnson with Seaport Research.

I want to go a little bit deeper into Eric's question about boat shows. And you mentioned early boat shows are encouraging. Now excluding Fort Lauderdale in this conversation, can you just dive deeper into that? What shows, what regions maybe were most encouraging over the past month or so and what segments?

Yes. This is Brett, Gerrick. The boat shows that's kind of what made the comment in our script there that we called out a bunch of different shows from St. Pete to Boston and in between. And the reason we did that is really across all markets we saw a positive boat show. Some of these shows are smaller in the grand scheme of things, but it's an indicator for that market of what to expect. And like we keep saying kind of heading into the spring selling season, what are we kind of up against which last year, like Mike keeps saying that our Q1 and Q2 were pretty good last year and then Liberation Day hit and so therefore, we've been adjusting inventory because of that harsh reduction in the industry sales. And with inventory in line, hopefully nothing like a Liberation Day come at the beginning of the quarter for Q3, you're kind of going in with good inventory and an uptick in sales, you should be in a good place there.

Okay. So it sounds encouraging. Now given that we lost Sunday in New York, is that impactful to your second quarter?

I think all of those shows, I would say, when I think back to the decades that Mike and I have been attending shows and our team, it feels like every year, there's something in every one of those shows. So the comparables are real hard to say. We probably lost a day last year. The attendance was down. There was a lot going on in Minneapolis, but all of our shows did fine, you take St. Petersburg, I mean 2 days were weather issues, and we still had a great show. So yes, back to your question, that does have effects on things, but usually, it balances out for the effect of New York, a decent show, so it should shine through in our quarter.

Okay. And you mentioned news having an impact on your customer last year. Did that have any impact in the quarter given the government shutdown happened like in the middle of the quarter?

It's actually -- the way I would answer that, and Brett may have his own views on it, but the way I would answer that is, to the extent something like that, just kind of messes with consumer demand and how the consumer feels and all that. And that's negative. It probably had a negative impact on us from that perspective. I don't know if we can directly go. We got this boat sale, we lost this boat sale because of it.

It has that start-stop effect on our consumer, right? You get good momentum at Lauderdale or a boat show and then news like that, and just people get consumed, and they sit on the sideline for a couple of weeks, and then they start coming back. So it's the start-stop uncertainty that we're feeling this last 3, 4 months.

Our next question is from David McGregor with Longbow Research.

This is Joe Nolan on for David. Just on gross margin, the year-over-year change, can you quantify or talk directionally about the drivers to the decline in margin? Just how much was mix? How much was promos, et cetera?

It's a good question. I don't really have that broken down right in front of you. And I tell you all of it is promotional, not really mix in terms of new boat gross margin decline from a year-over-year perspective. And that's really what's driving the overall gross margin decline. So I guess to your point, mix because we do have an increase in boat sales overall, would contribute to that. But the biggest driver is just where boat margins are versus last year.

Got it. Okay. And then on same-store sales, you guys had a great quarter. Can you just talk about the cadence through the quarter and just what you've seen so far into January?

Yes. October was a good month. November and December were aided by the Fort Lauderdale Boat Show. Traffic and just units and business itself were challenged in those 2 months, consistent with the industry data. I mean, we did fine. But -- so the same-store sales were strong kind of throughout the quarter because of the strength of the Fort Lauderdale Boat Show. And then as we said on the call for January, we are expecting January to finish with positive same-store sales growth. And as Brett said, all the boat shows, all the ones you rattled off, which were quite a few across the country have been generally pretty positive. .

Okay. Great. And if I could just sneak 1 more in, just on acquisitions. Just wondering what you're seeing in terms of valuations, where your targets are there? And just anything you could say about that?

I can comment. We always have a robust acquisition pipeline, and we still do. The challenge right now is for many of the entities in our pipeline, and they're not all necessarily boat dealers, but for many of them that are dealers, there's just no earnings. And so it's kind of hard to -- it's hard to come up with good valuation discussions with potential people that we merge with. What I'd say is over our long history of doing this, we don't really lose an acquisition target. They may get postponed and then we come back and acquire them at some point in the future when it makes sense to us and makes sense to them as well. The valuations in terms of those type of businesses haven't changed a whole lot other than the earnings within those businesses. It's just very, very weak to the extent they have any.

There are no further questions at this time. I would like to turn the conference back over to Brett for closing remarks.

Yes. Thank you, everybody, for joining us this morning. And for those of you heading to the Miami Boat Show, we hope to see you there, and look forward to talking to you on the next call. Have a great day.

Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.

Good day, and welcome to the MarineMax, Inc. Fiscal 2025 Fourth Quarter and Full Year Conference Call. Today's call is being recorded. [Operator Instructions] I would now turn the call over to Scott Solomon of the company's Investor Relations firm, Sharon Merrill Associates. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Hosting today's call are Brett McGill, MarineMax's Chief Executive Officer and President; and Mike McLamb, the company's Chief Financial Officer. Brett will begin the call by discussing MarineMax's operating performance and recent highlights Mike will review the financial results and provide the company's fiscal 2026 financial guidance. Brett will make some concluding comments, and then management will be happy to take your questions. The earnings release and supplemental presentation associated with today's announcement can be found at investor.marinemax.com. And with that, I'll turn the call over to Mike. Mike?

Thank you, Scott. Good morning, everyone, and thank you for joining this call. I'd like to start by reminding you that certain of our comments are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, any forward-looking statements speak only as of today. These statements involve risks and uncertainties that could cause actual results to differ materially from expectations.

These risks include, but are not limited to, the impact of seasonality and weather, global 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 the company's most recently filed 10-K and 10-Q and other filings with the Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

On today's call, we will make comments referring to non-GAAP financial measures. We believe that the inclusion of these financial measures helps investors gaining a meaningful understanding of the changes in the company's core operating results. These measures can also help investors who wish to make comparisons between MarineMax and other companies on both a GAAP and on a non-GAAP basis. The reconciliation to non-GAAP financial measures to the most directly comparable GAAP measures is available in today's earnings release. With that, let me turn the call over to Brett. Brett?

Thank you, Mike. Good morning, everyone, and thank you for joining us today to discuss our fiscal fourth quarter and full year 2025 performance. Let me begin by recognizing our team's exceptional dedication throughout what has been a challenging year for the recreational boating industry, elevated interest rates, persistent inflation and the uncertainty stemming from the trade wars and geopolitical tensions have resulted in many consumers deferring their boat purchases. In the face of these headwinds, our team has remained focused on delivering world-class customer experiences that continue to set us apart as reflected in our industry-leading Net Promoter Scores.

Our full year adjusted earnings and adjusted EBITDA were in line with the guidance we gave last quarter. For the fourth quarter, we achieved revenue of over $552 million with same-store sales growth of more than 2%. Despite significant pressure on new boat margins due to the sustained elevated inventory level across the retail industry, our gross margins expanded to 34.7%, demonstrating the strength of our diversified business model and the benefits of our strategic focus on higher-margin businesses such as Finance and Insurance, Parts and Service, Superyacht Services and Marina Operations, including IGY.

These diversified revenue sources provide important balance and support our financial resilience through different macroeconomic and industry cycles. We also benefit from cross-selling opportunities between yacht sales, Superyacht Services and Marina Operations and we are regularly finding new ways to unlock synergies between each of these businesses and deliver greater value for our customers and our shareholders. There are many examples, including a 35-meter yacht sale at the recent Fort Lauderdale International Boat Show, which resulted from touch points across all of these businesses.

This is a great example of how we continue to see tangible results across yacht sales, charter bookings and storage through these connected marketing and sales initiatives. We are confident that our integrated approach will continue to support retail yacht sales and strengthen the connection between Superyacht Services and Marina Operations. On the retail side, we continue to add customer service capabilities and strengthen our network. The launch of our flagship yacht sales and service center in Fort Myers, Florida is representative of MarineMax's focus on innovation and customer service.

This facility spans more than 30,000 square feet and brings together sales, maintenance, storage and on water services in 1 convenient location in one of Florida's top yachting and boating markets. Locations like these, which combine world-class service and traditional retailing, enhance the customer experience and support efficient cross-selling of our products and services. As the industry's recognized technology leader, we set the standard for digital innovation in recreational marine services, and we are continuing to invest in technology to support customer growth and engagement.

A great example is Boatyard, our subscription-based customer experience platform, which streamlines service ordering, payment, invoicing and estimating, making the boating experience frictionless for both customers and dealers. Since its launch, Boat yard has been well received by the dealer community and has been recognized as one of the industry's most innovative companies on 6 occasions. Boatyard's active subscriber growth has increased by more than 160% over the past 12 months.

And while still in its growth phase, this momentum validates our technology leadership and positions us well for continued expansion. In addition to Boatyard, we are harnessing the power of proprietary technology platforms like Customer IQ, our business growth intelligence engine. Customer IQ integrates artificial intelligence and automation to provide us with real-time insights, enabling our sales teams to engage more efficiently and effectively with customers and drive conversions. We're in the process of rolling out Customer IQ across all MarineMax businesses, including IGY and financial services.

It's a step we believe will further amplify the technology's contribution to company-wide growth. Along with these investments in customer service, technology and innovation, which support long-term value creation, we are also taking steps to optimize our business to enhance operational efficiency. By eliminating underperforming brands and refining our product portfolio, we're aligning more closely with evolving customer demand and driving greater value. Combined with strategic store optimization, this brand and portfolio rationalization enhances operational efficiency and positions MarineMax for stronger returns when macroeconomic conditions normalize.

Before I conclude my prepared remarks, I want to take a moment to update you on the success we had at Fort Lauderdale as well as a few other developments. MarineMax had a significant presence at the recent Fort Lauderdale International Boat Show. I am happy to report that the show was stronger than last year, and several of our displays produced modern error records, which along with great customer engagement is very encouraging. Collectively, we sold more boats at the show than any time post COVID and generated a sizable increase in contracted revenue versus last year.

Across the show, we saw exciting developments in sustainable materials, autonomous features and enhanced vessel connectivity from a wide range of OEMs. Innovative brands are advancing the industry, and we are exceptionally proud to be partnering with many of these companies. I would add that our brand cruisers yachts launched several new models at the show, including a new 50 Flybridge and the 38 VTR. Overall cruisers set a post-COVID record show in terms of units and dollars.

Last month, I had the privilege of participating in the ICOMIA World Marina Conference, joining senior executives from the world's largest marina organizations. It was a powerful opportunity to reinforce our role as a strategic voice in marine services, shared perspectives and emerging global trends and deepen relationships with key stakeholders across the industry. These platforms not only elevate our visibility, they also ensure we remain at the forefront of shaping the future of marine experiences worldwide.

To support our strategic initiatives and long-term positioning, we recently added 2 distinguished new members to our Board of Directors. Odilon Almeida and Dan Schiappa. Odilon and Dan each have proven track records in driving innovation and scaling complex global operations and we're confident that their expertise and fresh perspectives will yield immediate contributions to our Board and company. Looking at the broader industry landscape, we are optimistic the sector is near or at an inflection point. While the industry is currently managing inventory normalization and macroeconomic uncertainty, the underlying fundamentals for premium recreational boating remain exceptionally strong. Now let me turn the call over to Mike for our financial review. Mike?

Thank you, Brett. I want to echo Brett's appreciation for our team's outstanding performance during this challenging period. Total revenue for the fourth quarter was over $552 million, which was down modestly from last year due to the impact of our store rationalization efforts, including the strategic closure of 10 stores since December of fiscal '24. During the quarter, same-store sales increased over 2% driven by growth in used boat revenue, Finance and Insurance, Parts and Service and Contributions from superyacht services and Marina Operations, including IGY.

In terms of units, they were down in the quarter as we continue to see a migration to higher average unit prices. Gross profit was over $191 million and our gross margin increased to 34.7%. The increase in gross margin, as Brett noted, reflects continued growth in our diversified higher-margin businesses and was achieved despite historically low boat margins due to the challenging retail environment. Selling, general and administrative expenses were over $177 million. The increase primarily reflects a greater contribution of service-related revenue, which drives gross margin dollars but does have a higher cost dynamic than retail store operations.

Along with increases in targeted marketing investments incurred to maximize sales opportunities in a challenging environment as well as higher foreign currency translation costs due to a weaker dollar. Interest expense was down slightly year-over-year. The reported net loss in the quarter was just under $1 million or $0.04 per share, which was the same as the adjusted loss per share -- and brand optimization efforts. Our full year gross margin was 32.5%, down slightly from last year despite historically low boat margins across the industry. Our reported net loss per share was $1.43 with adjusted earnings per diluted share of $0.61.

Adjusted EBITDA for the full year was about $110 million compared with $160 million in the prior year. Our balance sheet remains strong with cash of more than $170 million despite buying back a significant amount of shares this year, acquiring a great Marina and retail operation in Shelter Bay in the Keys as well as making regular investments in our business, including the opening of IGY Savannah, the Stuart Marine expansion and the opening of the expanded Fort Myers operation among other initiatives.

Inventories decreased by nearly $40 million year-over-year, reflecting our continued efforts to optimize inventory levels with our manufacturing partners. Our net debt to adjusted EBITDA ratio was about 2x at quarter end, providing substantial financial flexibility. Based on current business conditions, recent industry registration data, retail trends and other relevant factors, we expect fiscal 2026 adjusted EBITDA to be in the range of $110 million to $125 million, with adjusted net income in the range of $0.40 to $0.95 per diluted share.

Our guidance assumes industry units for our fiscal year will be down slightly to up slightly depending on the various factors that have affected consumer demand. This implied same-store sales growth will be flattish to slight growth subject to mix. Retail margin pressure is expected to continue across the industry through the end of our fiscal second quarter, which corresponds to the seasonally slower winter months. We expect industry inventory levels to be healthier in the second half of the fiscal year than the same period in fiscal 2025.

Given the success of our higher-margin business expansion, we expect to be able to maintain our annual consolidated gross margins in the low 30s. Our guidance incorporates the currently announced interest rate cuts and uses an annual effective tax rate of 26.5% with a share count of around 22.8 million shares. These projections exclude the potential impact of material acquisitions or other unforeseen developments, including changes in global economic conditions. When you think about 2026, keep in mind, our revenue, EPS and EBITDA was tracking well for the first 6 months of 2025 through March despite the challenging environment.

It wasn't until after Liberation Day that things grew much more challenging. As such, our front half comparisons overall are more difficult than the back half comparisons. Now let me comment on current trends. October finished with positive same-store sales growth and Brett discussed the successes we had at the Fort Lauderdale Boat Show. In both cases, we are encouraged, but we also recognize the undeniable softness that has persisted in the industry as evidenced by a soft September, especially for -- boat sales. So while we are encouraged, we are also balanced. Now let me turn the call back to Brett for closing comments. Brett?

Thank you, Mike. Although our fiscal 2026 outlook reflects a prudent approach in light of macroeconomic uncertainty and persistent industry headwinds, we remain confident in MarineMax's long-term strategy and growth opportunities. Our management team has guided the company through multiple challenging economic cycles, and we believe that the continued execution of our strategy will drive sustainable and profitable growth for our shareholders. Our diversification across higher-margin businesses, combined with our strong balance sheet, support our resiliency in the face of industry headwinds while also providing us with the flexibility to invest in growth and seize emerging opportunities.

We will continue to focus on strategic initiatives and product innovation, digital engagement and customer experience, areas that are becoming increasingly valuable as buyers become more discerning. The recreational boating industry is approaching several potentially positive inflection points. Industry-wide, inventories are expected to reach more normalized levels over the coming quarters, which should provide margin relief. Additionally, interest rate cuts are generally positive for our consumer and the further rate cuts that many expect to occur over the coming months should support improved customer demand.

The fundamentals supporting recreational boating remain exceptionally strong. Interest in the boating lifestyle continues to accelerate as evidenced by robust activity levels at our marinas, service centers and at the recent Fort Lauderdale Boat Show. Premium consumers increasingly view boating not as a discretionary purchase, but as an essential lifestyle. As macroeconomic conditions improve, our strategy positions us to emerge more resilient, more diversified and uniquely poised to capture the long-term opportunities in the global recreational marine market.

With that, Mike and I will be happy to take your questions. So operator, please open up the line for Q&A.

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We take the first question from the line of James Hardiman from Citi.

So obviously, the same-store sales number accelerated nicely from 3Q to 4Q. I was hoping you could help us out just splitting sort of how much of that was units versus ASPs? And then I guess similar question on the month of October. I think you said positive same-store sales for October. Are you actually seeing unit acceleration into the off-season.

Yes. Great question, James. So obviously, you guys followed the industry, the industry for the core categories that we're in has seen softness, double-digit declines in July, August and September; in some categories, 25% except from a unit perspective. So we typically outperform the industry. So our units for the quarter are down in the mid-single-digit range, which is better than the industry overall.

And so the difference from down mid-single digit to up 2% is the increase in average unit selling price during the quarter. And then on the month of October, you got to keep in mind, the month of October last year, we were dealing with the hurricane in Florida, but our units were up in the month of October, and we also did see a modest increase in average unit selling price.

That's really helpful. And then just very briefly, I just wanted to dig into the rate environment. Obviously, we've gotten a couple of 25 basis points rate cuts. I think the 10-year is modestly lower than maybe the last time we spoke. Are you seeing that show up in terms of relief from your lenders? And is that having any impact from a consumer perspective, as they contemplate lower payments?

Yes, James, good question. I think rates for the consumer, obviously, we're kind of dealing in a higher end segment as we've always talked about. So monthly payment maybe isn't driving the need to just rush out and buy something. But I've said before, a lot of our customers are small business owners, construction companies, et cetera. And when there's a rate environment that's more favorable for the business, they get a little more excited and optimistic about things and they come forward with a boat purchase.

So I think both of those things are helping. But consumer feeling better about the rate, I think we see some of that like even at Lauderdale, feeling better about that things are going to come down is given a positive news if they haven't had in a while.

We take the next question from the line of Mike Albanese from The Benchmark Company.

I just want to ask about gross margins. Obviously, jumped, I think, 34% in the quarter. You've been pretty consistent, keeping them above 30% here in a tough market. And obviously, some of that is mix, but it appears your adjacencies are holding up well. Could you just kind of tap into that a little bit deeper? And I'd love to kind of understand how much of that has been kind of strategic initiatives, cross-sell synergies, et cetera, versus just sustainable demand within those segments?

I can comment. I'll take a first stab. But yes, in the current environment, boat margins are the second lowest I've seen in 27 years, they're not down as far as they were in the great financial crisis, but they're very low. They're like 300 to 350 basis points below normal. And so hopefully, over time, we'll see some upside in boat margins as inventories normalize. But I do think our strategy of expanding in these higher-margin categories, whether it's the Marinas, Superyacht Services, Finance and Insurance, Service, Parts and Accessories, there's a lot of different higher-margin components that we've been expanding with. I think, really shines in an environment like this and helps us maintain elevated gross margins overall. It comes through in the quarter.

And Mike, when we set out with this strategy, and we're very focused on it with these higher-margin businesses and the growth we've had in those and the investments we've made in those businesses does show through. It shines. And you ask a question, yes, those businesses have what's close to recurring type revenue as you can get, so you can kind of rely on those types of things. Of course, you've got to manage the business but we're continue to unlock different synergies, cross-selling, consumers feeling good about buying a larger yacht at a MarineMax, Fort Myers location, let's say, and then feeling good about, well, what if I want to put that in charter with Fraser yachts or whatever it might be.

So they feel comfortable with that all the way up to where are they going to put their boat when they get to the Caribbean through our IGY Marina. So we're seeing a lot more of those synergies, and we'll continue to unlock those as well.

We take the next question from the line of Joseph Altobello from Raymond James.

This is Martin on for Joe. I just want to take a finer point on to the promotional drag in the quarter. Could you give a little bit more color to what that headwind was and sort of what we can expect entering the new year?

Yes. If I understand your question, right, Martin, good question. So the -- I'd say this entire fiscal year, we've seen a very challenged environment because of elevated inventory levels really across the industry certainly true in the current quarter. I just commented a little while ago just how soft boat margins are.

When we think about 2026 and in our guidance, we're not expecting much of a lift in boat margins. I think I commented in my prepared remarks that at least through the winter time, when there's a lot of dealers who are feeling softer sales and increased pressure, when it comes to carrying costs, et cetera, I think the pressure will still be there. It is thought that later on in the year when you get into the summer selling season as inventories begin to normalize, that we could see some relief on the margin side.

Obviously, it won't snap back overnight, but it will potentially begin to improve like in the summertime in the back half [Audio Gap]

We take the next question from the line of Eric Wold from Texas Capital Securities.

Mike, kind of looking at the guidance for fiscal '26, I guess, your industry assumptions relative to your same-store sales? It looks like -- and once I'm reading this wrong, it looks like you're expecting kind of more in line-ish performance with the industry versus kind of more of the outperformance that you've had before, especially given the mix towards higher-end premium boats. Am I reading that wrong? Are you trying to take a little more cautious view on mix? Or how should we think about kind of what's embedded in that guidance in terms of relative performance to the industry.

No, Eric, I think you're reading that right. I think the first assumption is does the industry get to flattish units from negative. That's one assumption that's in there, and then obviously, what happens with mix from our perspective. But I think we're trying to be prudent in terms of our guidance figures because you're right, we typically do outperform what the industry does.

I think we're really trying to see -- let's get through fiscal 2026. Let's see that the industry really does get back to first to 0 instead of negative and then just slightly positive in the second half of the year.

Got it. And then just quickly update us on where you are with your rationalizing kind of operating expenses in general and overhead and kind of what you expect as you move through fiscal '26?

Well, I commented that we have closed 10 stores now since last year, and we've made other cost cuts and savings. There is a current drag that's going on within the business, which is just additional marketing spend, additional inventory maintenance spend, et cetera, and really what the whole industry is having with the slower turns that we've had, which would improve.

But in our 2026 guidance, we're not baking in any substantial additional cost savings from what we're seeing in the current levels of 2025.

We take the next question from the line of Anna Glaessgen from B. Riley Securities.

I'd like to start on same-store sales cadence. On the 1 hand, it seems that we're assuming some sequential improvement as we get to the back half in terms of market performance. But then on the other hand, we have some sort of onetime laps like lapping the hurricane in Florida the easiest comp in 1Q. So just trying to understand the puts and takes as we think about the shape of the year.

No, it's a great question, and you're right. I mean the state of Florida was impacted by hurricanes. Our -- we were down negative 11% in the December quarter than up 11% in March. So technically, we do have an easier comparison right now, which is why I said with October being up, it's up against the storms. And then when you go out throughout the year, obviously, the quarter with Liberation Day, which is the June quarter. In theory, is another easy comp. We were down 9%, and then it sort of levels up in September.

So you do got to bake all that in from the assumption perspective. I think the point that I was trying to make in the -- in my prepared remarks is that when you look at our bottom line financial performance in the December quarter and the March quarter, we exceeded our thinking in the street and our guidance in those 2 quarters from an EBITDA and from an earnings perspective. So when you're modeling out the whole year factoring in the same-store sales questions that you're asking, we actually have an easier comparison from an earnings perspective in the back half of the year than the front half of the year also.

Got it. And then turning back to the boat margin question. Understanding the seasonal aspects of maybe getting some improvement once we get through the March quarter when we enter the retail selling season. But trying to understand kind of like the key drivers of improvement there? Is it getting through some of the aged inventory that maybe competitors feel? Is it improved market performance? Or is it really just that seasonal aspect that's impacting the first 2 quarters of the year?

Yes. I think the aged inventory, getting rid of that, getting inventory levels down to a more manageable level and kind of balancing the supply-demand side is fundamental to everything. the promotional activity is strong. There's also, I think, a consumer sentiment, but prices have really increased over the last 5 years. So there's pressure on just consumer feeling like they need a discount, even if there's not an aged inventory or too much inventory. So we just got to kind of lap through that and let customers get back to a more normal buying pattern. But inventory levels are definitely going to help get the margins squared away..

Industry levels, yes.

Ladies and gentlemen, I will now hand the conference over to Mr. McGill for his closing comments.

Well, thank you, everybody, for joining us today, and I look forward to keeping you updated on our next call. Have a great day.

Thank you. Ladies and gentlemen, the conference of MarineMax, Inc. has now concluded. Thank you for your participation. You may now disconnect your lines.

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