Bill McGill is piloting MarineMax's recovery from the recession. Sales are up, and new buyers are testing the waters.
At 69, Bill McGill, the chairman and CEO of Clearwater-based MarineMax, still water skis — barefoot. He takes his Nautique powerboat out to churn waves in the Gulf, or gathers his family, grandkids and all, to whisk them down to the coastal islands on a chartered yacht, and he always captains the boat.
At his headquarters on busy U.S. 19 in Clearwater, he's normally the first to arrive at work, at 6 a.m. But he doesn't mind, because for four decades boating has been good to him, and there's nothing better than finding new ways to drive sales. Especially after the troubled waters of recession, when he took a direct hit that cost his company a half-billion dollars in sales. He's fighting back.
For McGill, the experience of boating — from the rocking waves behind a speedboat to the murmur of conversation on a yacht — is inseparable from his corporate world. He built MarineMax into the largest boat retailer in the United States, reporting $524.5 million in revenue in 2012. He commands a national work force of 1,300 people— the sales crew are all boaters — and, through acquisitions, has absorbed 29 companies under the MarineMax umbrella.
But just in 2006, his revenues had climbed to $1.2 billion with net income of more than $39 million before the recession knocked thousands of boat companies out of business, and reduced the U.S. industry from 5,500 retailers to 3,500. To survive, McGill sliced his work force of 2,600 in half, and imposed pay cuts. For its fiscal year ending Sept. 30, 2008, the company lost $134 million.
“There was a glut of foreclosures, and dealers were in trouble,” says McGill. “Boats were being dumped.” For buyers, financing was hard to come by. “We're going to weather this,” McGill told his executive and sales crews, as deals fell away. “My biggest job was keeping the morale up, and helping the team realize that the customers are out there, and they're going to be returning, in better times.”
And so they are. Across the $32 billion boating industry, sales rose 10% in 2012, and the National Marine Manufacturers Association projects another 5% to 10% growth in fiscal 2013, says Thom Dammrich, president of the Chicago-based group, which represents recreational boat producers. The slowest market to recover has been cruising boats of 30 feet and longer, which makes up part of MarineMax's inventory. Its average boat sale is a 24-footer priced at $120,000, although prices range from about $20,000 to more than $1 million. One brokered boat for sale on the MarineMax website, a 2008 Azimut, carries a tag of $7.8 million.
Over each of the past three years, revenues at MarineMax have climbed, from their recent bottom of $450.3 million in fiscal year 2010, to $480.9 million in 2011, and a larger leap to the 2012 level of $524.5 million. Over the same time, profits and loss have seesawed from a gain of $2.5 million in fiscal year 2010 to a loss of $11.52 million in 2011 and then back to a gain of $1.1 million in fiscal year 2012. Although the earnings are modest, the turn back to profitability is a large one considering the $76.77 million MarineMax lost in fiscal 2009.
But rebuilding is a painstaking process, and McGill says he stuck with a strategy of steering clear of debt. Plenty of boats were available at tempting prices— distressed inventory from struggling retailers and owners — but McGill chose not to snap up the bargains. Cash is king, he knew, and he decided instead to preserve capital to service his customers, and meet payroll and other staff needs. He guarded the balance sheet, and refused to take on more debt. The company's only debt is for half its new inventory, which is floor-planned, an approach also used by car dealers, in which a bank lends money for the new product.
McGill applied the same frugal strategy to real estate, even as the company grew. “We have over $100 million worth of property that we own—all debt-free,” he says. Some property investments over the years have multiplied in value, such as the 4 acres he bought in Clearwater for $1 million, now worth many times that amount. In addition, MarineMax leases stores in some markets.
“We had the cash and we still do, where we could get through these tough times,” says McGill. Spending on real estate or distressed inventory was not a priority. “It was more important to take care of our customers and our team because when the good times returned, and they're beginning, we're there to capitalize on it.”
Leader of the pack
From Clearwater to Miami, and out to the MarineMax stores in California, buyers are slowly returning. And MarineMax (symbol: HZO; recent price: $12.86) is forging ahead with a new acquisition, buying Parker Boat Co., a company with an 85-year history and stores and service operations in Orlando and Daytona Beach. The acquisition brings MarineMax's total number of stores to 55, and makes it the exclusive distributor in Florida for popular Sea Ray boats.
McGill's losses, and his steps to regain customers and revenue, have not gone unnoticed. For the boating industry, what happens at MarineMax matters.
“MarineMax is the largest new boat dealer by sales or any other measure,” says Dammrich. “It is probably fair to say that MarineMax is watched by other retailers and manufacturers to see what they are doing.” he notes. “Bill is clearly one of the industry's leading executives. He is an innovator and is passionate about boating and bringing the boating lifestyle to the American public.”
McGill goes beyond sales as he reaches out to the nation's boaters. His effort doesn't stop with the contract. MarineMax crews lead new buyers out on their maiden voyage, showing them the ropes, teaching them to navigate, offering women as well as men lessons on operating and docking the boat. The company fosters relationships among buyers through getaways led by the MarineMax sales staff — day trips from Clearwater to the islands off Sarasota or Fort Myers, or longer excursions to the Keys and other destinations. In 2012, MarineMax provided more than 1,000 getaways at little expense to participants.
Around the country, the company hosts excursions and marketing events. In North Carolina, MarineMax boaters can spend Father's Day spinning over to Bald Head Island or in July, they can join a pontoon parade. In Minnesota, boaters can spend the first weekend in May at a water show on Lake Minnetonka. MarineMax also offers charter vacations to the Caribbean and European waterways.
In the British Virgin Islands, MarineMax is actually building boats for a charter fleet based there. The new program offers charter trips, and income to boat buyers. A buyer purchases a boat with a small down payment, and gets a specific number of weeks to use the boat. The rest of the time, it's chartered for vacationers, says McGill. The buyers don't get the charter fees, but they receive guaranteed monthly income, and maintenance for the yachts, which run to 38 feet or 48 feet.
“I realize what we've done over the years. We really change people's lives,” says McGill. Families unite, kids and parents are less distracted by mobile phones, TVs, or individual activities. They talk. They fish. They enjoy the scenery. They pull together to tend the boat. Wives thank McGill for plucking their husbands from the golf course or hunting grounds. “I've got my husband back,” they tell him.
“On the water, you connect with yourself,” he says. People leave behind the office, the terrible news reports. “You get out on that water and you forget it all.”
McGill's life didn't begin in a marina; it started on a farm in Tennessee. His dad introduced the kids to boating on a local lake and shared his delight in waterskiing. But McGill was more intrigued by the sky than by water. He became an engineer, and worked for Pratt & Whitney, the aircraft engine manufacturer, as a test engineer, after college. “I was going to try to be an astronaut,” he says.
He worked on the space station at Langley Air Force Base in Virginia, but eventually realized that with spending cuts for NASA programs, it would be many years before the space station became a reality. He moved on to Colgate-Palmolive Co., but rather than relocate to Boston or New York for the company, he left, and in 1973, headed south, to his uncle's boat business in Sarasota. McGill opened a Tampa retail store, and about six years later, bought his uncle out.
In 1998, he rolled six private companies into his, and later went public. From time to time, he missed the world of space, and traveled to the Kennedy Space Center in Cocoa to watch shuttle launches.
But his passion for water had grown stronger than his passion for space, and for 40 years, boating has been his life. He snow skis, he runs, but boating calls him back. “I was out waterskiing yesterday,” he says. “I was out barefooting.” He used to compete in tournaments, but he hasn't done that lately. “I want to get back to that when I grow up.”